I’m planing on making an offer to an individual who owns a 1.93 acre parcel with an office warehouse on essentially half of the property. The other half of the parcel is wooded and vacant with a generally level topography and good visibility and access. My offer (if he won’t sell the entire property) is to create a new parcel out of the 1.93 acres and buy that parcel to develop another industrial building. The numbers could work and I haven’t talked with the current owner yet.
What would be the order of events for something like this? Would the parcel have to be divided then bought or can we structure the deal before that process?
It is easy if he own the property outright. He just surveys off the amount that you are buying, he files it with the county and gets a new legal address for the property, has it appraised and sells it. If he has a lien on the property it is not so easy. He has to get a lien release from the current lender first before starting the above process. Depending on the lender and his payment history it can go smoothly or they can be very difficult to deal with. Figure if he has a 50% LTV and he is selling half of his land his LTV is going up so he may have to pay the lender to allow the release of part of the land.
Thanks for the response. I didn’t think about the lender issues involved if it’s mortgaged. The property was recently purchased and I doubt they own it free and clear. I’m still keeping my eyes open for other vacant land in the area. I like the particular location of this parcel though. We’ll see…
The lien release may not be a huge deal for the bank. I think it is still worthwhile to check it out if you want the property.
It is common practice to have lien releases built into loan agreements if the collateral is multiple properties. If the 1.93 acres hasn’t been previously subdivided then it could be more diffucult but not necessarily.
Typically the title company will call the lender for a release price and that will be paid from the seller’s proceeds.