Does anyone knows the official HUD/FHA definition for an ADU or a kitchen?

[MMing5000]

Appraised a larger than typical hign-end 1 bedroom dwelling with 1,000 sf GLA improved on concrete piers located in a flood zone A area in a beach community for FHA financing where the garage below the dwelling has been newly improved as a family room with 1/2-bath (no shower stall no tub) and a wet bar where there is no existing electrical wiring for a stove. The appraisal report noted that there are no similar large 1 bedroom comparable dwellings within 5-mile radius, however, there are smaller 800 and 900 sf dwellings with 2 bedrooms in the immediate area which were used as comparables to demonstrate there is market acceptance for smaller dwellings and used a couple of larger 3 bedroom dwellings to bracket the upper end of subject's dwelling size, then adjusted $10,000 for differences in the number of bedrooms based on estimated cost from a local contractor for carpentry work and electrical work needed to add a bedroom with door and windows.

The Lender's Underwriter came back and said the family room with wet bar and 1/2 bath is considered an ADU. I had responded that the family room does not have a functional kitchen because it has no stove, and only has a half bath and sent the attached article found online that an ADU requires a functional kitchen. The reviewer replied and said that HUD/FHA has no requirement for a stove in the kitchen, nor does it have a requirement for a full bath in the ADU. The reviewer also insisted a similar 1 bedroom dwelling must be used to demonstrate marketability or they can't do the loan.

I can't find any legal or official definition of an ADU on HUD/FHA website. Can anyone help?

As for finding a large 1 bedroom comparable, i would have to go find someone to buy a small 2 bedroom property, remove the common wall between the 2 small bedrooms and then resell it as a large 1 bedroom property to show there iss market acceptance for 1 bedroom dwellings.

 

[Dublin ohio]

The UW is an idiot. Almost impossible to fight stupidity. Of course the FHA info you provided does say it is up to the appraiser to determine if it is an adu or not. So there is that.

 

[Dublin ohio]

I did a google search for FHA kitchen requirements. There is some HUD info concerning kitchen requirements that reference fair housing requirements. Take a look. It appears that there might be some info that would help

 

[MMing5000]

I did a google search for FHA kitchen requirements. There is some HUD info concerning kitchen requirements that reference fair housing requirements. Take a look. It appears that there might be some info that would help

i have done FHA appraisals on vacant properties being sold with no appliances at all, where adjustments are needed for basic appliances for a functional kitchen. But i do not think any appraiser would consider a functional kitchen without proper wiring for a stove. A kitchen sink, a stove and a fridge are 3 basic minimal items needed in a functional kitchen. IF a portable cooktop counter burner can be qualified as a stove for a functional kitchen, then many master bedroom suites with a portable fridge could also qualify to be considered as an ADU if there are dual entries to the master suite, which would open up a whole new can of worms because many high-end properties have multiple master bedroom suites with mini fridge fit under the wet bar and would now have to be identified as an ADU based on this particular Underwriter's criteria.

 

[Elliott]

I don't have a definition of an ADU, but I know it when I see it. I don't recall any assignment when the lender said, 'Oh, there's also an ADU.' Always a time for revisiting the fee.

 

[andrew81]

The handbook does not indicate what is considered a kitchen but it does say a bathroom must include, at a minimum, a water closet, lavatory, and a bathtub or shower.

Here's what I found in the Handbook about living units, ADUs, and converted spaces.

Requirements for Living Unit
The Mortgagee must confirm that each living unit contains:
• a continuing and sufficient supply of safe and potable water under adequate pressure and of appropriate quality for all household uses;
• sanitary facilities and a safe method of sewage disposal. Every living unit must have at least one bathroom, which must include, at a minimum, a water closet, lavatory, and a bathtub or shower;
• adequate space for healthful and comfortable living conditions;
• heating adequate for healthful and comfortable living conditions;
• domestic hot water; and
• electricity adequate for lighting, cooking and for mechanical equipment used in the living unit.

Accessory Dwelling Unit
Definition
An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, created within, or detached from a primary one-unit Single Family dwelling, which together constitute a single interest in real estate. It is a separate additional living unit, including kitchen, sleeping, and bathroom facilities.
Standard
A Single Family residential Property with an ADU remains a one-unit Property. For any Property with two or more units, a separate additional Dwelling Unit must be considered as an additional unit.

Required Analysis and Reporting
As part of the highest and best use analysis, the Appraiser must make the determination to classify the Property as a Single Family dwelling with an ADU, or a two-family dwelling. The conclusion of the highest and best use analysis will then determine the classification of the Property and the analysis and reporting required.
An ADU is usually subordinate in size, location and appearance to the primary Dwelling Unit and may or may not have separately metered utilities or separate means of ingress or egress. The Appraiser must not include the living area of the ADU in the calculation of the Gross Living Area (GLA) of the primary dwelling. The Appraiser must notify the Mortgagee of the deficiency in MPR or MPS if more than one ADU is located on the subject Property.

Additional Manufactured Home on Property
The Appraiser may consider a Manufactured Home to be an ADU if it meets the highest and best use and FHA requirements. The Appraiser may value a Manufactured Home on the Property that physically or legally may not be used as a dwelling and does not pose any health and safety issues by its continued presence as a storage unit.

