How to Sell Part of Your Land - 7 Step Guide to Selling

Why sell part of your property?

Normally, the main motivation to sell part of your property is to earn extra money. If you own a large piece of land, selling a piece of your land for a profit might be a way to earn some extra income. Or maybe it could be a way to cover some of the costs of maintaining the rest of your land.

Another common scenario is when someone wants to give or sell part of their land to a family member. In this case, you're not looking for a complicated process. But you also know that transferring ownership has to be done correctly to avoid creating title issues in the future.

Check if you can sell a piece of your land

It can be more complicated to sell a portion of land than it would be to sell the whole thing. There are several things you need to check before signing a contract to sell part of your land to make sure the purchaser gets what they intended.

Does the property have multiple parcels?

Before you go any further, you should understand if your property consists of more than one parcel of land. It's common for land to be sold in larger holdings that consist of more than one lot or parcel of land.

If the portion of land you want to sell is already a separate lot, it will be much easier to sell. If not, the part of land you want to sell may need to be subdivided. If that's the case, there are more rules to comply with and the process is more costly.

Subdivision of land - planning permission

Subdivision of land is dividing one piece of land into two or more smaller pieces. Most counties and cities have regulations to control the subdivision of land. Consult your local planning, zoning, or development department to evaluate what rules apply in your situation.

Here are some common requirements to consider before meeting with the planning office:

Minimum lot size

When land is subdivided, normally each new parcel has to meet a minimum area. The size requirement varies by location from a low of around 2,500 square feet in a city to 5 acres or more in suburban areas. There may also be minimum dimension sizes for lots. For example, there might be a requirement for a minimum lot width.

Access

Normally, the new parcels would require adequate legal and physical access. In other words, they would need either public or private road access. The purpose of this is to avoid creating a landlocked parcel.

Utilities

You may also have to bring utilities or other infrastructure to the new parcel. Requirements might include extending sewer service or showing that the ground of the new parcels will pass a percolation test for a septic system. This ensures the lots are suitable for housing in that jurisdiction.

Can I sell or subdivide land if I have a mortgage?

Yes, you can sell or subdivide part of your land if you have a mortgage if the borrower obtains a partial release of mortgage from the bank. When you take out a loan, the property is collateral or security for the loan. By selling a piece of your land, you are reducing the collateral for the bank. It may be an extra risk which is why you need to obtain the bank's consent.

Contact your lender or financial institution to ask permission for a partial release of mortgage. Be aware that some loans do not allow partial releases. Other loans allow releases when the landowner has enough equity in the property.

Can I sell land to my neighbor?

Yes, it's very common to sell land to a neighbor. When selling to a neighbor, you may not have to meet your county's minimum lot size if the part you're keeping is still large enough. Otherwise, many of the same considerations apply to selling to a neighbor as they would for any other sale.

How to sell a portion of your land

1. Ask your bank if they will allow a partial release from mortgage, if applicable.
2. Contact your local planning or zoning department to find out the subdivision requirements. If the land to sell is already a lot with it's own legal description, you can skip to step 6.
3. Hire a land surveyor or engineer to survey the property and draw a plat. A plat is a map of your land that identifies the property boundary, access to public right of ways, and easements.
4. Submit your plat map with a subdivision application and any application fees. The average approval process can take from a few months up to a year.
5. If successful, you will now have title to the new lots.
6. Enter into a sale contract with the purchaser.
7. Schedule a closing and transfer title to the piece of land to the buyer.

Legal documents for selling part of your land

Vacant land purchase agreement

One of the most important legal documents for selling land is the contract between the buyer and seller. The purpose of the contract or purchase and agreement is to establish a binding agreement between two parties.

This document identifies the real estate to be sold. The contract also lays out the deal terms, including price, closing date, and any contingencies. It is important to make sure that the land contract is clear and concise, and that both parties understand what they are signing.

Deed

The deed is the document or instrument that conveys equitable and legal title to real estate. In most cases, a warranty deed will be used. Seek legal advice specific to your situation.

Typically, the buyer will want the deed to be recorded in the county clerk's records. To do so, the property owners signature on the deed needs to be witnessed by a notary before it can be filed for recordation.

Selling land for cash

One way to sell a portion of your land is to sell to a real estate investor. This can save you valuable time. You won't need to search for and interview a real estate agent or create your own marketing to sell land by owner.

One of the other benefits is that land buyers are experienced professionals with expert knowledge. They can guide you through procedure of splitting your land. The disadvantage is you'd be selling the property below market value.

Still, for some people the convenience of selling real estate hassle-free is more important than getting full price. It's also the fastest way to sell land - the whole process typically takes less than two weeks. If you have interest in selling your land quickly, find out more about the benefits of selling land for cash.