Occupancy Determination (CHECK BOX)

[residentialguy]

Then I would say to you, read certification number 10 again if your SOW has you using a Fannie 2005 form for reporting and signature.

Ok smartie...and how do you certify that the home owner lives there? Assumption? Family photos? Hidden camara?

the renter said he only rents a couple months.

 

[Webbed Feet]

So... what do you do regarding occupancy checkbox on the 1004?

The only thing that would change is the checkbox, the explanation is is the same in my addendum. And it doesn't affect value....which do you check off BRCJR?

Anon, see post number 4.

At the moment of the effective date, the owner of the property has given up the right of possession of the Realty. Right of possession is not something real estate appraisers should lie about in order to facilitate a loan for all involved. As well as I would think such a request is a HVCC violation coming out of the requestor.

Inform the requester asking for the "owner occupied" checkbox to be used that you can certainly do that, as long as they are willing to understand that this renegociation of the SOW would require replacement of the reporting form with a non-Fannie form in order for a HC to be used that is disallowed under the prohibition against modification of the Fannie SOW.

 

[Peter LeQuire]

So... what do you do regarding occupancy checkbox on the 1004?

The only thing that would change is the checkbox, the explanation is is the same in my addendum. And it doesn't affect value....which do you check off BRCJR?

Gee, let's wrestle this dilemna. The owner isn't living in the house. The person living in the house is a tenant. My choice of check boxes is owner, tenant, vacant.

Reason to check tenant? It reflects what was true on the date of inspection.

Reason to check owner? Doing so preserves the loan terms that are being applied for and keeps a lender happy.

Reason to check vacant? It ain't vacant.

It's up to the owner to explain what s/he does with the property - that's not the appraiser's job.

 

[Webbed Feet]

Ok smartie...and how do you certify that the home owner lives there? Assumption? Family photos? Hidden camara?

the renter said he only rents a couple months.

Point out any such "certification" contained in the USPAP minimum required or in Fannie 2005 forms. Beyond the certifications that we are not signing a misleading appraisal report. Checking certification number one versus the preprinted SOW in the 2005 Fannie form (which I must assume is being used as Anon didn't bother to tell us intended use) we find in the SOW part five that has him certifying he is reporting his opinions and conclusions... not the entities asking for the box to be changed. It seems to me Anon's opinion and conclusion was correctly "tenant occupied" on the effective date.

As the property owner has given up the right of possession to a non-family member under a rental/lease agreement... what would you call knowingly indicating that the right of possession has not been transfered to a tenant by agreeing to such a request as to lie via checkbox?

The only interesting gray area here is for short term tenancies, renting versus leasing, we do not consider the Fee Simple to have morphed into Leased Fee in appraisal practice. But that is a different side topic.

And I'll never say Fannie's certification number 10 isn't stupid, because it is stupid and unrealistic. Regardless, because of it, everytime any appraiser types the words.. "the property owner (borrower) said........ " the appraiser had better consider the liability of that statement because of that certification.

 

[incognito]

Very common in my parts. I would mark "owner Occupied" with an asterisk, and comment below that the property is a non primary residence second home, which is rented during periods of non-owner occupancy, and I would also report the presence or lack thereof of a homestead exemption. I would ask the owner (and report) the approximate percentage of the time the unit is rented and owner occupied. Lastly, I would report the address the tax bill is sent to. If it is not homesteaded, it is nearly a 100% chance it is not a primary residence. If the tax bill goes elsewhere, it is very likely not a primary residence.

 

[Webbed Feet]

<...snip....>
Reason to check owner? Doing so preserves the loan terms that are being applied for and keeps a lender happy.

<....snip....>

Bingo! It also is somebody on the lending end trying to get out of additional work by asking the appraiser to lie ... and I am very sure what is next starts out with.. "................all the other appraisers do it!"

Which is why all my communications about this would be in writing, as this will probably morph into undue pressure to violate USPAP by providing a misleading report regarding who has possession of the Realty on the effective date.

 

[Webbed Feet]

There ya go Incognito..... It becomes the "... Way to go client.. Now the appraiser is gonna refuse to check any box regarding occupancy and go the addendum route" solution. However, I would mark BOTH owner and tenant occupied boxes with an asterisk. Just to be clear I was no longer using either of the boxes. Otherwise, later on someone could attempt to claim the sole asterisk in the owner occupied box was indicating owner occupied.

 

[residentialguy]

You raise some very good points, as usual, Webbed

The question is, Does owner occupancy a "today it is or isn't" situation, as you suggest, or what is it overall throughout the year. I tend to go with that the overall view of majority of the time it is owner occupied, therefore checking owner occupied, but include stating that today it isn't owner occupied. The tenant confirmed that it was very short term.

 

[BOCK FOLKEN]

Would you quote the line numbers of USPAP that contain the "be done with it" standard of reporting for us?

Point taken.

here are Fannie's second home requirements:

Must be located a reasonable distance away from the borrower’s principal
residence.
Must be occupied by the borrower for some portion of the year.
Is restricted to one-unit dwellings.
Must be suitable for year-round occupancy.
The borrower must have exclusive control over the property.
Must not be rental property or a timeshare arrangement.
Cannot be subject to any agreements that give a management firm control over the
occupancy of the property.

So, if this appraisal conforms to Fannie guidelines using Fannie forms, then I take back my prior statement. If the unit is rented, leased or otherwise occupied by someone other than the owner, it may not qualify for a Fannie loan. On the day we appraised it, if it was occupied by someone other than the owner, you must report that to your lender/client in some way. To further document this may require a lease or other agreement, but the lender is charged with sorting this, not us.

If the unit is occupied by someone other than the owner, I would report "Tenant" in the check box. I stand corrected.

Good discussion.

bock

 

[Peter LeQuire]

Point taken.

here are Fannie's second home requirements:

Must be located a reasonable distance away from the borrower’s principal
residence.
Must be occupied by the borrower for some portion of the year.
Is restricted to one-unit dwellings.
Must be suitable for year-round occupancy.
The borrower must have exclusive control over the property.
Must not be rental property or a timeshare arrangement.
Cannot be subject to any agreements that give a management firm control over the
occupancy of the property.
bock

The only ones of these that the appraiser can reasonably determine are whether the property is a one unit dwelling and whether it is suitable for year-round occupancy.