23Degrees
Senior Member
- Joined
- Jan 31, 2004
- Professional Status
- Certified Residential Appraiser
- State
- California
Gama - Title company taking the hit for the appraiser?? - Sounds too good to be true. Might be she meant insurance company, as in the appraiser's E and O - do any title companies have E and O insurance divisions? - I've spent hours trying different search terms on the California Courts website and found numerous references to appraisers, often as witnesses, a few cases basically showing that hiding behind intended user is probably not going to happen in this state, and a few other interesting things but nothing extensive on this issue. Perhaps this stuff is getting cutoff at the claims stage by settlement. I'm going to keep trying to find out what the deal is.
Mejappz - sounds like you are handling it in a compliant way as Randolph indicated however the potential fallout from a liability standpoint is what I'm trying to figure out. And, just to throw another wrinkle into this way of handling it, how about that Fannie selling guide - it indicates that in order to define the "illegal unit" or "illegal use", as it refers to it in the next section, as typical for the market the appraiser needs to provide an analysis of at least three other comparables with the same "illegal" use. So technically, if you can't find three other "comparables" with an unpermitted garage conversion (or unpermitted granny unit etc.), then it does not meet the standard of typical for the market and is not eligible for Fannie funding. It appears as though this portion of the guideline is being interpreted by some to mean the appraiser needs to provide three gridded comparables. I actually fell into this interpretation in another thread myself but as I read it again it states "analysis of" and does not specifically indicate that they must be gridded. In other words dated data seems suitable for the purpose. So again, if three comparable properties either suitable for gridding or for analysis are not found then by Fannie's definition the subject property cannot be considered typical and is not eligible for funding. If you adhere to the idea that by requesting a report to be completed on a Fannie form, the user has by default indicated that the intended use is to fund and unload on Fannie, then the SOW rule would require you to notify the client (or by proxy the AMC) and discuss options, ie: make it a "subject to" report, cease work etc. --- At least that is how I'm reading this scenario.
As for "illegal use" vs. "unpermitted use", thank you for bringing up that point. The selling guide seems to use the terms "illegal unit" and "illegal use" interchangeably in the section that deals with this. This came up in the no permit garage thread in the General Forum and then died. I think one respected member indicated that "unpermitted" by itself would constitute an illegal use, and another seemed to disagree in that if the conversion is allowed by zoning it is a legal use despite the fact that the specific conversion is not permitted. At least that was my take on the posts involved. There was no stampede towards resolving this amongst ourselves. If you have time go and read the thread, it did not get very long, and tell me:
Is Uncle Jethro's work an illegal use period or is it a legal use that does not have the proper building permits? - If you were completing an "as is" appraisal would you check "illegal" in the zoning compliance section or "legal"?
http://appraisersforum.com/showthread.php?t=164078
As for when the grandfathered claim is presented - until proven its just that, a claim. Maybe the unit is grandfathered for the zoning or it could be a moot point with Calfornia's second dwelling law but shouldn't there at least be a building permit somewhere?
Mejappz - sounds like you are handling it in a compliant way as Randolph indicated however the potential fallout from a liability standpoint is what I'm trying to figure out. And, just to throw another wrinkle into this way of handling it, how about that Fannie selling guide - it indicates that in order to define the "illegal unit" or "illegal use", as it refers to it in the next section, as typical for the market the appraiser needs to provide an analysis of at least three other comparables with the same "illegal" use. So technically, if you can't find three other "comparables" with an unpermitted garage conversion (or unpermitted granny unit etc.), then it does not meet the standard of typical for the market and is not eligible for Fannie funding. It appears as though this portion of the guideline is being interpreted by some to mean the appraiser needs to provide three gridded comparables. I actually fell into this interpretation in another thread myself but as I read it again it states "analysis of" and does not specifically indicate that they must be gridded. In other words dated data seems suitable for the purpose. So again, if three comparable properties either suitable for gridding or for analysis are not found then by Fannie's definition the subject property cannot be considered typical and is not eligible for funding. If you adhere to the idea that by requesting a report to be completed on a Fannie form, the user has by default indicated that the intended use is to fund and unload on Fannie, then the SOW rule would require you to notify the client (or by proxy the AMC) and discuss options, ie: make it a "subject to" report, cease work etc. --- At least that is how I'm reading this scenario.
As for "illegal use" vs. "unpermitted use", thank you for bringing up that point. The selling guide seems to use the terms "illegal unit" and "illegal use" interchangeably in the section that deals with this. This came up in the no permit garage thread in the General Forum and then died. I think one respected member indicated that "unpermitted" by itself would constitute an illegal use, and another seemed to disagree in that if the conversion is allowed by zoning it is a legal use despite the fact that the specific conversion is not permitted. At least that was my take on the posts involved. There was no stampede towards resolving this amongst ourselves. If you have time go and read the thread, it did not get very long, and tell me:
Is Uncle Jethro's work an illegal use period or is it a legal use that does not have the proper building permits? - If you were completing an "as is" appraisal would you check "illegal" in the zoning compliance section or "legal"?
http://appraisersforum.com/showthread.php?t=164078
As for when the grandfathered claim is presented - until proven its just that, a claim. Maybe the unit is grandfathered for the zoning or it could be a moot point with Calfornia's second dwelling law but shouldn't there at least be a building permit somewhere?
