So Who Is Repsonsible To Verify Permits?

[Robert Anderson]

USPAP provides that:

In performing appraisal services, an appraiser must be certain that the gathering of factual information is conducted in a manner that is sufficiently diligent, given the scope of work as identified according to Standards Rule 1-2(f), to ensure that the data that would have a material or significant effect on the resulting opinions or conclusions are identified and, where necessary, analyzed.

Although it is a difficult thing to prove, it has become clear to me over the years that the market value of a property with a permitted addition is often different from the market value of an otherwise similar property with an unpermitted addition. Further, most appraisers that I am familiar with check permits on room additions. As a result, it is my opinion that an appraiser in my area needs to check permits whenever feasible to comply with USPAP. I don't believe that makes us home inspectors.

 

[moh malekpour]

We are not supposed to be "permit police". Repeat after me...I am an appraiser. I am not a home inspector and I am not the permit police.

Permit is a construction document that if it is not handle correctly, it can cause a legal problem for the appraiser. Of course, appraiser is free as a professional to take full responsibility and make a judgment about the addition at the time of inspection by saying that it was built in workman like manner without even mentioning the word permit. As soon as appraiser said the phrase “built in workman like manner”, the appraiser takes a full responsibility and liability as a professional. I never do such a risk because I don’t know much about the construction. So, if there is an addition without a permit or without recording data and I don’t want to say the Phrase “built in workman like manner”, what I am supposed to say? The addition is there, it shows in my sketch and my photo and I want to count it as a living area. I cannot dance around it and make assumption and put responsibility on somebody else. I got to make my mind and it is a black and white situation. Either there is a permit for it or not. If the owner says there is a permit but it doesn’t show in the recoding data, I have to either use the phrase and take the full responsibility, or don’t count the addition due to lack or evidence of permit or make a trip to city hall or a phone call to city hall whatever is practical. But whatever I do, I should not put responsibility of my work on someone else. If you have a recent sale in MLS but you are not sure it is a closed sale or not, what would you do? you call the title company or county assessors office to get the doc# for that sale. Are you a data police or county recorder police when you try to verify the sales data? No, document verification is your job. Permit is a document and needs verification. If you said there is a permit for it according to the owner, you got to verify it. You don’t make assumption for your sales data verifications, why do you want to make an assumption for the permit verification?

 

[Webbed Feet]

Originally posted by moh malekpour@Jun 1 2005, 12:44 AM
Permit is a construction document that if it is not handle correctly, it can cause a legal problem for the appraiser. Of course, appraiser is free as a professional to take full responsibility and make a judgment about the addition at the time of inspection by saying that it was built in workman like manner without even mentioning the word permit. As soon as appraiser said the phrase “built in workman like manner”, the appraiser takes a full responsibility and liability as a professional. I never do such a risk because I don’t know much about the construction. So, if there is an addition without a permit or without recording data and I don’t want to say the Phrase “built in workman like manner”, what I am supposed to say? The addition is there, it shows in my sketch and my photo and I want to count it as a living area. I cannot dance around it and make assumption and put responsibility on somebody else. I got to make my mind and it is a black and white situation. Either there is a permit for it or not. If the owner says there is a permit but it doesn’t show in the recoding data, I have to either use the phrase and take the full responsibility, or don’t count the addition due to lack or evidence of permit or make a trip to city hall or a phone call to city hall whatever is practical. But whatever I do, I should not put responsibility of my work on someone else. If you have a recent sale in MLS but you are not sure it is a closed sale or not, what would you do? you call the title company or county assessors office to get the doc# for that sale. Are you a data police or county recorder police when you try to verify the sales data? No, document verification is your job. Permit is a document and needs verification. If you said there is a permit for it according to the owner, you got to verify it. You don’t make assumption for your sales data verifications, why do you want to make an assumption for the permit verification?

Mr. Malekapour, (is it Mister?)

