New York City · Member since 2017 · 29 posts · 7 votes
I have an opportunity to buy a 4 acre parcel. The owner has two parcels, one is the vacant parcel and the other is his own house with 5 acres, next to each other. After title search, the 4 acre lot and the house (40 yrs old below average condition) both are under a re-financed mortgage the owner took out 10 years ago of $335,000. The house is on the market selling for $325,000 by a realtor in Jan 20. Based on the amortization table, the mortgage balance would be $286,000 by now.
I offered $5000 for the 4 acres, before the knowledge of the mortgage lien. The estimate for the current (before virus) market (with clean title, of course ) was $18000. But now, with the mortgage lien, I will need to hold till the house is sold and pay off the mortgage. That could be 1 yr or more. In the mean time, the market could deteriorate more. At some point if price drop so much that the owner may let the house go to foreclosure too. (worst case)
Should I buy the parcel and take the risk?
Should I offer less ($2500 -$3000 ) and take the risk?
Wholesaler · Sunnyvale, CA · Member since 2016 · 106 posts · 58 votes
6y
You can try to contact the bank that holds the mortgage and see if they'll separate the land from the home. Selling the land could trigger a clause in the mortgage causing the seller to have pay the full mortgage (due upon sale clause I think?). Either way you need to get it out of the mortgage. The seller may just be required to pay any proceeds to the bank/lien holder.
You really need to read the mortgage to find out what clauses it has. You likely won't be able to take title to the land with a lien on it unless you did some kind of "subject to" deal, but I don't think that's even feasible.
My opinion, see if you can get it separated from the rest of the mortgage, if you can't then just go find more land.