Illegal Addition Can Be Included In GLA For A FHA Report?

[ipari21]

Hello, everyone.
I recently performed a FHA report for a duplex that included non-permitted space/beds/baths to the main house, then I excluded the non-permitted configuration after reviewed all City documents. But the space
was not permitted.
Now I have an condition below.

---Below---
The client has come back to us regarding the rear unit and the way it was reported in your appraisal. Based on FHA requirements in 4000.1, the area should be considered in one of two ways:

1) The area should be added to the GLA if it meets the area requirements below.
2) The area should be added as a line item within the sales grid and market reaction should be addressed/adjusted.

Additions and Conversions: The appraiser must include additions and conversions in subject GLA
provided that the added/converted space is accessible from the interior of the main dwelling in a
functional manner, has a sufficient/permanent heat source, and was built with similar design, appeal,
and quality of construction of the main dwelling. In this case, comparable properties without
added/converted areas must be analyzed for differences in functional utility. However, if any of the
criteria are not met, the area should be addressed as a separate line item (excluded from GLA), and thappraiser must comment on the marketability of the space.
---End Below---

My question is the addition can be included in GLA regardless of the permission?
All work appears to be done in workman like manner. However, the non-permitted structure involved City code/zoning violation.

Any advise would be helpful. Please advise.
Thank you.

 

[Artemis Fowl]

Is the space adding value or subtracting value in the eyes of a typical buyer? Forget permits for a second.
Address this question appropriately. Line item and some narrative sounds appropriate for most cases. This way you are fulfilling your responsibility to be both diligent and value the as-is improvements (assuming that's your assignment).

Most times I've seen un-permitted work it is pretty good and wouldn't have known otherwise unless looking for permits. Most times an inspection and fee to the municipality takes care of the problem. Depends on the municipality how severe remediation (if any) will be over and above that. The very few times I've seen un-permitted work be a problem...it was very obvious there was an issue and would be noticeable to anyone observing the space. Please note use of the word MOST. IMO any electrical or gas work done without permits is a potential safety issue. Your job is to inform the client of these issues...no more.

Insurability is a different issue and not yours. Inform the client. Give an opinion of market value. They decide what to do from there.

 

[Mike Kennedy]

Which City??

 

[Restrain]

I will tell you what my research found. It depends on the city. Some cities will allow it with an inspection and permit fee. Others will require the addition to be removed completely. Call the city and ask them the policy for unpermitted additions without disclosing the address. That should give you a guideline. If allowable, allow the addition with a subject to permitting regs. If not allowable and required to be removed, go back to the client.

 

[ipari21]

Which City??

It's located City of Los Angeles.
Please advise. Thank you.

 

[ipari21]

I will tell you what my research found. It depends on the city. Some cities will allow it with an inspection and permit fee. Others will require the addition to be removed completely. Call the city and ask them the policy for unpermitted additions without disclosing the address. That should give you a guideline. If allowable, allow the addition with a subject to permitting regs. If not allowable and required to be removed, go back to the client.

Thanks for your advice.

 

[ipari21]

Is the space adding value or subtracting value in the eyes of a typical buyer? Forget permits for a second.
Address this question appropriately. Line item and some narrative sounds appropriate for most cases. This way you are fulfilling your responsibility to be both diligent and value the as-is improvements (assuming that's your assignment).

Most times I've seen un-permitted work it is pretty good and wouldn't have known otherwise unless looking for permits. Most times an inspection and fee to the municipality takes care of the problem. Depends on the municipality how severe remediation (if any) will be over and above that. The very few times I've seen un-permitted work be a problem...it was very obvious there was an issue and would be noticeable to anyone observing the space. Please note use of the word MOST. IMO any electrical or gas work done without permits is a potential safety issue. Your job is to inform the client of these issues...no more.

Insurability is a different issue and not yours. Inform the client. Give an opinion of market value. They decide what to do from there.

Thanks for your kindly advice.

 

[CANative]

Which City??

Why don't you stay out of California? You still have problems understanding the difference between permitted (permissible) and permitted (building permit.)

 

[CANative]

It's located City of Los Angeles.
Please advise. Thank you.

The City of L.A. is tough about permits and things.

Why you say "permitted" are you talking about the legal right to have something versus no legal right (a McDonalds Restaurant in the back yard) or the right to have something but you just need a building permit and they didn't get one?

 

[Cob]

Here is what me "What if?" has always been in this situation, So you count this illegal addition that did not have permits to be completed, what if a fire happens in this area and the house burns down to the ground, this illegal addition had no electric permit, you "may" be held liable or questioned about it at a later date.