Deed restriction on building

[finchrat]

I have a residential property in Calabasas California. A deed restriction was put on the place in 1987 while my parents owned it and I have no idea why nor does the local planning office.
It gives the county "the right to restrict erection of buildings and other structures as long as the property remains in a high hazard area." This is a high fire hazard area.
What would be the impact on a property appraisal? The property is 2 acres with a very old house.

Thank you

 

[shrubberyvaluation]

I have a residential property in Calabasas California. A deed restriction was put on the place in 1987 while my parents owned it and I have no idea why nor does the local planning office.
It gives the county "the right to restrict erection of buildings and other structures as long as the property remains in a high hazard area." This is a high fire hazard area.
What would be the impact on a property appraisal? The property is 2 acres with a very old house.

Thank you

Look at other properties in that have similar deed restrictions. Lenders may not want to lend if the subject can't be rebuit after a natural disaster, but thats seperate from the valuation.

 

[George Hatch]

The intent might be to limit the redevelopment potential of the parcel so that it couldn't be turned into multiple dwellings or some oversized McMansion. The verbiage "right to restrict' doesn't necessarily mean "is restricted", but implies that the county reserves the right to exercise some discretion on any future development plans. They might have made the addition of this restriction a condition in exchange for connecting to a utility or improving a road or some amenity.

This might be a common restriction among other properties in proximity to this one, which would mean that whatever the effect is on the value or marketability of your property would be shared by others in the same situation.

 

[finchrat]

Look at other properties in that have similar deed restrictions. Lenders may not want to lend if the subject can't be rebuit after a natural disaster, but thats seperate from the valuation.

Good point about the rebuild and very relevant if I were to sell. I didn't consider that. How would I find other properties with similar deed restrictions? Not sure where to look. Don't really want the neighbors to know. Any suggestions?

 

[glenn walker]

The issue is can fire insurance be purchased as no Lender will fund a loan on it unless the buyer or owner can present an Insurance binder. In California --The CA Fair Plan can be used but its premiums are way higher also in most areas the Property has to have a Fire hydrant within 1,000 yards of the property etc.

California is home to more than 75 communities, in designated high fire zones where at least 90 percent of residents live in these very high-risk swaths, the analysis found. The extremely fire-prone towns include: Rancho Palos Verdes, ***Calabasas*** La Canada Flint-ridge, Palos Verdes Estates and Malibu in Los Angeles County.

In Summary: The deed restrictions even if it had not been recorded YOU ARE still in a Designated High Risk Community where State And Insurance regulators determine what can or cannot be built. Since your entire community is in similar high risk areas its a zero sum game the prices of comparables in your neighborhood or general market area have already factored in higher fire insurance rates and which companies will or will not insure BUT CA FAIR PLAN in most cases will insure exiting structures but not necessary new construction.

 

[finchrat]

The intent might be to limit the redevelopment potential of the parcel so that it couldn't be turned into multiple dwellings or some oversized McMansion. The verbiage "right to restrict' doesn't necessarily mean "is restricted", but implies that the county reserves the right to exercise some discretion on any future development plans. They might have made the addition of this restriction a condition in exchange for connecting to a utility or improving a road or some amenity.

This might be a common restriction among other properties in proximity to this one, which would mean that whatever the effect is on the value or marketability of your property would be shared by others in the same situation.

Attaching the doc. On the signatory page (not posted) I see its signed by someone from county facilites management. There was a fire hydrant put in some time in the past on part of the property. Might be that? Again nobody knows for sure even the county.

The issue is can fire insurance be purchased as no Lender will fund a loan on it unless the buyer or owner can present an Insurance binder. In California --The CA Fair Plan can be used but its premiums are way higher also in most areas the Property has to have a Fire hydrant within 1,000 yards of the property etc.

California is home to more than 75 communities, in designated high fire zones where at least 90 percent of residents live in these very high-risk swaths, the analysis found. The extremely fire-prone towns include: Rancho Palos Verdes, ***Calabasas*** La Canada Flint-ridge, Palos Verdes Estates and Malibu in Los Angeles County.

In Summary: The deed restrictions even if it had not been recorded YOU ARE still in a Designated High Risk Community where State And Insurance regulators determine what can or cannot be built. Since your entire community is in similar high risk areas its a zero sum game the prices of comparables in your neighborhood or general market area have already factored in higher fire insurance rates and which companies will or will not insure BUT CA FAIR PLAN in most cases will insure exiting structures but not necessary new construction.

Yes you are right about fair plan we are most all on that. We have a fire hydrant actually on our property and I wonder if that wasnt what this restriction was about as it is signed by someone from county facilites management. Anyway thanks for the help I appreciate it.

 

[George Hatch]

In my experience that's exactly the kind of scenario where the County might engage in some horse trading to get what they want with respect to limiting new development. My guess is that if you were going to redevelop with a fire-resistant structure that's similar in size to what you have but with sprinklers and a large defensible zone around the structure then they'd probably go along with that without a sweat. But they're probably going to oppose adding any additional structures or enlarging the existing structure.

 

[glenn walker]

Attaching the doc. On the signatory page (not posted) I see its signed by someone from county facilites management. There was a fire hydrant put in some time in the past on part of the property. Might be that? Again nobody knows for sure even the county.

Yes you are right about fair plan we are most all on that. We have a fire hydrant actually on our property and I wonder if that wasnt what this restriction was about as it is signed by someone from county facilites management. Anyway thanks for the help I appreciate it.

Thats a Million Dollar Fire Hydrant - I once had a place were the nearest fire hydrant was a mile away and that was before CA had the Fair Plan and I could not get insurance.

 

[Russ Kitzberger]

Appraisers value the rights in the real estate:
If you are being asked to value the fee simple, then none. Value it as fee simple absolute; free of encumbrances.

If you are appraising the fee simple subject to the restriction; you should get a legal opinion on what that restriction is for and if it is even applicable or encumbering. Many restrictions have been vacated by procedure, regulations, or law.

I noticed this is a general public ?

This means you are going to need to get a specialist appraiser who understands how to value deed-restricted properties and will work with your attorney to scope the project to value what is saleable.

 

[finchrat]

In my experience that's exactly the kind of scenario where the County might engage in some horse trading to get what they want with respect to limiting new development. My guess is that if you were going to redevelop with a fire-resistant structure that's similar in size to what you have but with sprinklers and a large defensible zone around the structure then they'd probably go along with that without a sweat. But they're probably going to oppose adding any additional structures or enlarging the existing structure.

Actually I am not looking to build anything. I am asking because I own 1/2 the property and am looking to purchase the other half from a sibling. Naturally anything that can lower the value is of interest to me and I wanted to explore this deed restriction as it might apply to the appraisal value of the property.