Consulting assignment questions

[Michael Tipton]

I would be inclined to refer the client to a California real estate attorney for advise/assistance in determining their legal options. Guidance from their attorney would help determine the type of assignment required and aid in identifying SOW issues.

 

[CANative]

I just thought of something. I no longer even know which lot is the subject of what assignment.

Keep track of this: Two affected lots.
Lot 1. The lot with the older house which is owned by the client through foreclosure and which has the house that encroaches on the adjacent property which is not owned by the client. Although this is the property the client owns and need

Lot 2. The lot next to the clients property which has been encroached upon and which is not owned by the client. This was the subject of my original assignment. The client did not know that there was a building on this lot.

I guess the subject of this new assignment (or whatever we call it) is both properties.

 

[Mike Boyd]

Have you checked with the county to see if a lot line adjusted was completed---on either lot?

Then, call your client and ask them to put in writing exactly what they want you to do and to fax it to you. Then you can give them a fee estimate. Is this in Clear Lake Riviera?

 

[VolcanoLvr]

Seems to me that your client just needs to figure out how to solve a problem that existed prior to them becoming the 'owner' via foreclosure...that problem being a boundary line encroachment of the current older improvement.

A full title search is necessary to determine when the properties were subdivided. Then research of the building permits for the older improvement (if available). Then research into who actually built the improvement that caused the encroachment...that entity may be liable for the problem.

The simplest way to solve this is to get a boundary line adjustment approved by the jurisdiction. A licensed surveyor will be necessary to determine exactly where all components are located.

The value to purchase the encroached upon property would then be an appraisal assignment.

I agree with the other poster that a real estate attorney should be involved ASAP, probably prior to any appraisal assignment.

Your consulting assignment would be to do as recommended above, without any mention of value. Consider doing that pro bono at this time, as a favor to your client.

 

[hastalavista]

If you provide an opinion of value only, then it is an appraisal.
If you provide an opinion of value with a recommendation of action to take, then it is a consulting assignment.

If your client asks you, "What would this property be worth if I assume X" that is an appraisal.
If the client asks you, "Can you tell me what I should do based on the value you come up with?" that is a consulting assignment.

 

[larryhaskell]

Based on the info you have provided so far I wouldn't necessarily turn down the assignment but I would make sure I was well paid for your time. This should be a great learning experience.

Do you have some idea how or why the lender was able to make a loan on this property? seems to me that there should have been some cloud on the title.

Do you have any idea why the owner of the lot that was encroached upon allowed a portion of the improvements to be built on his lot. He may have allowed them to proceed knowing that at some point he could hold the owner hostage just to resolve the issue.

I agree with others that you need clear intructions from your client so you can develop your SOW. I wouldn't let your client rush you on this assignment with an unreasonable time frame. This assignment sounds complex based on your description and you deserve all of the time you need.

It ssems to me that there are two possible solutions for the two property owners. Your client may have to remove that portion of the improvements that cross the property line plus some additional footage on their own lot to meet setback requirements. This doesn't seem like a good option to me.

The second option would be for your client to attempt to pay for a lot line adjustment and pay for the portion of the adjoining lot to meet local codes. I doubt that your client would get a sweetheart deal on this but it seems better than any alternative I can imagine.

Who do you believe is responsible for allowing this type of mistake to happen? Seems like the original builder of the improvements could be liable for not placing the improvements where this problem would never have become an issue.

I don't think you can determine if this is an appraisal, consulting assignment or both until you have a clear indicationj of what your client needs and you have completed your SOW.

Keep us informed, this sounds very interesting.

Sound like your trying to compete with Ray Miller with this assignment.

 

[Mike Boyd]

By the way....it would seem that the title company....the one that insured the title when the encroaching house and lot was built, would have some, if not all, the liability.
Also, if there was a construction loan on the adjacent lot where a house is under construction, THEY may have some liability.....not to YOUR client but to the adjacent lot owner. If this is where I think it is, the encroachment is not a new discovery. I am pretty certain there was a lot line adjustment completed.

 

[Mike Garrett RAA]

Simply put....

An opinion of value is an appraisal. A consulting assignment is when the end result is not an appraisal but rather solving a problem for a client. An appraisal could be part of a consulting assignment but not the end result.

 

[Marcia Langley]

Greg,

I'd step it out for them.

Step one would be to tell them what exists. That is neither an appraisal nor a consulting assignment but of course it falls under appraisal practice.

Once they know "what is" then they will have the info they need to decide the parameters of an appraisal assignment.

It seems your sticky point is in attempting to convey your reasons for believing the owner knew about the encroachment without getting into reporting an opinion of value.

You might be able to report to the client that a retro appraisal of the property could produce evidence of the owner's prior knowledge. Then, if they want that appraisal, they could order it.

I'm with you that if you discuss those retro values in relation to the subject, you have done an appraisal. At any rate, I don't think you will have recommended any course of action (consulting), just provided information and possibly an opinion of value.

 

[PropertyEconomics]

No one can prove what an owner knew and when they knew it. This is the failing part of the assignment. Think about it .. you can provide evidence of when things were documented with the documents themselves, but you cannot show the owner ever read them or knew anything.
Dont get caught up in the "owner knew" because its all speculation. Merely point a time line of what happened and document it.
Provide value indications of with and without the encroachment and offer your suggestions as to the means of curing the issue. Simply consult with your client about their options but DONT say when anyone knew anything. You simply dont know.