LLA proposal to a lender

[David Kendall]

Performing an LLA for a client right now, simple case of an equal area exchange between two adjoining landowners — something on the order of a quarter acre each way between 3 to 5 acre lots.

Recent thread on title reports has reminded me to consider the lenders permission early in the process. Well I forgot to do that and I set pipes last Friday right in front of both owners so the deal is rolling now....

How do you make the sales pitch to the lender? I’ll advise my client to get their blessing before we go any further with mapping. Looking for guidance on presentation. Thanks

[mpallamary]

Gently ask the clients to contact the lender and assure them that the asset has not been compromised and the adjustment solves some longstanding problems. Was there any consideration (money exchanged)? If not, it should not be a problem. Lenders sometimes want an appraisal.

Go slow so no one gets alarmed.

Good luck.

[Peter Ehlert]

the Owners should make the initial contact with the Lenders. (plural)

The owners (plural) should be made fully aware of what can happen if tragedy strikes and there is a foreclosure. Yes, it is rare, but stuff happens.
In your particular case the undoing of the LLA might not be a big deal for either party, but if construction is anticipated it could be huge.

best of luck.

as Mike said, the gentle approach is always the best... an emotional response could actually result in one of the mortgages being called... depending on the wording of those Original loan agreements.
I don't see how you could be culpable in either case, but it is best to get everyone informed

[dedkad]

And just hope that one of the lenders isn't Mortgage Electronic Registration Systems (MERS). Getting their signature on anything is a nightmare. Some people have even been forced to refinance with a more willing and acceptable banking entity in order to finish the LLA or map.

[Mr. Smith]

Lender Signatures hold up many of our adjustments, some times for years.
It is a good idea to have language in your proposals indicating that the
Client is responsible for all signatures fees etc.

I also recommend not setting pipes until the adjustment is perfected.

Kendall, I have done the same as you; just before recording one of my Clients died, I had pipes in the ground before
the adjustment was complete.

Bri

[Warren Smith]

Fortunately, in Tuolumne County, Lot Line Adjustments are perfected by means of an unconditioned parcel map through local ordinance. Once the application is approved, the map is signed by all record title owners, monumented, approved, taxes paid, and filed for record. Transfer deeds reference the new parcel numbers.

The title company handles the concurrent recordings as a matter of escrow.

[hellsangle]

Mr. Smith brought up a good point!

I had same thing happen . . . my client died and widow was told by friends - not to do anything for a year!

After that happened, I now suggest to my LLA clients: have an attorney draft some sort of "enforceable agreement" . . . that once we start down this path . . . everyone will sign deeds, applications, pay their respective taxes, lenders, etc. (Who is responsible for what.) Too much money is at stake.

In another case . . . the lender was giving up enough ground . . . that the lender required a $25,000 pay-down on the loan before they would sign a Partial Reconveyance. Many things to think about.


I can't emphasize enough - find out what lenders want FIRST before you do anything!

Phil - Sonoma