Single Family with rented ADU

[unloadit]

I have a single family home (about 2,000 SF) and on the property is an ADU that is 1,000 SF. It is actually split up into two sides of 500 SF each side, so it is actually a duplex ADU. Each side is a studio with a bathroom and a kitchenette. He is renting one side of the ADU, and the other side is occupied for free by a family member. The ADU is metered separately for electricity, but shares a well and septic.

My question.....should I do this as a triplex, or as a single family with an ADU. I'm not sure what the HABU is just yet, but I'm thinking about just declining it all together before I put too much time into it. Also.....it's FHA.

Thanks

 

[Walter Kirk]

First you must determine the H&BU. It doesn't matter is its FHA, VA, Conventional or Cash, the market value is the market value. The rules of the lender or guarantor are a secondary consideration.

 

[Webbed Feet]

I have a single family home (about 2,000 SF) and on the property is an ADU that is 1,000 SF. It is actually split up into two sides of 500 SF each side, so it is actually a duplex ADU. Each side is a studio with a bathroom and a kitchenette. He is renting one side of the ADU, and the other side is occupied for free by a family member. The ADU is metered separately for electricity, but shares a well and septic.

My question.....should I do this as a triplex, or as a single family with an ADU. I'm not sure what the HABU is just yet, but I'm thinking about just declining it all together before I put too much time into it. Also.....it's FHA.

Thanks

Your moniker is precisely what you should consider doing. Whoa! What part of Oregon, what is the zoning, is this puppy remotely legal at all? What about sewer, septic, and oh yeah... little things like FHA requirements when ya slam into what is probably an illegal improvement? The fact that you so much as posted what I changed to red font before you found out from the county or city involved if this thing is legal or not means to me that you should decline this assignment. The question is not what you should "do this as," the question is what in the ding dong IS it !!

 

[unloadit]

Yea...I'm just going to decline it. Or "unloadit" lol. I don't want the headache. Somebody else can deal with it.

 

[Webbed Feet]

Yea...I'm just going to decline it. Or "unloadit" lol. I don't want the headache. Somebody else can deal with it.

Good idea... ... If we can't figure out what improvements to real estate are in regards to legal, legal nonconforming, illegal, then we can't so much as consider what the SOW should be or much of the proper engagement elements for the assignment.

P.S. Besides, you REALLY don't want to end up a text example in the next Oregon trainee/supervisor course number II for what not to do if certified or licensed in the state of Oregon. Often, knowing when to walk away is the peak of wisdom! Wisdom before knowledge in our business can be much smarter than so much knowledge wisdom has become forgotten.

 

[zdfenton]

HUD Handbook 4150.2 Appendix D

Accessory Unit / Accessory Dwelling Unit
The accessory unit is defined as a habitable living unit added to, created within, or detached from a single-family dwelling that provides the basic requirements for living, sleeping, eating, cooking, and sanitation.
Accessory Dwelling Units (ADUs) are commonly understood to be a separate additional living unit, including separate kitchen, sleeping, and bathroom facilities, attached or detached from the primary residential unit, on a single-family lot. ADUs are usually subordinate in size, location, and appearance to the primary unit and may or may not have separate means of ingress or egress.
Attached units, contained within a single-family home, known variously as "mother-in-law apartments," are the most common type of accessory dwelling unit. Accessory units usually involve the renovation of a garage, basement, or small addition to a single-family home.
FHA Criteria
“Accessory dwelling unit" means a subordinate dwelling unit may or may not be incorporated within, or detached from a single-family structure. Accessory units may not be subdivided or otherwise segregated in ownership from the primary residence structure.
Some accessory units may predate the adoption of local zoning ordinance and may therefore be classified as legal nonconforming units.
Utility Service Requirements
An accessory apartment must be connected to the utilities (except telephone, television and cable) of the dwelling unit and may not have separate services.

Is there separate metering for each half of the ADU, or one meter for the whole ADU? HUD is picky about metering, and the subject's unit count should be the same as the amount of meters. But if your highest and best use doesn't fit HUD's metering guidelines you may have to make the report subject to adding metering or making units subserviently metered.

