Chapter 6 Control of ownership

Sandra has been hired by the Illinois Department of Transportation (IDOT) to assist in its purchase of several properties to make way for a new highway. Several of the estates will be purchased in their entirety, and the houses torn down. One house, however, sits near the rear of the property and only half of the lot will be needed for the highway project. In this case,

• a government lien will be issued for the front portion of the property.

• Sandra needs to appraise not only the cost of the land but also the negative impact the remaining property will sustain.

• eminent domain allows the state to purchase the land needed for public good, but estates must be purchased in their entirety.

• due to the power of eminent domain, the condemned property cannot be subdivided.

Answer explanation

Eminent domain allows the state to acquire land for public use, but it requires that entire estates be purchased, not just portions. Therefore, the correct choice is that estates must be purchased in their entirety.

Owner Crowe has a property in which the use of the improvements has been identified by the city as a grandfathered use. What does this designation mean for the property owner?

• The existing use no longer conforms to the current zoning regulations and may limit how Crowe may improve the property in the future.

• The city has temporarily granted owner Crowe spot zoning for the property.

• Crowe must eventually file for a zoning variance to continue the existing use.

• The building is no longer viable and is ready to be condemned

Answer explanation

The designation of grandfathered use means that Crowe's existing use does not conform to current zoning regulations, which may restrict future improvements to the property.

Commercial property owner Winston received an invoice for a tax that is based upon the market value of her retail shopping center property. What type of tax does Winston have to pay?

• value added tax

• ad valorem tax

• capital gains tax

• assessment tax

Answer explanation

Winston must pay an ad valorem tax, which is based on the market value of her property. This type of tax is commonly applied to real estate and is calculated as a percentage of the property's assessed value.

Jillian is appraising Mark and Sarah's soon-to-be purchased home so that they can finance through Action Mortgage. Mr. Fergison the seller, is still occupying the home and agreed to show Jillian around on the agreed upon inspection date. Mr. Fergison was more than eager to inform Jillian of everything he knew about the home from the oak flooring to the diameter and number of the trees in the established landscaping. He also told her about the new sidewalk which is scheduled to be constructed down the entire street a month after Mark and Sarah are to take possession of the home. He told her that the new buyers would have to pay for the cost of the concrete and the labor but that the results would definitely add value to the final appraisal. The city is currently bidding out estimates for the labor to reduce the costs. When appraising this dwelling Jillian must

• estimate the cost of the sidewalk and labor herself by contacting local businesses and deduct this number from the appraised value.

• report the ad valorem tax on the addendum since the buyers will be paying for it themselves, and use comparable sales with similar sidewalks to the one that is projected.

• take the quality of flooring and the mature landscaping into account when looking for comparable sales, but the sidewalk need not be addressed as it is not yet in existence.

• take the pending special assessment into account as it could negatively impact the appraised value.

Answer explanation

Jillian must consider the pending special assessment for the sidewalk, as it could negatively impact the appraised value. This is crucial since the buyers will incur this cost, affecting their financial situation.

Comprehensive plans

• usually grandfather past uses.

• are future-oriented.

• are for a specific property.

• are currently restrictive.

Answer explanation

Comprehensive plans are designed to guide future development and land use, making them inherently future-oriented. This distinguishes them from options that focus on past uses or specific properties.

Bill and Brandy are cashing out on some of their home equity to cover the cost of sending their son to college. To maximize their borrowing potential, they hired Jeff to appraise their home. He informed them the appraised value of the property is $335,000. Luckily for them, this was more than enough to cover the cost of college tuition, but they were concerned because their assessed value is currently $375,000. The mill rate for their county is comparatively high. Which of the following best describes the cause for their concern?

• The appraiser should have taken the high mill rate into account to obtain a more accurate value.

• In this case, the special assessment is not high enough and the couple should challenge the appraised value.

• The couple is probably paying too much in taxes. They may be able to get their mill rate lowered if they present the county with the lower appraised value.

• The couple is probably paying too much ad valorem tax based on the assessed value and the mill rate

Answer explanation

The couple is likely overpaying in ad valorem taxes due to their assessed value being higher than the appraised value, combined with the high mill rate, leading to increased tax liabilities.

Brian was in the process of building a one-car detached garage when he came across the steal of the century on his dream car. He soon realized he would need additional storage for his new purchase. Luckily, he hadn’t gotten very far on his garage project, so he poured another slab to make it into a two-car garage. The building inspector showed up on the site and issued him a ticket because

• Brian failed to obtain a new building permit when he changed his construction plans.

• the county did not receive notification of changes to the construction plans in order to properly compute the mill rate for property taxes.

• Brian failed to obtain a special assessment to accommodate the improvements.

• the garage addition was not in concordance with Brian’s ad valorem tax.

Answer explanation

Brian needed to obtain a new building permit when he changed his garage from one-car to two-car. Failing to do so led to the ticket from the building inspector.

Mike recently made plans to knock down his dilapidated one-car garage and build a new two-car with a large attic for storage in its place. He went to the city to get a building permit and was turned down because his garage was too close to the property line. When it was originally constructed approximately fifty years ago, there was not a setback in place. He was told he could add onto the garage, but if he knocked it down he would have to move it twenty feet into his yard. Mike's garage is currently

• illegally conforming because it is grandfathered in.

• legally conforming to the current easement in gross.

• legally nonconforming because it conformed to the zoning at one time.

• a zoning variance because the previous owner and builder of the garage obtained a waiver of the rules.

Answer explanation

Mike's garage is legally nonconforming because it complied with zoning regulations when built, but now does not meet current setback requirements. Thus, it retains its status as nonconforming.

While inspecting a Victorian two-story for a refinance, Edgar noticed the couple who owned the home had installed a separate lockable entry door in the front hall and another at the top of the stairs to separate the main level from the upper level. They had also converted one of the upstairs bedrooms into a kitchen. The couple had obviously converted the upstairs into a separate apartment. Later, Edgar checked the zoning map in his office and found that the property is zoned single-family residential. He called the clerk's office and found that no changes had been made to the zoning. The property is

• a part of the towns buffer strip that mixes commercial and residential in order to maintain a higher level of energy conservation.

• not in legal use according to its zoning. Edgar should appraise the home as a single-family dwelling and make functional adjustments for the lockable entrance doors and the upstairs kitchen.

• legally nonconforming because even though it never conformed to zoning laws, it could be easily be converted back to single-family.

• conforming to its certificate of occupancy if there is enough square footage to accommodate two apartments regardless of single-family zone

Answer explanation

The property is not in legal use according to its zoning as it is zoned single-family residential. Edgar should appraise it as a single-family dwelling, adjusting for the separate entrances and the kitchen.

A lien creates a potential ownership interest.

• True

• False

Answer explanation

A lien does not grant ownership but creates a legal claim against an asset, indicating a potential ownership interest if the debt is not repaid. Therefore, the statement is True.