What you do is you make your appraisal subject to the owner providing evidence of permits. There is little point in doing otherwise. My stand is you just can't "not" value the addition. To do so you are now appraising under a hypothetical condition without your client's approval to do so. Because the addition actually exists, you can't just pretend it doesn't. Also, with that, simply dropping the addition out of your analysis leaves out the little fact that most fire insurance becomes invalidated by unpermitted additions when the jurisdictional authority required them. As the loan undoubtedly requires valid fire insurance you see where this little problem is going. Plus, when the market places value on the addition, regardless if you just drop it out or not, then you are not doing your job by dropping it out. Then you have many clients do not want appraisers to be the "Permit Police" for fear of upsetting the borrower if their house gets red flagged. Typically, I find it's easy to pull permit history without causing that however. Hence, in what I consider good practice, there is only one solution to the unpermitted addition situation. It's "Subject To" time baby! No need to "extract" out the value of an unpermitted addition.. no need to alert the permit police. The lender gets documentation the fire insurance is gonna hold .... or appraisal is no goody!

All very simple.

Barry Dayton

 

[Abester]

Are the permit pullers also pulling the permits on their comparable sale data?

 

[jay trotta]

I think there are many ways to view this issue and "In Your Area Or State" it may differ, along with YOUR CLients Request.

on some occassions we have had, on the Request Order (in writting) requests to "NOT CHECKING" for permits- when this happens we do not check !

I believe "zoning" and "health dept" regulations play a roll in the requirements for additions or alterations.

"Workman like manner"- what does that actually mean when building a structure :question:
was always of the impression that if it was an "Unworkman like manner" the structure would fall over and therefore the statement would never have to be used, just a thought here.

Anyway, if there are noted differences from visiting the subject to the town assessor's field card data, we check for permits, unless the Client requests Not To.

How would you resolve this question via an AVM ?? On line Appraisal Co ??

h34r:

I swear to God, they're not paying us enough for our work B)

 

[airphoto]

Good point, Gregory .. however:

The Old Guy has spoken!

And this old guy believes him to be correct. Fortunately, here in the Tulie Bushes we don't often have building permits, and they are incomplete. My home, for instance, has never had a CO (certificate of occupancy, for those of you in East B'Jesus!) Doesn't mean that it's uninhabitable, just that CO's weren't issued until a year ago ..

 

[jeff samolinski]

Gotta go with the ole guy on this one!!!! As long as you disclose the assumption

 

[Pamela Crowley (Florida)]

It really does depend on the area where you are appraising.

Interesting article about this:

http://www.rismedia.com/index.php/article/...eview/9604/1/1/

Miami Residents Have New Ways to Check Homes for Code Violations

RISMEDIA, Mar. 11 – (KRT) – Sometimes, Miami residents buy more than a house. They also acquire code violations.

"Anyone interested in a property can see if it has problems like illegal additions or rental units," said Mariano Loret De Mola, Miami's director of code enforcement.

With the second program, which begins Monday, people can call one of the city's three code enforcement offices or local NET office and receive a case number when they file a violation complaint. De Mola said that under the new system, nicknamed "311," a complaint is immediately assigned to one of the city's 40 code inspectors, who must investigate within six days.

After that, the resident can get the results of that inspection by calling and referring to the complaint number, or through e-mail.

 

[hal380]

Good Morning all:

Here is a compromise:

During the inspection and verifications the appraiser noted that additions have been made to the subject at some time in the past. The owner stated that permits had been obtained for all work. The appraiser makes the extraordinary assumption that its is, in fact, true. If this proves to be incorrect the appraiser may revise the final opinion of value. If this is a matter of concern to the lender then it is recommended that the presence of permits be verified

I realize the retort can be, Ok you verify it. My short answer is No.

In the course of my work or your work, do I/you verify that the house was originally built with a permit????????, Do you normally verify that the house has a certificate of occupancy???????. Do you make sure all the mechanicals were installed by licensed contractors, etc etc? Even if built with a permit how do we know that the additions were built according to code???

We live by assumptions every day all day.


Regards

Hal

 

[Otis Key]

I go along with Ryan in that I thought we had kicked this dog too many times already. But, in light of that, I'll agree with Mike G. I'm not a roofer, a plumber, an electrician, and on and on and on. I'm also not in the title business - I believe they do research for permits, title transfers, etc.

I'm an appraiser! That's all! I also don't do survey's!

But I did stay at a Holiday Inn ~~~~~~ Once.

You also have to understand that NM is a non-disclosure state and according the "powers to be" in certain county offices, unless you are the property owner, you can't get any info except taxes, legal description, owner of record and assessed values. As such, I stand by my grounds - NOT going to research permits! Not MY job! EA that it was.