As-is Or Subject To

[ZZGAMAZZ]

Also, if the temporary waiver allows occupancy, market reaction to the absence of the COO can't be determined because during the temporary period--in which the effective date occurs--occupancy is occupancy. I guess that's why Mike asked what he asked????

 

[Hamlet]

Donna: A drive through most Pasadena neighborhoods literally evokes a vision of the way life used to be...should be...

If the way life should be includes wallpaper police...count me out!

 

[CURT VAN HOOSER]

As often happens, the Forum deals with an issue a week before a similar assignment comes my way.

The subject is a SFR being sold in Pasadena, CA, with a "City Occupancy Waver," which per the Building Dept authorizes a purchase transfer with the buyer accepting the responsibility to resolve the issues of deferred maintenance within 30 days, either before or after recordation. The city rep could not answer my question, "What if the issues aren't resolved within 30 days?" and I will visit the Dept in person tomorrow.

Per the agents the pending repairs are purely cosmetic and "not a big deal."

However I don't see how I can appraise this property without it being "subject to" the COO being obtained; and that is not the sceario in this deal. That is to say, the intention is not to obtain the COO prior to funding as far as I am aware.

Caveat: I have absolutely no knowledge of the FRT issue that was cited earlier in this thread.

Questions:

Is there an alternative to "subject to"?
As a cosmetic fixer the property might be described as average condition with a cost to cure, and I would propose to include the cost to cure the COO-related deficiencies among those that are beyond the scope of the COO into a single number, correct?

Holy cow! Is this Waiver and its conditions and time limit something that would need be disclosed to the buyer and included in a Purchase Agreement?

 

[ZZGAMAZZ]

Good question. I just got off the phone with the borrower who asked me what an appraiser does. I explained the part of this assignment in which I would need to confirm the "Waiver" at City Hall.

He appeared to be marginally aware of the implications of the transfer and asked "Will the waiver hold up the deal"? I felt justified in interpeting the "deal" to mean the property transfer; and I explained that based upon my preliminary research the waiver, per se, would not hold up the transfer--although it remains to be seen whether the appraisal being conditioned subject-to obtaining the COO will kill the deal or not.

Once again I'm being exposed to a nuance of which I was previously unaware . . . but it seems that somebody along the food chain prior to my involvement would have realized that the waiver could pose a problem. I'm waiting for a return call from the MB but my primary goal--not sure what chapter of USPAP--is to collect the COD fee ASAP (LOL)...

And by happenstance I communicated with two Pasadena brokers who claimed prior experience with similar sales, although neither knew whether the appraisers had conditioned the reports "subject to," or whether the waivers had been fully disclosed...

 

[Webbed Feet]

ZZGA,

This is about police powers. A lack of a certificate of occupancy typically means that police powers can opt to condemn the building and force any, and all, occupants out of the building. A buyer that is only "marginally" aware of the implications of not meeting a 30 day deadline regarding police powers has failed the test of a well informed buyer by the definition of market value we use. As a buyer's broker I would never allow any buyer I represented to enter into such a situation ignorant of the repercussions.

More at the root of this, how would a lender like foreclosing on a property and then discovering it had an expired temporary COO and they were on the hook for a bunch of repairs in order to obtain one? How would an appraiser like to be asked to open up their check book for failing to properly disclose and consider the situation? You need to find a J.A. employee that knows their *** from a hole in the ground and can answer your prior question that remains unanswered. But you better get it in writing. Ask to see the verbiage regarding whatever code or statue involves this and the powers / repercussions of failing to comply. Get a copy. That is what you need in your work file. That is what needs to be in your report. Let some UWer take the hit on this.

"Subject To" or "As-Is": This is a combination of SOW discussions and debate with your client over client desires versus what you are willing to do and take liability for. Any "As-Is" is going to require proof of marketability just exactly like non-permitted additions do as I assume you are to meet secondary market guidelines. So yes, you would need comps where it was confirmed you had informed buyers that wanted to proceed anyway. I would communicate with my client only in writing on this so I had the paper trail in my work file. "Subject To" protects you and any following third party lender. "As-Is" makes a MBer happy but leaves you exposed and also any third party lender. Most MBers will want the entire issue left out by omission, and way too many appraisers would do just that.

If this has an intended use of a loan through a federally insured bank for an in-house loan you have a FRT and the "As-Is" cannot be avoided at least as a second value opinion along with any "Subject To" final conclusion. But of course all of the above is just my opinion. I'm feathered, what the heck do I know?

Webbed.

 

[ZZGAMAZZ]

cool. i'm out the door & will update the Forum asap.

 

[Couch Potato]

My comment is below.

 

[ZZGAMAZZ]

I resemble that remark...

 

[Couch Potato]

I resemble that remark...

The first step in the cure.