An Activity and Use Limitation, or AUL, is a restriction that allows certain uses of a property but not others. Where contamination is underground, a limitation may, for example, allow use of the surface of the site but prohibit unsupervised excavation and forbid vegetable gardening. Or, it may allow a commercial property owner to perform remediation appropriate to a commercial use, with the understanding that no conversion to residential use will take place unless further clean-up to meet the more stringent requirements for residences is performed. The AUL allows government to accept as a solution a program of clean-up appropriate to each property type. The question for appraisers and those who seek appraisers' advice is what effect the imposition of an AUL has on a property's value.
Appraisers seek answers in the behavior of market participants.
A survey of lenders in Greater Boston indicates that, so long as an AUL does not impair the use that produces the property's value, for the most part a lender is as willing to take a property with an AUL as collateral as any other. In the six years since AULs' institution, sufficient sales of limited-use properties have taken place to allow analysis of the effect of AULs on value. Analysis of sales produces a view consistent with the larger body of data for properties affected at some point by contamination. Contamination is often widespread. To be a participant in this market means to accept that the property one wants to acquire may contain fill with unknown materials, may have been used for manufacturing during the period when solvents were routinely disposed on-site, or may be underlain with groundwater carrying contaminants from where they originated on neighboring property decades ago.