Additions and Converted Space
The Appraiser must treat room additions and garage conversions as part of the GLA of the dwelling, provided that the addition or conversion space:
• is accessible from the interior of the main dwelling in a functional manner;
• has a permanent and sufficient heat source; and
• was built in keeping with the design, appeal, and quality of construction of the main dwelling.
Room additions and garage conversions that do not meet the criteria listed above are to be addressed as a separate line item in the Sales Comparison Approach (SCA) Grid, not in the GLA. The Appraiser must address the impact of inferior quality garage conversions and room additions on marketability as well as Contributory Value, if any.
The Appraiser must analyze and report differences in functional utility when selecting comparable properties of similar total GLA that do not include converted living space. If the Appraiser chooses to include converted living spaces as GLA, the Appraiser must include an explanation detailing the composition of the GLA reported for the comparable sales, functional utility of the subject and comparable properties, and market reaction.
Alternatively, the Appraiser may consider and analyze converted living spaces on a separate line within the SCA Grid, including the functional utility line to demonstrate market reaction.
The Appraiser must not add an ADU or secondary living area to the GLA.

 

[MMing5000]

I don't have a definition of an ADU, but I know it when I see it. I don't recall any assignment when the lender said, 'Oh, there's also an ADU.' Always a time for revisiting the fee.

i have responded to have the Reviewer provide a couple of examples where it can be considered to by common and typical for an ADU to not have a stove in the ADU in subject's neighborhood to demostrate its marketability without a stove.

 

[MMing5000]

The handbook does not indicate what is considered a kitchen but it does say a bathroom must include, at a minimum, a water closet, lavatory, and a bathtub or shower.

Here's what I found in the Handbook about living units, ADUs, and converted spaces.

Requirements for Living Unit
The Mortgagee must confirm that each living unit contains:
• a continuing and sufficient supply of safe and potable water under adequate pressure and of appropriate quality for all household uses;
• sanitary facilities and a safe method of sewage disposal. Every living unit must have at least one bathroom, which must include, at a minimum, a water closet, lavatory, and a bathtub or shower;
• adequate space for healthful and comfortable living conditions;
• heating adequate for healthful and comfortable living conditions;
• domestic hot water; and
• electricity adequate for lighting, cooking and for mechanical equipment used in the living unit.

Accessory Dwelling Unit
Definition
An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, created within, or detached from a primary one-unit Single Family dwelling, which together constitute a single interest in real estate. It is a separate additional living unit, including kitchen, sleeping, and bathroom facilities.
Standard
A Single Family residential Property with an ADU remains a one-unit Property. For any Property with two or more units, a separate additional Dwelling Unit must be considered as an additional unit.

Required Analysis and Reporting
As part of the highest and best use analysis, the Appraiser must make the determination to classify the Property as a Single Family dwelling with an ADU, or a two-family dwelling. The conclusion of the highest and best use analysis will then determine the classification of the Property and the analysis and reporting required.
An ADU is usually subordinate in size, location and appearance to the primary Dwelling Unit and may or may not have separately metered utilities or separate means of ingress or egress. The Appraiser must not include the living area of the ADU in the calculation of the Gross Living Area (GLA) of the primary dwelling. The Appraiser must notify the Mortgagee of the deficiency in MPR or MPS if more than one ADU is located on the subject Property.

Additional Manufactured Home on Property
The Appraiser may consider a Manufactured Home to be an ADU if it meets the highest and best use and FHA requirements. The Appraiser may value a Manufactured Home on the Property that physically or legally may not be used as a dwelling and does not pose any health and safety issues by its continued presence as a storage unit.

Additions and Converted Space
The Appraiser must treat room additions and garage conversions as part of the GLA of the dwelling, provided that the addition or conversion space:
• is accessible from the interior of the main dwelling in a functional manner;
• has a permanent and sufficient heat source; and
• was built in keeping with the design, appeal, and quality of construction of the main dwelling.
Room additions and garage conversions that do not meet the criteria listed above are to be addressed as a separate line item in the Sales Comparison Approach (SCA) Grid, not in the GLA. The Appraiser must address the impact of inferior quality garage conversions and room additions on marketability as well as Contributory Value, if any.
The Appraiser must analyze and report differences in functional utility when selecting comparable properties of similar total GLA that do not include converted living space. If the Appraiser chooses to include converted living spaces as GLA, the Appraiser must include an explanation detailing the composition of the GLA reported for the comparable sales, functional utility of the subject and comparable properties, and market reaction.
Alternatively, the Appraiser may consider and analyze converted living spaces on a separate line within the SCA Grid, including the functional utility line to demonstrate market reaction.
The Appraiser must not add an ADU or secondary living area to the GLA.

Thanks Andrew, i did see that portion in the handbook. I think the handbook does not require actual appliances to be present in the kitchen, but surely there should be proper wiring for the stove. I would think that if a person asks any appraiser what makes up a kitchen one would say a sink and a fridge and stove is not needed in a kitchen.

 

[Dublin ohio]

Thanks Andrew, i did see that portion in the handbook. I think the handbook does not require actual appliances to be present in the kitchen, but surely there should be proper wiring for the stove. I would think that if a person asks any appraiser what makes up a kitchen one would say a sink and a fridge and stove is not needed in a kitchen.

Considering the definition of a bathroom includes a shower or tub. It is not by definition an ADU

 

[Terrel L. Shields]

Ask for the supervisor to settle it.