Wants me to switch to 2-4 family form

[PropertyEconomics]

The lower level finishing was given value in the appraisal, markedly less so than the above grade finishing as indicated by the market in this area and by the condition of the finished basement space, based upon a comparison to other properties with basement finishing, the market gives little value to finished basements in 102 year old properties like the subject, as this basement, similar to other basements of this age, are somewhat damp, with typical settling cracks. The appraisal did inform the lender that the basement apartments were leased on a 30 day oral lease. The lender has full knowledge of what is contained in the property from the appraisal, they are just stating that they now, after ordering and receiving an appraisal on a 1004 form, want the property appraised using a 2-4 family form. My analysis, as it has always been, is that this property will sell best as a single family home. If the client wants to ensure that the highest and best use is followed, maybe they should require that the tiny kitchens in the basement be removed.

Neil ...

1) How long have the tenants been in the basement units?
2) What is the contributory value difference between a basement (damp aside) and the income stream as leased?

The answer to these two questions are critical to your analysis.

 

[Webbed Feet]

Mr. Melby,

I probably missed this. BUT.... That "registration" that allows renting of the basement units ..... is the registration granted run with the land, or is it granted or "registered" to the property owner? What happens upon sale to the registration?

Webbed.

 

[Neil Melby]

The registration is granted to the owner of the property, and must be renewed on an annual basis for a fee, and is subject to an inspection of the property with possible repair requirements every other year, owners are given a time period not to exceed 60 days to complete any required repairs. If the registration ever lapses for any reason, the property is then considered a new application for rental registration, and then must conform to present requirements, including a separate heat source for each apartment, separate meters, etc.

 

[Webbed Feet]

The registration is granted to the owner of the property, and must be renewed on an annual basis for a fee, and is subject to an inspection of the property with possible repair requirements every other year, owners are given a time period not to exceed 60 days to complete any required repairs. If the registration ever lapses for any reason, the property is then considered a new application for rental registration, and then must conform to present requirements, including a separate heat source for each apartment, separate meters, etc.

LOL! Oh man, am I going to throw open the debate on this one I suspect! Mr. Melby, you did not answer what happens upon sale. Is the registration right that is granted to the OWNER even so much as tranferable to a new owner? Or does a new owner have to reapply for a new registration? I am immediately having issues here. If this is being granted to the owner, and not the land, then this is sounding like "the registration" is personal property and NOT real estate.

Convince me this is a real property right, and not essentially a personal property "License" to use the land for certain activities granted only to one person, or persons, that happen to own the land.

Webbed.

 

[Neil Melby]

The city rental registration is for a one year period, then renewable, the city rental registration is transferable to a new owner for the balance of the year remaining, provided that the new owner provides notice to the code enforcement office of a transfer in ownership to a new owner within 30 days of the title transfer.

 

[Webbed Feet]

Mr. Melby,

Is not this one quite the headache? .. I'm leaning towards police powers have made this a personal property right and not a real estate right. They went beyond zoning into essentially requiring a license to be a landlord. Regardless of the word used "registered" to dodge the word "license." Then no separate meter or heat, grandfathering of stuff that fails current codes, possibly even violates current fire codes. My, my, my.. .. You showing as licensed, if this were Oregon I'd be asking the transaction value and telling you to call the board to see if this meets complex definition and to consider the scope of your license..

I don't know. At the moment I am thinking the income stream is attributable to a personal property "registration" and only indirectly to the land due to the registration. Because without the registration the income is lost, at least legally. The registration does not run with the land, it runs with the person(s) by what you have told me.

What happens if a seller doesn't want to transfer their registration, they want to take it with them to a different house?

Webbed.