How to Refi Triplex property after subdivision into 2 properties
I'm posting this story to share my recent experience in the process of subdividing a triplex in hopes that others will learn how simple and easy this can be (at times). This process had me perplexed for over a year - only because i/we (humans) often make things out to be more difficult than they need to be. The other reason is that i took a LAZY approach... I didn't look into this until the past 30 days. Once i began to visit the city's planning office it took me 10 days to figure it out, and 30 days to complete the process.
I purchased a triplex over a year go with the intent to subdivide it and sell one of them after renovating the units - mostly cosmetic improvements. The property is located in San Bernardino County, CA, and is made up of a duplex (large unit in the front and a smaller unit in the rear, R2) and another unit (SFR), adjacent to the duplex, in a corner lot. Total size of combined lot is 14,900 sq ft. After inquiring with nearly a dozen people (realtors, lenders and investors) none of them were able to provide guidance on a resolution.
In 2007, a previous owner combined the two parcels into one to reduce the tax burden (remember, this is CA). I discovered the other reason why some owners choose to combine parcels is for development, to expand the size of the building/s. My $100,000 question was... "How do i divide the, now, single parcel into two parcels (two different APNs)?? After renovations costing around $50k over the past year I visited the building and planning office of the City of Big Bear Lake three different times. Some of the city staff were working remotely due to Covid, which i understand. In a nutshell, the city's response was, "it can't be done, but you're free to check with the county, if you'd like". The city staff effort seems legitimate and to their best knowledge, yet short of being 100% accurate. So, I contacted the County Office of the Assessor. With a simple call, after a 7-minute hold time, i spoke with a friendly, live staff who explained the process and directed me to the County's website for the needed information and a single page form. I downloaded the Parcel Combination Rescission Form, wrote a check for $108 and mailed them to the County. After a three week's wait time I received the approved letter subdividing the parcels into two. The property will be listed for sale within the next 60 days. This seemed too easy, but, my lesson was, some times things are too good to be true :).
Question for you all: What do I do about the loan on the triplex after i sell one of the units? Refi? At this time, I have one loan on the entire triplex, which is no longer a legal triplex. My lender's response to this question was, "in the 30 years i've been a loan officer i've never come across this scenario", hence my post on BP. Wonder if Brandon Turner has ever dealt with this situation.. ? ;)
The moral of the story is... Keep It Simple Stupid (KISS) ;)