Howdy Ags!

I have 4 lots in a small Texas city that are contiguous. Our house is on one of the lots. We currently have a home equity loan on our house (and the one lot that it's on). We are wanting to do some improvements to the property including building a shop/garage that would cross the lot lines between two of the lots. We've been told by the city that we need to replat the 4 lots into one large one so that the utility easements, etc between the lots is released. They have a fairly simple process for doing this and I have a surveyor that will provide a turnkey service for the replat.

My question concerns the home equity loan. I'm not sure what involvement or even what question to ask at the bank about this. As I said, the lot our house is on is the one with a lien for the home equity loan (we have no other mortage) and we want to combine that lot with the other three into one large lot. Make sense what I'm asking?

Why do you want to combine all four into one? That would obviously affect your equity loan's collateralization. Reading your post it sounds like this is an idea the city staff has given you because (bureaucratic self rationalizing here).

Which of the lot lines are going to be crossed by the proposed shop? If the answer doesn't involve the lot with the house on it I'd propose you stay away from involving the loan in a platting process without a good reason for it.

Could there ever be a situation where you needed to sell one of the four lots quickly to cover an expense? The city would require a new replat (long processing time) at that point and could block you from doing so. There is marketability in holding severable lots.

Do you have a homestead exemption on all four lots? How will the CAD view any changes?

Is the loan to value after the replat still under 80%?
If so ask the bank to refinance your loan if you have had the loan over a year and replat at the same time.

If the 4 acres were used to qualify you for the home equity and are still needed to support the sub 80% LTV then you can't do anything

The legal description in which you own your property will change after the re-plat and not match what is filed on the D/T for your HE loan.

The bank may ask to revise the legal description to match the re-plat - or they may not if you don't tell them.

But in any event, if you defaulted on the HE, the bank would be able to repossess all four lots after the re-plat.

normaleagle05 said:

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Why do you want to combine all four into one? That would obviously affect your equity loan's collateralization. Reading your post it sounds like this is an idea the city staff has given you because (bureaucratic self rationalizing here).

Which of the lot lines are going to be crossed by the proposed shop? If the answer doesn't involve the lot with the house on it I'd propose you stay away from involving the loan in a platting process without a good reason for it.

Could there ever be a situation where you needed to sell one of the four lots quickly to cover an expense? The city would require a new replat (long processing time) at that point and could block you from doing so. There is marketability in holding severable lots.

Do you have a homestead exemption on all four lots? How will the CAD view any changes?

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Probably because of easements and building set back lines that would prevent them from doing what they want to do.

Which would likely explain combining two lots. Why combine all four?

normaleagle05 said:

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Which would likely explain combining two lots. Why combine all four?

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The value of all four together would be significantly less than making them one and then the other two. You may save a little on property taxes but lose the flexibility.

Also, I would not replat until I have the release of the easement documents in hand.

Just went through a replat in our county that increased my total acreage. The county required the lienholder to sign off on the replat before it went to commissioners court for approval.

I Have Spoken said:

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Just went through a replat in our county that increased my total acreage. The county required the lienholder to sign off on the replat before it went to commissioners court for approval.

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I'd like to know how that worked.

Sorry, everyone, got busy with life and finishing up the semester.

In answer to the questions: We are replatting because the city will not issue a building permit for a building that crosses lot lines. Yes, our house is on one of the four lots. Our septic field is on another lot, and the proposed shop will cross the lot lines of the other two lots. Someone asked the question on why not just replat the two together where the shop will be. The way our property is laid out, it just makes sense that it is all combined into one large lot. And the cost will be the same whether we combine just two or all four. We've treated it all as one large lot for over 20 years, and combining them gives us flexibility not only in building the shop but expanding the house.

Well, due to the mortgage company demanding all kinds of stuff that would have greatly increased the expense, we just replatted the two lots in question into a single large lot. Now to get a building permit...

This is a very touchy issue with the multiple lots and improvements crossing over boundary lines and it gets complicated. The issue is a term called "excess land", which is land than can be easily separated and sold off independently. Many times an inexperienced appraiser will value the multiple lots as one package, like one lot with improvements, which is incorrect. The seperate lots should be valued independently as the highest and best use is not the same. However, problems arise when things start crossing boundaries, like your septice crossing on to an adjacent lot. Those two lots will need to be sold together and can be appraised similar to one lot, with some explanation.

You can google "excess land" for more information. I'm sure some of the guys around here can give more details as I'm certainly no expert on the subject.