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Another way to address this issue is in the offer to purchase. Add a contingency in the offer that the offer is subject to the seller providing a copy of a valid proof of permit for any addition, etc. I have found that motivated sellers don't have a problem with this. The proof is either provided or a red flag is raised about a potential problem that can be further researched.
Whether or not an addition or improvement or modification is permitted is a legal issue. As an appraiser I assume the property "as is" is legal. It is not my job to make a legal determination or judgment. It is similar to a rebuild letter from the planning and zoning department on a grandfathered usage. I appraise as the property is as of a specific date with the extraordinary assumption that it is legal and will continue to be legal. If the lender wants additional certifications or rebuild letters or anything else outside the value of the property they can get an attorney or someone else.....I do not want to assume the responsibility.
It is similar to encroachment. If you want to find out if a building encroaches on another site, call a surveyor. If I say it encroaches and it doesn't, I can be liable for any resulting losses.
Last edited by Goodpasture; 03-16-2009 at 08:05 AM..
There is necessarily a "standard". Some lenders require the appraiser to check for permits and some do not. Some lenders ask the appraiser to ask the owner if permits were obtained and note in the appraisal their reply but not to verify with the city. It is up to the buyer to do due diligence on the home they purchase and many appraisers make sure they note in the appraisal that it is good business practice for a buyer to research permits.
Not in my part of the country. I also don't search to see if the title is transferable. I appraise "as if the title is good, all additions have all permits, and all inspections were performed and passed." If there wasn't a permit pulled, it MIGHT affect my estimate of value. I would have to research the subject and see if new comparables are needed.
I also don't do rebuild letters if a use is grandfathered in.................
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researching permits
