What would you do?

[hastalavista]

The first order was for a 1025.

I inspected the property and informed the lender of the illegal kitchen. They then canceled the 1025 order and replaced it with a new order # for a 1004 due to the different fee schedule.

I'm a bit lost here?
Is the subject a two-unit property that has a non-permitted kitchen, or
is the subject a one-unit property that has non-permitted kitchen?

 

[Tony V]

Ed,

Does it come up as a 210 or a 220...

I have recieved many orders for 2 family and when I start to research the subject is a 1 family with an accessory appartment....I would be looking at class first...

 

[Edward OConor]

Ed,

Does it come up as a 210 or a 220...

I have recieved many orders for 2 family and when I start to research the subject is a 1 family with an accessory appartment....I would be looking at class first...

It's classed as a 220, however, if you do a fair amount of work in Nassau county you already know that that doesn't mean $h!t. The county assessors record doesn't always match the town/village issued C/O. If the C/O was issued by the county it might be different.

An "off record" with a town official indicated that there was never a permit filed for this property and that she didn't know of any case that an apartment in a basement would be approved. There is no question that this basement kitchen is illegal, but common to the area.

Here is another question: While checking for a C/O the clerk states "I'll check for you but then I will report the inquiry to an inspector for investigation." Do you give the specific address? Is this a breach of confidentially?

 

[robert higgins]

Can you a bit more specific, as to why you will not touch it with a 10 foot pole?

Eli,

First off I would not call anything illegal in the first place, as I do not have the authority in doing so; I would state that the kitchen is/was a non-permitted kitchen. Second, I do not have the power to make someone removed something. What the client is asking is beyond my power, thus as written, unacceptable conditions within the appraisal order.

Edward,

You got yourself stuck between a rock and hard place now. What I would have done is ask for any records for permits on file for 123 Main Street and that’s it. Make notes on what I found or not found and relay them in my report. If I had a question regarding permitted items or status, I would call (in general, if I had a non-permitted zzz, what is the zoning stand on it) or look up the zoning regulations, again relay them in my report.

I would make the report “subject to” the homeowner provide evidence of all required permits and final inspections by jurisdictional authorities.

 

[Mike Kennedy]

It's classed as a 220, however, if you do a fair amount of work in Nassau county you already know that that doesn't mean $h!t. The county assessors record doesn't always match the town/village issued C/O. If the C/O was issued by the county it might be different.

An "off record" with a town official indicated that there was never a permit filed for this property and that she didn't know of any case that an apartment in a basement would be approved. There is no question that this basement kitchen is illegal, but common to the area.

Here is another question: While checking for a C/O the clerk states "I'll check for you but then I will report the inquiry to an inspector for investigation." Do you give the specific address? Is this a breach of confidentially?

1. Personal visit to town hall, fill out a FOIL request.......REVIEW the existing file YOURSELF. Discuss with NO ONE.

2. "class" 210 / 220 - Tax Assessment classification means nothing. In the Event Assessors become aware (usually via MLS listings or neighbor notifications) that an illegal apartment was created in a SFR, the vast majority will TAX it as an R-220 - WHILE stating "we don't verify if its LEGAL or not - if its' there....we tax it - need clarification - obtain it from Building & Zoning.

3. Highest and Best Use MUST be legally permissible.

4. playing wizard of oz and magically making the illegal use dissappear (as some have suggested) is intentionally misleading and a violation of the Ethics, Competency, and SOW Rules. It is there..... Value Opinion necessarily based on H.C. a C of O exists for the ACCESSORY APARTMENT......

5. fannie form assignment - follow fannie guidelines re Illegal Accessory Units INCLUDING citing the Illegal use.

 

[Mike Kennedy]

XI, 404.01: Zoning (01/31/06)
The appraiser is responsible for reporting the specific zoning classification for the subject property. The appraiser must include a general statement to describe what the zoning permits—“one-family,” “two-family,” etc.—when he or she indicates a specific zoning such as R-1, R-2, etc.

The appraiser also must include a specific statement indicating whether the improvements represent a legal use; a legal, but non-conforming (grandfathered) use; or an illegal use under the zoning regulations; or whether there is no local zoning.

We generally will not purchase or securitize a mortgage on a property if the improvements do not constitute a legally permissible use of the land.

