In an expensive real estate market like Bermuda, it is sometimes the case that a senior family member will assist their grandchildren in taking the first step on the property ladder. Such a scenario sometimes involves a senior member who owns a large plot of land, and wishes to subdivide it, or to build condominiums on it, for the benefit of their younger relatives.

The first step is to consider seeking planning permission from the Department of Planning. The Bermuda Plan 2008 zoning maps are available online at http://www.planning.gov.bm/Documents/Bermuda%20Plan%202008/Zoning%20Maps/Map%20Index.pdf.

There is no guarantee that a particular scheme will receive permission based on a review of the zoning maps, but the plan will at least indicate whether a residential scheme is likely to get the go-ahead. A dense housing scheme is most likely to get permission on land designated as 'Residential Zone 1' and a less dense scheme on land designated as 'Residential Zone 2'.

If a scheme is thought likely to gain planning permission, it is worth consulting a surveyor who should be able to advise on, or draw up a scheme, that stands the best chance of obtaining the official go-ahead. Once a scheme is drawn up, you must consider how the units are going to be owned – either through a straightforward subdivision, or a condominium scheme.

If access is shared, and there are shared amenties and shared walls, a condominium may be appropriate. In that case, you can either proceed under the Condominium Act 1983, or by way of long leasehold, usually 999 years. Proceeding by way of long leaseholds is usually preferred by developers, being perceived as less expensive and faster to set up, than under the Condominium Act 1983. Each condominium, like a traditional house, becomes a property unit capable of being sold, mortgaged or let.

By this stage there should be enough information available to put forward a proposal to a bank for financing your scheme. In such a scenario, a bank may be willing to fund building through a mortgage, if say the senior member of the family contributes the land free of charge and the younger members of the family agree to pay off the mortgage. The bank will likely require a mortgage over the whole of the scheme's property but hopefully repayment can be postponed until after the units are built and transferred to the owners.

Once planning permission and finance are available, the scheme can be constructed. After construction the units can be sold, in which case the existing mortgage can be paid off. Alternatively, the units can be transferred to family members who then take new mortgages over each unit in exchange for the release of the original mortgage. Sometimes units are sold at full price to non-family members with family members taking a free transfer of other units. Alternatively some units are let to provide income to the senior or other family members. A frequent concern of families splitting up land is the possibility of strangers acquiring ownership.

Such a possibility is difficult to avoid where finance is required from a bank, or in situations where a family member proceeds to get a divorce. In the latter situation, a court may order the unit transferred to a non-family spouse.

In the event of mortgage default the bank may force units to be sold, and that may result in non-family members taking ownership. Another concern might be to stop family owners letting units to outsiders, though such a restriction is most likely unacceptable to a financing bank. An attorney can assist with advising on how a scheme should go forward, whether as a subdivision or as a condominium and which particular circumstances should satisfy the family and the bank, if financing is involved. The attorney can draw up documentation to commit all concerned to a scheme, though different family interests may require separate legal representation.

Attorney Neil Molyneux is a member of the Property Practice Group of Appleby. A copy of this column is available on the firm's web site at www.applebyglobal.com.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.