Legal Question in Real Estate Law in Michigan

Re: How can we split our property with a mortgage?

Hello, and thanks for visiting.

Not to appear flip, but I would start with an attorney, particularly if you are looking to subdivide the 35 acres in some fashion - the Michigan Land Division Act has some peculiarities to it that will require close attention as to how the process is done.

In any case, I would suggest a survey to determine exactly what the revised property lines will be, and obtain new legal descriptions of the parcels that you want to identify.

Once you have legal descriptions, then a trip to the bank or lender would be in order to ask them to release their claim on the 35 acres and have the mortgaged property be only the five acres plus the home. You would then own the 35 acres unencumbered by the mortgage and could do with it what you want without having to have the mortgagee's (bank's) permission.

If the lender will not go along with that proposal, then you could ask for them to split the loan into two pieces - one for the 5 and another for the 35.

If the value of the 5a + home is adequate security for the lender, you have a great situation. Otherwise, the lender would require that when all or part of the 35a is sold you would then have to apply part of the proceeds toward the principal balance of the mortgage.

If you were to sell all or part of the 35 on an installment sales contract (aka "land contract") you might still accomplish that with the mortgage in place, but I would be awfully careful as to how the documents are drawn so as to protect your interest.

Good luck.

Tom Weiss

Mount Pleasant