Advice duplex made into quadruplex - no permit (also posted under FLorida)

[Panncake]

I am appraising a duplex, owners added an additional two units in a new building, no permits pulled (both per owners and tax records) I suspect the two new units can not be included in the appraised value since there are no permits. Need advice how to proceed. Thanks.

 

[Overimprovement]

Contact client. They may want a HC included assuming proper permitting. Curious why no permits pulled...

 

[Surf Cat]

I concur with Overimprovement.

Write a description of what you observed. Include a couple photos. The client will let you know on how they want you to proceed.

Were the original two units separately metered? Did they add two more meters or are two units running on one meter?

 

[Terrel L. Shields]

How do you pretend something does not exist without a hypothetical assumption?

 

[J Grant]

I am appraising a duplex, owners added an additional two units in a new building, no permits pulled (both per owners and tax records) I suspect the two new units can not be included in the appraised value since there are no permits. Need advice how to proceed. Thanks.

Ask your client how to proceed IMO ,

As for your own decision wrt HBU, I would look at the zoning - is it legal to have a four-unit improvement on the lot ? If the four units are legal, but two were built with no permit, Fannie and Freddie allow non-permitted dwellings, idk about for small income properties. What is the construction like, is it on sewer etc? Odd that they did not get permits

What kind of HC makes sense in a situation like this? If you are going to use an HC, then it should be subject to that HC ( not as is ). ask the client about that as well.

 

[Tom D]

Interesting, but deadly for you. Is it up to a 4 unit code now. Here, a 2 unit here can have smoke detectors, but a 4 unit must have a hard wired fire alarm system. Big difference. Also, the fire insurance policy will not pay if it wasn't done with permits and zoning allowed. Insurer will use any excuse not to pay. Around here if you didn't do it right and someone dies in a fire, the city will arrest owner, so good luck.

This is a slick owner trying to skirt the law. And you are going to help them, think about it.

Now the lender may say, yea everything ok. But that loan goes south, or a fire, and the now unhappy investor holding the loan, will not know you one bit, and sue you.

So don't be stupid for how much. You get anything wrong, and the state will find 10 other things you didn't do properly to burn you with. And the happy do it lender will become the suing lender because you missed whatever. And saying i didn't know that is not an excuse. This is one of the most obvious do not do appraisals. And some of you are suggesting to do this.

 

[sputnam]

I am appraising a duplex, owners added an additional two units in a new building, no permits pulled (both per owners and tax records) I suspect the two new units can not be included in the appraised value since there are no permits. Need advice how to proceed. Thanks.

If your Client asked for market value, then you have to appraiser the property at it's highest and best use. Is a quadraplex permissible? If not, you're question is answered.

 

[KHS445]

Couple of thoughts:
- Contact client and explain the situation to them and see how they would like you to proceed.
- If they say to move forward, I would contact the local Assessor/Building Department and ask them what the consequences of the situation are. Tell them what you have found and tell them what the zoning classification is for the property. DO NOT DISCLOSE THE LOCATION OF THE PROPERTY. See what they tell you regarding fines, remediation, inspections, etc. and then communicate that to your client. If the client still wants you to proceed, include the information you have received from the Assessor/Building in your report.
- As I see it, at that point, you have two options if you end up completing the assignment. First would be to complete the report "as is", subject to all required inspections and permits being obtained for all property improvements. If the new units were built without permits/inspections, what other work may have been complete without required permits/inspections? Second would be to value the property "as is" including the information regarding the new units in your report, but not assigning any value to them due to their not being permitted. Explain what you learned from the Assessor/Building Department and let the chips fall where they may. You will want to discuss these options with your client.
- Lastly, even if this is a 4-digit assignment, I would run and not walk away from it if at any time you are not feeling comfortable. How many cookie cutter reports could you complete in the amount of time and effort you will spend on this report?

Sometimes the assignments we walk away from are the most profitable ones.

Good luck and let us know how things work out.

 

[alebrewer]

It would depend on the permitting requirements of the local municipality. If they allow retroactive permitting, and 4-unit is legal per the zoning the subject is located in, then I concur - use a HC that the units have been retroactively permitted. If retroactive permitting is not allowed (or if 4-family is not a legal use under that particular zoning ordinance), then it's probably a 'subject to' appraisal to convert back to 2-family. Either way, I'd find out whether retroactive permitting is allowed and visit with my client (as many have stated herein) prior to completing the assignment.

 

[Tom D]

I doubt this fee is above a normal 1025 form fee. Like said above, run away right now. Asking your question is being smart, but thinking you can do it correctly is being stupid.
If the lender at any point realizes the real problems, you will be stiped to death so that they don't have to pay you. Then they will send it to the state to make sure they don't have to pay you.

The owner is to slick, and they are going to pull you into their slickness. Maybe ask your E&O if you get it wrong, will they defend you. Why did the owner not get permits, or 4 unit use approval.
Around here you have to have architect plans to convert from a 2 to a 4. But maybe that area is different, you better read the whole code book, not just ask a question. And prove how you got your answers. Because with the lawsuit they will, to destroy you.

Bear traps all over this appraisal. And we are doing it for what reason.