Deed Restrictions, Covenants, Easements

[George Hatch]

Clarification:

I think there's a difference between noting an item of fact (the deed restriction) that may or may not have an impact on the valuation and getting involved with issues that exceed the scope of the appraisal, like editorializing on zoning laws or CC&Rs. We have no way to account for how variances from applicable rules and regs occur and can make no assumptions that these variances will be granted or denied to the stubject property.

Regardless of what the valuation itself turns out like, if the appraiser fails to disclose an item of fact that someone may eventually interpret as being of affect on value, they have introduced some plausible deniability into the deal. That someone could, under worst case scenarios, come back to the appraiser later and say something like:

"If I had known that there was a deed restriction that legally prevented me from graveling this driveway, I would have never done it this way, and subsequently would never have been sued by the HOA or local planning board for the violation. Now you owe me for the cost of fixing the problem, the fines and the legal fees I spent to cover your omission".

Regardless if that's what they really would have done, the appraiser has no defense because they did omit an item of fact to which they had access. Most likely, their E&O provider is going to settle for this omission and give this someone money to which they would not otherwise have been entitled.

I still believe in observe and report. Make a note of the item and give them at least one option, and preferably more, to clear the condition. Then they can make their own decisions accordingly. Anything less than that and we're effectively taking responsibility for items that are beyond our control. And we don't want to do that.


George Hatch

 

[Bill Abraham]

I've been waiting to hear how this issue was going to be resolved before responding-

I contacted the lender and informed them of the issue and offered them the option the appraisal being subject to the driveway being completed as per the covenants/restrictions or removal of the restriction. They in turn contacted the realtor involved (who hadn't read the restrictions) who then contacted the builder and his atty. Apparently a waiver will be issued for the subject to have a gravel driveway.


Appreciate all the responses.


Bill Abraham

 

[jeff samolinski]

First of all good catch. I wonder if the lender appreciated your competence in finding that item or were you looked at as a pain in the *** for complicating their deal? We are rarely appreciated for these things but it would nice if I heard for once that a lender was appreciative.

 

[Bill Abraham]

I wouldn't say appreciative is the right word. But hey, at least I didn't get any negative feedback for placing a speedbump in the middle of the loan processing highway. Have to say I feel more appreciation when I turn an order in a week early...

 

[Richard Carlsen]

I'd ask for direction from the lender. If that gets you nowhere, you might think of doing something like this.


"Plans and specifications provided indicate that the subject is being constructed with a gravel drive installed. Known deed restrictions indicate that a brick, concrete or blacktop drive is required. This would appear to be a violation of the existing deed restrictions. This value opinion contained in this report is based on compliance with all building codes, zoning ordnances and all deed restrictions in force. This report makes the assumption that subject's construction will be in compliance with the known deed restrictions and, in the absence of specific instructions, altered plans or specifications from the client, this report will assume that the drive will be constructed IAW the deed restrictions. The Subject will be assumed to have a concrete drive."

or this

"This report makes the extraordinary assumption that the proposed gravel drive which appears to be contrary to the existing deed restrictions will not be contested or subject of any action to correct. The value opinion contained in the report will consider the subject to have a gravel drive. If this extraordinary assumption is not correct, the value contained herein is no longer considered valid."