Hypothetical Condition?

[Surf Cat]

It is common but there is not comps that would indicate towards this as they could not sell I was that first year. Once they sold, if they sold, it would be after the condition or special stipulation expired and would not be relevant at that point

Who makes the stipulation that a rehab from the property owner can't be sold for a year? I've never heard of that...

 

[CPreebz]

That's for all the help. Really puts my mind at ease to get the input!

 

[CPreebz]

Who makes the stipulation that a rehab from the property owner can't be sold for a year? I've never heard of that...

From the county that issues the certificate of occupancy. I have never seen it before on any other CO but per the owner/builder he said it's been in place for years now on the diy builds.

 

[J Grant]

From the county that issues the certificate of occupancy. I have never seen it before on any other CO but per the owner/builder he said it's been in place for years now on the diy builds.

I wonder if it is enforceable.
I would not worry about it - the cert and conditions on the URAR ( below) covered you it - the assumption is already stated in the certs that the title is good and marketable as of the eff date - the eff date is for valuation purposes, and property could have a lien or cloud on the title but we are not hired to render title opinions -disclose it and you have fulfilled your responsibility, imo.

STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS: The appraiser’s certification in this report is
subject to the following assumptions and limiting conditions:
1. The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title
to it, except for information that he or she became aware of during the research involved in performing this appraisal. The
appraiser assumes that the title is good and marketable and will not render any opinions about the title.

 

[Charles West]

Who makes the stipulation that a rehab from the property owner can't be sold for a year? I've never heard of that...

That one raised my eyebrows, too.

 

[KHS445]

The one year restriction preventing the sale of a home built by an owner/occupant probably is in place to prevent unlicensed individuals from building multiple houses. In Michigan an unlicensed homeowner can complete any and all work on their own home, but they are still subject to all building related inspections.

It appears the restriction applies to the homeowner, but (without seeing the statute) I doubt the restriction would apply to a lender that legally foreclosed on the property. Some quick research indicates that a residential foreclosure in the State of Washington has a redemption period of 8 months if the lender is willing to forego any deficiency or 12 months is they want to pursue a a deficiency. The default period, typically at least 60 to 90 days, would precede the redemption period. So even if the restriction applied to the lender chance are good the one year time period would expired prior to the lender obtaining the ability to sell the property.

I would mention the restriction in the report, but would not worry about discounting your estimate of subject’s present value. To me it is a title issue and not an appraisal issue.

 

[Zoe]

I would use HC because the deed restriction is contrary to what can be done as of effective date. The property rights cannot be transferred as of effective date.

If bank took it back in foreclosure, I assume local authorities would let them sell it. I don't know that.

Bank might have to keep it a year and rent it or whatever and then sell it. I don't know.

I guess you could do both HC and EA.

The bank has a lawyer that could tell how to do it for free. Just tell client you need to speak to their legal counsel on this matter.

Your E&O company lawyer could probably tell you for free.

You could also talk with the local authorities and tell them what you are doing and ask what would happen if bank gets the property back and has to sell it before the 1 year runs out.

Notice all my advice just costs you time. It is not free. Time is not free.

Sometimes CYA is worth more than money.

Similar to "luck" is a fantasy. "luck" is not real.

 

[sputnam]

An HC would be appropriate if you are developing market value. It is known that the owner can't sell for one year but, you are pretending that they could.

 

[Zoe]

An HC would be appropriate if you are developing market value. It is known that the owner can't sell for one year but, you are pretending that they could.

Your hitting both avenues on HC and EA if you assume the client could sell it before one year if they can't. I would call my E&O lawyer this morning and ask them first. The other avenues with bank lawyer and local authorities are on the table. Probably before I talked to bank lawyer, I would want the other opinions first from E&O and local authorities.

Then it will all come together on what you need to do.

And look who you have behind you? Your E&O, local authorities and bank (client) lawyer?

 

[Tom D]

Current assignment is a new construction duplex. Upon inspection, the owner/builder provided me with the certificate of occupancy. On the certificate it stated under special stipulations and conditions that the owner/builder can not sell within 1 year of issuing certificate of occupancy. This is common in our market when properties are built by the owner/builder and did all the work themselves. So my main question is would I have to use a hypothetical condition to report a opinion of market value?

Don't they trust the builder/owner to do the job right. Is this a waiting time to see if it don't fall down. There are many appraisals done just to know the value.
I'm confused. Is this a refi now. So it can't be re sold for a year. The lender can take it tomorrow and that's all they care about, It takes a couple of years to foreclose sometimes anyway, not when you can sell it.
It's an underwriting issue, if the lender cares at all.

We have those with the CDC loans where they sell the house for less than it cost to build with a certain time stipulation for a re sale. They don't want to buyer to flip it tomorrow and take the profit, since that difference is a gift from the tax payers.