We do make certain exceptions to this policy, as long as the property is appraised and underwritten in accordance with the special requirements we impose as a condition to agreeing to make the exception:

•
•
•We will purchase or securitize a mortgage secured by a one-family or two-family property that includes an illegal additional unit or accessory apartment (which may be referred to as a mother-in-law, mother-daughter, or granny unit)

as long as the illegal use conforms to the subject neighborhood and to the market.

The property must be appraised based upon its current use and the borrower must qualify for the mortgage without considering any rental income from the illegal unit.

The appraiser must report that the improvements represent an illegal use and demonstrate that the improvements are typical for the market through an analysis of at least three comparable properties that have the same illegal use.

The lender also must make sure that the existence of the illegal additional unit will not jeopardize any future hazard insurance claim that might need to be filed for the property. We will not purchase or securitize a mortgage secured by a three-family to four-family property that includes an illegal accessory apartment.
•

 

[Mike Kennedy]

XI, 404.02: Highest and Best Use (06/30/02)
The highest and best use of a site is the reasonable and probable use that supports the highest present value on the effective date of the appraisal. For improvements to represent the highest and best use of a site, they must be legally permitted, financially feasible, and physically possible, and must provide more profit than any other use of the site would generate. All of these criteria must be met if the improvements are to be considered as the highest and best use of a site.

A strict theoretical highest and best use analysis identifies the perfect improvements for a site—assuming that the site is vacant and available to be developed. The appraiser’s highest and best use analysis of the subject property should consider the property as it is improved. This treatment recognizes that the existing improvements should continue in use until it is financially feasible to remove the dwelling and build a new one, or to renovate the existing dwelling.

If the use of comparable sales demonstrates that the improvements are reasonably typical and compatible with market demand for the neighborhood, and the present improvements contribute to the value of the subject property so that its value is greater than the estimated vacant site value, the appraiser should consider the existing use as reasonable and report it as the highest and best use.

On the other hand, if the current improvements clearly do not represent the highest and best use of the site as an improved site, the appraiser must so indicate on the appraisal report. In such cases, we will not purchase or securitize a mortgage that is secured by the subject property.

 

[hastalavista]

Second, I do not have the power to make someone removed something. What the client is asking is beyond my power, thus as written, unacceptable conditions within the appraisal order.

(my bold)

Robert-

I agree with you and neither do I have (or want) such power.
But I think sometimes we lose sight as to what the "subject to" condition means. All it means is that our value conclusion is credible subject to the hypothetical condition that issue X is addressed.

So, I don't think it is beyond an appraiser's power to conclude credible results that rely upon a hypothetical condition and I wouldn't generalize using such a procedure as an unacceptable assignment condition (unacceptable as in it violates USPAP).

Now, as a practical matter, there are some assignments where I choose not to use an HC. But that's a business decision (more than not). And, it usually means that I pass on the assignment.

In this specific case, the question is, "Is the use of the HC legitimate?"
On the face of it, I wouldn't call it illegitimate. Isn't this the problem below-
Borrower Smith goes to Prudent-Lending Bank to get a loan. Prudent-Lending Bank sends out Appraiser Mary to do appraisal. Appraiser Mary diligently reports back to Bank what she observed. The bank, being prudent, decides it does not want to loan on the property in its as-is configuration and asks Appraiser Mary to complete an appraisal based on the Hypothetical Condition that an observed and presumed non-permitted kitchen is removed. The bank will use this information to provide lending options to its client (the prospective borrower).
(BTW, I still don't understand if the subject improvement of the original poster's question is a two-unit with a non-permitted kitchen or a one-unit with a non-permitted kitchen?)


I'm not picking an argument. I'm just pointing out that all we do is provide an opinion of value and nothing in our reports (for mortgage finance transactions) require anyone else to do anything they don't want to do.

 

[Mike Boyd]

If you have not completed the report on the 1025, I see nothing wrong with following their instructions.

(providing you are correct in that it is an "illegal" kitchen in the basement) How about the finished basement itself? Was that completed without permits or are permits needed to do that in your area.

If you already completed the report and have sent it in, then it is a new assignment. Charge accordingly.

If you have completed a major portion of the report on the 1025, it is a business decision on your part whether or not you want to charge them for the hassel.

 

[Mike Kennedy]

Denis - "a one-unit with a non-permitted kitchen?" / Accessory Apartment