Should the appraisal note any unpermitted construction?

[Mike Kennedy]

USPAP 2012-13 Ethics Rule
 must not perform an assignment in a grossly negligent manner.
230 Comment: Development standards (1-1, 3-1, 4-1, 6-1, 7-1 and 9-1) address the requirement that
231 “an appraiser must not render appraisal services in a careless or negligent manner.” The above
232 requirement deals with an appraiser being grossly negligent in performing an assignment which
233 would be a violation of the Conduct section of the ETHICS RULE."

Competency Rule
Competency requires:
328 1. the ability to properly identify the problem to be addressed; and
329 2. the knowledge and experience to complete the assignment competently; and
330 3. recognition of, and compliance with, laws and regulations that apply to the appraiser or to the
331 assignment.

Scope of Work Rule

Assignment conditions include assumptions, ex
401 traordinary assumptions, hypothetical
402 conditions, laws and regulations, jurisdictional exceptions, and other conditions that affect the
403 scope of work. Laws include constitutions, legislative and court-made law, administrative
404 rules, and ordinances. Regulations include rules or orders, having legal force, issued by an
405 administrative agency.

SR 1-1 (b) not commit a substantial error of omission or commission that significantly affects an appraisal;

SR 1-2 (e) identify the characteristics of the property that are relevant to the type and definition of value
511 and intended use of the appraisal,10 including:
512 (i) its location and physical, legal, and economic attributes;
513 (ii) the real property interest to be valued;
514 (iii) any personal property, trade fixtures, or intangible items that are not real property but
515 are included in the appraisal;
516 (iv) any known easements, restrictions, encumbrances, leases, reservations, covenants,
517 contracts, declarations, special assessments, ordinances, or other items of a similar
518 nature

SR 1-3
556 (b) develop an opinion of the highest and best use of the real estate.
557 Comment: An appraiser must analyze the relevant legal, physical, and economic factors to the
558 extent necessary to support the appraiser’s highest and best use conclusion(s).

SR 2-2
(b) The content of a Summary Appraisal Report must be consistent with the intended use of the 731 appraisal and, at a minimum:
743 (iii) summarize information sufficient to identify the real estate involved in the appraisal,
744 including the physical and economic property characteristics relevant to the
745 assignment;27
Comment: The real estate involved in the appraisal can be specified, for example, by
747 a legal description, address, map reference, copy of a survey or map, property sketch,
748 and/or photographs or the like. The summarized information can include a property
749 sketch and photographs in addition to written comments about the legal, physical, 750 and economic attributes of the real estate relevant to the type and definition of value 751 and intended use of the appraisal."

798 (ix) state the use of the real estate existing as of the date of value and the use of the real 799 estate reflected in the appraisal; and, when an opinion of highest and best use was 800 developed by the appraiser, summarize the support and rationale for that opinion;

 

[Mike Kennedy]

I am new this forum, so I apologize in advance if this has been posted before. I searched the forums for a while but I could not find exactly what I was looking for.

I bought a 2bed 1ba house about three years ago. I refinanced the house about one year ago. No problems with the appraisal in any of them. Both appraisers indicated the house had a 1 car detached garage.

I found out early this year the garage is supposed to be a carpot and is not permitted. To make things worse, present code requires any new garage to be a 2 car garage and I do not even have the space for that. After a real fight with the city I managed to get the approval for the reconstruction according to code of the garage for only 1 car as it was.

What I am trying to figure out is this, shouldn't the appraisal report indicate this discrepancy between city and county records and the real thing? I mean, if had known this from moment one I would not have bought the property probably or I would have paid a lot less for it. Is it possible that no one is responsible for something like this hiding in the entire process? As everything starts with the appraisal before you get the loan confirmed, that is why I am asking.

thanks!
jose

Recommend you visit with the Attorney you used for the Contract of Sale. Review the Contract for contractual seller's warrants, assertions and/or obligations of the Seller re legally permissible use of the site improvements vs local Municipal Building Ordinance (local, county, or state law), Zoning Ordinance (local, county, or state law), and/or other applicable Municipal Laws and the garage conversion which existed as of the Effective Date of Appraisal AND the closing date of sale.

 

[Mike Kennedy]

On Residential purchase/refi/mortgage lending assignments where the SOW requires utilization of the GSE report forms and adherence with their Guidelines:

"B4-1.4-06, Appraisal Report Review: Subject Property
Zoning (12/01/2010)
Introduction
This topic contains information on subject property zoning, including:
• Subject Property Zoning
• Permissible Use of Land
• Highest and Best Use

Permissible Use of Land
Fannie Mae does not purchase or securitize mortgage loans on properties if the improvements do not constitute a legally permissible use of the land.

