Converted Garage

[debbiejohnson]

Why not? Is it legal or not?

Looks like an issue to me.

That has not been determined yet- building department was not aware of the conversion.

 

[hastalavista]

I need some help regarding building permits- SFR converted from Commercial Building, owners added two bathrooms, kitchen, bedroom (no walls) that was not permitted. City changed zoning from Commercial to SFR approx. 1 year ago, the owners have moved out and it is under contract to the current tenants. Do I need to pull permits if I am appraising "as is"

In many of my jurisdictions, the following exists:
Zoning allows for commercial and residential use.
Original improvement was used as a commercial (or, non-residential, such as a church) use.
Owners want to convert the use to a residence.
Residential is an allowable use: are there issues?
Yes. Again, in many of my jurisdictions, there are two factors at play which is easy for appraisers to lose sight of: A conversion of use and compliance with what is allowed. Most focus on compliance with what is allowed, but in many cases, a conversion of the use triggers certain and specific development standards be met.
The prior improvement may not meet the parking, set-back or other requirements. It may not meet the yard requirements. It may need a permit to allow for the conversion as well as permits for any alterations or modifications.

My advice is to visit the jurisdiction and speak to a planner and building inspector to determine if there are any special requirements for the conversion.

Good luck!

 

[Terrel L. Shields]

That has not been determined yet- building department was not aware of the conversion.

Then almost certainly there was a permit violation.

 

[hastalavista]

Another mistake I see sometimes in cases of a change of use:

Since the improvement predates the zoning change, is it a grandfathered use?
Many times, the answer is "yes" but, again, the use that is grandfathered is the commercial use. To convert to a residential use, that could require specific and special steps.
So, the lesson here (and it is obvious you are not making this assumption): Just because it was pre-existing to the zoning change, do not assume that conversion to SFR is grandfathered.

Case in point: I have been involved with an assignment of a property that is improved as an industrial warehouse with yard. Zoning has changed to high-density residential. My property lost its right as a grandfathered use since it was not used for 12-months. Industrial is no longer grandfathered and conversion to residential is a highly complex process(feasible, but requires a number of steps).

 

[Mike Garrett RAA]

My opinion, not that anyone will care, is...The highest and best use is still residential. The fact that the conversion was done without a permit does not change the highest and best use; however, it could affect the marketability of the property.

I've run into this on numerous occasions here in the Colo Spgs metro area. It was quite common in older, smaller residences of, say, 900 to 1,000 sf tract built houses. Both FHA and VA have said the property is acceptable and the appraiser may consider the converted area as GLA provided it has interior access and is heated. There is no necessity of requiring the space to be returned to it's original status as a garage. In nearly all cases, in my opinion, the additional GLA is off-set by the loss of a functioning garage.

If I find one of these conversions that has been recently done I will check to see if there was a permit. If it was done years ago I do not as the building department records don't go back that far. I'm not the permit police. In most cases, the market accepts these conversions and that's what I am concerned with.

Please note this applies to MY MARKET and could be very different else where.

 

[hastalavista]

My opinion, not that anyone will care, is...The highest and best use is still residential. The fact that the conversion was done without a permit does not change the highest and best use; however, it could affect the marketability of the property.

Mike- I believe you are commenting on the original OP's situation, and if so, I definitely agree with you.

I'm jumping in (and this will be the last post on this issue I make, because I've said all there is for me to say) to voice my opinion that Poster DebbieJohnson's (the commercial conversion) is not the same as the garage conversion of the OP's scenario which you are addressing.

Specific to the Commercial Conversion question in post #79:
There are four things that can happen to an improved property in order for it to be consistent with the H&BU, as-improved (and, as-improved, it is residential improvement that was formerly a commercial improvement).
1. Renovate (update; effectively cure physical deterioration
2. Remodel: Change the use or utility. I bolded this one because this appears to be the issue with the DebbieJohnson's situation. Changing the use would mean changing the current use from commercial to residential (more on this to follow). Changing the utility would also be a remodel (we many times call a renovation a remodel; a remodel would be expanding a galley kitchen into a modern kitchen layout because a galley kitchen suffers from functional obsolescence; we are effectively changing/improving the utility; this always has to be financially feasible otherwise the obsolescence is incurable).
3. Demolish the improvements: Improvements have no remaining economic life left and contribute no value to the site.
4. Retain as-is: No need to change anything at this point; continue normal maintenance which includes the replacement of short-lived items when necessary.

Poster DebbieJohnson's issue is that a commercial building has been converted to a residential building and apparently without permits.
What is necessary for her to proceed is to determine what kind of permitting is necessary for such a conversion to be compliant with the zoning? What is necessary is for the appraiser to obtain the information from the appropriate jurisdiction that outlines the process/procedure for the remodel (change in use) to occur. In her jurisdiction, there may be no special requirements. In my market, there are a lot of special requirements.

What if the former commercial use was a dry cleaner (on-site) operation? Such uses are notorious groundwater contaminators. Likewise, auto-shops (especially with yard space). The list goes on.
Converting from one of these uses to a residential use may have required a Phase I/II environmental report or special environmental permit-application. Residential (again, in my market) has the highest standard for environmental review when one wants to change a former use to residential use.
If contamination is found to exist, remediation may be financially non-feasible. The H&BU of the site may have been to continue as-is pre-conversion/remodel (continue as a commercial use).

Converting a per-existing commercial-use improvement many times does not mean it can be modified/altered as-if it were a per-existing residential-use improvement. Once the use has been established as a legal use and an improvement is built to comply with that legal use, then subsequent modifications to the improvements are typically easy to make.
However, changing a use is similar to building a new improvement: what was allowable for the commercial use may not be allowable for the residential use and to change that use, the remodeled improvement may need to come into compliance with those current development standards. In such a case, the cost to remodel the existing building and change its use may not be financially feasible. Unknown to any of us is if the non-permitted remodeling/conversion was done to current code-requirements and development standards. If not, then the cost of retrofitting the existing improvements may be non-feasible (it is incurable). What's the H&BU then, as-improved?

We appraisers tent to think of improvements defining the use. Many times, this is the case. A converted commercial building that now resembles a residential building has definitely changed the building-type. But that change does not necessary nor automatically change what is allowable to be used at that site.
Highest and best use is about "use".
Highest and best use as-improved is about how consistent the existing "improvements" are with the use that the property should be put to. The improvements are measured against the use, not the other way around. And, while the zoning may allow for dual use or may have been re-zoned to allow only residential use (going forward), it is highly likely that the pre-existing commercial use was grandfathered as a pre-existing commercial use. Changing that grandfathered use to a residential use is not necessarily the same as taking an older, grandfathered residential improvement and renovating it.
In many of my jurisdictions, in order for the new use to be legally permissible (Where's Mike Kennedy?), the property must obtain a change-of-use permit. Without it, the use allowed for that site is not residential; the use allowed for that site is commercial.

Again, good luck!

 

[CANative]

http://www.mentalfloss.com/article/76892/cube-has-everything-you-need-turn-warehouse-apartment