Legal non conforming use help

[NC Hammer]

I have a request to appraise a SF detached home located in a special use zoning area that allows for the current use of the subject as a single family detached home but does not allow for the home to be rebuilt as it is if it were to be destroyed. It could be rebuilt as a town home or condo but not a detached single family home. Also, the home sits in a very transitional land use area which is moving to commercial or light commercial from SF use. The subject sits directly behind a restaurant with a large parking lot and the subject is also adjacent to a big box pharmacy. I have a call into the FHA outreach center and have been searching the MPR online but have found nothing yet.:Eyecrazy: Will FHA insure a property that can not be rebuilt with its current use?

 

[ctapraser]

I have a request to appraise a SF detached home located in a special use zoning area that allows for the current use of the subject as a single family detached home but does not allow for the home to be rebuilt as it is if it were to be destroyed. It could be rebuilt as a town home or condo but not a detached single family home. Also, the home sits in a very transitional land use area which is moving to commercial or light commercial from SF use. The subject sits directly behind a restaurant with a large parking lot and the subject is also adjacent to a big box pharmacy. I have a call into the FHA outreach center and have been searching the MPR online but have found nothing yet.:Eyecrazy: Will FHA insure a property that can not be rebuilt with its current use?

Are you sure on the rebuilt? In my area, if the town currently allows the dwelling, the town must let the owner rebuild on current footprint, they (owner) can NOT make any changes but can rebuild to what currently exists.

If you are correct, you have a major marketability issue. If someone buys it because they like it, why would they buy it if they can't replace it "as is"?

 

[NC Hammer]

Yes, zoning does not allow for rebuild as SFR detached per city planning.

I spoke with person from FHA outreach. He instructed me that FHA has no verbiage on such a situation. Furthermore, he stated that it's the lender or the underwriters decision of whether to loan on a property that can't be rebuilt if destroyed and to continue with the appraisal if i could properly complete it. Geeze. Now to find similar zoned sales.

 

[CANative]

More Than One Highest and Best Use

Highest and best use is not necessarily just one specific use. It is possible that several uses will
prove equally profitable. For example, two different uses may return the same net income to a
property.

Interim or Transitional Uses

A property's highest and best use may be prepared to change in the foreseeable future. The use to
which a parcel is put before its transition to a future highest and best use is known as an interim
or transitional use. An interim use typically continues for a relatively short period of time before
converting to a succeeding use. Interim uses appear in transitional areas where older uses are
yielding to new ones. For example, given appropriate zoning and growth trends, an agricultural
area on the outskirts of a city may be in transition to residential use. The current agricultural use
is an interim use. Or, an older residential district in a city may be in transition to commercial use.

The current residential use is an interim use. As a final example, in downtown areas, vacant lots
are often used for parking; however, as market conditions warrant, the lots will be developed and
utilized much more intensely. In such cases, the parking lot use is an interim use.

The total market value of a property in transition is based on both its interim and succeeding use.
The total value of transitional property is the sum of: (1) the present worth of the net real
property benefits from the interim use over the period of interim use; (2) the present worth of the
salvage value of the interim improvements, if any, at the termination of the interim use (or the
negative present worth of the cost of removing the improvements, if this exceeds the salvage
value); and (3) the present worth of the net future real property benefits from the succeeding
highest and best use.

However, an interim use may or may not contribute to current property value. An interim use
contributes to current property value if the gross income derived from the use exceeds operating
expenses related to the use. For example, an interim agricultural use of land often produces a net
return above that of unused vacant land, thereby contributing to the total market value of the
transitional property.

 

[Mr Rex]

Yes, zoning does not allow for rebuild as SFR detached per city planning.

I spoke with person from FHA outreach. He instructed me that FHA has no verbiage on such a situation. Furthermore, he stated that it's the lender or the underwriters decision of whether to loan on a property that can't be rebuilt if destroyed and to continue with the appraisal if i could properly complete it. Geeze. Now to find similar zoned sales.

I assume that this means you spoke with someone in authority. I recently had a similar situation in a small town and the language in the Zoning Ordinance was pretty clear, no rebuild. Well the 1 person in charge of Zoning compliance was out of the office for the week, so I quoted the section of Zoning into my report and indicated that per my interpretation of the written ordinance that the property could not be rebuilt if destroyed by fire etc. and detailed my efforts to confirm and the lack of contact etc. and encouraged the lender extra due diligence in their lending decision. Well it turns out that the one guy in charge apparently is the judge and jury in cases like this and he wasn't about to step on an individual landowners rights in such a case yada yada, so it could be rebuilt, contrary to the written policy.

 

[Pilgrum]

If the municipality allowed it to be built then decides it cannot be rebuilt if destroyed wouldn't that amount to 'Taking'?

 

[Pilgrum]

Maybe I am misinterpreting the definition.

taking
1. The acquisition of a parcel of land
through condemnation.
2. In land use law, application of police
power restrictions to a parcel of land
that are so restrictive as to preclude
any reasonable use.

 

[Mike Kennedy]

If the municipality allowed it to be built then decides it cannot be rebuilt if destroyed wouldn't that amount to 'Taking'?

Nope. per OP "It could be rebuilt as a town home or condo but not a detached single family home."

 

[redfish]

I assume that this means you spoke with someone in authority. I recently had a similar situation in a small town and the language in the Zoning Ordinance was pretty clear, no rebuild. Well the 1 person in charge of Zoning compliance was out of the office for the week, so I quoted the section of Zoning into my report and indicated that per my interpretation of the written ordinance that the property could not be rebuilt if destroyed by fire etc. and detailed my efforts to confirm and the lack of contact etc. and encouraged the lender extra due diligence in their lending decision. Well it turns out that the one guy in charge apparently is the judge and jury in cases like this and he wasn't about to step on an individual landowners rights in such a case yada yada, so it could be rebuilt, contrary to the written policy.

This kind of stuff chaps my ***. The ordinance is law and without a variance being granted through the due process of law the ordinance stands as law. Then some hot shot zoning cowboy :new_2gunsfiring_v1: says screw the ordinance that property can be rebuilt because I say so.

I provide the written ordinance verbatim that relates to appraisal problem. That's it. Even if some drugstore cowboy zoning official says something contradicting the law.

 

[CANative]

The last time I questioned a planner about this type of thing he said "the county isn't in the business of putting people out of their homes."

I don't see a problem with a planning department official making decisions on a case by case business. Except it can make an appraiser appear foolish to his client.