# Two income properties on one deed



## GregR (Apr 10, 2009)

We are currently in the process of buying our first income properties and are running into some issues. The biggest issue is that the two properties (side by side) are on the same deed and we'd like to get seperate mortgages for them as one of the properties will be residential 3.5% and the other commercial/residential mix 5.5%. They have seperate building numbers and Parcel PIN #'s but are on the same lot #. 

I've discussed the issue with a few different lawyers to see if we can get them on seperate deeds when closing to facilitate the mortgage arrangments and have recieved different answers everytime.

Has anyone here ever had an issue with two properties on the same deed or have any advise on how to proceed?


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## OhGreatGuru (May 24, 2009)

The fact that you are getting conflicting legal opinions about the ability to deed them separately suggests that there may be problems with getting approval to legally sever the 2 lots, perhaps for zoning reasons. It sounds like it may be a side-by-side duplex on a single lot. In other words, they are really one property, not two. Maybe you need to talk to your lawyer about whether you can back out of this deal. Was it misrepresented to you as 2 properties?


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## Charlie (May 20, 2011)

Can they be sold separately? If not, then you may have to mortgage them together -- after all someone has to be in first position on the collateral. 

No idea how big or expensive a process it would be to separate them -- if it's even possible. But if a reputable lawyer is telling you you can get them on separate deeds, let him do it.


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## marina628 (Dec 14, 2010)

I do not know if this will help but i remember when my father gifted some land to his sister so she could build a house next door they had to get the land extracted from the land survey and a new survey had to be done so my aunt could have proper legal ownership and deed to her land.


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## Berubeland (Sep 6, 2009)

It is my understanding that severing lots is possible but doing so requires dealing with the city or town that the lot is in. 

Dealing with the city is a slow painful process. Closing the property is limited by your closing date that the city will not care anything about. 

The most practical approach is to buy the property then sever the lots. I doubt you can get this done before the closing date. My understanding is that it takes quite a while.


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## arie (Mar 13, 2011)

*lots*

first are the properties in Ontario??

if so to convey them separately you must get consent of the committee of adjustments in your municipality if there has never been a prior consent ( i am assuming they are not separate lots on a plan of subdivision -- your lawyer can advise you of this )_; they of course will look to see if the 2 properties can be separated ie separate utilities or do they share things that can not be easily separated 

depending on the municipality to get a consent can take about 4 months


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## GregR (Apr 10, 2009)

Thanks for the info guys and gals...

Just talk to the town again today (someone who seemed to actually know a little more) and the properties were already severed into seperate parcels and should never have been put back on the same deed because one is residential and the other commercial. They asked that I request my lawyer forward the information to them and they will correct it on closing. 

Stopping in to see the lawyer tomorrow and get the ball rolling, again, hopefully this time in the right direction.


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## OhGreatGuru (May 24, 2009)

GregR said:


> ....
> 
> Just talk to the town again today (someone who seemed to actually know a little more) and the properties were already severed into seperate parcels and should never have been put back on the same deed because one is residential and the other commercial. They asked that I request my lawyer forward the information to them and they will correct it on closing.
> ...


Lucky you. It was looking kind of dicey there for a while.

To Berubleand, who wrote: _The most practical approach is to buy the property then sever the lots. I doubt you can get this done before the closing date. My understanding is that it takes quite a while._

It is now moot in the OP's case, but in general it cannot be assumed that City would agree to severance. It would depend on the lot size and zoning. If it was not a cut-and-dried case, that required a variance, members of the public could also object. So buying a property first and applying for severance afterward means purchaser is assuming all the risk.


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## arie (Mar 13, 2011)

OhGreatGuru said:


> Lucky you. It was looking kind of dicey there for a while.
> 
> To Berubleand, who wrote: _The most practical approach is to buy the property then sever the lots. I doubt you can get this done before the closing date. My understanding is that it takes quite a while._
> 
> It is now moot in the OP's case, but in general it cannot be assumed that City would agree to severance. It would depend on the lot size and zoning. If it was not a cut-and-dried case, that required a variance, members of the public could also object. So buying a property first and applying for severance afterward means purchaser is assuming all the risk.


you are quite correct; the best approach in such cases is to extend the closing until the matter goes to severance ; it is not necessarily a slam dunk and can be refused


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## Berubeland (Sep 6, 2009)

OhGreatGuru said:


> Lucky you. It was looking kind of dicey there for a while.
> 
> To Berubleand, who wrote: _The most practical approach is to buy the property then sever the lots. I doubt you can get this done before the closing date. My understanding is that it takes quite a while._
> 
> It is now moot in the OP's case, but in general it cannot be assumed that City would agree to severance. It would depend on the lot size and zoning. If it was not a cut-and-dried case, that required a variance, members of the public could also object. So buying a property first and applying for severance afterward means purchaser is assuming all the risk.


Yes the risk would be with the purchaser, but I know several investors who use this as a tactic to increase their property values with success. There is no way they would pay more that the market price for the property as is where is. 

They don't pay a premium for a property that has an extra lot that can be severed, or a large property that can be split into parts. One guy I know bought a huge parcel of land with a strip mall/ office on one part, then another small strip mall with a convenience store and then another strip mall with apartments on top. He severed each property and actually sold the strip mall/offices for more than he paid for the entire parcel. 

So yeah he risked that he could not sever them, but he paid a competitive price for them in the first place. The severing was just gravy. 

Another lady investor I know buys houses on corner/double size lots and severs one and sells it. Yes again she takes the chance that it may take a long time to sever it or it won't happen, but again she only pays for what she initially gets not the price of the lot + the property. 

The idea of paying a premium for these kinds of properties is nonsense. Both would tell you if you want me to pay more for the severance then do it and I'll pay you, other than that I'll pay you less than the going rate. 

Both have since sold most of their holdings, if that tells you something about the real estate market. They're still looking to buy but haven't found anything in a while.


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## GregR (Apr 10, 2009)

Hello all.

Its been a while but here's an update on the issue.

We ended up negotiating with the seller and purchased both properties with irresistibly good terms.

6 residential units and one commercial. Great cash flow and great tenants (hand picked of course).

While its been one heck of a learning curve we've self managed the property and purchased a few more. Even got an eviction or two under our belts.

Definitely not for the faint of heart but very rewarding.

Thanks for the input.


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## Rusty O'Toole (Feb 1, 2012)

I got caught on this myself. Bought 2 adjoining semi detached houses from one owner. They were built as separate residences on separate lots and had never been anything else until the former owner bought them, one in 1954 and the other in 1956.

Under local laws they merged into one property as soon as they were owned by the same guy even though this did not show up in a title search.

I had a hell of a time getting them severed again. Had to comply with all the latest building codes and ordinances, get a new survey, inspection by an engineer, in all took nearly a year and cost $7000.


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## Jay1 (May 14, 2015)

*I am in the same situation exactly, please tell me of the outcome. thank you*



GregR said:


> Thanks for the info guys and gals...
> 
> Just talk to the town again today (someone who seemed to actually know a little more) and the properties were already severed into seperate parcels and should never have been put back on the same deed because one is residential and the other commercial. They asked that I request my lawyer forward the information to them and they will correct it on closing.
> 
> Stopping in to see the lawyer tomorrow and get the ball rolling, again, hopefully this time in the right direction.



I am very interested in your situation here, I am in the exact same situation with a conjoined residential and commercial package that was joined by error 20 years ago, I am in the 60 day to closing situation and would love to quote the legal statutes your lawyer submitted to try and save some money and time paying more lawyers.
email [email protected] if you have time. Thank you very much. Jay


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