Highest and Best Use
If the current improvements clearly do not represent the highest and best use of the site as an improved site, the appraiser must so indicate on the appraisal report. Fannie Mae will not purchase or securitize a mortgage that does not represent the highest and best use of the site."

 

[Mike Kennedy]

here is what the OP asked:



and the answer is no, the appraiser is not the permit police nor are we responsible for researching for permits (unless that is part of the sow and clearly defined prior to accepting the assignment, which typically isn't the case with a purchase or refi on a residential property).

Ohio
Para (A)
http://codes.ohio.gov/orc/4763.13

 

[TRESinc]

Re-read your post # 6 and tell me you were just being helpful.

i did, and it was. i pointed the OP in a direction to find someone he could actually lay the blame on. read here:

Here in Pasadena the city's certificate for occupancy inspection is mandatory. In theory, it is not possible to sell a house without this certificate by the city.

I assumed regulations were way more strict than where I come from. I never imagined something like this could go unnoticed to every single part involved and I had no idea about the occupancy inspection when I bought the property... though both real estate agents and I guess the appraiser should have...

the op made some wrong assumptions and now is looking to lay blame somewhere and the obvious choice is the person who did the city inspection, as i noted above, not the appraiser.

 

[George Hatch]

Legally permissible /= having permits.

Many areas of the city of Pasadena were developed prior to the city issuing permits for appurtenant structures such as carports and garages. Just because there is no permit on file doesn't automatically mean it was illegal when it was built (or modified), and even if it was built without permits it may still be "permissible" on either a don't-require-its-removal policy and/or can-be-permitted-retroactively.

 

[George Hatch]

That the OP was able to obtain the permit after the fact shows that the structure was indeed "permissible" and was not an illegal use that would affect the HBU analysis. So the damages that could be attributable to the sellers not disclosing, the buyer not inquiring and the appraiser assuming it could remain are going to be limited to the effect on value of the cost and effort involved of obtaining the permit retroactively.

Moreover, researching the *entire* building permit history at the city of Pasadena might still involve a process that can take 30 days and which would *not* be within the normal course of business for residential appraisers operating in this region. The last time I did anything there the online database only went back to (if I recall correctly) 1986; permits issued prior to that were stored offsite on microfiche and had to be researched by staff (not anyone from the public) separately.

Maybe things have changed since the last time I was in there (a couple years ago, for a commercial property) so I don't claim to know what's current there. But all you out-of-state appraisers who aren't familiar with exactly what comprises the normal course of business outside of your own region should qualify your remarks accordingly.

 

[Terrel L. Shields]

Availability of permits and related items are suspect. During the normal course of business many appraisers do not discover the lack of permits. In some instances, the information MAY EXIST yet be impossible to locate, especially older permits that are not "on line" - Ditto for titles...Title companies generally only go back 30 or 50 years. But many many properties haven't changed hands in 50 years, have issues that go back decades earlier, etc. etc.

 

[Mike Kennedy]

http://www.ci.pasadena.ca.us/Planning/Projects_Without_a_Required_Building_Permit/

 

[Mike Kennedy]

http://www.ci.pasadena.ca.us/planning/buildingservices/


14.04.030 Violations.

All sections in the codes referenced in Section 14.04.010 herein pertaining to violations are amended in their entirety to read as follows:
It shall be unlawful for any person, firm or corporation to erect, construct, enlarge, alter, repair, move, improve, remove, convert, or demolish, equip, use, occupy, or maintain any building or structure in the City, or cause same to be done, contrary to or in violation of any of the provisions of this chapter. Any person, firm, or corporation violating any of the provisions of this Ordinance, shall be deemed guilty of a misdemeanor, and each such person shall be deemed guilty of a separate offense for each and every day or portion thereof during which any violation of any of the provisions of this Ordinance is committed, continued, or permitted, and upon conviction of any such violation such persons shall be punished by a fine of not more than one thousand dollars ($1,000) or by imprisonment for not more than one (1) year, or by both such fine and imprisonment.​

In addition to the above penalty provisions, violation of any of the provisions of this chapter may be subject to the administrative proceedings set forth in Chapter 1.25 of this code.​

(Ord. 7127 § 4 (part), 2007)​

(Ord. No. 7201, § 3(D), 12-6-2010)​

City of Pasadena Municipal Code
http://library.municode.com/index.aspx?clientId=16551