Appraising Properties Without Permits For

[Pamela Crowley (Florida)]

Home permit history comes back to haunt
By Dian Hymer
Inman News
Consumer Real Estate News

http://realestate.yahoo.com/realestate/sto...628/20040628201

Later, when the home was sold, the appraiser for the buyer's lender refused to give full value to the addition because the work was done without permits. To save the sale transaction, the sellers had to apply for permits after the fact, which meant paying penalties in addition to the permit application fees.

Another homeowner converted a detached cottage on his property to a bedroom and bathroom for his daughter. This work was done by licensed contractors, but without a building permit. When the homeowner listed his house for sale, a neighbor reported the illegal living unit to the city planning department.

The city issued a violation notice to the homeowner. When the buyers were told of this, they insisted that the homeowner bring the unit into compliance with city requirements. The unit was so close to the property line that it was impossible to make it legal. The only way to comply was to remove the structure.

 

[Frederick R. Ruffell]

This is why I always make my reports subject to an certificate of occupancy issued by the municipality if there is any discrepancy between the public record GLA figure and what I measure.

 

[Kate]

So you make the report subject to, or is it just a disclaimer that you put in?

 

[Kate]

Can you assume that if your sketch and measurements are close to the town data that you are covered?

 

[Otis Key]

I use "Extraordinary Assumptions" - it seemed a lot easier than stirring the pot up front and it's still, IMHO, a fairly reasonable way to CYA.


Kate - not all states are disclosure - I can't get squat from the assessor's office except owner of record, legal description, taxes & assessment.

 

[Mountain Man]

And not all out in the sticks muncipalities issue certificate of occupancy's.

 

[Kate]

So what is the answr then? What is the best way to protect your self?

Statements regarding zoning compliance are intended only in the most general sense. Zoning and building ordinances vary significantly from one municipality to another, and can be extremely detailed. The scope of this report does not include a comparison of every potentially significant characteristic of the subject property's site and improvements relative to zoning and building ordinances.

This is the only thing that I have that is close to what might protect me. What elce should I have as a standard boilerplate statement to protect myself?

 

[Richard Carlsen]

Simplest way, if you think you must CYA, is to make the Extraordinary Assumption that all additions or modifications done to the house which would normally require county approval, have that been done IAW current building codes and statutes.

We are to appraise the house as is; not check to see if the homeowner has been dishonest in his modifications.

I know, some will say that we are there to safeguard the buyer and make sure the county gets its fair share of the revenue from the permits.

If that is what we are there for, we are not charging enough.

Value is the name of the game; not compliance.

Appraise; not inspect.

 

[Frederick R. Ruffell]

Hey look, if my measurements are within 50 SF of public record I will look at my sketch for a possible solution and really do not sweat it. But if there is a big discrepancy then I can usually identify the family-room addition or whatever. If this is the case and no one has provided me proof positive of permits issued and signed off (i.e. certificate of occupancy) then my reports are made "subject to" the issuance of said certificate/or signature of municipal building inspector for the final inspection. Let your client take it from there. If they need the proof positive they can pay me for my time to go to the building department/hall of records to research it, my hourly rate is very reasonable. (think scope of work)
You got to realize that to some extent our clients are what I call "risk avoiders" and we appraisers are "risk seekers" up to an extent. Where I draw the risk line is going to be different to where you draw it. In in the ultimate end it doesn't matter where we draw it because the judge is going to draw it for you and lets hope we have all drawn it on the correct side of the judges line.

 

[Tater Salad]

I know that we are looking at value and not permits, but I'm torn in certain areas where they sometimes require tear-down.

In St. Louis City, it's the luck of the draw on who inspects the property. If you get a form-filler, you're in the clear. If you get Barney Fife, you get a citation and are required to 'open it up' for inspection. These inspections can be invasive if there is no access to what they need to see (wiring, plumbing, etc.). Add to that the average age of a dwelling in the city (70-80yrs old) and you've got a possible fire trap with my name all over it.

If there is what looks like an unpermitted addition, I always check for a permit (opened and closed) and just report what I know. I don't require anything but I do disclaim and suggest. The market doesn't care about unpermitted additions because of the lower taxes, but most of them don't know that they could be required to tear it out/down. That's the part that I want to communicate.