Calling unpermitted an ADU

[Fernando]

If a SFR has an ADU but not permitted, would you still check the box indicating ADU?
I wouldn't but reviewer said I should. What is Fannie's final word?

 

[Trihard]

If its an ADU report it as an ADU.

Unpermitted as in Illegal where the zoning ordinance does not allow an ADU, it's still reported as an ADU with the illegal use box checked on page one and you need to find two comps with an illegal ADU. If zoning allows the ADU but no permits are pulled its still reported as an ADU, you just have to find other unpermitted ADU comps or extract the adjustment from the market somehow.

Zoning for an ADU
If it is determined that the property contains an ADU that is not allowed under zoning (where an ADU is not allowed under any circumstance), the property is eligible under the following additional conditions:

• The lender confirms that the existence will not jeopardize any future property insurance claim that might need to be filed for the property.
• The illegal use conforms to the subject neighborhood and to the market.
• The property is appraised based upon its current use.
• The appraisal report states that the improvements represent a use that does not comply with zoning (“illegal” use).
• The appraisal report demonstrates that the improvements are typical for the market through an analysis of at least two comparable sales with the same non-compliant zoning use. Aged settled sale(s) with the same non-compliant zoning use are acceptable if recent sales are not available. At a minimum, the appraisal report must include a total of three settled sales.

See B4-1.3-04, Site Section of the Appraisal Report, for subject property zoning information.

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Additions without Permits​

If the appraiser identifies an addition(s) that does not have the required permit, the appraiser must comment on the quality and appearance of the work and its impact, if any, on the market value of the subject property.

 

[andrew81]

if it exists, then it exists. check the adu box.

Zoning for an ADU
If it is determined that the property contains an ADU that is not allowed under zoning (where an ADU is not allowed under any circumstance), the property is eligible under the following additional conditions:
• The lender confirms that the existence will not jeopardize any future property insurance claim that might need to be filed for the property.
• The illegal use conforms to the subject neighborhood and to the market.
• The property is appraised based upon its current use.
• The appraisal report states that the improvements represent a use that does not comply with zoning (“illegal” use).
• The appraisal report demonstrates that the improvements are typical for the market through an analysis of at least two comparable sales with the same non-compliant zoning use. Aged settled sale(s) with the same non-compliant zoning use are acceptable if recent sales are not available. At a minimum, the appraisal report must include a total of three settled sales.

 

[Tim The Enchanter]

I looked at one comp recently. The MLS listing said guest house, another said doll house.
The pic looked like it was maybe 8 x 8 .
Can you say shed?

 

[Fernando]

I looked at one comp recently. The MLS listing said guest house, another said doll house.
The pic looked like it was maybe 8 x 8 .
Can you say shed?

Be careful what you call it. A guest house sounds better than a shed and lender may require an interior photo if you didn't take one.

 

[sputnam]

Permitting is a governmental function. Another way to collect fees. A structure could meet or exceed building codes without ever having been permitted. We are appraisers. Usually the assignment is to determine what the market would pay for a property or for features of a property. Permitted or not, check the boxes and fill in the blanks that describe the property. AND, include all the comments you need to avoid a misleading report.

 

[glenn walker]

If your calling it a ADU -Permitted or not it's still an-ADU- Each City in California is different as to permitted use. But in general CA will aloow most unpermitted to be used but not for rental purposes . So the reviewer is correct check the ADU box- If its a shed or a storage area then don't call it an-ADU-

 

[Tom4value]

if it exists, then it exists. check the adu box.

Zoning for an ADU
If it is determined that the property contains an ADU that is not allowed under zoning (where an ADU is not allowed under any circumstance), the property is eligible under the following additional conditions:
• The lender confirms that the existence will not jeopardize any future property insurance claim that might need to be filed for the property.
• The illegal use conforms to the subject neighborhood and to the market.
• The property is appraised based upon its current use.
• The appraisal report states that the improvements represent a use that does not comply with zoning (“illegal” use).
• The appraisal report demonstrates that the improvements are typical for the market through an analysis of at least two comparable sales with the same non-compliant zoning use. Aged settled sale(s) with the same non-compliant zoning use are acceptable if recent sales are not available. At a minimum, the appraisal report must include a total of three settled sales.

I saw this too but consider it bogus in “real life” situations.

1. Unless the community’s zoning enforcement officer is Sgt. Schultz (I see nothing...NOTHING!), the illegal ADU will NOT ”conform to the neighborhood and to the market”.

2. Good luck getting insurance on a property with an illegal ADU, especially if there are safety violations.

3. Because of #1, you will not find one, let alone two comps that were listed for sale, sold and were funded with an illegal ADU. Therefore, there is no way you can say they are “typical of the market”.

 

[Cob]

If a SFR has an ADU but not permitted, would you still check the box indicating ADU?
I wouldn't but reviewer said I should. What is Fannie's final word?

Why wouldn't you check the box? Since they didn't get a permit does that mean it doesn't exist???

 

[Tim The Enchanter]

I have seen sheds a time or 2 used as a tiny dwelling in the back yard. The one that comes to mind had no bathroom, but there was one attached to the house with outside access only, a few steps away. This house also has an enclosed patio type room also used as a bedroom and iirc not accessed from inside the house. Don't know if these were rented or occupied by the black sheep of the family or what. I wonder if they made that loan.