Contract, New Construction

[Mike Ault]

Peripheral Question: Assignment is FHA new construction SFR in builder subdivision. I ask the Sales Office for the City Cert of Occupancy. Two different Offices tell me "not worry it was sent directlyi to lender." I asked AMC to obtain it from lender. Response was 'lender says don't worry. they don't need it anyway."

Indicating the month and year completed per the certificate of occupancy used to be an an old 4150.2 FHA requirement. No longer applicable, however.

(8-3) h. Age (Yrs.): Enter actual age. Construction records may be helpful if available. Insert both the month and year completed where the property is less than two years old. If it is over two years old, insert the year completed only.

https://www.HUD.gov/sites/documents/41501C8HSGH.PDF

 

[J Grant]

I honestly don't even remember when or where I got the idea. I'm fully prepared to go with the flow but it seems that satisfactory completion of new construction as confirmed/approved by the appraiser is essentially the go-ahead for the mortgage loan to be extended; so doesn't the appraiser's place in line, at the end of line, carry inherent liability unless it is scoped away, but who could successfully scope away liability if the jury didn't agree? [Kinda just asking philosophically but it could be a critical issue if something goes wrong after the move-in date...]

There are far fewer cases wrt liability than the fear warrants - we are valuation experts not title experts and the mortgage loan is their responsibility wrt clear title, c of o to, good that you are so concerned though

 

[sputnam]

Dear Sputnam: How's this for intellectural curiosity: your statement Quis custodiet ipsos custodes? is attributed to Juvenal, who asked "Who will guard the guards themselves?" Woa, very thought-provoking with a million current implications.

Yeah... Without effective enforcement, rules only really apply to people who self regulate.

 

[sputnam]

Peripheral Question: Assignment is FHA new construction SFR in builder subdivision. I ask the Sales Office for the City Cert of Occupancy. Two different Offices tell me "not worry it was sent directlyi to lender." I asked AMC to obtain it from lender. Response was 'lender says don't worry. they don't need it anyway." [IMO that leaves me fully responsible to indicate that construction was completed per plans.] Would my peers refuse to sign the CIR/1004D.]

I have never asked for a certificate of occupancy

We are asked if the construction is p; physically completed. That is all we are asked for.

Simple is always better, imo. Some Lenders do ask for verification that the CO has been issued. I just call the County and ask if the CO has been issued. A note about who I chatted with and the time and date of the call goes in the work file.

 

[J Grant]

I honestly don't even remember when or where I got the idea. I'm fully prepared to go with the flow but it seems that satisfactory completion of new construction as confirmed/approved by the appraiser is essentially the go-ahead for the mortgage loan to be extended; so doesn't the appraiser's place in line, at the end of line, carry inherent liability unless it is scoped away, but who could successfully scope away liability if the jury didn't agree? [Kinda just asking philosophically but it could be a critical issue if something goes wrong after the move-in date...]

Appraisers who are overly concerned about liability can create more liability for themselves. As soon as we deviate from the realm of valuation and take on the responsibility of other experts, such as title work C of O, now we can be liable for our statements about it - so just make no statement about it and avoid the problem. The cliche legal warning - anything you say can and will be used against you in a court of law. The certs cover that we are not responsible for legal title.

We can from the example of other professions -when my exterminator comes to spray for bugs, he does not give me a valuable opinion of my house, and he does not go in the garage and start fixing the door. If I sit with an attorney to go over x document and I cough, she does not offer a medical diagnosis.

 

[CGinMN]

[IMO that leaves me fully responsible to indicate that construction was completed per plans.]

A CO won’t indicate if the home was constructed per the plans and specs that were provided to you. That’s your role, but only to the extent of your visual appraiser observation. You’re never fully responsible because limiting conditions (specifically 5 and 6) cover you.

 

[alebrewer]

what was basis of $10K Adjustment to comp#? [ must not understand the premise.]

So, C1 had $10k in concessions - C2 and C3 had none. After analysis, Comp1 had (-) $10k in net adjustments and Comp2 had + $10k in net adjustments. Before application of any concessions adjustments, the adjusted values of all comps were/are $240,000. If we adjust Comp1 down for the $10k in concessions, it proffers an adjusted value of $230,000, which is $10k less than the adjusted values of the other two sales. This indicates that - for this particular property, the concessions had no material impact on the raw sales price of Comp1. As such, your options are: adjust dollar for dollar - which would be a breech of your Cert/Limiting Conditions, OR adjust only that level of the concession that is above what is typical for that market - again - failing to follow the Cert you signed, but nonetheless better than 1st option. OR don't adjust the concession, because your analysis has demonstrated that the concession had no material impact on the sales price of Comp1.

 

[CGinMN]

Fannie just put this out. It is somewhat odd, no?

https://singlefamily.fanniemae.com/media/37541/display

 

[Mark K]

"....tends to inflate the appraisal results and undermines the credibility of the appraiser."

Wow! Who woulda' thought?

 

[ZZGAMAZZ]

Fannie just put this out. It is somewhat odd, no?

https://singlefamily.fanniemae.com/media/37541/display

View attachment 82838

Are they saying that the credibility of the appraiser is undermined just because the results are inflated by not adjusting? Wouldn't the results need to be analyzed to determine whether the failure to do so was or wasn't appropriate?