Owner or tenant occupied?

[lmichels]

What is a tenant?

Here's the situation - SFR is occupied by owner, girlfriend, and another friend who rents a room in the house. Is the roommate a tenant? This is for a mortgage, so it's on the Fannie Mae form. Do I check both boxes?

For futher thought:
I've hit so many situations where the occupant of the house is unclear. For example, if the above roommate doesn't pay actual money in rent, but instead barters for the room by cleaning and cooking? Is a "nanny" a tenant? How about if a family member occupies the house is it owner occupied or tenant occupied? What if the family member doesn't pay rent? When does an SFR become a commercial boarding house - at 3 people renting rooms? or at 10 people renting rooms? If the home is occupied by the owner, with 1 room provided to a disabled person with the owner recieving payments for nursing care - what is that? A tenant? A commercial use of a residential property?

There are so many atypical occupancy situations out there. What are your opinions?

 

[VolcanoLvr]

Imichels...........

As a west coastie not far from you, I'll venture a comment...after a couple of glasses of port!

I'd say you have an owner occupied SFR, since the borrower lives in the dwelling.

If the borrower chooses to rent out the extra rooms, so what?

If on inspection, if you were NOT told of that rental situation, would it appear as just a typical dwelling with typical residential use?

Dave

 

[Marcia Langley]

I,

What you describe is an owner occupied house. Having roommates does not create a tenant situation.

If there are many rented spaces that are accessible from inside the main house (in other words not a multi-unit building), you would have to consider those on a case by case basis.

In general, if the house conforms to the neighborhood in floor plan, number of bedrooms, and number of bathrooms, access to all areas by owner, and is owner occupied you probably do not have a tenant situation. In a 3-4 bedroom house you could have 2-3 or so roommates and still be owner occupied.

If you find 10 bedrooms in a 3 bedroom neighborhood and the house has been reconfigured, you probably have tenents but there are exceptions (some group homes). In those cases, you have to figure it out case by case.

 

[lmichels]

Thanks for the feedback. You're right - I wouldn't have known that the roommate was renting the room vs. being a sister, etc. except that she met me at the door saying "hi, I'm the renter". The owner doesn't own any other properties in town - he definitely lives there. So I'll go with the owner occupied box.

 

[Kris Chase]

I had this question come up recently too. I found the answer somewhere on the Forum.

We cannot be the "occupancy police". I had someone tell me once that "friends" were staying in the house while the "owners" were out of town. The "friends" looked real cozy in the house and like they had moved in to me, but hey, I'm not a detective, the owners might have been out of town, not for me to say.

You can only do the job with the information that is presented to you to the best of your ability.

 

[Otis Key]

What is a tenant?

Here's the situation - SFR is occupied by owner, girlfriend, and another friend who rents a room in the house. Is the roommate a tenant? This is for a mortgage, so it's on the Fannie Mae form. Do I check both boxes?

For futher thought:
I've hit so many situations where the occupant of the house is unclear. For example, if the above roommate doesn't pay actual money in rent, but instead barters for the room by cleaning and cooking? Is a "nanny" a tenant? How about if a family member occupies the house is it owner occupied or tenant occupied? What if the family member doesn't pay rent? When does an SFR become a commercial boarding house - at 3 people renting rooms? or at 10 people renting rooms? If the home is occupied by the owner, with 1 room provided to a disabled person with the owner recieving payments for nursing care - what is that? A tenant? A commercial use of a residential property?

There are so many atypical occupancy situations out there. What are your opinions?

I believe, as Dave & Marcia pointed out, that you answered your own question in your question, as I BOLDED above. If the owner is renting out space then it is sure to show up on the loan app and has nothing, in all honesty, to do with what the opinion of market value should be reflected. I have a neighbor that rents out "space" to several individuals of the same nationality. As long as the they are quiet, safe, sanitary (from the exterior view point) and not creating a problem, what do I care? What does the lender/investor care (except that he can qualify for the loan and make the payments)? [FWIW, there for a while it was like rotational occupants - so what]

 

[Joyce Potts]

I don't think paying actual money for rent defines what a tenant is.

I think anyone occupying the property that is not cited on the deed is a 'tenant' even if they're not technically paying rent, especially if you're only given the choices of owner-occupied or tenant and you're forced to pick one.

This is another example of putting more liability on the appraiser when everyone knows there is no 100% sure way to know if anything is owner occupied. If a lender is making a loan based on owner-occupancy typically they have the borrower sign an affidavit of occupancy at closing.

I would cavaet my report to read something like this:

Typically leases are not recorded, nor is it within the scope of this appraisal to procure a title search in an effort to verify if a lease exists. The appraiser spoke to "__________________" who identified himself/herself as the owner/buyer and verbally communicated that they physically occupied the property as either their primary or a secondary residence. There is no available source with which to verify with certainty the true occupancy status of the property.

For me, gone are the days I rely on anybody's verbal representations as true and accurate. Especially when it comes to condo or pud information. If verbal information is all I have, my report will CLEARLY state that's where the information came from, so if my client relies on it, they've been put on notice and can govern themselves accordingly.

We're in a ERA of nothing but CYA.

 

[Frederick R. Ruffell]

My opinion is that if the OWNER (forget about the term borrower) resides in the subject as his/her primary residence as evidenced by the TAX BILLING ADDRESS listed in public record then it is Owner Occupied. So that leaves us with a million different other possible situations. So is the property Tenant Occupied by default in those situations where we determine that it is NOT Owner Occupied? I dont know what FNMA intended. You can always check a box or boxes and then explain in your addendum.

 

[Gregory Beck]

It's owner occupied

 

[DTB]

For informational purposes only, not relating to occupacy policing for an appraisal.

Many municipalities restrict SFR to 2 or 3 unrelated people cohabitating. Beyond that it becomes an illegal use.