24VAC30-41-450. Mixed-use properties.

A. When the acquired dwelling unit is part of a structure which also includes space used for nonresidential purposes, the amount of the purchase supplement offer will be determined by using only that part of the fair market value that is attributable to the residential use of the acquired property. The following calculation shows how this amount is determined:

Example Displacement Property in Residential and Commercial Use
A grocery storeowner lives in a two-bedroom, one-bath apartment above the store. The residential unit has 1,200 sq. ft. of habitable living space. The property is appraised at $150,000. The appraiser allocated 40% of total property value to the residence. There are several two-bedroom, one-bath units available for sale. They are: (i) a duplex with two identical units - $125,000; (ii) a single-family house - $75,000; (iii) a condo unit in a sixplex - $50,000.
Most comparable property: a) duplex unit.	Value $62,500
LESS: Displacement dwelling.	Value $60,000
Maximum Purchase Supplement Amount	$2,500

When the replacement property is a structure which includes space used for nonresidential purposes, only that part of the total cost that relates to the value of the owner's living unit will be used when determining the purchase supplement payment.

B. When the replacement property contains buildings other than the residence which are used for nonresidential purposes, the value of these buildings must be carved out of the entire purchase price of the replacement property in order to determine the residential use value. The residential use value will represent the amount paid for replacement housing when determining the purchase supplement payment amount. The following calculation shows how this amount is determined:

Example
Displacee Purchases Mixed Use Replacement Property

A family displaced from a single-family house (acquisition value $80,000, purchase supplement $10,000) contracts to purchase an operating chicken farm for $250,000. They will live in the farmhouse, which has an estimated value separate from the farm of $85,000. The displaced family submits a claim for the full $10,000 maximum purchase supplement amount.

The family is eligible to receive $5,000, not $10,000, as a Purchase Supplement Payment

Before processing the claim for payment, the district office must determine the value of the farmhouse on a lot normal for residential use in the area. This will determine the payment ceiling. The part of the purchase price attributable to the farm operation ($165,000) is not to be considered in the claim. This should have been explained to the displaced family members before they search for replacement property.

C. When the acquired property consists of a multi-family structure of which one unit is owner-occupied, the amount of the supplemental offer will be the difference between the value of one unit of a multi-family comparable and the value of the owner occupied residential-use portion of the acquired property. When the replacement property is a multi-family structure, only the value of the owner's living unit can be used to determine the supplemental payment, not the entire purchase price. The purchase supplement amount will be the price of one unit of a multi-family comparable or the price of one unit of a multi-family replacement, whichever is less, minus the residential use portion of the acquired property.

The following calculation shows how this amount is determined:

Example
Owner Displaced from Condominium Unit

The acquired dwelling is a condominium unit in a building containing three stores and six residential units. The appraised value of the building is $1 million. The value of the displacee's unit is $120,000.

The purchase supplement is the cost of a comparable condo unit in a similarly configured building having residential and commercial units, less the $120,000 attributed to the displacement unit.

There may not be a condominium unit on the market in a mixed use, six residential unit building. Look for units in buildings having five, four, three, or two units. Use the "most comparable" unit considering the ownership form and configuration of units, as well as other factors.

Statutory Authority

§ 25.1-402 of the Code of Virginia; 42 USC § 4601 et seq.

Historical Notes

Derived from Virginia Register Volume 18, Issue 3, eff. November 21, 2001.

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