Unpermitted Additions

[Randolph Kinney]

Part B, Origination Through Closing
Subpart 4, Underwriting Property
Chapter 1, Appraisal Requirements, Appraisal Report Assessment
April 15, 2014
Printed copies may not be the most current version. For the most current version, go to the online version at
https://www.fanniemae.com/singlefamily/originating-underwriting. 575
Highest and Best Use
Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use
of the site as improved. If the current improvements clearly do not represent the highest and best
use of the site as an improved site, it must be indicated on the appraisal report.
The appraiser determines highest and best use of a site as the reasonable and probable use that
supports the highest present value on the effective date of the appraisal. For improvements to
represent the highest and best use of a site, they must be legally permitted, financially feasible, and physically possible, and must provide more profit than any other use of the site would generate. All of those criteria must be met if the improvements are to be considered as the highest and best use of a site.

Why does Fannie and lenders finance the purchase of properties where Realtors and the appraiser disclose that these properties have additions without building permits? And the appraiser demonstrates marketability and acceptance of the market by using comparable sales, with and without permits?

Your quote of must be legally permitted is not supported by market activity and the fact that Fannie buys such loans on properties without building permits all the time.

 

[Meandering]

Not arguing, just saying,

On a vacant piece of land in a subdivision, if having a garage is legal under the zoning ordinance, and every other house has a garage, the building a house with a garage on the vacant parcel is legally permitted.

No house exists, no garage exists, it's legally permitted because no variance is required to build them.

Now if they failed to get a permit,

Is it still legally permitted to stay on the land? Or must it be bulldozed?

I don't know, it varies from place to place. But the "permit" is not the function of the highest and best, which, are the 4 tests you're quoting. The "permit" might only be a small fine of a couple of hundred dollars, well with in the financially feasibility of paying to bring the land to it's highest and best without bulldozing thousands of dollars of garage.

.

 

[CANative]

For improvements to
represent the highest and best use of a site, they must be legally permitted,

You're misrepresenting and/or misinterpreting what this means Kennedy.

 

[Randolph Kinney]

You're misrepresenting and/or misinterpreting what this means Kennedy.

Kennedy's interpretation creates a paradox and a contradiction of what Fannie says they will buy: Only properties that are at their highest and best use, yet Fannie buys mortgages on properties that have additions without building permits that lenders have sold to them.

 

[CANative]

He's mixing up the issues of legal land uses with the requirement for getting building permits.

But we'll never be able to untangle it with him because he refuses to write original thought. He merely copies, colors and pastes random passages that seem to bolster his incorrect point of view.

 

[Meandering]

To Mike's credit,

Some places in NY and NJ would make them bulldoze the garage. So it's the same meaning in those areas, bulldoze, start over with a permit.

Here, it's a small fine and a building inspection, so, its financially feasible to pay the fine and keep the garage.

By Mike, it might not be that way.

.
.

 

[CANative]

Some places in NY and NJ would make them bulldoze the garage. So it's the same meaning in those areas, bulldoze, start over with a permit.

They would do this as a punitive measure? Even if the structure otherwise met all requirements?

 

[Meandering]

Later when I have more time, I'll try and surf up some that made the news out there. Egos are big, and if it's not permitted, its not being taxed, so it has to go. There is no building cert, or engineering cert, required when it was not constructed with a permit, to them, its flat illegally there and has to go.

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[Meandering]

http://www.codeattorney.com/2009/06/building-without-a-permit/

 

[Meandering]

http://www.northjersey.com/news/family-will-remove-flagpole-1.962661
I gotto get back to work now. I'll find more later.