Zoning Violation

[Terry L. Hart]

I have been asked to appraise a property originally identified as a single family residence. Upon inspection the improvement has been modified to accomodate two separate living quarters. Two electric meters are installed and separate entrances established. I contacted city building and zoning to which they advise the property is in violation. Upon notify the client, the client wishes me to proceed with the report. What is your advice?

 

[Mike Kennedy]

 

[Randolph Kinney]

I have been asked to appraise a property originally identified as a single family residence. Upon inspection the improvement has been modified to accomodate two separate living quarters. Two electric meters are installed and separate entrances established. I contacted city building and zoning to which they advise the property is in violation. Upon notify the client, the client wishes me to proceed with the report. What is your advice?

Appraise with a cost to cure with the HC that the property has been restore to meet zoning.

Or, if other like properties exist and have sold, you can contrast those that meet zoning with those that don't.

 

[J Grant]

Ask your client if they want as is value or subject to...
Beyond 2 entrances and meters, how else has configuration from a single family house been changed? Walls put up to divide house in half, extra kitchen?

 

[Michigan CG]

How does your client wish for you to proceed? As-Is? Hypothetically?

What is the intended use of the report?

 

[Meandering]

Double your fee as it is not an SFR, and will be a PIA with bunches of additional comments and research needed.

That'll back up the client to think about this.

.

 

[Slappy]

Think HBU. If it is not legally permissible, the HBU is a SFR no matter the configuration or number of meters. Practically speaking, no reputable lender would fund an illegal use. So if this is for a refinance/purchase with a standard lender, the request does not make sense. I would appraise as a SFR with necessary functional / cost to cure adjustments to make property functional as a SFR.

 

[Terrel L. Shields]

The "cost to cure" might be to eat humble pie, pay a fine, and get the property established legally. It is unlikely in most places I have been that they would make you tear it out, therefore an "HC" would be skirting a USPAP violation of having an HC that is so unlikely as to be misleading. Most jurisdictions would let you go thru a zoning change hearing and unless someone objected with sound reasons, would make a zoning exception upon an inspection. So I would suggest the lender allow a Extraordinary Assumption and subject to the property be brought into compliance. A secondary market lender would not accept this perhaps but,

no reputable lender would fund an illegal use.

is not necessarily true of in house banks. Many such properties are funded by such lenders.

 

[glenn walker]

How did they get separate meters ? in my area it takes a permit from the city or county before the electric , gas or water meters are installed by the utility companies. ? If you want to proceed I would raise my fee to what you charge for a 2-4. Hope this is a portfolio lender because Fannie, Freddie, FHA, VA is not buying that loan and expect a lot of headaches. Is this order from an AMC ? if so they probably have no idea what you are even talking about and once you send in the report the real party begins.

 

[Mike Kennedy]

The Dictionary of Real Estate Appraisal, fourth edition, includes the following highest and best use definitions:


"• Highest and best use. The reasonably probable and legal 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, physical possibility, financial feasibility, and maximum profitability.

Testing Highest and Best Use
To test alternative uses for the highest and best use, an appraiser usually applies the four criteria in the following order:
1. Legal Permissibility
2. Physical Possibility
3. Financial Feasibility
4. Maximum Productivity
In practice, the tests of physical possibility and legal permissibility can be applied in either order but they both MUST be applied before the tests of financial feasibility and maximum productivity. A use may be financially feasible, but this is irrelevant if is legally prohibited or physically impossible."


Page 334

"legally permissible uses would conform to the land's current zoning classification and local building codes along with any other relevant regulatory or contractual restrictions on land use."

Page 338
"In addition to analyzing zoning and private restrictions as part of the test of the legal permissibility of a land use, appraisers should also investigate other applicable codes and ordinances, such as building codes, historical district ordinances, and environmental regulations."