Hey guys hope everyone is having a good day.I have a question i am working on a appraisal that they are requesting a rent analsys.The owners bought the condo on Peachtree St. so that there daughter could be close to Georgia Tech.My problem is that if the daughter is living there who should i state is occuping the unit.She does not pay rent the parents pay the note.Thanks in advance.

even though she isn't paying rent, she is still a tenant

I agree with Bill.

The rent will be the market rent for the unit under market terms and conditions.

Thanks everybody

Should i report the mortgage as the rent, because the daughter pays nothing.

It's not time for joke of the week, is it?

There is no lease, the owners are not collecting any rent, so there is no rent on the subject. Explain and leave those spaces blank. You are determining the market rent for the area and the subject. If the subject was rented, after determined the market rent, you would determine if the subject's rent was to high or low.

I wondered how the daughter could be a tenant if she wasn't paying rent. How about "guest?" "Family occupied?"

Michael why even respond if you were not trying to help Andrew?

Tenant is anyone with occupany rights. Those who rent are lessee's.

Thank you for that clarification, pappy.

Metro, I think I did help Andrew.

Market Rent is the most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations; the lessee and lessor each acting prudently and knowledgeably, and assuming consummation of a lease contract as of a specified date and the passing of the leasehold from lessor to lessee under conditions whereby:



1. Lessee and lessor are typically motivated.

2. Both parties are well informed or well advised, and acting in what they consider their best interests.

3. A reasonable time is allowed for exposure in the open market.

4. The rent payment is made in terms of cash in United States dollars, and is expressed as an amount per time period consistent with the payment schedule of the lease contract.

5. The rental amount represents the normal consideration for the property leased unaffected by special fees or concessions granted by anyone associated with the transaction.


Scheduled Rent (also called Contract Rent) is the amount of rent called for in the lease. The appraiser must consider the amount of the contract rent, the duration of existing leases, and the market rent to determine the appropriate method to use in estimating the potential gross income.

to understand what is needed you must understand what it is.

From here you can find your required information.

subject is in a lease fee status, no contract rent but there is a market rent and you will need three comparables (rents) adjusted for the market features and there ye shall find the answer.

"subject is in a lease fee status"

No it is not.
Daddy still has a right to occupy the unit. He has not given up any of his rights in the bundle of ownership, so no leased fee exists.

Andrew probably already checked the "fee simple" box in the subject section. That much he got right. : )

I hope "members of the club" do not check the "leasehold" box given the scenario,
or would you?

.

I checked the Fee Simple box.Correct me if i am wrong since the unit is occupied but no income is been made from the subject.Should all i need to do now is explain in an addendum? Is it correct to say the subject is not RENTED.

The dictionary says a tenant is ”Someone who pays rent to use land or a building or a car that is owned by someone else.”

The AI Appraisal Dictionary says a tenant is

”One who holds or possesses real property; commonly a person who occupies and uses the property of another under a lease, although such a person is technically a lessee, not a tenant.”

I'd submit if the property is not owner occupied it enters the realm of investor property. The choices to identify occupancy are owner, tenant or vacant and checking anything other than tenant when not owner occupied or vacant would clearly mislead intended users of the appraisal.

If its not owner occupied and not vacant then you have a tenant. The amount of rent be it $0 to $1000 is only relevant in the rent analysis. To report that the subject is owner occupied would be misleading. Explain the situation but I would mark it "tenant". If for any reason someone was to sue over this appraisal, I would not want my name on it saying that it was owner occupied and I knew the owner of record was not living in the subject. A lease is a great thing but many people pay week to week or have various family members in the properties but they have possession. Under most lables someone with possession of a property not the owner would be a tenant in a leased fee situation. The leased fee situation is not the lender situation but that is the current state of the current tenant in the subject. Member never said that you should mark it leased fee he/she said the daughter is in a lease fee situation, a tenant. Mike C jumped in to ass u me that he/she was talking about the appraisal itself and not the status of the situation. I agree with Mike that the appraisal should reflect fee simple but we are talking about two different subjects her status and the appraisal.

While the "owner" of record is in fee simple the daughter is a tenant and she is in leased fee with all the rights of a leased fee but not that of an fee simple even if she is not paying a dime of rent. The amount of rent does not establish the degree of fee/lease simple that is a legal status not a monetary relationship. The two things that are not the same. I seem to agree with pappy and member that she is a tenant and that her legal status is that of leased fee even if she is not paying one dime of rent.

Now if the client wants a rent analysis and that is part of your scope of work it does not matter if you agree with that or not its supplemental assignement requirements. Without extreme knowledge of the clients loan process and how, who, what and when of this loan it may be a investment 80% or some other type that would require a rent analysis for properties not owner occupied. Do the rent analysis and understand the process. Good luck.

my thoughts

Thanks.I am calling my client right now.

So, Andrew:
Is there a lease contract between owner and daughter for you to analyze?

IMO, your answer will settle the tenant/owner disagreement here.

