Are we required to obtain permits?

[Lee Lansford]

As I've noted before, in some areas (due to severe enforcement for non-compliance) this topic is an important issue; in others (due to de facto non-enforcement), not so much so.

 

[23Degrees]

The argument that presumes we are suggesting that one must, or one is somehow now obliged to check permits on every last nail just because one initiates an SOW discussion regarding readily observable deviations from public records or obvious anomalies such as garage apartments is a straw man. I have not read one post where someone suggested the need to confirm every single permit and based on the presence of Statement 1 I refute any implication that just because one inquired as to the 400 square foot discrepancy in public records one is now on the hook for making sure the furnace installed in 1996 was done with a permit.

I don't think the discussion or argument is really about whether or not we need to physically go look for permits. In some cases yes, in some cases no. My own goal is for that to take place rarely if ever and when it does that I get paid for the trip. And it is not an argument about valuation. No one on either side of this argument is against providing an opinion of value reflecting what actually occurs in the market for these issues in an "as is" report if one agrees to proceed via that route.

The argument might just come down to how one sees the links involved with Statement 1, the zoning compliance question we are mandated to answer on the forms, and the options available in the reconciliation section regarding the incorporation of EA's and HC's.

Draw your own line as to where you initiate the SOW discussion and gain your own comfort zone as to where you check "as is" and "legal" and where you require some form of EA or HC before you check "legal" for the zoning compliance question. How this decision is reached (responsibly) is going to be different depending upon where you work. And before someone brings it up for the third time this question of zoning compliance (sometimes tied to actual permits) is different from the question of "legally permissible" which is accounted for in the HBU question/analysis. Based on what I go through just about every time I run into a family living in a bootleg apartment in the garage I can tell you that in my area many appraisers are not proceeding responsibly and are just accommodating client desires to push the loan forward. If you don't check "as is" and "legal" here you are in for a beating because "all our other appraiser's do it that way".

Regarding whether or not there is known enforcement vs known non enforcement, as a pure analysis of the market area there is no argument that one should proceed by making one's own interpretation of the state of affairs and value appropriately. My only question would be in those cases where the appraiser relied on known or perceived non enforcement and applied what is clearly a supportable value for such a situation and the city decides post effective date to enforce code in place as of the effective date. Assuming the zoning compliance question was answered correctly, or at least cannot be readily attacked, I wonder what the potential action could be against the appraiser, if any, if that readily observable off the books addition opined as having a value of $50,000 by the appraiser needs to be torn down per order of the city based on code in place as of the effective date. Just food for thought.

 

[Mike Kennedy]

As I've noted before, in some areas (due to severe enforcement for non-compliance) this topic is an important issue; in others (due to de facto non-enforcement), not so much so.

There's a new definition of HABU ??

[FONT=&quot]HIGHEST AND BEST USE[/FONT][FONT=&quot]
The reasonably probable and legal (maybe-see below)use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility (but only if a municipality actually enforces their Local Law), :mellowhysical possibility, financial feasibility, and maximum profitability.[/FONT]

If anyone would kindly provide a link to the "official" newbie def, I would be grateful.

 

[CANative]

So you're saying that if an improved property has an illegal addition or isn't being used to what a zoning code says it's supposed to be used for the entire building should be torn down and a new building that conforms to the zoning ordinance be built in it's place?

 

[23Degrees]

So you're saying that if an improved property has an illegal addition or isn't being used to what a zoning code says it's supposed to be used for the entire building should be torn down and a new building that conforms to the zoning ordinance be built in it's place?

Not sure who this is addressed to but I read no post by anyone that suggests that. That would be some crazy stuff. Which post are you referring to?

 

[Fnbpos]

I'm getting the impression that some of you "permit guys" are NOT appraising what is actually there and existing, but rather you are appraising what SHOULD be there based on your "permit search & analysis".....good luck with that....if that detached garage has no permit, are you pretending its not there ?

Also, it seems as though there is a fine line in where that permit search begins and ends on each property, if its actually being done on each property....a line so fine it is simply invisible. The permit pullers are all in a world of inconsistency; search on this one, but not on this one, I'm suspisous on this one, but not that...should i check the roof, bath, & electric or just the enclsoure from 1965 ?

