Subdividing land with a loan - Posted by DavidV

Posted by NJDave on September 02, 1999 at 11:02:59:

I meant “improved” as in improved with a dwelling. I recommended that David V. give a mortgage (in exchange for a mortgage loan) on the “improved” portion of the original tract, the part with the multi-family dwelling.

Subdividing land with a loan - Posted by DavidV

Posted by DavidV on September 01, 1999 at 13:32:10:

Anyone have any experience subdividing land with bank financing? Will they release part of the land if you can show adequate appraisal for the other part? I have not bought the property yet, the subject property is an eight unit on 3 acres. Looking for any input before any offers go out.

Re: Don’t give a mortgage on the entire property. - Posted by NJDave

Posted by NJDave on September 01, 1999 at 14:44:19:

When you purchase the premises, make sure that you only give a mortgage on the portion of the property upon which the dwelling sits. There is a lot of preliminary legal work creating the new lots, but make your offer to purchase subject to subdivision approval.

Once you complete your purchase, the lots will not be encumbered by a mortgage and mortgage loan. You’ll own them F&C.

Re: Don’t give a mortgage on the entire property. - Posted by jonah

Posted by jonah on September 01, 1999 at 20:14:28:

“Only give them a mortgage on the portion of the property which the dwelling sits” - that does not make sense

If he’s sub-dividing the property one assumes the property is currently on (1) deed.

Re: Don’t give a mortgage on the entire property. - Posted by NJDave

Posted by NJDave on September 02, 1999 at 09:25:36:

Sure it makes sense, but maybe too broad a response. David V. is seeking to purchase and finance a tract of land (one deed) that he wants to subdivide. The recommendation was that he enter into a contract to purchase subject to subdivision approval. With the subdivision approval in place, David V. could give a mortgage (in return for a mortgage loan) on ONLY the improved portion of the original tract. The remainder would be owned free and clear, and not subject to the purchase money mortgage he had given to a lender.

Re: Don’t give a mortgage on the entire property. - Posted by jonahnj

Posted by jonahnj on September 02, 1999 at 10:30:58:

that was clear - not to be picky again, but you mean “approved” (meaning land has final subdivision) , not “improved” (meaning improvements are completed, i.e., road, curbs etc.)