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Unit Count Issue For 2 Flat

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Steven Spychalski

Junior Member
Joined
Jan 14, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
Hello everyone:

Looking for a little FHA advice on a 2-4 unit assignment. Thanks in advance!

The subject is a typical Chicago 2 flat with 2 units above grade. The basement is full and finished and was apparently previously used as an additional rental unit. The building is currently vacant.

The subject previously sold REO and the current Sellers have made repairs. They requested a Certificate of Zoning Compliance from the City and it came back as a 2 unit building.

The Zoning allows 2 and 3 unit buildings.

The Sellers have removed all appliances from the basement kitchen and capped all gas lines. They were clear in the marketing of the property that only 2 units are permitted by the City.

The Chicago Zoning ordinance definition of a Dwelling includes verbiage stating that dwellings must have have a Kitchen or cooking appliance. (There is a Caveat for Single room occupancies, but it does not apply here).

Soooo, I feel the subject is a 2 unit building. The Lender/DEU (unclear which), it requesting the assignment be completed including the 3rd basement unit.

Everything listed above is in the report along with all permits pulled in the past 12 months and a copy of the Zoning Cert. I have worked on assignments that had illegal units and were issued violations/cease and desist orders from the City. In those cases, the owners had to remove cooking appliances and cap gas lines to stop the fines (in addition to removing the occupants). It appears the current owners/sellers have done what is required to abide by the City.

Am I handling the assignment properly? Any issues from an FHA standpoint?

Advice is appreciated!

Thanks!
 

Dublin ohio

Senior Member
Joined
Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
From what you posted. It appears that the Lender/DEU I now asking for subject to being a 3 unit. If zoning allows 2 or 3 unit. Why did cert come back as 2 unit. Must be something in zoning that would address the reason for not allowing 3 basement unit. (I would surmise that if 3rd unit was completely below grade. That could be the issue) Have appraised a few 2-4 family properties in my area that have a "walk down" unit where the majority of unit is above grade. Legal pre zoning. But zoning would not allow "finished basement" to be considered legal unit. Also makes me wonder why client would make such a request since it seems that you fully addressed the issue in the report. Something triggered the request.
 

Steven Spychalski

Junior Member
Joined
Jan 14, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
From what you posted. It appears that the Lender/DEU I now asking for subject to being a 3 unit. If zoning allows 2 or 3 unit. Why did cert come back as 2 unit. Must be something in zoning that would address the reason for not allowing 3 basement unit. (I would surmise that if 3rd unit was completely below grade. That could be the issue) Have appraised a few 2-4 family properties in my area that have a "walk down" unit where the majority of unit is above grade. Legal pre zoning. But zoning would not allow "finished basement" to be considered legal unit. Also makes me wonder why client would make such a request since it seems that you fully addressed the issue in the report. Something triggered the request.

Thanks for the reply. My 'Guess' is that the 3rd unit was added at some point without permit and/or inspection (It's a 100 year old building). Very common in the area. It is 100% below grade, but below grade units are permitted in this Zone.

I got a little more info... it seems the lender may have ordered 2 appraisals, and the other appraiser called the Building a 3 unit and included the GBA and potential income.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Thanks for the reply. My 'Guess' is that the 3rd unit was added at some point without permit and/or inspection (It's a 100 year old building). Very common in the area. It is 100% below grade, but below grade units are permitted in this Zone.

I got a little more info... it seems the lender may have ordered 2 appraisals, and the other appraiser called the Building a 3 unit and included the GBA and potential income.

What I would do: Send the client (AMC I will wager) a copy of the Zoning Compliance Certificate.
 

Steven Spychalski

Junior Member
Joined
Jan 14, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
What I would do: Send the client (AMC I will wager) a copy of the Zoning Compliance Certificate.
Thanks. Already included it in the report. I told them the other report was most likely incorrect if they had deemed the subject to contain 3 legal units. Awaiting response.
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
2 units with finished basement at this point. After closing it can go back to 3 units.:oops:
 

Dublin ohio

Senior Member
Joined
Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
With zoning being 2-3 family, basement units being permitted under zoning. What would keep someone from making it a legal 3 unit?
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
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