Subdivision involves buying a parcel of land and then going through a procedure governed by local law for breaking it up into smaller parcels of land (usually referred to as “lots”) upon which individually owned houses are constructed. The individual members then own title to a lot and their home. The subdivision may also include some “common areas” (such as a common house) owned by a homeowner’s association (a non-profit corporation) in which all of the individual lot-owners are members. Subdivisions can contain single-family (free-standing) homes and/or town (attached) houses. Developers have a great deal of latitude in structuring and managing the development via a homeowners association.
The subdivision process can be very costly depending upon the zoning and requirements in the area although this form of ownership may be the best suited if your goal is individual homes on lots and the land you buy is already zoned compatible with your plans. Some areas allow for “zero lot line” subdivision which makes it possible to join homes into duplexes or triplexes. Other areas allow for cluster development, where a lot size may be reduced, and a bonus amount of lots allowed, if the homes are clustered together and open space is preserved. Any number of lots can be held by a homeowners association for use as common elements, such as a commonhouse or a shop. Planned residential developments (PRD) are often required for subdivisions that include more than a particular number of homes. PRD’s often have extensive checklists of requirements, although a PRD may be required for condominium or coop ownership as well.
Legal issues for communities: A primer http://www.ic.org/nica/Legal/Legal1a.html