Legal Question in Real Estate Law in Massachusetts

Do I need to let the bank know I am rebuilding, if I have cash in hand to build? I am tearing down my existing home (I still have an existing mortgage with the lender) and using cash/HELOC to build a new home. Do I need to let the mortgage company know this? I was told by many that I do not have to let them know and it shouldn't concern them. Keep in mind the home we will build will be worth significantly more than the note we carry and the previous house was worth. Can it bite me later? Take away the house? Foreclose? Any help is appreciated.


Asked on 2/08/13, 6:31 pm

1 Answer from Attorneys

Technically you need to inform them if you are tearing down the home and rebuilding it. This is because you are destroying a major part of the asset they are secured against.

The Bank should not stop you but will want some additional assurances that the work will be completed and the funds will be there to accomplish it.

If the loan is with a local bank, I would arrange to meet with the lender and get things straightened out face to face. If it is with a lender which does not have local offices, then you still need to speak with someone and get the matter cleared.

Your bank should not have a problem once they are assured the new home will be of equal or greater value once completed and the money is set aside for the construction.

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Answered on 2/09/13, 9:20 am


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