Is it possible to sell part of a 2 unit duplex that is under the same loan?

Question

I own a 2 unit duplex in Texas (DFW) which have seperate addresses and want to sell one unit. The mortgage company is telling me they can not or will not do a partial release of the title to enable me to sell. Is there any way around this that will enable me to sell just one of the units, instead of having to sale the entire duplex?

Answer 1

Part of the problem is because the duplex property is built on a single lot zoned for a duplex building. So it's difficult to sell just one. And your loan is for the entire property which includes both of the buildings. The Bank which holds the loan on your property is well within it's rights to deny any partial sale of the property unless you're using the proceeds from the sale to pay down the loan. Their biggest fear is that let's say you sell one of the buildings and pocket the money and then default on the loan. Then the bank would only have half the property to sell to recoup their losses on the loan instead of the whole property. I hope that gives you some insight into why they're denying you.

Answer 2

In order to sell the units of a duplex separately;y, I believe you would have to do a condo conversion. Not doing so could cloud the title to the property as the county has it registered as a 2-4 unit property and not as two separate residences. Also it is probably on a single tax lot.

The lender is perfectly within their rights to disallow this proposal.

Answer 3

If the mortgage company will not work with you, you may have to refinance with another company that will accomodate the transaction. Of course, you would only be seeking a loan on the part you intend to keep and the amount the new bank is willing to loan might be less depending on the appraisal on the real estate you intend to keep.

Answer 4

You need permission from the mortgage company. They may be hesitant because the value of the single unit is far less than your loan.