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Should the report be "Subject to" on a non-FHA sale based on Arizona state law with

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The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
respect to on-site septic system? State law states the septic needs to be inspected prior to the sale taking place. The contract did include the on-site wastewater treatment facility addendum calling for the inspection of the septic system by a qualified professional within six months of the close of escrow, and no less than 3 days from the close of escrow. The house was vacant. No certification was present to verify this inspection was completed. Me thinks "subject-to"... I just don't want to hit my lender with mis-information if I am mistaken (rather have done my homework first). Bueller?
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
If there is nothing else and the property is "as is" I do not make it subject to an inspection of the private waste disposal system (I never use the terms septic because I am not an expert and I do not know what they have--it may be oil drums or an old car body down there under the dirt-inspecots have founds those and stranger items). That is a title problem, not a market value problem.

I have the following paragraph in every report that has an existing private waste disposal for the property.

"Since July 1, 2006, new Arizona Department of Environmental Quality rules require any person transferring a property served by an on-site wastewater treatment facility to have an inspection of the facility performed before the transfer of ownership, pursuant to Arizona Administrative Code (A.A.C.) R18-9-A316. The requirement is a condition of the State Aquifer Protection Permit program. Details about the ADEQ Transfer Inspection program are at http://www.azdeq.gov/environ/water/permits/onsitenot.html."

 

The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
Thanks JoAnne... Ironically enough, this property was listed for $1.2M two years ago and is located in Pegasus Airpark. The short sale price is $645K currently. If this property was in Paradise Valley, it would have multiple offers and easily be a steal at $2M (the interior finishings are that nice). In Queen Creek though, someone is getting this ridiculous upgraded property about $45K less than the cost to build (based on the M&S data I just ran). The land is worth $185K based on recent data. Wish my buddies and I were a little more liquid... we could make it a killer bachelor pad (my one buddy even went as far as saying he could deal with the drive to Queen Creek with something this nice)... properties this nice will only appreciate when the market returns to form. Thanks again for the verbiage!
 

redfish

Senior Member
Joined
Sep 2, 2007
Professional Status
Certified Residential Appraiser
State
Michigan
In order to particpate in a transaction involving the subject property you would have had to turn down the assignment. I don't want to see THE SHERIFF as a owner of said property next time I'm surfing Pinal County Records.
 

The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
Nah... Not buying it myself, although maybe someday I'll be able to afford it (it's actually Maricopa County for this part of Queen Creek)... but the quality of the finishings of this house easily rivaled some of the properties I do in the upper end Scottsdale areas. Redfish... do you work for Forsythe?
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Mortgagee Letter 2005-48 states:

Septic Tanks – (required inspection only if evidence of system failure or if mandated by state or local jurisdiction.
 

redfish

Senior Member
Joined
Sep 2, 2007
Professional Status
Certified Residential Appraiser
State
Michigan
Who's forsythe
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
My Bad! Sorry, I didn't read that this was a non-FHA appraisal.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I think an extraordinary assumption that the septic will pass inspection could be applicable.
I might write something like

Since July 1, 2006, new Arizona Department of Environmental Quality rules require any person transferring a property served by an on-site wastewater treatment facility to have an inspection of the facility performed before the transfer of ownership. No one has presented the appraiser with evidence that the system will either pass nor fail. We therefore evoke the extraordinary assumption that the system is compliant with the law and in the event the system does not comply the value estimate may be affected by that condition.
 
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