Recently bought 40 acres of land. My father-in-law would like to purchase 5 arces to build a future house.?

Question

He would like me to sell him this land for a few hundred bucks but the land is worth $25k to $30k. Since I have a loan on the property would the bank allow me to do this? (Sell part of the property to a relative under market pricing?)

Answer 1

I doubt it unless you have enough equity in the property that the redution of what you sell still gives the bank enough collateral against your existing loan.

Think like a banker for a second......you could sell him a chunk of the land you really like for a few hundred....let the existing loan be foreclosed on and then get the property you sold for next to nothing back for the same price.

If I were the banker I would not let you do it.  No reflection on you but I would have a bank board to answer to regarding my actions, decisions and reasoning.

Answer 2

No.  You would have legally subdivide the land and refinance your loans into two separate loans.  Then you could sell the 5-acre parcel.

Answer 3

Don't do it.  Tell him that you wanted to do it, but that i refused to let you do it.

Doesn't make any sense at all.  The bank won't really care but the mortgage papers you signed said that you wouldn't do this.  I promise you that they say this.

Answer 4

You don't own the land outright and the bank is not going to go for you selling off any of it for any amount of money.  You will also need a land surveyor.

Answer 5

NO //////////////////