If the Assessor or Realist says a property is a duplex, does that make it a duplex? Not necessarily. Let me share a quick scenario to help illustrate the importance of taking what the Assessor says with a grain of salt. I recently appraised a property in Sacramento that is listed by the Assessor as a duplex (two houses on one lot). Upon inspecting the property though, the second dwelling was really an accessory unit instead of a full-fledged second unit. But more importantly, after digging around a bit I learned the secondary unit didn’t actually have any permits on file with the planning department or the building department. Granted, there was a fire in the 1970s at Sacramento County headquarters, so permits are incomplete at times, but still all signs in this case pointed toward the secondary unit NOT being permitted (despite Tax Records showing two units).
Moral of the Story: The Assessor doesn’t have the final say when it comes to what a property is and whether it is legal or not. In other words, just because the Assessor or Realist says there are two units does not mean there are actually two legal units on the property. Does zoning allow for two units? Were both units built with a permit? These are questions that are best answered from the planning and building department, so we need to give the most weight to what both of these departments say. On a related note, keep in mind Realist might also be incorrect about square footage, zoning, or bed/bath count, so be cautious about giving ultimate authority to what you see listed in Tax Records.
I hope this was a helpful reminder and maybe a good reference point when working with clients. Finding out what is actually legally constructed and allowable in terms of zoning takes work, but it can make all the difference, right?
Questions: Any thoughts on stories to share? Do you think a house with a non-permitted secondary accessory unit would sell for more in the marketplace? I’d love to hear your take.
If you liked this post, subscribe by email (or RSS). Thanks for being here.
Great job on your research – what a value you have created for your job. Wow. Nice work. We get so fixated on written items being the truth, when we should always follow up and verify items in person. All the more reason of value of seeing and being in places in person to determine actual items. Great post Ryan. Thanks for sharing this info.
Thank you so much Heather. This one was definitely interesting, and I’m so glad I did not assume it was legal and legit. Thanks too for sharing it on your Google+ page. I appreciate that.
Well, I guess that also brings into question the property taxes the owners have been paying. Was it legal for the county to collect taxes on a property that was not really known or permitted to be there?
That’s a good question. I’m not sure the legal answer, so I won’t venture to guess if an Assessor should or should not tax something that is not legal. Another interesting angle is that most buyers would still probably pay more for this unit even though it doesn’t have permits. Now whether there will be loan issues is a whole different story of course, but the prospect of renting the unit for $800 per month is definitely alluring.
Good advice.
1. The assessor doesn’t really care if something was permitted, the Assessors office will tax what is actually there.
2. Because of prop. 13, you are most likely paying taxes on what you paid for the property. If the assessor has the wrong characteristics it most likely wouldn’t effect your tax base because the assessor doesn’t reappraise property taxes every year, like other states, only when you sell or transfer your property.
Thanks Nathan. I appreciate the comment. Many property owners and/or folks in the real estate community tend to think if it’s listed in Tax Records, it must be legit. But just as you alluded to in your first point, that’s simply not the case. The interesting part to me is I’ve seen cases where I find an addition is in progress, but it ends up on the tax roll somehow despite not being completed. For instance, I did some tax appeal consulting last year on a property that was over-assessed by 200K+ very easily because the Assessor seemed to interpret this large addition as being completely finished (despite only being studs). In this case the Prop 13 value was solid where it was, but the addition in progress triggered a reassessment that inflated the assessed value well beyond where it should have been (for the time being at least).
I saw a place on the Sacto. Association website for statistics, for Sac. County only – Is there one for Placer? Eldp? Nevaco?
Hey Truett. Different associations publish their own stats, and some have more detailed ones than others. You can probably find them by looking at the respective association websites. For any onlookers, right now the following links work for stats from various associations:
Sacramento
http://www.sacrealtor.org/public-affairs/statistics.html
Placer:
http://www.pcaor.com/downloads/?category=1
El Dorado:
http://www.edcar.org/stats_new.html