Can we allow our daughter to build a permanent residence on property that is already being used as security for our current home mortgage?
Question Details: We own 14.41 acres; 1 acre free and clear and 13.42 acres are used as security on the new home we built 3 years ago. The County now regulates to add an additional residence, you must have a minimum of 2.5 acres. I only own 1 outright. Our plat would have to be redrawn to "show" 2.5 acres as a different "plot" on the same property. We currently have 2 parcels for taxes; 1 for the new home sitting on 13.41 acres and 1 acre free and clear that I own. If we redo plat to change to 13.41 acres to 11.91 2.5 2.5 to allow daughter to build by county rules, isn't this a big problem to my mortgage company? As stated, my escrow pays both parcels now, 1 for the home and 13.41 acres and another parcel for 1 acre. I don't know if I can allow daughter to build a residence on a new drawn 2.5 acres when 1.5 of those acres are really tied up in my current mortgage.
If you have to re-plat, you can't do this: re-plating would reduce the amount of acreage providing security on the mortgage, but you cannot reduce the lender's security without their consent or agreement, since you have no power to unilaterally (without their consent) alter the agreement (the mortgage) between you and them.
You can build a home partially on the land they have a security interest in, but bear in mind that if you default, they will get that portion (if any) of the home on the land on which they can foreclose. However, their having a security interest does not bar you from using or improving, including building on, that land, so long as you do not impair their security.