An appraiser is valuing a property in a California single-family zone that was converted to a 4-unit rental through a lot split under SB 9 (Government Code §65852.21), resulting in two parcels each developed with a duplex. When selecting a cap rate from comparable sales, which California-specific factor is MOST important for the appraiser to consider?
Correct Answer
C) The cap rate should reflect SB 9's regulatory constraints — including owner-occupancy requirements, unit size limitations, and deed restrictions — that may affect investor demand and risk relative to conventional multifamily properties
California's SB 9 (Government Code §65852.21) permits ministerial approval of duplexes and lot splits in single-family zones but imposes regulatory conditions — such as owner-occupancy requirements for lot splits, unit size caps, and prohibitions on demolishing affordable or rent-controlled housing — that distinguish these properties from conventional multifamily assets. These restrictions affect the investor risk profile, resale marketability, and income potential of the property. An appraiser must select or adjust cap rates to reflect these differences, consistent with USPAP's requirement that the appraiser analyze all factors affecting value.
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