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Two Family With Zoning Downgraded To Single Family

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Tony in Ohio

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
I appraised a “built as” two family home on a street that has had zoning downgraded to single family. The neighborhood is conforming with approximately 25% of the homes being built as 2 family structures in the 1920’s and 30’s. The area is in an older, but upscale suburban community, but close to a distinctly less upscale community and as a result has a mix of quality and condition factors. It’s basically a transition zone.

The local planning department was distinctly unhelpful about confirming grandfathered use as a two family but I feel comfortable enough checking the legal non conforming box as it would be unusual enough to be common knowledge, and enforcement of the zoning is so weak anyhow, that you routinely see listings and sales in the area that blatantly say there is an illegal third unit in the attic.

The reason I am talking about this is that a lender is trying to get me to write a letter saying that the home could be rebuilt as a 2 family if destroyed. At her first request I referred her directly to the planning department, but she found them no more helpful than I did and she is still trying to get me to do it.

It’s my understanding that each community makes its own rules about the circumstances that a non conforming home can be rebuilt in a no conforming use. And that specifically the owner must apply for a variance to rebuild and the rules are applied in whether to accept or reject the application. I refuse to take on the liability of predicting the future actions of a planning department in response to such a broad hypothetical question, however I would like any input you guys and gals may have as I am kind of questioning myself.

Do I need to know the specifics in determining highest and best use? The thought crossed my mind, but I don’t think so because that assumes the property is whole.
 

Ron in AR

Sophomore Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arkansas
If it's legal non-conforming as to zoning, it is still legal and the highest and best use based on what you have told on this post appears to be 2-family.

In my area legal non-conforming means that it cannot be rebuilt if destroyed.

Sounds to me like your thinking is straight.
 

Patrick Egger

Sophomore Member
Joined
May 29, 2003
Professional Status
Certified General Appraiser
State
Nevada
Your thoughts look correct ... this is a lender issue, you need to point it out clearly in your report... regarding the possibility that it could not be rebuilt. This leads me to the question ... any impact on sales/values for the non-conforming nature? Assume your sales all have similar conditions?

I think your job is to value the property ... inform the client ... let the underwriter take issue with the zoning ... basically I see more risk and hence reduced LTV ... that's why the lender wants you to sign the letter and grant access to your E & O in the event of a fire!

Your job is not to tell the client what they want to hear ... but rather what they need to know. Their job is to assess the risk and underwirte it.

Just my 2 cents ...
 

Tony in Ohio

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
Thanks guys,

I thought I knew the answer but I’m so tired I wanted to run it up the flag pole for some feedback in case I was missing something.

Talk about lousy days.

I was no showed for the first time in a long time yesterday. Owner’s father was to meet me and let me in. He forgot and I fit him in today. Of course the owner forgot to put the key in the box so it’s another wasted trip. Next inspection was a two family. Got there and the owner tells me one of the tenants is out of town till the end of the week., and do I need to see both units. Uhh, yes. Had to have it reassigned because I am going on a much needed vacation this weekend. It’s a shame too; since I did a model match a block over last week. Stopped at a light, and a bird crapped on my knee. No kidding, I had the window down half way and there was maybe an inch of horizontal clearance for the sucker to take his shot. Thank goodness I had baby wipes in the car. Next inspection got me rained on. Which I guess is good, since it rinsed off anything the wipes missed.

Got to laugh ‘cause crying don’t help.

Oh well, another inspection and lots of write ups and I am getting some much needed R&R
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
In the first place, you cannot personally attest to any "rebuild" of the subject unless you are a planning department official. DO NOT write ANY letter! In the second place.....If there are other similar structures in the neighborhood then I would consider the two unit to be Highest and Best Use 'as is'.

NOTE: Sometimes "rebuild" requirements are really convoluted. I had a case where the subject could be rebuilt 'as is' IF it was NOT destroyed more than 25%.....IF there was a permit issued and IF it was rebuilt to the same 'foot-print."

I understand that in California, there is legislation being passed in July to allow for second units in previously zoned single family areas. This legislation will most likely trump local zoning....In fact, a city in my area has already entirely re-vamped their entire local zoning ordinance in order to comply with the new state requirements.......
 

Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
Same basic requirements here as with blue - Most communites say you could rebuild if 10% or more of the original structure (read - foundation counts) is still in existnce it can be rebuilt as it pre-exists current zoning. Since the Lender (don't know if it was LO or UW) has already spoken to the zoning board, I'd tell her "sorry, since I can't get a straight answer out of zoning if it can be rebuilt, I'm not going to write a letter that it can".......try to be nice about it, but I wouldn't write a damn thing for them.
 
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