Chicago Basement Units

[Lee Lansford]

And that solves what exactly?

So do you believe every appraiser should turn down an assignment once they learn that there is an illegal or Non-conforming dwelling unit?

No, that is not my suggestion to all appraisers. I don't decline such assignments.

 

[William K]

No, that is not my suggestion to all appraisers. I don't decline such assignments.

So then my Original question still stands what do you do?

Example::: 2 units up , garden unit down. They collect rents on all 3 units. They call the Garden unit an "in-law" unit. City Zoning permits 2 units. They have listed and are selling the property as a 2 unit with "In-Law" unit.

You have 4 choices on the 1025 Form of boxes to check regarding Zoning Compliance... Legal..... Legal Nonconforming (grandfathered Use)...... No Zoning....... Illegal (describe).

My question stills stands What do you do?

( Please keep in mind the City of Chicago does not recognize an "In-law Unit", its either a Dwelling unit or it is not.)

 

[pawwly2]

Assuming multi family is a permitable use within the zoning ,

GSE’s will accept the appraisal if:1) appraiser can demonstrate that it is common for the market to have unpermitted GLA /area (provide at least two similar comps with unpermitted GLA/area)2) no value is given to the addition (GLA/area or rooms)3) appraiser states that it was built professionally in workman-like manner (or similar verbiage)4) if there is electricity or plumbing, the appraiser needs to comment to whether or not there are any health/safety issues5) any gas stove will need to have the gas line capped due to health/safetyNote, if the appraiser states the unpermitted area was not constructed professionally in a workman-like manner, the unpermitted area would have to be removed or the property would most likely be ineligible.

 

[William K]

Assuming multi family is a permitable use within the zoning ,

GSE’s will accept the appraisal if:1) appraiser can demonstrate that it is common for the market to have unpermitted GLA /area (provide at least two similar comps with unpermitted GLA/area)2) no value is given to the addition (GLA/area or rooms)3) appraiser states that it was built professionally in workman-like manner (or similar verbiage)4) if there is electricity or plumbing, the appraiser needs to comment to whether or not there are any health/safety issues5) any gas stove will need to have the gas line capped due to health/safetyNote, if the appraiser states the unpermitted area was not constructed professionally in a workman-like manner, the unpermitted area would have to be removed or the property would most likely be ineligible.

(Above bold), Thats the problem, the zoning permits 2 dwelling units not 3 not 4. The building is being sold as a 2 unit with an "in-law garden unit". The "in-law" unit has separate ingress/ egress, separate heat-electric and so on...... It is by the city of Chicago's definition a "Dwelling unit".

I shake my head when I see appraisers condition on the removal of the stove and capping of the gas line as a way to correct the issue, "Look its not a kitchen now!" (does anyone in the city know they make Electric Oven Ranges?)

 

[Tom O'Malley]

This would make for a great Continuing Ed class....

 

[AlwaysLearning]

(Above bold), Thats the problem, the zoning permits 2 dwelling units not 3 not 4. The building is being sold as a 2 unit with an "in-law garden unit". The "in-law" unit has separate ingress/ egress, separate heat-electric and so on...... It is by the city of Chicago's definition a "Dwelling unit".

I shake my head when I see appraisers condition on the removal of the stove and capping of the gas line as a way to correct the issue, "Look its not a kitchen now!" (does anyone in the city know they make Electric Oven Ranges?)

Fannie will accept a mortgage secured by a 2-flat with an illegal additional unit.

XI, 404.01: Zoning (01/31/06)

The appraiser must report that the improvements represent an illegal use and demonstrate that the improvements are typical for the market through an analysis of at least three comparable properties that have the same illegal use.

However, Fannie will not accept a mortgage secured by a 3-4 unit property that includes an illegal additional unit.

 

[Sid Holderly]

In my county any Grandfathered (non-conforming) use is legal. Its Grandfathered because is existed before the zoning was made more restrictive. It is legal until the house is modified (room addition, expansion, replacement). The problem is when the house is destroyed/damaged to more than 50% of improvement value it can not be rebuilt back to its original Grandfathered use, it must meet current zoning requirements, unless a variance or special exception is granted. So, in my County, the use is legal now but may not be in the future.

 

[AlwaysLearning]

This is where the Lie comes in, appraisers are ignoring it, because "everybody else does", or are reporting it as "non-conforming" when it was never grandfathered in.

You hit the nail on the head

And this is the answer to your original question

 

[DTB]

A. The subject is legal as to zoning if it allows 2 units. The basement apartment would not be legal. (This does not mean the entire improvement is illegal).

B. Tell it like it is. 2 legal units with basement finished as additional living area. This area may not be legally rented out and no income is attributable to the basement area.

C. Find similar comps, use income from the legal units and appraise property.

Would the subject's improvement be illegal if you found a fireworks factory in the basement? Would you attribute any income from said factory in your appraisal?

Ridiculous comparison made to make my point (hopefully).

 

[AlwaysLearning]

A. The subject is legal as to zoning if it allows 2 units. The basement apartment would not be legal. (This does not mean the entire improvement is illegal).

B. Tell it like it is. 2 legal units with basement finished as additional living area. This area may not be legally rented out and no income is attributable to the basement area.

C. Find similar comps, use income from the legal units and appraise property.

Would the subject's improvement be illegal if you found a fireworks factory in the basement? Would you attribute any income from said factory in your appraisal?

Ridiculous comparison made to make my point (hopefully).

The legality issue is a binary question.

There are four choices on the 1025 form regarding Zoning Compliance, so which box do you check considering your example above?