Non-permitted 2nd unit?

[Johnny Knucks]

I am appraising a property with a garage, which has been converted to a 2nd unit. The 2nd unit does not have permits, and the lender has instructed me to appraise the property as if the 2nd unit does not exist. I'm not sure how to approach H&BU or whether it's legal. Then there is that question about conformity. I would answer that it does not conform, due to the unpermitted 2nd unit.

It appears that the 2nd unit would conform to local building codes as far as I can determine, however there are no permits as I have mentioned.

 

[shrubberyvaluation]

I am appraising a property with a garage, which has been converted to a 2nd unit. The 2nd unit does not have permits, and the lender has instructed me to appraise the property as if the 2nd unit does not exist. I'm not sure how to approach H&BU or whether it's legal. Then there is that question about conformity. I would answer that it does not conform, due to the unpermitted 2nd unit.

It appears that the 2nd unit would conform to local building codes as far as I can determine, however there are no permits as I have mentioned.

You would have to use a hypothetical since you know it exists. Can't do it on a 1004 or other FNMA forms.

 

[swandel1]

Could they want you to appraise it subject to returning it back to pre-ADU??

 

[J Grant]

I am appraising a property with a garage, which has been converted to a 2nd unit. The 2nd unit does not have permits, and the lender has instructed me to appraise the property as if the 2nd unit does not exist. I'm not sure how to approach H&BU or whether it's legal. Then there is that question about conformity. I would answer that it does not conform, due to the unpermitted 2nd unit.

It appears that the 2nd unit would conform to local building codes as far as I can determine, however there are no permits as I have mentioned.

What do you mean when you say the garage has been converted into a "second unit?"

Typically, in a SFR dwelling, a garage is finished or more extensively converted to liiving area. Does this garage now have a kitchen and bathroom? what kind of windows and access does it have ? Did they remove the garage door? Without further description, it is not possible to give a credible answer.

 

[Terrel L. Shields]

To appraise as if the unit does not exist would require a hypothetical condition. And is the loan a conforming secondary market loan or a non-conforming loan (bank held in house) Are you operating under FNMA or FHA rules or under IAG (interagency guidelines) As JG noted there is a lot to unfold here to be much help.

 

[Surf Cat]

Then there's zoning..... depending on where you are, some Incorporated cities "require" two car covered parking. In your case, the subject property would be legal nonconforming.

"If" the garage conversion has a kitchen with a gas stove or heater in there (which code may not allow) and it's not ventilated to code.... now it's posing a health and safety concern.

As J Grant stated, more information is needed.

As others have stated, you can't appraise the property pretending the garage conversion isn't there without a hypothetical.

 

[Johnny Knucks]

You would have to use a hypothetical since you know it exists. Can't do it on a 1004 or other FNMA forms.

Why can't I use the 1004? I would have to use a GP form then, which I don't think a lender would accept. This is for a sale. The value is there for a single unit. It's also a detached garage.

 

[Surf Cat]

Wait....what? I thought the garage was converted to a non permitted Adu. What do you mean it's also a detached garage?

 

[Johnny Knucks]

Then there's zoning..... depending on where you are, some Incorporated cities "require" two car covered parking. In your case, the subject property would be legal nonconforming.

"If" the garage conversion has a kitchen with a gas stove or heater in there (which code may not allow) and it's not ventilated to code.... now it's posing a health and safety concern.

As J Grant stated, more information is needed.

As others have stated, you can't appraise the property pretending the garage conversion isn't there without a hypothetical.

There is no requirement for parking. Main unit has nat. gas, 2nd unit all electric, kitchen bath and 3 br. Not separately metered. Garage is detached. Lot is about 1/2 acre, public w/s. Not 100% sure how they did sewer since the 2nd unit is towards the back of the lot and it's close to 100 ft to the road.

 

[Johnny Knucks]

Wait....what? I thought the garage was converted to a non permitted Adu. What do you mean it's also a detached garage?

Yes it's a detached garage. Hypothetical condition would seem to apply, but can I do that on a 1040 form?