Unpermitted Additions

[Tim The Enchanter]

See the attached MLS listing disclosing addition without permits.

At least the agent made it reasonably clear what was going on.
Didn't just add in a few hundred square feet w/o explanation.

Maybe it's just me, this stuff used to be easier to deal with.
Now it becomes a pita.

 

[CANative]

I don't understand how a certified appraiser of MK's alleged experience can not understand highest and best use. It just floors me.

 

[Randolph Kinney]

San Diego County - CA

SEC. 91.1.111.1. ILLEGAL TO USE OR OCCUPY WITHOUT CERTIFICATE OF OCCUPANCY.
It shall be unlawful for any person to use, to occupy or to change the existing use or occupancy of a building or structure or portion thereof until the building official has issued a certificate of occupancy as provided in this chapter.

The property that I posted with PDF files showing the MLS and county record demonstrates that the code you cite is not enforced. The property is located in an unincorporated area of the city of Vista. Zoning is controlled by the county of San Diego.

Did you take notice of the county record on this property?



There is a difference of 364 square feet gross living area difference from what the MLS marketed and sold this property as versus what the county says the GLA is.

The MLS fully discloses NO PERMITS for the additional area. I fully disclosed NO PERMITS for the additional area and appraised the HBU as-is and legal zoning.

The sale of this property was consummated; closed escrow March 18, 2015.

 

[CANative]

San Diego County - CA

SEC. 91.1.111.1. ILLEGAL TO USE OR OCCUPY WITHOUT CERTIFICATE OF OCCUPANCY.
It shall be unlawful for any person to use, to occupy or to change the existing use or occupancy of a building or structure or portion thereof until the building official has issued a certificate of occupancy as provided in this chapter.

Mike, PLEASE, stop spewing out nonsense. Assuming the structure is a legal use that conforms with the uses permitted or allowed and was built in accordance with building department specifications, it's a legal use which is the issue at hand.

The above law pertains to people, not land or buildings.

 

[23Degrees]

Standing Invitation to all Interested Parties:
Kindly post from a recognized Appraisal Source (Appraisal of Real Estate, Dictionary of Real Estate, USPAP etc.) an industry accepted Definition of Highest and Best Illegal Use. Thanks in advance.

http://apps.americanbar.org/litigat...3-real-estate-appraiser-highest-best-use.html

There is no such thing of course. But here are some questions for you - Wouldn't a use have to change in order to go from legal to illegal? And in the context of how appraisers define use within their scope of practice would the use of an SFR change if it had a no permit den added?

At what point would you declare that a change to an illegal use had occured - when a no permit electric outlet was added? When a bedroom was expanded 100 square feet without permit? Or when a duplex was converted without permit to a triplex? Based on the typical zoning codes where I work only the last one constitutes a change in use that may or may not now be illegal. The prior two represent unpermitted features only one of which where it would reasonably be expected for an appraiser to become aware of, disclose, discuss, and incorporate into the analysis.

Also, that was an interesting paper but to equate the examples he was citing to a home with a no permit addition appraised properly and with full disclosure on a fannie form where there was no actual change in use doesn't make any sense.

 

[Randolph Kinney]

 

[Mike Kennedy]

HABU Zoning is the left shoe, local, county (such as San Diego County's above) and state Building Ordinance (Law) is the right shoe. Both must be complied with to be Legally Permissible on an effective date of appraisal.

The Dictionary of Real Estate Appraisal, fourth edition, includes the following highest and best use definitions:
• Highest and best use. The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability.4
4 Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 135. 5 Ibid. 6 Ibid., 135-136.

• Highest and best use of property as improved. The use that should be made of a property as it exists. An existing property should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one.6

In analyzing highest and best use, consider legally permissible uses, then physically possible uses, then financially feasible uses. Finally, of those, determine which use is maximally productive (that is, brings the highest economic return). Another way of analyzing highest and best use is to examine which of the three following possibilities makes the most sense for the subject property:

1. Demolish the existing improvements and redevelop
2. Remodel, add on, or otherwise modify the existing improvements ( MEK *which would include modifications if any to comply with local, county, or state Building Ordinances)
3. Keep the improvements as they currently exist

 

[hastalavista]

HABU Zoning is the left shoe, local, county (such as San Diego County's above) and state Building Ordinance (Law) is the right shoe. Both must be complied with to be Legally Permissible on an effective date of appraisal.

I'm not going to change your mind, Mike, I know that.
I bolded the "legally permissible" part because this defines much of the disagreement (IMNSHO):
There is a difference between legally permissible and permitted.

-If a zoning ordinance allows for residential use, public parks, and houses of worship, and no other uses, then building a gas station in that neighborhood (non-grandfathered) would be an illegal use; it isn't permissible (is not allowed) and one permission for it. Current use? Illegal.

- If a zoning ordinance allows for residential use, public parks, and houses of worship, and there is a residential improvement that functions as a home and it has a non-permitted family room; what is that? The use is legally permissible (residential). The addition does not have permits. Current use? Legal.

If the client has a policy that all additions must be permitted, that's fine. Current use is legal; make the appraisal subject-to permits being obtained. Value the property as-if the addition was permitted.
If the client has a policy of requiring an as-is value, that's fine. Current use is legal; value the subject as-is and measure the market reaction to the non-permitted addition in that as-is value.

Again, my post won't budge you, and your posts won't budge me. I'm just posting this as an alternative viewpoint for those members who read the threads. They can evaluate the arguments and make their own judgment.
I suppose they can cite you if the decide one way, and me if they decide another!

 

[CANative]

 

[Mike Kennedy]

"The Appraisal of Real Estate"

HABU Analysis Pg 334
"legally permissible uses would conform to the land's current zoning classification and local building codes along with any other relevant regulatory or contractual restrictions on land use."

Testing HABU Pg 335
"To test alternative uses for the highest and best use, an appraiser usually applies the four criteria in the following order:
1. Legal permissibility
2. Physical permissibility
3. Financial feasibility
4. Maximum productivity

In practice, the tests of physical possibility, and legal permissibility can be applied in either order, but the both must be applied before the tests of financial feasibility and maximum productivity. A use may be financially feasible, but this is irrelevant if it is legally prohibited or physically impossible."