Is this paragraph correct .

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by Carnivore, Jun 10, 2007.

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  1. Carnivore

    Carnivore Elite Member

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    Jan 15, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    Is the pargraph from AO-23 correct when it says examples of a Real Property appraisal could be for improvements without the underlying land?

    http://commerce.appraisalfoundation.org/html/2006 USPAP/ao23.htm

    " The right or rights might be owned in part, as a fractional interest, or in full. Further, real estate can take many forms, such as land, land and improvements, improvements without the underlying land, or an infinite variety that involve one or more of the physical aspects of real estate. Alternatively, a type of property, such as Class A Office Space, does not signify specific ownership rights in identifiable real estate. Consequently, surveys or studies relating to a class of property do not constitute the “subject” of a real property appraisal under STANDARD 1. In such situations, the service provided by completing the survey or study is not an appraisal assignment because there is no “subject property.”
     
  2. Richard Carlsen

    Richard Carlsen Elite Member

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    Jan 15, 2002
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    Certainly.

    An example: A house built on leased land would not have the underlying land included in the value of an appraisal but only the possessory interests of the leased land reflected in the leasehold rights.
     
  3. Mike Garrett RAA

    Mike Garrett RAA Elite Member

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    Jan 14, 2002
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    Colorado
    I concur, besides Fannie Mae knows what they are doing, right?
     
  4. Chris Colston

    Chris Colston Elite Member

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    Jul 24, 2003
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    Florida
    DARN! Richard beat me to it! :rof:

    LAND LEASED property would qualify as "improvements without the underlying land". Used to do a lot of those when I was in Maryland.

    Thought we were discussing USPAP. :shrug:
     
  5. Richard Carlsen

    Richard Carlsen Elite Member

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    Jan 15, 2002
    Professional Status:
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    Michigan
    Morning Chris

    Richard has been up since 5AM this morning. Normal getup time and it's hard to break the pattern on the weekends.

    Plus I had a mfg house report with 3+ hours work into it on Friday, sail off into cyber space somewhere so I had to start all over this morning.

    Have a good one.

    Regards

    Richard
    (The Early Bird)
     
  6. Otis Key

    Otis Key Elite Member

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    May 15, 2004
    Professional Status:
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    State:
    New Mexico
    Excellent Richard. Andrew, not only the leased land, but Indian Reservation land where the individual does not own the land, just has permission to contruct and live in a particular location. The Reservation owns the land (might be different with some Reservations but that's the way it is for almost all of them out here in the SW).
     
  7. Mike Garrett RAA

    Mike Garrett RAA Elite Member

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    Jan 14, 2002
    Professional Status:
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    Colorado
    Is that not technically..."leased land"?
     
  8. David Wimpelberg

    David Wimpelberg Moderator Staff Member Moderator

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    Mar 30, 2005
    Professional Status:
    Certified General Appraiser
    State:
    New York
    Another assignment using a similar condition involves determining the residual value of the improvements for purposes of donation.
     
  9. Carnivore

    Carnivore Elite Member

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    Jan 15, 2002
    Professional Status:
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    State:
    North Carolina
    David, That makes absolute sense to me.


    I think maybe the AO is just not stated very well. That is not really a big deal anyway.

    The purist might say that something seperated from the land is not real estate or real property. The AO is saying real estate can be in the form of improvements without the underlying land.

    From the Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002).

    real estate
    Physical land and appurtenances attached to the land, e.g., structures. An identified parcel or tract of land, including improvements, if any. See also real property.

    real property
    All interests, benefits, and rights inherent in the ownership of physical real estate; the bundle of rights with which the ownership of the real estate is endowed. In some states, real property is defined by statute and is synonymous with real estate. See also personal property; real estate.
     
    Last edited: Jun 10, 2007
  10. Otis Key

    Otis Key Elite Member

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    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Not down here - they don't even have to pay a fee in some cases. They just use it.
     
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