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Subdividing land
Posted on 7/22/25 at 11:53 pm
Posted on 7/22/25 at 11:53 pm
So if I have say, 20 acres, with a mortgage, and wanted to sell 2 acres…
How does this work? Mortgage co holds as collateral … so what’s the play here?
How does this work? Mortgage co holds as collateral … so what’s the play here?
2
Posted on 7/23/25 at 12:28 am to xBirdx
You would first need to check with the mortgage company and see if it’s even possible for a partial release. (for a fee) Then if they would entertain it, you’d have to see if the remaining 18 acres would cover the remaining loan balance. Then you would have to legally subdivide the land, jurisdiction requirements, surveyor. (More fees). Get appraisals on the newly subdivided land to make sure the value is sufficient for your mortgage company to agree to the terms (fees)..
Or just pay off the mortgage and proceed with the subdividing and selling off parcels
Or just pay off the mortgage and proceed with the subdividing and selling off parcels
Posted on 7/23/25 at 12:30 am to SuperSaint
Thanks
And if I had &200k to pay it off…. Probably wouldn’t be selling g lol
And if I had &200k to pay it off…. Probably wouldn’t be selling g lol
Posted on 7/23/25 at 4:12 am to xBirdx
SuperSaint did a good job explaining it. I would only add that a lot of times a bank will want an amount of money to partially release collateral such as land. They may say we will release these 2 acres for a 15k payment.
Before wasting much time with it, I would check with the parish to see if they will allow the land to be subdivided.
Before wasting much time with it, I would check with the parish to see if they will allow the land to be subdivided.
Posted on 7/23/25 at 8:47 pm to xBirdx
Your example of selling 2 acres of a 20 acre parcel and presently owing $200k on it:
Your mortgage company is going to (rightfully) want to protect their investment by determining how the 2 acre parcel removed from the other 18 acres diminishes the value of the remaining 18 acres.
All situations are different; don’t expect to necessarily get away with a pro rata payment (2 acres equals 1/10th of the mortgaged parcel, 1/10th of $200k = $20k).
Your mortgage company controls this situation unless you specifically negotiated an alternative arrangement. They can simply refuse to allow your proposal.
Good luck.
Your mortgage company is going to (rightfully) want to protect their investment by determining how the 2 acre parcel removed from the other 18 acres diminishes the value of the remaining 18 acres.
All situations are different; don’t expect to necessarily get away with a pro rata payment (2 acres equals 1/10th of the mortgaged parcel, 1/10th of $200k = $20k).
Your mortgage company controls this situation unless you specifically negotiated an alternative arrangement. They can simply refuse to allow your proposal.
Good luck.
Posted on 7/23/25 at 8:55 pm to soccerfüt
Ah makes sense. Appreciate it. Same to previous poster who shared good info
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