Non-permitted 2nd unit?

[Fernando]

I called owner and he said downstairs just had a bathroom added.
Good, no ADU. I was afraid owner added a kitchen.

Can't believe the owner. So when I saw the property, it has an illegal ADU.
It doesn't have a stove but a sink. Can it still be considered as an ADU for lending purposes?

 

[Tom4value]

I didn’t read all of these so apologies if I say something already covered.

1. Define not permitted. Did they just not bother to get a permit for the unit or does the bylaws not permit them at all? Do they have permits for the electrical and plumbing?

2. After you answer #1, interview the building inspector.What does the building inspector say? Will he/she say it is ok or will they require it be removed. If the latter, ask to define “removed”. I.e., just remove the sink and stove or remove all finishing and revert to a garage.

3. If #2 is worst case scenario, you can’t do a HC because you know it is not allowed. Let the client know. By all means, you cannot just pretend it isn’t there. If they do the loan, the owner must return the property to the previous condition and they default on the loan, you are getting called in as well.

 

[Fernando]

I would say most important is to have a bathroom in the unit. A kitchenette without a stove would be acceptable since one can use portable personal cooking devices.
The idea of permits is not needed to call an ADU in CA. The market and seems like lenders accept them.
The unpermitted unit I'm looking at is occupied by someone.
Of course, I can't live like that but for some in need of housing, it's habitable.

 

[Fernando]

I looked into the city's requirement to be a permitted ADU and subject does not qualify.
I will indicate the "unit" is not a permitted ADU and I can't call it an ADU and see how lender will respond to my view.

 

[Fernando]

Fannie needs to be more clear how permitted and unpermitted ADUs are considered in the old and new form instead of letting appraisers decide how to deal with them.

 

[Fernando]

Is it just me? I'm still confused with how ADU is dealt with in the new form especially in relation to dwelling and outbuildings.

 

[Surf Cat]

Fannie needs to be more clear how permitted and unpermitted ADUs are considered in the old and new form instead of letting appraisers decide how to deal with them.

Fannie is very clear in not just non- permitted ADUs, but also non permitted additions in general.

You should put down "The Fernando Way" appraisal text and review Fannie Mae guidelines. I'm not going to spoon feed it to you here. It's easily obtainable through a simple Google search.

 

[Fernando]

Fannie is very clear in not just non- permitted ADUs, but also non permitted additions in general.

You should put down "The Fernando Way" appraisal text and review Fannie Mae guidelines. I'm not going to spoon feed it to you here. It's easily obtainable through a simple Google search.

Doesn't matter what Fannie says. Lenders seem to be more lenient in calling ADUs and market gives it value even if illegal.

 

[Surf Cat]

See? Good thing I didn't waste the time and post Fannie guidelines for you as you would have just ignored them anyway.

 

[Fernando]

See? Good thing I didn't waste the time and post Fannie guidelines for you as you would have just ignored them anyway.

I just want to do the right way but Fannie guidelines don't make sense.
Fernando does his way and good thing lenders don't understand Fannie's ADU rules.