I did an appraisal a bit ago where there was a small cottage on the lot to the east. The parcels each had their own number. When i checked the zoning for the subject I found out it could not legally exist without being owned in conjunction with the cottage parcel to the east. Because it did not meet minimum lot size standards and at one time both parcels were owned by the same owner, it could not be considered legal non-conforming per the zoing code. The municipality did not know why each parcel had a separate tax key, but they did not care. The subject could not transfer separately.
The kicker was a mortgage had been wirtten on the subject parcel separately at some point in the past, and it was a Fannie REO property. Oops! At some point an appraiser had appraised the property for a mortgage without checking the zoning code. So essentially, Fannie foreclosed on a property that could not legally exist on its own.
When I reported this to my client, and then it was reported to the selling agent, who also had the cottage listed for sale separately, I was not popular. The buyers ended up buying both parcels, and I appraised the properties subject to the razing of the cottage which was junk, and the combining of the two parcels under one tax key to create one conforming lot.
A good example of why carefully checking zoning requirements is so important. When the broker was complaining to the lender that "lots" of properties transfer as legal non-conforming, (even though in the case of the property I was hired to appraise it was an illegal use), he provided an example. When the appraisal on that property was checked so he could prove his wothless point, the zoning in the report simply stated "residential" and legal conforming.
And we wonder why people think appraisers are worthless. In my opinion, Fannie should track down the appraiser and whomever else involved with the transfer of what ended up being an REO and make them pay.
