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Horizontal Property Regime With Private Elements

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Jack Crabb

Jack Crabb

Freshman Member
Joined
May 10, 2016
Professional Status
Certified Residential Appraiser
State
Tennessee
A client has asked me to appraise a townhome located within a Horizontal Property Regime. I’ve researched the HPR & determined, for the most part, how to approach the appraisal. The one uncertainty I’ve encountered thus far involves the site section of the 1004 – URAR.

This is from the Declaration of Covenants, Conditions, & Restrictions:
"Section 4.2. Unit Boundaries. The boundaries of each Unit include exterior perimeter walls, the middle of interior demising walls, the land located underneath building footprint of the Unit, together with the heating, hot water, and air conditioning apparatus exclusively serving the Unit whether or not located within the boundaries of the Unit."

I’m curious how other appraisers might approach the site dimensions & site area sections of the 1004. Leave them blank & add commentary, maybe the text copied above? Use the unit footprint? Some other way?

It’s clearly stated in the Declaration of Covenants, Conditions, & Restrictions that this is not a condo, by the way.

I plan to continue my research whether or not I choose to accept the assignment, & I’d like to know how others approach the HPR.

Thanks!
 
Here, a similar description typically includes the same components as yours, plus (variably) land under the garage, sidewalks, driveway, etc. In some cases, the Assessor estimates and reports those areas. If all comps and the subject have a site area reported by the Assessor, I use those. If not, I calculate the land area for the subject (I try to measure all the components when onsite) and compute a ratio of land area to GLA. In your case, that appears to be only slightly over 1, but it varies. I apply that ratio to all the comps, report how it was derived in the addendum, and am sure to state that it is meaningless. This helps alleviate questions when the Assessor is inconsistent in either reporting the information, or in their derivation of their estimate. Typical comment I use is below.

"Townhouse and patio home units typically include the land beneath the dwelling, garage, sidewalks, and decks, and driveways, even though that land has not been legally subdivided from the land in the development. There are no consistent sources for the size of the site included with each unit. Where available, we have used the size reported in the MLS or in Assessor records. Where those sources don't exist or have any information, we have estimated the site size as 1.86 times the square footage of GLA. This is meaningless information and there is no measurable impact on value attributable to any differences. Any impact on differences in size are related to the value of GLA and garage areas."
 
TerryRohrer said:
Here, a similar description typically includes the same components as yours, plus (variably) land under the garage, sidewalks, driveway, etc. In some cases, the Assessor estimates and reports those areas. If all comps and the subject have a site area reported by the Assessor, I use those. If not, I calculate the land area for the subject (I try to measure all the components when onsite) and compute a ratio of land area to GLA. In your case, that appears to be only slightly over 1, but it varies. I apply that ratio to all the comps, report how it was derived in the addendum, and am sure to state that it is meaningless. This helps alleviate questions when the Assessor is inconsistent in either reporting the information, or in their derivation of their estimate. Typical comment I use is below.

"Townhouse and patio home units typically include the land beneath the dwelling, garage, sidewalks, and decks, and driveways, even though that land has not been legally subdivided from the land in the development. There are no consistent sources for the size of the site included with each unit. Where available, we have used the size reported in the MLS or in Assessor records. Where those sources don't exist or have any information, we have estimated the site size as 1.86 times the square footage of GLA. This is meaningless information and there is no measurable impact on value attributable to any differences. Any impact on differences in size are related to the value of GLA and garage areas."
Click to expand...

Thanks, Terry - that is very helpful! And, I'm curious now if my software will flag the word "meaningless", lol...
 
Jack Crabb said:
Thanks, Terry - that is very helpful! And, I'm curious now if my software will flag the word "meaningless", lol...
Click to expand...
When I get flagged for something like that, I simply replace "meaningless" with "xxxxxxxxxx." That allows them to supply whatever term they dream of. But they also have the redacted version should they desire my opinion on the matter!
 
Jack Crabb said:
A client has asked me to appraise a townhome located within a Horizontal Property Regime. I’ve researched the HPR & determined, for the most part, how to approach the appraisal. The one uncertainty I’ve encountered thus far involves the site section of the 1004 – URAR.

This is from the Declaration of Covenants, Conditions, & Restrictions:
"Section 4.2. Unit Boundaries. The boundaries of each Unit include exterior perimeter walls, the middle of interior demising walls, the land located underneath building footprint of the Unit, together with the heating, hot water, and air conditioning apparatus exclusively serving the Unit whether or not located within the boundaries of the Unit."

I’m curious how other appraisers might approach the site dimensions & site area sections of the 1004. Leave them blank & add commentary, maybe the text copied above? Use the unit footprint? Some other way?

It’s clearly stated in the Declaration of Covenants, Conditions, & Restrictions that this is not a condo, by the way.

I plan to continue my research whether or not I choose to accept the assignment, & I’d like to know how others approach the HPR.

Thanks!
Click to expand...
When I used to do those in the Middle TN market, for dimensions I would enter, "Follows building footprint - see attached"
 
Check to see if there is a plat map filed with the county recorders office. If there is, use those dimensions. I know in Texas, the developer will have a plat map for townhomes, with individual land ownership, and those are the dimensions I use. If that isn't available, use "Rely on Survey", and see if they have an issue with that, most don't.
 
How do you handle the cost approach for the HPR townhome? Opinion of site value?
 
it's a pud, the house footprint is basically the site. use the exterior house measurement for the lot dimensions. not sure how they measured anything else not inside the house. forget doing the cost approach. lucky guess on site because what ground do they share in the project. don't get confused by the legal lingo used to describe it.
 
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