Cant be any more consistent that stating (in EVERY REPORT) you are NOT the permit police.

...and regarding the quality issue of these conversions....unless shoody work is readily observable, shouldnt you be assuming no issues. Its either inferior to, commensurate with or superior to the OBSERVED quality and workmanship of the main house. This analysis is the same way you obseve the rest of the house ??? You cant see through those walls either, can you ? Appraisals are full of assumptions and disclaimers.

Disclose what is there and how it relates to the public record data, if different. Value it based on the market and stay within your scope of work. You should be good to go....

 

[Lee Lansford]

There's a new definition of HABU ??

[FONT=&quot]HIGHEST AND BEST USE[/FONT][FONT=&quot]
The reasonably probable and legal (maybe-see below)use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility (but only if a municipality actually enforces their Local Law), :mellowhysical possibility, financial feasibility, and maximum profitability.[/FONT]

If anyone would kindly provide a link to the "official" newbie def, I would be grateful.

Mike, are you suggesting that each and every improvement upon the site that might be subject to the permit process is an item to be researched and verified by the appraiser as having been put in place via the permit process?

And, further, that the appraiser is to verify that what is in place--if put in place via a permit--conforms with the permit?

"Legally permissible" (under H&B Use) pertains to what is a legally permitted use under a zoning classification. Such a legally permitted use might be "single family residential".

Testing "legally permissible" is an issue of "use" (as in "the house in which I live, having 'residential' zoning, does not allow me the option of operating a restaurant out of my house").

Similarly, under the zoning which limits the number of living units to one, I could not convert the improvements to a 2-family and begin offering for rent one-half of the improvements. Here, certainly, "legally permitted" would have relevance as there would be no permit given that the use is not legally permissible.

 

[hastalavista]

I'm getting the impression that some of you "permit guys" are NOT appraising what is actually there and existing, but rather you are appraising what SHOULD be there based on your "permit search & analysis".....good luck with that....if that detached garage has no permit, are you pretending its not there ?

How you are getting that is beyond me. :new_smile-l:

BTW, any luck with finding an example of being sued by a homeowner for checking permits?

 

[23Degrees]

I'm getting the impression that some of you "permit guys" are NOT appraising what is actually there and existing, but rather you are appraising what SHOULD be there based on your "permit search & analysis".....good luck with that....if that detached garage has no permit, are you pretending its not there ?

Have you really read any post that says that..really?

Also, it seems as though there is a fine line in where that permit search begins and ends on each property, if its actually being done on each property....a line so fine it is simply invisible. The permit pullers are all in a world of inconsistency; search on this one, but not on this one, I'm suspisous on this one, but not that...should i check the roof, bath, & electric or just the enclsoure from 1965 ?

Yup - as invisible as 400 extra square feet hanging off the back of the house or the studio apartment with kitchen and bathroom in the garage. Check the electric? Who said that? - Again, I don't think you have been reading this thread very carefully if at all.

Cant be any more consistent that stating (in EVERY REPORT) you are NOT the permit police.

I won't argue with the consistency here. Unfortunately consistent boilerplate does not necessarily end up as consistently credible.

...and regarding the quality issue of these conversions....unless shoody work is readily observable, shouldnt you be assuming no issues. Its either inferior to, commensurate with or superior to the OBSERVED quality and workmanship of the main house. This analysis is the same way you obseve the rest of the house ??? You cant see through those walls either, can you ? Appraisals are full of assumptions and disclaimers.

And the Fannie forms allow for whatever additional assumptions you need to make so that your boilerplate works, right? Take another read of the documents you sign.

Disclose what is there and how it relates to the public record data, if different. Value it based on the market and stay within your scope of work. You should be good to go....

You forgot to add to always check "as is" and "legal", regardless of what you run into, and as far as your clients are concerned - you should be good to go.

 

[normando]

When a home is remodeled with permits, I give the home maximum value since they did everything right even if workmanship is average. Once in a while, I see finished basement done without permits but beautifully done and I give it significant value.