 

[zdfenton]

See ADU description in Appendix D of 4150.2.

HUD is very picky about metering, and anything that isn't separately metered can't a unit.

So figure out its highest and best use and make it "subject to" additional metering or subservient metering to make it meet HUD guidelines.

 

[Michigan CG]

..........HUD is very picky about metering, and anything that isn't separately metered can't a unit..........

Thank you, I learned something today.

 

[janey]

This is the most current guidelines for FHA with regard to ADU;

Most recent guide for the captioned situation:
An accessory dwelling unit (ADU) is defined as a habitable living unit added to, created within, or "detached" from a primary single family dwelling and contained on one lot. ADU�s are commonly understood to be a separate additional living unit, including kitchen, sleeping, and bathroom facilities. ADU�s are subordinate in size, location and appearance to the primary home
and may or may not have separate means of ingress or egress. An attached unit contained within a single family home, also known as a "mother-in-law apartment," or a �garage apartment� that "may or may not" be attached to the primary residence are the most common types of accessory dwelling unit. An accessory dwelling unit sometimes involves the renovation of a garage, basement or a small addition to a primary residence.
The determination of whether or not an ADU is a second dwelling unit is to be made by the appraiser and indicated in the site analysis section of the report where zoning, highest and best use, and legal use are addressed.
The fact that an ADU is rented or generates income should not categorically result in a determination that the property contains two dwelling units.
An accessory dwelling unit may or may not have separate electrical service. The appraiser will make the determination of whether or not an ADU is a second dwelling unit utilizing the criteria stated above in question number one.
FHA does not take the position that an appraiser should conclude the presence of two electric meters necessarily constitute a two dwelling unit structure and not an ADU.

This was sent to me from FHA resource center on Monday 10/04/2010. I was working on a similar project of a SFR with a detached ADU on separate meters, well and septic and was concerned about the utilities. I called the FHA resource center in Philadelphia as well as my home office in CT and received this same answer from both offices. It really comes down to whether or not it is legally a SFR or 2 unit, HBU. In my situation since the site does not meet current minimum zoning requirements and set backs the property can not be subdivided to 2 SFR and there is no multi-family zoning permitted in the town. So it is a SFR with ADU however it does not meet FHA minimum requirements due to location of well and septic for both units.

 

[Mike Kennedy]

This is the most current guidelines for FHA with regard to ADU;

Most recent guide for the captioned situation:
An accessory dwelling unit (ADU) is defined as a habitable living unit added to, created within, or "detached" from a primary single family dwelling and contained on one lot. ADU�s are commonly understood to be a separate additional living unit, including kitchen, sleeping, and bathroom facilities. ADU�s are subordinate in size, location and appearance to the primary home
and may or may not have separate means of ingress or egress. An attached unit contained within a single family home, also known as a "mother-in-law apartment," or a �garage apartment� that "may or may not" be attached to the primary residence are the most common types of accessory dwelling unit. An accessory dwelling unit sometimes involves the renovation of a garage, basement or a small addition to a primary residence.
The determination of whether or not an ADU is a second dwelling unit is to be made by the appraiser and indicated in the site analysis section of the report where zoning, highest and best use, and legal use are addressed.
The fact that an ADU is rented or generates income should not categorically result in a determination that the property contains two dwelling units.
An accessory dwelling unit may or may not have separate electrical service. The appraiser will make the determination of whether or not an ADU is a second dwelling unit utilizing the criteria stated above in question number one.
FHA does not take the position that an appraiser should conclude the presence of two electric meters necessarily constitute a two dwelling unit structure and not an ADU.

This was sent to me from FHA resource center on Monday 10/04/2010. I was working on a similar project of a SFR with a detached ADU on separate meters, well and septic and was concerned about the utilities. I called the FHA resource center in Philadelphia as well as my home office in CT and received this same answer from both offices. It really comes down to whether or not it is legally a SFR or 2 unit, HBU. In my situation since the site does not meet current minimum zoning requirements and set backs the property can not be subdivided to 2 SFR and there is no multi-family zoning permitted in the town. So it is a SFR with ADU however it does not meet FHA minimum requirements due to location of well and septic for both units.

Excellent Post.