Scope of work: 100% rebuild letter requested

[Rufus]

... if they'd like a rebuild letter included in the report, they can certainly forward it to me after obtaining it themselves and I'll be glad to scan it in for them.

Some zoning departments will only provide the rebuild letter to the homeowner. Check to see if that is the case and then you can inform the lender of same. Some offices around here have the rebuild letter application online and I've included that in an email to the lender.

 

[Caterina Platt]

ZZGAMAZZ,

It will all depend on what exactly makes the property 'non-conforming'.

My 'for instance' is based on my typical non-conforming issue - in law quarters. I come across many that have a small auxillary unit that pre-date zoning. Both units are well over 30 years old in most cases. Considering a re-build of a new single family unit with the insurance proceeds, your resulting value would generally be more than sufficient to secure the mortgage in consideration on two 30+ year old structures. The in law quarters are almost invariably a minimal contributory amount to begin with.

Were the non-conforming issue something that would preclude re-building ANY sort of residential structure on the site, the insurance proceeds approach wouldn't really matter.

 

[ZZGAMAZZ]

Cat: That's interesting because the existence of an ADU in Cali typically would not affect conformity because of statewide mandate promoting auxillary units (subject to developmental standards of course).

 

[Couch Potato]

I used to always consider an undersized residential lot in a residential zone to be a non-conforming property. But after looking into a bit and reading Fannie, I believe I was wrong about it and that we are not expected to be THAT technical on the matter. I really think all Fannie is concerned about is whether the use is conforming and not whether lot size is.

I would say we are expected to be that technical on the matter if it has any affect on marketability. For instance, the non-conformity section of one of my local land use ordinances contains the following:

When a nonconforming lot can be used in conformity with all of the regulations applicable to the intended use, except that the lot is smaller than the required minimums set forth in Section 15-181, then the lot may be used as proposed just as if it were conforming. However, no use (e.g., a duplex) that requires a greater lot size than the established minimum lot size for a particular zone is permissible on a nonconforming lot.

Although such lots function as conforming, they are non-conforming properties. As conforming properties on the block get purchased and converted to duplexes for the college students, such non-conforming properties are left out of the market. When most of the other houses build guest quarters, the non-conforming property is left out. Non-conforming properties need to be compared to other non-conforming properties unless you want to take the time to sort out the market impact.

Being non-conforming is not an issue if the local ordinance contains clear language allowing the property to be rebuilt. Simply include that part of the ordinance in the report along with references to find the entire ordinance. The client will not ask for a rebuild letter in such cases.

 

[Caterina Platt]

Cat: That's interesting because the existence of an ADU in Cali typically would not affect conformity because of statewide mandate promoting auxillary units (subject to developmental standards of course).

Guess it just goes to show that geographic competence is a necessity. :new_smile-l:

A statewide mandate promoting ADU's is interesting. I imagine that had something to do with the affordability factor in California and the need for a place for Grandma/Grandpa or your young 20 something kids to live. Just a guess from an outsider 2 states away.

Zoning is so different in each individual area, it's indeed interesting to hear about the differences from other locations.

If the subject's site is able to be re-built with a residential structure, it does help sometimes to look at what the potential value of a new conforming structure would be. That's the bottom line that the lender is concerned about.

 

[Mztk1]

When a nonconforming lot can be used in conformity with all of the regulations applicable to the intended use, except that the lot is smaller than the required minimums set forth in Section 15-181, then the lot may be used as proposed just as if it were conforming. However, no use (e.g., a duplex) that requires a greater lot size than the established minimum lot size for a particular zone is permissible on a nonconforming lot.

Well in that particular case the use (as a 2 family) is prohibitted due to lot size so it would be checked as either legal non-conforming or illegal depending - but it remains a use issue. In fact, the way I read the ordinance, I am guessing there is a separate minimum lot size for a 2 family in this residential zone, so even some lots that meet the minimum lot size for SFR cannot be improved with MFR, unless they get some type of approval.

But I am not saying that lot size requirement is unimportant. Nor am I saying it should be overlooked.

If you have a single family residence built prior to code, in the zone you are talking about, and it does not meet lot size requirements but, as you state, the use is permitted, are you checking "legal non-conforming"? Personally, after reading Fannie, I don't think you should because that section of the form per the guidelines is concerned with the legality of the use and your use is legal. But if the house you are appraising is a two family and the circumstances are otherwise the same, then, based on how I am reading the guidelines, you have to check legal non-conforming or illegal, depending.

Of course, either way, you are responsible to determining the effect on value of having a lot that does not meet minimum lot size requirements. If a lot is undersized, or if set backs are not met and I can tell, I put that in the site comments and look for similar properties for market reaction. But that alone doesn't make it a non-conforming use.

Just like you, I include the zoning ordinance on rebuild directly in my report when necessary. It is easy here. Just a cut and paste off the internet.

 

[Couch Potato]

Of course, either way, you are responsible to determining the effect on value of having a lot that does not meet minimum lot size requirements. If a lot is undersized, or if set backs are not met and I can tell, I put that in the site comments and look for similar properties for market reaction. But that alone doesn't make it a non-conforming use.

Just like you, I include the zoning ordinance on rebuild directly in my report when necessary. It is easy here. Just a cut and paste off the internet.

In the areas I work, that would indeed make it a non-conforming use. For a non-conforming lot, there is no conforming use other than vacant land. That is why permission to use the lot is written into the section of the code on non-conformities. It is of particular importance to note the non-conformity in the case of obvious setback problems, in that many ordinances will restrict rebuilding in such cases. In some areas, a special use permit is required to build on a lot that is non-conforming in size. I don't see how one could call it a conforming use if a special use permit is required.

As long as rebuilding is clearly not a problem, it is not an issue that will ever cause a problem. Not every jurisdiction is as easy to make that determination as the ones where we work.

 

[Marcia Langley]

I've already stated in the report - after verbally verifying with the building department - that the subject may not be able to be rebuilt to its current footprint if destroyed (it's legally non-conforming). According to the building department, nothing more definitive could be stated without a hearing.

The lender is now requesting a 100% rebuild letter from the building department, which is beyond the appraisal's scope of work in my opinion; I've reported what was told to me by the building department and my job ends there, although if they'd like a rebuild letter included in the report, they can certainly forward it to me after obtaining it themselves and I'll be glad to scan it in for them.

Comments? Thanks in advance.

I certainly would not accept an assignment to instigate a hearing on behalf of the homeowner or the lender.