And newbies wonder why we get excited when a question like this is asked and there is no mention of a mentor or supervisor.

If you have a family member staying in your own home, you have a guest.

Here's a question: just because there are only three little boxes to check doesn't mean that sometimes a situation will not conform to the boxes, does it? Can't you simply not check anything and put a comment in explaining the situation? It's not as though this sort of situation doesn't exist everywhere there is a college. Are we not allowed to think outside the box(es)?

I think the three boxes covers everything. The only gray area would be second homes. For mortgage purposes lenders are trying to determine if they're making primary residence loans or investor loans. The three choices provide guidance. Explanatory comments are useful but probably only useful to the extent they're read.

"The only gray area would be second homes"

That is why this thread is important, this is not only a legal status question, a check box question it is a question of understanding the entire scope of the appraisasl. The understanding of a second home or investment property does have something to do with the whole process. Now Mike C wants you to analysis the lease agreement: to do what? I guess if you limited to minor analysis then your report should reflect that.The thread has explained that no rent is beign paid, does that change the status of the three boxes- owner/tenant/vacant. If the owner is not living there and its not vacant I can find no box for family living in a home. While I know that some of you want to have a box for everything the CLIENT has requested you use a FANNIE MAE form and as you all know you are requried to follow the supplemental rules and regulation unless otherwise stated which would mean you should not use a FANNIE MAE form.

This is very simple- is the owner living there? Who is living there? Mark the box that best supports you inspection, explain in add. Moving on!

aPPraiser,
I think you make your point clear but IMO, if you (as the appraiser) want to force an "occupant" into a "tenant" status you need legal documentation to do so.
We are not required to police the occupants, BTW.
If the girl had not identified herself as the daughter, like Katrina suggested and says I am a friend of the family, you would not label her as tenant in the absence of a lease contract.

PS. I am glad aPPraiser is not a member of the club;
seems we are at least in agreement about the leased fee thingy.

"force an "occupant" into a "tenant" status" what a silly statement. How can we force anything into anything last time I checked we REPORT what we inspect. Its not if she had not identified herself-she did. Just like if you looked into a closed room and found the flooring missing. It is part of your inspection process.

Member did not say that the appraisal is a leased fee he/she said the situation of the daughter is a leased fee. We do agree on one thing- when someone ass u mes something then a simple thing like checking one of three boxes becomes harder.

REPORT what you see and hear.

my thoughts on this subject are based upon the limited information from this thread and the lack of an inspection.

aPPraiser, you posted:

"While the "owner" of record is in fee simple the daughter is a tenant and she is in leased fee with all the rights of a leased fee but not that of an fee simple even if she is not paying a dime of rent. The amount of rent does not establish the degree of fee/lease simple that is a legal status not a monetary relationship. The two things that are not the same. "

I have no idea what you are describing,
but it's "bass ackwards" anyway.

Even after reading John B's post that gave you the definition of a tenant?

Let me give you one more definition as the "club members" don't seem to have a clue:

Lessee
--------------------------------------------------------------------------------
A Lessee (Tenant) is one who has been granted the rights of occupancy and
use of a property under a lease agreement
--------------------------------------------------------------------------------

What don't you understand about the lease agreement?

Even Andrew got it by now.

PS find a better club aPPraiser! You might learn something.

Moving ON!!!!!!

We have to find a way to answer questions without cutting throats, lol.

Michael C,

You best be careful or Rustie…er…uh…I mean aPPraiser (or whatever moniker he is currently using) will boycott this site…again.

"What don't you understand about the lease agreement?"
AGREEMENT- the act or fact of agreeing, a contract duly executed and legally binding.

CONTRACT- a binding agreement between two or mare person or parties, to bring on oneself as an obligation. Webster's

Now I may be bass akwards but I understand simple appraisal knowledge.

a lease does not have to be written, a contract can be oral just like an appraisal and binding- ie, you may live here while in school and pay $0 amount in rent. Do you agree? By the girls action she has brought oneself as an obligation and performed an act of agreement by living in the subject.

As a licensed appraiser MC you should know that your not a lawyer and the tenant statement is limited to two sources. Please tell me you try to educate yourself in a manner somewhat more than limited to three forums. While this is a very basic level registered type test

One- the USPAP,
Two - the supplemental standards of the fannie mae form
Three the supplemental requirements of the client
and
Four the scope of work as determined by the actions of the clients and the appraiser.

The inspection found that the owner of record is not living in the subject. If the lender "thinks" that the owner of record is living in the subject and that is not what was found at the inspection that would be called tenant mortgage fraud. Now with a fannie mae form there are three boxes. The boxes show owner/tenant/vacant. Once more simple: is the owner there, no. Is the subject vacant, no. Then the person who is living in the subject is either a life estate- fannie mae wrong form or a tenant(paying or not paying rent) Many pay by week to week without a written lease and some are kicked out of apartments for not paying rent but they are still tenants. Your logic is flawed. The payment of rent is a monetary status not a legal one. The status of tenant is a legal one as it defines a group of rights. Stop being limited, my thoughts.

