Question by Tammie R: To acquire a mortgage for a new building, does the title for the land it will sit on be free and clear?
I own 50 acres of land (a 40 acre parcel and a 10 acres parcel with separate tax ID numbers, but which were purchased with one mortgage). The house and buildings sit on the 40 acres. The other 10 are unimproved Ag zoned. I want to put a business on the adjoining acres, including putting up a new building. I want it to be separate from my home, and I want to be able to sell it separately, perhaps, in the future. If I want to get a mortgage for the new building, do I have to separate the 10 acres from the other 40 so that the 10 acres has a clear title? What are the chances that my bank will do this for me (I have paid 5 years of a 15 year mortgage – I had originally put down 20%). How should I negotiate this wtih the bank for the best possible outcome which is to get a clear title on the 10 acres without paying too much or anything.
The land was subdivided prior to my purchase – separate tax parcel numbers, so that’s not an issue. I just have one mortgage for the two pieces of propery.
