Water

[Edd Gillespie]

Thanks Lee Ann,
OK. I got it. I do an H&BU. Now assume I think the highest and best use is as irrigated farm land. The land is vacant and I will do it sans water SHARES right? I decide due to location, soil types and other factors that this land is highest and best used as irrigated land if you can get water.
OK.
I am not getting into seniority or drought issues here.
Now it just so happens the guy who owns this land and is wanting to sell it or encumber it alos owns some water shares and that water can get to the land via the ditches and laterals.
Everybody says the water is already part of the land, and I know legally that is not true, but they don't want to hear it.
If I understand you correctly I have a communication problem. That is what I want help with. How do you communicate this to somebody in demnial and beyond that how is it done on this dadgum FANNIEMAE 1004 that the lenders and underwriters have fallen in love with? I know they fell in love with it cause FANNIE buys their loans if the LO requires us to use it.

 

[fdjaynes]

Are you saying that you are appraising vacant land on a 1004?

Fred Jaynes

 

[Farm Gal]

Sheesh Ed :

If H&BU is with water and "guaranteed water" is presently available per contractual means all you gotta do is "Use your appraisal tools" :idea: if you wanna appraise it "with water" :mrgreen: Shouldn't matte WHICH of the ownership terms is available to the land as long as they are continuing.

"Subject to the Extraordinary Assumption that access to water in the specified amount of ________ will convey with land title. This report is also subject to the Hypothetical Condition that the subject property 'shares' are recorded in (what-ever legal means is customary) as tied to conveyance of title of the land. The appraiser recommends that the tie be set for less a time frame than the length of the loan and any reissue of lending funds for the subject. IF the water rights are not separately assured and legally recorded to the property owner and to the holder of mortgage lien, the property value opinion rendered herein is null and void, and the appraiser would have to form a different value opinion."

I AIN'T A LAWYER AND I DON'T PLAY ONE ON TV!!!

Run it by an attorney for proper wording in your state as to the suggested wording of the statement so that neither lender nor property owner can sell it off without consent of the other AND such that neither of them can hold the other over a barrel if other transactions HAVE to occur (conveyance of loan or real estate to some third party(s).

Now if the dim-bulb lender fails to observe your prominently located conditions and advice, and they fail to adequately secure the water rights, shares whatever.... it ain't YOUR problem. ya know? But your VALUE opinion should be solidly based on an ASSumption that the place has whatever amount of water you are told it is entitled to!

These quasi-property rights issues can get tricky... Try appraising things on leased land sometime... Timeframes and what you GET for your money MATTERS!

 

[Edd Gillespie]

Originally posted by Lee Ann@Dec 1 2004, 01:42 PM
This report is also subject to the Hypothetical Condition that the subject property 'shares' are recorded in (what-ever legal means is customary) as tied to conveyance of title of the land. The appraiser recommends that the tie be set for less a time frame than the length of the loan and any reissue of lending funds for the subject. IF the water rights are not separately assured and legally recorded to the property owner and to the holder of mortgage lien, the property value opinion rendered herein is null and void, and the appraiser would have to form a different value opinion."

I AIN'T A LAWYER AND I DON'T PLAY ONE ON TV!!!

Run it by an attorney for proper wording in your state as to the suggested wording of the statement so that neither lender nor property owner can sell it off without consent of the other AND such that neither of them can hold the other over a barrel if other transactions HAVE to occur (conveyance of loan or real estate to some third party(s).

Now if the dim-bulb lender fails to observe your prominently located conditions and advice, and they fail to adequately secure the water rights, shares whatever.... it ain't YOUR problem. ya know? But your VALUE opinion should be solidly based on an ASSumption that the place has whatever amount of water you are told it is entitled to!

These quasi-property rights issues can get tricky... Try appraising things on leased land sometime... Timeframes and what you GET for your money MATTERS!

OK. So the hypoteticl is eno0ugh to alert the lender USPAP-wise?
Thanks

 

[Farm Gal]

Me,? I'd use BOTH the EA and the HC... cause you are ASSuming for the purpose of value both the Hypothetical (what really isn't) and the (what for the purpose of the report value is ASSumed to be true and possible and you have no reason not to beleive) EA. Kinda covers yoru tailfeathers if the idjidts go and sell the water rights teh same day you appraised the place though.

I've never figured out exactly why under these circumstances one would be forced to use BOTH... the hypothetical alone should suffice in this instance... but past experience dictates that lenders pay more attention if you use TWO sets of really big words and put them in BOLD AND underlined and SUCH

Belt and suspenders... Or the baffle them with BS theory

...but be very, VERY careful to CLEARLY warn them that if they DO NOT assure the recordation of RIGHT to the water (in whichever form) the value can be "drydirt" and NOT what YOU appraised...

important concept to get across whatever you have to do to make it stick.