Legal In-law Or A Two Family?

[ginadirocco]

Inspected an older house with a new attached in-law unit. The in-law unit was nice and included a full basement, kitchen, bath, etc. Its use is restricted to family members only with no rent collection allowed. LO asked for a single family 1004 report. I included only the living space of the main house in the GLA, gave the in-law unit value as a lump sum at the bottom the report.

UW now wants a 2-4 family report. I told her "no can do, it is not legally permissible as a 2 family". She said it is a two family because it has a kitchen. At first I was sure that I was right, now she's got me second guessing myself? Any experience with this?? THANKS!!

 

[walt kirk]

The underwriter does not know what she is talking about. I'll bet she is not a licensed appraiser. In your determination of highest and best use you can only consider what is legally permissable. Since the in-law unit may not legally be rented the property is not a two family.

You are right, the underwriter is wrong.

 

[Chris Harrison]

gina,

You are right. We have many homes in this area with basement 2nd kitchen. Call it a "canning kitchen", which is what many of the older homes used to use during the summer for bottling fruit and veggies for the winter.
Also used for the 2nd wife if you had one :rofl:

Legal use

Now they may ask for other comparables with 2nd kitchen :blink:

Hope this helps

Chris

 

[Ben Vukicevich SRA]

Gina,

Several ways to approach this problem.

First, I would include the GLA of the in-law suite in the total GLA of the dwelling.

Second, many new home builders in my area are now moving to first floor master bedroom suites in two story dwellings. This lets the older parents have privacy while the teenage kids are upstairs. You could use this as an example of marketability. So just because the in-laws are using it, look at alternative uses such as a first floor master bedroom suite. Next how big is the kitchen? Small galley-type? So you have a master bedroom suite with an entertainment area for mom and dad while the kids use the main kitchen. Big whoop.

Third, underwriters are a pain in the a.. Especially since you have done your job correctly and valued the subject as per current zoning. Now the job is to baffle the UW with your brilliance as an appraiser to thwart silly questions. You see, in-laws are readily discriminated against...so call it a handi-capped suite. Yep. They won't discriminate against the handi-capped. That's not nice. I just did one where the father-in-law was in a wheel chair and had difficulty getting to the main kitchen so they installed a kitchen in the in-law suite for him to use. I mentioned the second kitchen and its use for a handi-capped person, the alternative use as a first floor master bedroom suite and that is was marketable in its present condition...and no questions whatsoever from the UW...... It's not nice to discriminate against handi-capped people.......it also stops silly addendum requests from UW's

Now, I bet you if the teenage son/daughter was occupying the area and you called it a teen-suite, your problem would also go away...

Ben

 

[Pamela Crowley (Florida)]

Good suggestions Ben, but....

First, I would include the GLA of the in-law suite in the total GLA of the dwelling.

NOT if you have to go outside of the base GLA to enter the in-law suite!!!! If you cannot directly enter it from the main GLA of the main house, it's separate. Period. ANSI and I think Fannie Mae guidelines. I'll look it up later.

 

[Chris Harrison]

Just .02 more...
from an area that typically has homes with fully finished basements and 2 kitchens. I have never included basement area in GLA! Most finish in the basements of homes in this market are done in a professional manner. Many homes have 2 water heaters and 2 furnaces, one for each floor. Below grade is still considered BASEMENT. They are still considered single family homes with "canning kitchen" or "mother-in-law" apartment. They are zoned for single family and if your caught renting the area, your subject to citation and fine.

There are areas near BYU that allow for student housing in an accessory apartment, but the zoning is modified to reflect that and an affidavit in on file at the building inspection department.

You will have to extract the market reaction for your area because it seems to differ from one part of the country to another.

I've appraised over 500 home with 2 kitchens for purchase or refinance, FHA and conventional and seldom get questioned about the 1004 form. Never been required to do a Multi family form once it was explained....

Chris

 

[ginadirocco]

Thank you for all your comments.

The zoning regs say that the main house and the in-law dwelling need to have a common entrance from the outside. The owners built it so your enter into a breezeway (sort of an enclosed, unheated porch) from the outside then go left for main house and right for in-law.

 

[Pamela Crowley (Florida)]

Originally posted by ginadirocco@May 2 2003, 06:54 PM
Thank you for all your comments.

The zoning regs say that the main house and the in-law dwelling need to have a common entrance from the outside. The owners built it so your enter into a breezeway (sort of an enclosed, unheated porch) from the outside then go left for main house and right for in-law.

You're clear with the zoning but it still doesn't meet ANSI standards.

 

[Ben Vukicevich SRA]

Pam,

I just followed the poster's wording of in-law "suite." The "suite" to me would mean common interior access from the in-law suite into the dwelling was a given and it may or may not have a separate exterior entrance/exit. It would be just like the first floor master bedroom suite, I listed in my initial post.

If it were an in-law "apartment," indicating a totally separate, living quarters, then it'd be a different story and would probably have very nominal value and no marketability to anyone other than a buyer with in-laws. Which would be a very limited market and then the UW would really bug-out with questions.

Ben

 

[Chris Harrison]

Oops...

Gina, you left out an important bit of information. The basements that I'm referring to do not have outside entry typically. If it's the only entry ..... then it changes the whole question. That would be a 2 family home in this market!!!

Chris