Selling a portion of your land when there is still a mortgage attached can feel confusing, especially if you have never dealt with property subdivisions or lender approvals before.
Many property owners assume they are not allowed to sell any part of their property until the entire mortgage is paid off, but that is not always true.
In many cases, you can do it as long as you follow the right steps and understand how lenders handle partial release requests.
This guide walks you through how the selling process works, what your mortage company expects, how to subdivide your property, and when it makes sense to work with land buyers like Sell Land Cash.
By the end, you will understand the practical steps to sell just part of your property without putting your remaining land or home at risk.
Can You Sell a Portion of Your Property With a Mortgage?
The short answer is: yes, you can.
Selling a piece of land with a mortgage is allowed, but it requires the cooperation of your lender because the lender has a legal interest in your entire property.
When you want to sell a portion of your land, you need a partial release, which is a document your loan company signs that frees a portion of the land from the mortgage so you can legally transfer ownership of that parcel.
Not every lender may approve a partial release, but most are willing to consider it if the value of the remaining property is still strong and the mortgage remains protected.
Why You Might Want to Sell a Piece of Your Land
Property owners choose to sell part of their property for many reasons, including:
- Reducing property taxes
- Selling to a neighbor who wants a section of land
- Creating a new parcel to sell for extra income
- Downsizing from a house and 10 acres to something smaller
- Paying down debt or using the profits to pay off the mortgage
Whatever your reasons are, selling a portion of your land can be a smart way to unlock value without selling the entire property or moving.
How a Mortgage Affects Your Plan to Sell
Any land with a mortgage is legally tied to the lending company until the loan is paid off.
This means the lender has a security interest in your entire property, including the land you want to sell. Your lender needs reassurance that releasing part of the property will not affect their collateral or the value of the remaining property.
This is why the first step to sell part of your land is to contact your lender and ask about their partial release process.
Your lender may require:
- A professional appraisal
- A subdivision or survey confirming new parcel boundaries
- A minimum payoff amount from the land sale
- Documentation showing the property value remains secure
Some lenders request that a portion of the sale proceeds go toward the remaining loan balance. Others simply require proof that the remaining land still holds enough value.
Steps to Sell Part of Your Property When You Have a Mortgage
The steps to sell part of your land vary by state, but the general structure is the same across the country. Below is the simplest way to approach it.
1. Contact Your Lender First
Before you spend money on a survey, planning fees, or zoning research, talk to your lender. Tell them you want to sell a piece of your land and ask what their requirements are for a partial release. Some lenders have straightforward processes, while others are more strict.
Be sure to ask:
- Whether a partial release is allowed
- What documentation is needed
- Whether proceeds from the land sale will need to be applied to the whole mortgage
- How long their review will take
Getting lender approval early can save you time and stress.
2. Check Local Zoning Regulations and Minimum Lot Size Laws
To create a new parcel, you need to confirm the land can legally be subdivided. Local zoning laws and minimum lot size rules affect what portion of your property can be split off.
Local planning departments can explain:
- Whether subdivision of land is allowed
- Minimum lot size
- Building setbacks
- Access requirements
- How zoning could affect your property or the new parcel
If your area restricts how small a parcel of land can be, you may not be able to sell off a portion that is too small. Understanding zoning regulations ensures you are not planning to sell a piece of property that cannot legally exist.
3. Hire a Land Surveyor to Establish New Parcel Boundaries
A surveyor will create a legal map that outlines the property boundaries and the portion of land you want to sell. This map is required by the lender, county planning office, and title company.
A survey helps with:
- Defining the new parcel
- Ensuring property lines comply with zoning
- Avoiding disputes with neighbors
- Completing the subdivision of land
This step also protects both you and the buyer by ensuring the boundaries are accurate and enforceable.
4. Apply for Subdivision Approval
Once the survey is complete, you will apply for subdivision approval with your local planning office. This officially creates the new parcel you plan to sell.
This step may involve:
- Filing an application
- A review period
- Possible hearings or notices
- Payment of filing fees
Subdividing land can take several weeks or months, depending on your county. If you want a faster option, you can consider selling to a cash buyer like Sell Land Cash, who purchases parcels of land as-is and can assist with property subdivisions.
For more details on this step, see the guide on how to subdivide land and sell it.
5. Work With a Real Estate Attorney
Selling a part of your land with a mortgage involves more legal work than a standard land sale. A real estate attorney can review documents, negotiate terms with the lender, and help ensure that property changes are properly recorded.
If you need guidance, a real estate attorney to guide you can help you avoid mistakes that affect your property or the value of the remaining land.
6. Request a Partial Release From the Lender
Once your subdivision is approved and the survey is complete, submit everything to the lender. The lender will review the new parcel details and confirm the sale does not harm the value of the remaining property.
They may also require:
- An appraisal
- A payoff from the sale proceeds
- Proof the buyer is legitimate
After approval, the lender signs a partial release, which frees the new parcel from the mortgage so that you can legally complete the land sale.
7. Complete the Sale With the Buyer
Once the release is in place, you can close the sale through a title company.
Both the buyer and lender receive copies of the release, and you receive your proceeds. If required, part of the money may go toward the entire mortgage or to pay off the balance.
If you prefer a simple and fast way to sell land, consider selling to a cash buyer like Sell Land Cash. They handle closing paperwork, pay cash, and can close quickly.
What If Your Lender Does Not Approve?
If your mortgage company refuses to release the portion of the land, you still have options:
- Sell the house and land together
- Refinance the entire mortgage
- Pay down enough of the mortgage for the lender to reconsider
- Sell to a buyer who can help you navigate the process
- Explore selling the entire property
Sometimes, selling to a neighbor or selling to a cash buyer provides an easier path if the lender will not cooperate.
Tips to Protect the Value of the Remaining Land
When you sell part of your land, always consider how the decision may affect the remaining property. Think about:
- Access roads
- Septic systems
- Water rights
- Future property value
- Zoning rules
- Boundaries and easements
A real estate attorney or land surveyor can help you understand how selling a part might impact your home selling experience if you choose to sell your home later.
When Selling to a Cash Buyer Makes Sense
Selling a part of your property involves time, paperwork, and lender negotiations. If you prefer a simpler option, selling to a cash land buyer like Sell Land Cash can help.
We buy land as-is, work across all 50 states, handle title and closing paperwork, and can work with unusual situations like land with a mortgage or selling land with a lien.
To see more guidance on doing it yourself, you can also review how to sell land yourself.
Selling A Part of Your Land? Check us out.
Selling a piece of your land when you still have a mortgage may seem complicated, but with the right steps and proper professional guidance, it is absolutely doable.
By contacting your lender early, understanding zoning rules, and getting a proper survey, you can legally create a new parcel and complete a profitable sale without risking the remaining land.
Whether you want to sell a portion of your land to a neighbor, sell off a portion to reduce property taxes, or simply want to sell land quickly, knowing the process puts you in control.
If you are ready to sell and want a fast, hassle free option, Sell Land Cash can help you navigate the process and get a fair cash offer for the land you want to sell.