Can an energy system that is not owned by the borrower contribute to the property's appraised value?

The appraiser must not include the value of leased mechanical systems and components in the market value of the subject property. This includes furnaces, water heaters, fuel or propane storage tanks, solar or wind systems (including power purchase agreements), and other mechanical systems and components that are not owned by the property owner. The appraiser must identify such systems in the appraisal report. 

For additional information see Handbook 4000.1 II.D.3.c.vii.(G) available at  https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04347