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What if a part of a house is more expensive then the rest of the house?

Like if a property is worth $ 300,000. Because the kitchen’s tiled floor is solid gold. So that part adds $ 100,000. If this is the case, then would a mortgage lender ever agree to lending to a borrower for this property?
Would it be legal for the borrower, once owning the house, to then sell the gold tiles to someone, then sell the property for $ 200,000?
This would put the lender at a big loss, so how would they protect themselves from this?
If a borrower actually did this then what would the lender do if the borrower wanted to sell the property?

1. Would a lender lend to a borrower for a property like this?
2. If so, would it be legal for the borrower to sell part of the house, then sell the property?
3. If the above is legal, what would the mortgage lender do in this scenario since they cannot get back the value of the property that would satisfy the loan in full?

4 Thoughts on Real Estate Property Question?
  1. Reply
    pickedon
    February 14, 2014 at 7:18 am

    gold floor tile would not be a feature any bank would lend for.

  2. Reply
    Robert R
    February 14, 2014 at 7:39 am

    The lender would require a full appraisal for the property because of the loan amount and in that report the house would be listed as having a value of 200K and extraordinary or unique items of 100K, the gold floor. The lender would not consider the flooring as part of the house for several reasons. So to answer your questions:

    1-Yes the lender would lend to the borrower in the amount of 200K if you are getting 100% financing.

    2-Yes you could sell the gold flooring. (I assume this is the part of the house you wanted to sell)

    3-The lender would not release the lien on the property until the loan is paid in full if you tried to sell the house.

  3. Reply
    Expert Realtor
    February 14, 2014 at 7:58 am

    No such thing as solid gold for building construction…they don’t even make jewelry in “solid gold” because it’s too soft.

    Given the price of gold these days, if that were true, the house would be worth far more than $ 300K.

    I think someone is handing you a big fat lie.

  4. Reply
    Home treasure
    February 14, 2014 at 8:06 am

    The value appraisal would be for the area you live in and the condition of the property overall. Unless it was significantly improved it probably would not fetch a significant amount more than the value for the type of property in the area in very good condition.

    The lender will recover what is needed for the debt plus any expenses and the property will probably go to auction for a quick sale if you cannot keep up the payments. Any money left after deductions would be returned to you. Your personal items would be considered towards a debt before your home was reclaimed. This could take several months. Always get legal advice early for any debts.

    Sometimes the improvements are granted as part of the loan but the ability to pay back the debt is the main thing. Reducing the value of the property by selling items from it does not make sense. You would be better off if the contract allows to let your luxury property and live elsewhere.

    You could sublet rooms in your property but not sell part of the house unless you have percentages on the deeds of the house and joint ownership.I would say you were compromising a lot by going this route especially if there was resistance to sell at the end should one not wish to buy the other person out – Messy!

    Alternatively is the property large enough to make two separate dwellings? You would need planing permission and also decide if there was enough profit by having two smaller places. Once registered as two separate dwellings you could sell or rent as you wish.

    To rip out luxury fittings would require you to replace with cheaper fittings. The revalued property would obviously be less in value especially if your property is worth less than a year ago. Unless you are high end of the market which most of us are not! Good Luck!

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