Q: My property’s large side yard is more than big enough to fit another house. I want to deed part of my property to my son so he can build his home there. Should I get my mortgage lender’s permission to transfer the vacant land? Is there anything else I need to do? —Gregg
A: If you live in a community association, you probably cannot do this because of the various restrictions over the entire community. Assuming you do not, you will need to jump through several hoops.
You have thought of the first one, which is getting your mortgage lender’s approval. You will need to contact your mortgage lender and explain the situation. Even though that side of your property is just vacant land, it still has value. Your lender may want you to pay down your loan enough so your remaining property’s value is greater than the remaining loan amount.
If you skip this step and don’t get your lender’s approval, you will have breached your mortgage agreement, and the lender could take enforcement action, even including foreclosure. Another reason you need to clear your existing mortgage from the property you are giving your son is because the lender giving him a construction loan will want their loan to be in the first lien position.
You will need to get the approval of the municipality and county you live in. The remaining two lots both need to be big enough to meet zoning requirements, and you will also need to make sure no deed restrictions affect the minimum lot size in your community. You will need to get the property appraiser’s approval to split your land into two distinct legal parcels. To get this done, you will likely need a detailed land survey and a title search.