If you use the fannie mae form you have three boxes
owner(daddy owns it)
tenantX
vacant(daughter lives there)
your logic is flawed.

Let her move in some friends and tear the place apart and see how the daddy has the court look at her.

Mike C your logic is flawed.

Is it reasonable to believe the same father, who was nice enough to let his daughter live in a place he owns rent free, would press charges?

But I do agree the "tenant" box should be checked. It is the best option available and thats what you should choose. Just explain in "comments" piece of cake. The End

You're right There are times when there is no written lease agreement usually between family and/or friends.

I think yousepappy was closest to the mark. The appraisal is to be used in making a mortgage loan decision. For lending purposes is the subject the owner's primary home or an investment property? Since it is investment property the occupant is a tenant. The lease is verbal, informal, and the rent is $0.

So, let's review
Somebody says tenant, another agrees.

aPPraiser convolutes everything with this statement:
"If its not owner occupied and not vacant then you have a tenant. " followed by non-sense dribble about a leased fee situation and rights associated with it.

The first post that makes sense is by Katrina:
"If you have a family member staying in your own home, you have a guest.

Here's a question: just because there are only three little boxes to check doesn't mean that sometimes a situation will not conform to the boxes, does it? Can't you simply not check anything and put a comment in explaining the situation?"

I like her suggestion, but the only issue is that FNMA expects the appraiser to make a determination about the occupant.

Youse Pappy narrows the discussion by introducing "second home" which most likely the loan product will be in this case. But it is not a gray area, as you will see below. Further states that the three boxes covers all occupant types- to which I agree from the viewpoint of the GSE- who design the form(s).

aPPraiser rants some more but ends his post with the ONLY credible statement thus far:
"While I know that some of you want to have a box for everything the CLIENT has requested you use a FANNIE MAE form and as you all know you are requried to follow the supplemental rules and regulation unless otherwise stated which would mean you should not use a FANNIE MAE form."

But he does not seem to have read the g'lines or missed THE important one. Maybe this quote from the selling guide will help him and all those who claim "daughter is a tenant" realize they are flat out not doing their job as an appraiser:

VII, 102.01: Occupancy Status (08/24/03)

"Owner Occupied Properties." :

A. Principal residence properties. A principal residence is a property that the borrower occupies as his or her primary residence. If there are multiple borrowers for a regularly amortizing mortgage, only one borrower needs to occupy and take title to the property (except as otherwise required for mortgages that have guarantors or co-signers, as discussed in Section 101.03 above).

Parents who want to provide housing for their physically handicapped or developmentally disabled adult children who are unable to work or who have income that is not sufficient for them to qualify for a mortgage on their own have special home financing needs. In recognition of this, we will consider a residence that parents purchase or refinance for such children to be a principal residence for purposes of satisfying our mortgage eligibility requirements even though the parent-borrower will not be the occupant of the property. We will extend this same flexibility to children who want to provide housing for elderly parents who are unable to work or who have insufficient income to qualify for a mortgage of their own.

B. Second home properties. A second home is a property that is located within a reasonable distance from the borrower's principal residence and which the borrower occupies for some portion of the year. We limit our purchase of mortgages that are secured by second homes to those properties that have one dwelling unit. The property must be suitable for year-round occupancy (and can, in fact, be occupied by someone other than the borrower—as long as the occupancy is not under a timeshare arrangement). The borrower must have exclusive control over the property; therefore, he or she must not enter into any rental agreements that require the property to be rented or give a management firm control over the occupancy of the property. When a property is classified as a second home, rental income may not be used to qualify the borrower.

Truth hurts, sometimes.

.

Good research, Michael C. - So the block "occupant - owner" should be checked.   Am I reading this right?

John

Only if the an adult tech student could be classified as physically or developmentally handicapped.

Hi John,
that's the one I think best meets the FNMA guidelines in Andrew's case.

Personally, I have checked either OO (owner occupant) or tenant for second homes with explanation.
UNLESS, I have reasonable basis not to check OO. OO fraud can be too much liability to get tangled in.

Fortunately, my clients indicate on the order (Calyx form ) what they want and I consider the request.
This form indicates three check boxes also:
1. primary residence
2. second home
3. investment property

.

Looks like the daughter is still a tenant. This is a second home for the owner. However, they do not occupy the property.......not even part time. It must be an investment property as there is no rent income but will be sold off or deeded over to the daughter upon graduation. I would check tenant occupancy as well.

"provide housing for their physically handicapped or developmentally disabled adult children who are unable to work or who have income that is not sufficient for them to qualify for a mortgage on their own have special home financing needs. In recognition of this, we will consider a residence that parents purchase or refinance for such children to be a principal residence for purposes of satisfying our mortgage eligibility requirements even though the parent-borrower will not be the occupant of the property."

just as I said the girl/daughter is a tenant. Moving on.