Deed Restrictions, Covenants, Easements

[Bill Abraham]

:question: I am appraising a residential property that is new construction. The specs indicate "a gravel driveway to be provided." The appraisal is subject to completion as per the specs.

On one of the three pages of deed restrictions, covenants, and easements it states "driveways shall be finished with asphalt, brick, or concrete."

The subject market does not discriminate between compact dirt drives and ones that are paved. Should I simply note the discrepancy in the report? My concern is that somewhere down the line the homeowner could possibly be legally forced to pave the driveway and then come looking for the appraiser to foot the bill.

Appreciate your thoughts

Thanks

 

[Jeff Horton]

Well it were me I would go by the specs and mention that the restritions call for paved drive. Might even mention there is not difference in value either way.

Our job is to appraise what is there, or in this case proposed. It's up to his neighbors or the bulding commitie or whoever to enforce the covenants.

 

[George Hatch]

An enforceable deed restriction is indeed a legal encumbrance on the property. Unless it can be removed, I would say that the specs on the construction are a violation of that restriction and cannot legally be used. Whether anyone would notice it or not in the future is another matter, but the appraiser isn't the one who gets to make that decision. All we do is observe and report. I'd make note of it and then make the appraisal subject to either removal of the deed restriction or ammendment to the specs. Give them the choice, as if there's actually a viable alternative to changing to a paved driveway.

By the way, that's a good catch on your part. Most appraisers would have never noticed it.


George Hatch

 

[walt kirk]

Wow! you actually read three pages of deed restrictions!

 

[jtrotta]

George

your correct "observe and report" - and if no one else is "Reading Deeds/Restrictions" - just remember it is; Fundamental - and ya don't want to be in court with someone who has the Deed and has read it, your at a big disadvantage - ya just lost yer case :mrgreen:

h34r:

 

[Willie]

Disclose it. Listen to Hatch.

 

[Mike Garrett RAA]

Here we go again being the covenant police! Ain't your job. If you want to mention the fact that you discovered this in reading the deed restrictions go ahead but don't assume you can tell the builder what to do. I would say..."the plans call for a gravel driveway which may or may not comply with current covenants or deed restrictions". Ask yourself, "does this affect the value?". If you feel it does then make an adjustment. Personally, I think you are opening up a can of worms you might have to eat.

 

[Tater Salad]

Now I'm confused.

I'm not saying that I'm right, but isn't this like an addition without a permit in the sense that maybe the prospective buyer would never know there's a problem and pay full price, but if they were to know that they could possibly have to tear it down (or in this case fork over a lot of money to pave it) that it would affect the value?

I know that if there was a possibility that I would have to pave the darn thing, I wouldn't pay the same as I would for one that is already paved.

Wouldn't you discount it for that?

Of course, then you'd have to find sales without driveways...

This job is giving me a headache

 

[Bob Alexander]

Bill,
What are you going to do with your Cost Approach? Are you going to mention the discrepency between the plans and the CC&Rs. When you answer that question, you will know what to do.
Bob - San Jose

 

[Mountain Man]

I agree with Mike, I don't Police the neighborhood for the board. Report the facts, and adjust for market differences.... if any.

I've seen violations of CCR's that were granted permission by the board. I've seen some that were not...... it's all in who you know.