Lake access property question and value to give.

[Ray Miller]

Have a subject property that I am doing an appraisal on. The subject is in an older lake development. It is a home that is across from the lake with homes in front of it that are on the lake. It has what I would call private lake access down the road south about a ¼ mile. It is a lake front lot that is owned by and association that was formed to buy the lot and give its fourteen members direct access to the lake, across this lot. There is three other public access points to this lake the nearest one being ¼ of a mile north of the subject property.

1. I assume that because there are 14 member lots each members owns 1/14 of the lake lot. Right / Wrong Do I value the lake lot and divide by 14 to get the value then apply that value to the value of the subject property.

2. Because of the association and it owner ship of the the lot does the association own the lake lot and the non-lake lot owners are just a member with little to no value given for being a member of the association.

3. I ask the question at the court house if the lake lot would always transfer with the subject property up on sale of that property. There answer was no, a current owner of the non-lake front lot is not required to sell the membership in the association at the time of sale of the non-lake lot, but could retain the association membership and the 1/14 interest in the lake lot.

How would you deal with this question in the appraisal? What would you do about the contributory value of the lake front lot?


Spelling and grammar police, I grant you the same leeway as I did in my last post. You are getting freebie's where I will not feel ofended if you correct my the spelling and grammer. But remember today only. After that I will wave my septor and turn you not into a frog, but a toad.

 

[Tim Schneider]

I have done similar parcels in Central Wis, and was lucky enough to find 3 comps with lake access but not frontage. Because of the comps having similar shared access, contributory value was not as much of an issue.

 

[airphoto]

Ray ..

Just my opinion, but the clue is in the courthouse response that the current owner need not transfer his portion of ownership in the lake access lot with the sale of the primary property. Effectively, that part-ownership should be treated like personal property, not real property. If it's not specifically mentioned in the deed to the primary property, it has no transferrable value (kinda like owning two separate parcels, non-contiguous.)

In short, I'd give some minimal additional value to subject's possible view and nearness to waterfront, but none to the deeded additional part-parcel!

Just my most humble opinion.

Incidentally, it is the assessor's practise in this area to add a nominal additional value for such part-ownership, if it's deeded to the main parcel, rather than create a tax bill for the commonly-owned parcel and have the owners argue about paying the bill. In your case, you have a homeowner's association to own that parcel, and to pay its tax bill from their dues.

 

[Mike Boyd]

Spelling and grammar police, I grant you the same leeway as I did in my last post[/B][/COLOR]. You are getting freebie's where I will not feel ofended if you correct my the spelling and grammer. But remember today only. After that I will wave my septor and turn you not into a frog, but a toad. [/SIZE][/FONT]

Too many to list. However, your eloquence and writing style compensates. LOL


Regarding the substance of your post: I would think that the 3 public access spots that are an equal distance to the subject would negate any significant additional value to the HOA lot. Any value would be locational and lumped together with any other amenities offered in the development. We have a similar situation in my market area. However, the Lake is California's largest natural lake wholly within the state. There are dozens of subdivisions with that same feature but Lake access is guaranteed by State law, irrespective of the many lakefront parks with launching ramps.

 

[Cyril L. Greenawalt]

You only have two issues here.

#1) What are you appraising?

#2) What is the value (or values) of what you are appraising?

The first question relates only to the property rights. As appraisers, this is our main concern....correct? So, you have a parcel with a house. That's one value. Then you have some other type of rights you have not yet defined. That is, an easement, a shared co-op access/association or something. It sounds as if it is a separate ownership bundle? You may, or may not, have two appraisals here. One value for the lake access, and another value for the house/land. Put yourself in the "buyers" shoes and ask "what am I getting here?" Legally describe WHAT you are appraising and then support the value, or maybe the values, in the report and you will be fine. Most likely if it is a low utility lake with no motors allowed, smaller or very shallow etc. the value of the ACCESS may be quite low. On the other hand if you are dealing with the only waterski lake (high utility) in the region the ACCESS may have a very high value that is measurable.

If you first answer these two questions.. the solution as to HOW to value them/it should become evident. At least then the next question can be asked. That is, HOW?.....I have several techniques in my toolbag for the HOW part.

Good luck! It sound like a FUN one...

 

[VolcanoLvr]

Ray...

Ey torned off mi speling & gramer kitcher!

I agree with the others. The 'bundle of rights' associated with the subject property regarding the lake access lot appears to be caught up in some form of association ownership bylaws, etc. Your subject may or may not have access rights technically associated with it, even though the property owner may use that lot anyway.

My guess is the value of the properties within the subdivision have positive attributes just for lake views and lake access that other properties further away don't have. Therefore the add'l access lot's value is already associated with the properties that can use it.

 

[Charley Horse]

I ask the question at the court house if the lake lot would always transfer with the subject property up on sale of that property. There answer was no, a current owner of the non-lake front lot is not required to sell the membership in the association at the time of sale of the non-lake lot, but could retain the association membership and the 1/14 interest in the lake lot.

The way I understand the answer above, the deeded interest in the shared lake access does NOT RUN w/the non-lake lot. Have you checked w/County to see if there have been any separate sales of these interests?

I think before you can go forward w/your analysis, you need to define explicity who owns the shared access interest... is it deeded to individuals or to the association?

 

[Richard Carlsen]

Ray

The question I have is: Is the interest in the private association included as part of the assignment? If the association that owns the lot was formed by individuals on their own to purchase a lot so as to have access to the lake, then it is not part of the real estate to be appraised. If this is a private appraisal, and the HO wants the 1/14th interest included in the appraisal, then you should value the site separately as unimproved, divide by 14 and add that amount to the value of the separate improved parcel.

If it is for lending consideration, stop what you are doing and get clear directions from your client as this 1/14th interest is a wholly separate piece of real estate and should not be included in the value of the improved parcel without legal incorporation.

 

[Ray Miller]

I am in contact with the AMC (this is a full fee AMC and a very good one at that). They are checking with the bank to see what is what.

lt appears at the court house that the lot is owned by the Association and each member has a 1/14 interest. But no one can tell me for sure if that 1/14 interest flows with the deed to the subject property.

By the way thanks for the answers.

Might mean two appraisal fees?

 

[wyecoyote]

Ray,

We have many here like you described. Where a HOA owns a lake front property for private access to the lake (even some where they own a Salt Water Lot). Around here in my market this provides minimal to no additional value. The reason being they have to pay HOA fees for the "lot" which is more expensive than just having a lot across from the lake and using a public access. So little to no additional market value in many cases. I would never value the lake front lot and divide by 1/14th to find the additional value. If no sales exist in the past year. I would go back in time and find the most recent sales. Then compare to other sales. See if there is any historic evidence to support a market reaction.