Legally Permissible ?

[WATCHOUT]

Can a property still be appraised if it is not Legally Permissible? Fact: Property is a 4-family dwelling located on a block that only allows up to 2-families. (there is no variance) Thus, it is an Illegal Use presently. BUT, can it be appraised 'Subject To' the client or homeowner providing evidence that the subject can be legally used as a 4 family?

 

[Terrel L. Shields]

And not grandfathered? How did it get past scrutiny in the first place?

BUT, can it be appraised 'Subject To' the client or homeowner providing evidence that the subject can be legally used as a 4 family?

Yes, I see no reason why not, but who is the report for? Bank, FHA, etc., and have they asked for an as is report?

 

[hastalavista]

Yes, it can be appraised: for market value and that value can reflect the as-is or as-if (hypothetical) value.
Your client will need to determine if they want an as-is (illegal use) or an as-if (as-if legally permitted) appraisal.
You get to decide if you want to complete the appraisal based on what they require.

Good luck!

 

[Howard Klahr]

But this would not be completed on a 1025 form report.

 

[WATCHOUT]

And not grandfathered? How did it get past scrutiny in the first place?

Yes, I see no reason why not, but who is the report for? Bank, FHA, etc., and have they asked for an as is report?

Now we're talking decades ago, the docs i reviewed that are on file with the county are from the 1940's. Anyways, it was previously approved for a 3-family and a Dr.'s Office. (It was never approved for a 4-family) But the 3-Famiy with Dr.'s Office Use has to be maintained and if 3 years go by and the paperwork is not kept up, that permitted use expires...........and in this case, that's exactly what happened. Now here we are decades later and the zoning allows only for 2-family dwelling. But again, our Subject is a 4-family. This is for a client in which there are no secondary market guidelines or underwriting. This is not an FHA203K or Homestyle loan, just a investment company who decided to lend money at a high rate.

 

[CANative]

What will the County do if they get wind of this?

 

[hastalavista]

... the zoning allows only for 2-family dwelling. But again, our Subject is a 4-family. This is for a client in which there are no secondary market guidelines or underwriting. This is not an FHA203K or Homestyle loan, just a investment company who decided to lend money at a high rate.

I had a somewhat similar assignment.
A particular property was allowed for 2-units and that is what it had been. Owner decided to renovate and then split the 2-units and create 2 new units (total of 4). The subject was a historic property, already non-conforming (at 2-units) and the city would not allow 4-units... period.
The assignment was for a lender (FRI). Despite this illegal use, the bank required an as-is appraisal anyway (I believe as part of its documentation process to show why it did not make the loan). This bank does not sell to the GSEs and required USPAP/FIRREA/IA compliance.
Assignment required an as-is value. H&BU as-improved was to remodel (change the use back to a 2-unit). Complicating the assignment was the fact that there were renters and this was a rent-control ordinance property. Further complicating the assignment was the borrower was well connected into the local political establishment.

It took a lot of time; this was a complicated assignment. I should have charged more but it was (and remains) an excellent client.

Good luck!

 

[J Grant]

what is the physical configuration of the property? What renovations/changes would need to be made to convert it back to two family use?

An option is You can suggest to your client 2 values...one value as is in it's current illegal use, the second value as an HC it was converted back to two family use ( and cost to cure for whatever physical changes need to be made)

 

[Gobears81]

I initially did a warehouse appraisal for a bank a few years ago. The mayor's son was railroading this thing through and the zoning department was angry because it wasn't allowed. I spoke with the bank because it was nonconforming, and illegally nonconforming at that. The deal seemed to die. I'd stop what you are doing on it, speak to the client, and be prepared to bill them for your time spent which may not end up reflected by a finished work product.

 

[Mike Kennedy]

Now we're talking decades ago, the docs i reviewed that are on file with the county are from the 1940's. Anyways, it was previously approved for a 3-family and a Dr.'s Office. (It was never approved for a 4-family) But the 3-Famiy with Dr.'s Office Use has to be maintained and if 3 years go by and the paperwork is not kept up, that permitted use expires...........and in this case, that's exactly what happened. Now here we are decades later and the zoning allows only for 2-family dwelling. But again, our Subject is a 4-family. This is for a client in which there are no secondary market guidelines or underwriting. This is not an FHA203K or Homestyle loan, just a investment company who decided to lend money at a high rate.

Which County?