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Commercial Use/Residential Zoning

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Shawn Bounds

Thread Starter
Freshman Member
Joined
Jan 3, 2006
Professional Status
Certified Residential Appraiser
State
Maryland
I have received a request to do an appraisal on a property that is zoned single family residential but the owner of the property has been granted a special exception permit allowing him to operate a business and lease space to other businesses. If he transfers the property the special exception permit is void and the property would have to transfer back to a single family residence. So should the property be appraised as a single family with cost to cure or as a commercial property? Thanks for the help!
 

Abester

Senior Member
Joined
Jun 12, 2003
Professional Status
Certified General Appraiser
State
Florida
What would a typical buyer be buying? Answer that, and you have your solution...
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
I have received a request to do an appraisal on a property that is zoned single family residential but the owner of the property has been granted a special exception permit allowing him to operate a business and lease space to other businesses. If he transfers the property the special exception permit is void and the property would have to transfer back to a single family residence. So should the property be appraised as a single family with cost to cure or as a commercial property? Thanks for the help!
What is the highest and best use? Appraise it to that.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
If he transfers the property the special exception permit is void and the property would have to transfer back to a single family residence. So should the property be appraised as a single family with cost to cure or as a commercial property? Thanks for the help!

You've answered your own question.

The appraised value is what the house would sell for if it were closing on the effective date. So, if the house were closing on the effective date, i.e., it is transferring, than the use reverts to residential.

Make sure you disclose that the reportis based on the hypothetical condition that any new owner who tries to obtain the special use permit will be denied. And before you make the extraordinary assumption, make sure it is reasonable by calling the town to find out if it is hard to get or not.
 

Scott R Marshall

Senior Member
Joined
Dec 14, 2006
Professional Status
Certified Residential Appraiser
State
New Mexico
If the special use permit is for the homeowner of the property and not the property itself, based on what you said appraise it as a single family residence. Depending on what "modifications" the current owner has made to the property, if any, in order to make the subject more "commercial", your cost to cure may become an issue but other than that it should not be a problem. I recently appraised a B & B with a similar situation, permit went with the owner not the house. If at all possible, get a copy of that permit for your work file or make some phone calls to the local planning and zoning department to make sure that the special use doesn't transfer to a new owner. And don't forget to report the current use in the appraisal report!!!
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
If the special use permit is for the homeowner of the property and not the property itself, based on what you said appraise it as a single family residence. Depending on what "modifications" the current owner has made to the property, if any, in order to make the subject more "commercial", your cost to cure may become an issue but other than that it should not be a problem. I recently appraised a B & B with a similar situation, permit went with the owner not the house. If at all possible, get a copy of that permit for your work file or make some phone calls to the local planning and zoning department to make sure that the special use doesn't transfer to a new owner. And don't forget to report the current use in the appraisal report!!!


Mr Marshall .. I think you are right here. More often than not those variances and licenses are issued to an owner and thus would be ? Personal Property ? ... certainly not part of the realty.
Good post.
 

Shawn Bounds

Thread Starter
Freshman Member
Joined
Jan 3, 2006
Professional Status
Certified Residential Appraiser
State
Maryland
Thank you all for your help. I do appreciate it!
 
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