The Maryland State Highway Administration has scheduled a project which will require a temporary easement on our property. The most recent appraisal of the landscaping impacted by the easement is just above $10,000.00. The SHA representative advised us to accept just under $10K because our mortgage bank will seize any compensation above that $10k. I called the bank, and they told me that the bank never lays claim to such compensations. The SHA rep then insisted that banks, "were not to be trusted," and that we should still accept a lower offer from the state to insure that we can, "keep it all." What's the truth, and where should we go from here?
Answer
Your mortgage (Deed of Trust) likely does have condemnation language basically saying that any money you get from the government taking your land will first go to the lender. However, it is unusual to have a dollar threshold. Most loans also have something called a "due on sale" clause which prevents transferring your property without the lender's approval. Check your loan documents to see what they say.
That being said, most of the time a temporary easement will not wreck havoc with a lender.
While I hope the general information above helps, it does not offer legal advice. You may wish to consult an attorney should you want specific advice on your situation.
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