Are we required to obtain permits?

[Lee Lansford]

And another thing

For a related matter, take a look at Fannie's Selling Guide, page 551, for the manner in which Fannie asks appraisers to approach a situation where the subject has "an illegal additional unit or accessory apartment".

If the appraiser complies with Fannie's pronouncement (and, I'll add my own requirement that there is no adverse effect from governmental agencies as to the 'as is' status), is the result Market Value or not MV?

 

[Mike Kennedy]

Nice try - no cigar

bldg codes & zoning ordinances have distinctly different purposes

Zoning prescribes land usage and regulates the function, size, and certain exterior aspects of bldg

...in contrast building code deals with structural and mechanical aspects of bldg, as they affect public health, safety and welfare.

Problem: Finished Basement.

Is it allowed per zoning ? if yes, the its legal PER ZONING CODE...it is in fact allowed. We have a finished basement and zoning allows it....legal

NO Permit ? then you have a violation of the BUILDING CODE.

Note the appraisal asks for zoning compliance, NOT building code compliance.

USPAP SR 1-2
510 (e) identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal, including:
512 (i) its location and other items of a similar nature, legal, physical and economic attributes;

516 (iv) any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature;

Building Codes are State, County, City, Town, Village Ordinances. Ordinances are Laws which govern the legal use and occupancy of real property. As commented several times - a Zoning Ordinance may control only zoning, or incorporate a Building Ordinance. A Building Ordinance governs Site Improvements and (as demonstrated in the Ordinances posted in this, and many other thread discussions) legal Occupancy.

In either case, "legal" and "ordinances", or "other items of a similar nature" above covers the gamut of Laws which, WHEN they exist, must be considered and compliance addressed pursuant to the USPAP Definition of Highest and Best (Legally permissible) Use as of an Effective Date of Appraisal

SR1-3(a), "land use regulations" (i.e. zoning, improvements, occupancy)

(b) develop an opinion of the highest and best use of the real estate.
557 Comment: An appraiser must analyze the relevant legal, physical, and economic factors to the extent necessary to support the appraiser’s highest and best use conclusion(s).

SR2-2(b)
(iii) summarize information sufficient to identify the real estate involved in the appraisal,
744 including the physical and economic property characteristics relevant to the assignment;
746 Comment: The real estate involved in the appraisal can be specified, for example, by a legal description, address, map reference, copy of a survey or map, property sketch, and/or photographs or the like. The summarized information can include a property sketch and photographs in addition to written comments about the legal, physical, and economic attributes of the real estate relevant to the type and definition of value and intended use of the appraisal.

 

[Mike Kennedy]

For a related matter, take a look at Fannie's Selling Guide, page 551, for the manner in which Fannie asks appraisers to approach a situation where the subject has "an illegal additional unit or accessory apartment".

If the appraiser complies with Fannie's pronouncement (and, I'll add my own requirement that there is no adverse effect from governmental agencies as to the 'as is' status), is the result Market Value or not MV?

http://appraisersforum.com/showpost.php?p=2343732&postcount=10

 

[23Degrees]

For a related matter, take a look at Fannie's Selling Guide, page 551, for the manner in which Fannie asks appraisers to approach a situation where the subject has "an illegal additional unit or accessory apartment".

If the appraiser complies with Fannie's pronouncement (and, I'll add my own requirement that there is no adverse effect from governmental agencies as to the 'as is' status), is the result Market Value or not MV?

It is MV of course. And Fannie makes it very clear in this case that they expect the "illegal" box to be checked in these cases where the zoning compliance question cannot be answered as being "legal".

I don't think anyone is arguing about proper valuation of the improvements in an "as is" report. The argument boils down to when one does so and then checks "legal" when that is clearly not the case based on what is written in the zoning code with regard to permit requirements.

Why the hub bub about accurately checking that box if one is not going to make use of an EA or HC and submit an "as is" report. I think I know the answer. It will anger clients and cause loss of income for those that do. Believe me, I can relate to that being down to two clients that do not follow the mantra that the legal box always needs to be checked or it is going to mess up deals. "So appraiser", the bulk of these turds say, "if you want more work, please pretend it is not there, pretend it is storage, add a cost to cure to make it all better... do whatever it takes but we need it "as is" and we need the "legal" box checked so that we can off load it and make our commission."

 

[Mike Kennedy]

I don't think anyone is arguing about proper valuation of the improvements in an "as is" report. The argument boils down to when one does so and then checks "legal" when that is clearly not the case based on what is written in the zoning code with regard to permit requirements.

Why the hub bub about accurately checking that box if one is not going to make use of an EA or HC and submit an "as is" report. I think I know the answer. It will anger clients and cause loss of income for those that do. Believe me, I can relate to that being down to two clients that do not follow the mantra that the legal box always needs to be checked or it is going to mess up deals. "So appraiser", the bulk of these turds say, "if you want more work, please pretend it is not there, pretend it is storage, add a cost to cure to make it all better... do whatever it takes but we need it "as is" and we need the "legal" box checked so that we can off load it and make our commission."

The Appraisal Institute, at Page 244 of the 10th Edition of The Appraisal of Real Estate, offers this definition for highest and best use:

"The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value."

 

[CNYAP]

I'm new to all of this but trying to use common sense, why would having a permit or not affect the value? Regardless of whether the owner got a permit, the appraiser will perform the same appraisal of the home's value. If the addition (or whatever) was built w/o a permit, how much value would you deduct for not having a permit (assuming you find no issues to the level of detail/inspection required of you)?

It seems to me the lender is just trying to get you to work for free (if not clearly included in the SOW)...seems like this is somebody else's job to check for a permit...but who would that be? I suppose it comes down to how much you want to have a long term relationship with this customer/lender (are they a big hassle to deal with).

 

[CANative]

Welcome to the forum. And thank you for posting common sense and the answer to the topic question.

We'll wait for yet another posting of highest and best use with selected phrases highlighted in colored script.

 

[Lee Lansford]

For those of you who choose not to reflect the market (as in "it tells you one thing, you do another"), I wish you well.

 

[Lee Lansford]

...

I don't think anyone is arguing about proper valuation of the improvements in an "as is" report. The argument boils down to when one does so and then checks "legal" when that is clearly not the case based on what is written in the zoning code with regard to permit requirements.

...

I hope that you are checking for permits for everything that is on the site...and that what is on the site conforms with what is in the permit.

 

[CANative]

Heroin is illegal, it is never permitted and it has no legitimate use.

Yet it has a market value that can be ascertained by studying the market.