No legal access

[Neil (Texas)]

Jtrotta,

Back in the 80s during the S&L debacle I was doing some work for FDIC. One appraisal request was for a 10 acre parcel right in the middle of a 500+ acre ranch. No road, no easements, no access, nada.

At the time I wondered what kind of bank LO would be ignorant enough to accept that parcel as collateral for a $100,000 loan. I reported that under the circumstances, unless access rights could be obtained, the only value would be to the adjoining property owner (yeah, you got it right, both parcels were owned by the same person).

Two days later in the morning paper was an article about FDIC closing the bank with said loan/collateral. The owner of both parcels was listed as a director/chairman of said bank.

 

[Caterina Platt]

You guys are great!

Greg, thanks for verifying the laws in NM. I had a call into my favorite RE attorney, but no answer yet. I was pretty sure that NM didn't have a provision demanding access, but not quite ready to put it in writing.

Well, here's how I think I'm going to tackle this. Appraise the parcel as usual and make it subject to obtaining legal access. I'll include an addendum stating the issues faced with the current lack of access and it's resulting limitations to marketing, use of the property, etc. My addendum will mention the likely discount expected for such a lack of access and clearly state that this is the appraisers opinion and no similar sales exist to support such. Probably will include a disclosure regarding obtaining legal counsel for further clarification and the creation of the easement.

I really appreciate all the feedback! If there's any further comments regarding my proposed solution, I'd love to hear them.

 

[Pamela Crowley (Florida)]

Sounds good to me. Make sure you put in that the Appraisal and Report is based on the Hypothetical Assumption that it already has legal ingress/egress access. Then your 'subject to' stuff.

I've been known to miss something now and then and it's not sitting in front of me to do so.... this is just my $.02.