Knock down house and build new one?

[J Corona]

Dumb Question: I have a rental home that I owe 60k to bank. Would I be able to knock down and build a new home and once I sale, I use proceeds to pay off the first bank? 

My wife has me asking. I already told her bank has first lien, you can’t just go and knock down their asset. I’m thinking builder won’t touch without bank allowing them. Am I right?