Can I buy 40 acres of timberland and subdivide it if I have a lien on the property?

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Can I buy 40 acres of timberland and subdivide it if I have a lien on the property?

Recently my 17 year old son, who is a senior in high school, was involved in an accident. He might be considered disabled now due to the loss of all fingers on his right hand. Realizing the challenges

that will face him, his dad and I would love to purchase some land in our nearby area. The problem is only large tracts are available. If we purchased 40 acres of timberland with a loan, could we turn around and subdivide the land and resell some to help pay for the property?

Asked on November 24, 2017 under Real Estate Law, Alabama

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You cannot sell portions of land with a mortgage or other security interest on it without paying off the loan. The land in its entirety secures the loan: it is the bank's guaranty of repayment that they could foreclose and sell the land at need. ALL of the land is covered by the mortgage, and the bank has a security interest in all of it: you cannot legally take away or sell part of the property covered by a security interest without paying off the loan first.


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