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Additon to home built without permits

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Monica Otto

Freshman Member
Joined
Mar 1, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I just did an inspection yesterday on a home that has a new 1200 s.f. addition to a home that was originally 1772 sf built in 1957. The original home has been updated, however the addition is far superior in quality and design. The owner of the home owns a mill work company and completed it himself without County permitting . How have you all handled additions without permits?
Thanks
 

Judy Whitehead (Florida)

Senior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I don't believe my job is to do the police work for the county....however.....how did you get the information? Did the homeowner tell you all of this? If so then I would state that in the report "per the owner." Once you have knowledge of something that may impact the subject, then I feel that you must pass the knowledge on to the client. If in the course of searching the public records this information is readily available then I would state that "during the research of the public records......."

In this county, if someone fails to pull a permit, if the county finds out about it (and they eventually will by field inspections) they can cause the homeowner to "undo" enough of the construction so that it can be properly inspected, make them do "whatever" to bring it up to code, and can also impose a fine. In reality, with small additions, etc. they just start taxing the homeowner and pass on the fines, etc. But this sounds like a biggy to me. The county or municipalilty does not want to miss out on any additional property taxes.
 

Monica Otto

Freshman Member
Joined
Mar 1, 2002
Professional Status
Certified Residential Appraiser
State
Florida
The owner told me during the inspection. I had commented that the county was showing a 1700 sf home, and did not show the addition. They replied that it was because the county didnt know about it.
I guess my question is, since this is currently not a "legal" use, and any of those things you sited above can also happen in this county, is there an affect on value? I doubt that the county would make them remove the addition, however I dont know for sure how far they will go ( and you are right, eventually they will find out) and cannot find out what they will do within opening a can of worms. If the bank were to end up owning this property there would be costs to rectify this. Also, although the work looks good, I dont know that is is built to code and wouldnt need extensive work. The addition adds 1200 sf living area to the home and has a major affect on value.
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Monica,

Ditto what Judy said.

We're basically reporters and any information we obtain should be passed to our client so they can make a sound lending decision. I've had some clients who could care less about such additions and others who immediately cancel the order. Since the owner told you about no permits, I think you need to let your client know about it and let them deal with it however they need to. If something were to happen to the property later because the additions weren't built to code, and it came to light you had been told that information but didn't inform the lender, guess who could be liable?

As far as the effect on value, I don't think there is any related to having or not having a permit for the additions. There may be an effect due to a difference in the quality of his additions when compared to the rest of his neighborhood. Does the additional living area make his property an overimprovement for his area? He is probably well aware that he should have pulled permits, he just didn't wanta pay for 'em. So he shouldn't be surprised when his attempt to get around the law catches up with him. Just don't feel like you're the bad guy for doing your job!

I just remembered a similar instance from last year. Our client instructed us to not consider the non-permitted addition as living space. We just called it storage and it cut the sq. footage in half and it severely affected the value. If you haven't already, you might want to talk to your client about this one.

Good luck.
 

Monica Otto

Freshman Member
Joined
Mar 1, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Hi Wally,
Thanks. Yes, I am definately going to disclose the information in the report. I just started looking at the value angle, and was not sure. I have not talked to the lender yet, it was late Friday when I got back. That's a good point - they may have instructions on what they want done. The owner indicated that they had told the LO about it already, but maybe not.
I have done similar thing with counting living area that was not up to code as "storage" - mainly finished bottom floors etc. I have never had this come up though when the "illegal" addition was nicer than the house :roll:
thanks
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
I second the other comments. You have no liability UNLESS you don't report it. Then you might if someone could show you knew it and didn't report it. IE the bank ended up with the property.

I can't comment on the value because in my area the Tax Man just adjusts your taxes when they find it. County has no zoning for permits required so it is up the Tax Man to find it if you don't report it.
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
The most recent instance to which I was referring was similar to yours, Monica, in that the additions were nicer than the original. I think the esteemed Bobby Bucks may have coined the term "trouse" (trailer + house) - original manufactured home with the additions constructed to site-built standards. The county (rightly so) continues to consider it a manufactured home for tax purposes and I don't know yet how they'll handle the non-permitted additions. The owner is new to this country and wasn't aware he needed a permit to add on to his house.

He does now!
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
My recommendation would not do anothing with this assignment until you have talked it over with your client. Your lender/client may either put it on hold or cancel the order. If they cancel the order, make sure you bill them for the amount of time you have put into the assignment. After the lender finds out about the situation, they may contact the homeowener and tell them to get permits before they will consider making a loan. Then when all the proper permits have been taken care of, the lender might want you to go back to the proeprty for a current observation and then write up the report. Or the lender might decide for you to go ahead with the subject "subject to" the owner obtaining all the appropriate permits. Or the lender might decide that you should do an appraisal based on the existing 1700 square feet, taking into consideration that the additional square footage has value only as storage because of the uncertainity of acceptance by the local authorities and availability of insurance. The value as storage might be minimal (no matter how well it has been constructed)--because of the possibility the addition would have to be totally removed to be in compliance with the local government regulations. So this is one of those that you dump the entire responsibility back into the clients lap before you put forth any more efforts!
 

Ted Martin

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Kansas
I don't know about Florida but the county appraiser's in Kansas are getting new aerial surveys from the Army Corp. of Engineers this spring with a six inch resolution. (I should be able to find that camara I lost last spring :lol:

I think they'ld notice a 1200 square foot addition.
 
A

Anonymous

Guest
First talk to your client about the situation, if the client says go ahead make your valuation conditional upon governmental approvals.
 
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