Commercial Property with Residential Mortgage

[Benjamin Benomar]

Is it common for mortgages to have restrictions on another use on the land?

A little background... my partner purchased a quadplex on commercial c-3 zoning in historic neighborhood, Atlanta, GA using a residential loan. The property is on a strip of bars and restaurants. We want to potential leverage the extra land next to the building to develop a bar/restaurant.  Does having a residential mortgage impact the ability do business? Are mortgages tied to the building or land?

Thanks in advanced for any insight or advice. 

[Stephanie P.]

Originally posted by @Benjamin Benomar:

Is it common for mortgages to have restrictions on another use on the land?

A little background... my partner purchased a quadplex on commercial c-3 zoning in historic neighborhood, Atlanta, GA using a residential loan. The property is on a strip of bars and restaurants. We want to potential leverage the extra land next to the building to develop a bar/restaurant.  Does having a residential mortgage impact the ability do business? Are mortgages tied to the building or land?

Thanks in advanced for any insight or advice. 

 So really you have a 4 unit in C3 zoning that's in a historic neighborhood. C3 zoning in Atlanta is considered "commercial-residential" so there's nothing an underwriter would have heart burn over.

Once you own the building and the land next to it, your use, unless specified in your mortgage note (or unless it's illegal like a brothel or a meth lab) is up to you.  Having said that, if you some day want to sell the now developed lot and the parcel is encumbered by your subject property, you would have to subdivide it somehow and that may not work.  Depends on the lender (because where the property they lent money on once was a vacant lot, it's now a thriving restaurant) and the zoning board (to determine if the property can actually be legally subdivided).

I could be wrong, but that's what I'm getting from what you wrote

Stephanie