Posted by Dr. Craig Whisler CA NV on October 09, 2003 at 23:04:30:
…you had the foresight to set it up with the lender (in writing) before you put the loan on your parcel.
If you are buying a lot with the intention of splitting it up and selling selling off one or more parcels before the loan is paid off, you usually have to negotiate with the lender for a partial release clause for each lot upon the payment of an agreed amount. You will generally need to pay off slightly more than a pro rata anount, if the lender is on the ball. I mean if you do a 4-way split and want to sell one lot, you will often have to pay off about 1/3 of the loan to release 1/4 th of the property.
If you do not negotiate this in advance the lender will usually give you a blank stare and demand full loan payoff. That way he gets to write you a new loan for the remainder of the lots and collect another loan fee from you. Well, don’t be surprised, Philip, that’s his job. Maybe he’ll even ask for another appraisal (done by his brother-in-law).
Regards, doc