Does a Buyer Have Standing to Sue an Appraiser in Florida for Negligence?

[TD Morgan]

An appraiser valued a condo hotel unit, on property zoned P-D (Planned Development) where the approved use is as a hotel.

The appraiser indicated that "multi-family" use is allowed, when it is not allowed.

The loan was VA, which requires the buyer live in the property for at least one year.

The buyer cannot live in the property because of the underlying zoning and now has to sell.

The buyer approached the appraiser who states that the buyer has no understanding of land use laws or zoning, or highest and best use, etc. He then goes on to say that, in Florida, the buyer cannot sue because the client was the lending institution.

What do you informed professional think.

Should the buyer have legal standing to sue for damages, including selling fees to get out of the investment?

 

[alebrewer]

Without knowing details of the engagement, SOW, transaction, etc., it would be tough to opine on an individual case. I will say, however, that anyone pretty much has the right to sue anyone else over anything. Certainly that would apply to a disgruntled borrower and an appraiser who may have been negligent...

 

[glenn walker]

I highly doubt it BUT I don't know Florida Law. Like all stories there is more to this than Zoning, and if it is a Condo-Hotel it seems something does not add up here ? They usually have a HOA and monthly or yearly dues and it would have been quite evident to the Lender that this was not a property ( last time I checked ) The VA doesn't even makes loans on Condo-Hotels or on purchasing non-owner occupied properties. Also most Condo-Hotles have a front desk and operate like a Hotel, when the owner is not staying there they rent it out for him. Another interesting point is the new owner says he is not allowed to live there full time ? SINCE WHEN- The owner of the unit can live there full time if he wants to but most don't . Anyway-This one sounds like a lot of parties dropped the ball, including the VA Underwriter , THE APPRAISER did he/she appraise it as a Hotel Condo or a regular Condo ? This is where the issue ultimately land if it gets into litigation, not the zoning or H & B use. The VA borrower should contact his REL and tell them they can have it back LMAO

 

[Cob]

As alebrewer (great name BTW) said, ANYONE can sue ANYONE, am at a lose as to how this is the appraisers fault or why you would sue the appraiser, the appraiser didn't approve the loan, the lender did, I'm not a fan of going after people with lawsuits, but it would seem to me that the lender and Realtors (if they were involved) are the ones who should have been aware of these type of situations.

 

[GWISC]

I wonder if the appraiser called the local VA Regional Loan department to explain the property and get some guidance. I know of only a few hotel/condo type properties in our area. I would be skeptical one being financed via VA.

 

[alebrewer]

Agreed - if the OP's scenario is accurate, there would be several parties that might be considered as defendants...

 

[TD Morgan]

As alebrewer (great name BTW) said, ANYONE can sue ANYONE, am at a lose as to how this is the appraisers fault or why you would sue the appraiser, the appraiser didn't approve the loan, the lender did, I'm not a fan of going after people with lawsuits, but it would seem to me that the lender and Realtors (if they were involved) are the ones who should have been aware of these type of situations.

The loan would never have been made had the lender not relied on the assertions by the appraiser that multi-family use was allowed per zoning.

 

[GWISC]

I highly doubt it BUT I don't know Florida Law. Like all stories there is more to this than Zoning, and if it is a Condo-Hotel it seems something does not add up here ? They usually have a HOA and monthly or yearly dues and it would have been quite evident to the Lender that this was not a property ( last time I checked ) The VA doesn't even makes loans on Condo-Hotels or on purchasing non-owner occupied properties. Also most Condo-Hotles have a front desk and operate like a Hotel, when the owner is not staying there they rent it out for him. Another interesting point is the new owner says he is not allowed to live there full time ? SINCE WHEN- The owner of the unit can live there full time if he wants to but most don't . Anyway-This one sounds like a lot of parties dropped the ball, including the VA Underwriter , THE APPRAISER did he/she appraise it as a Hotel Condo or a regular Condo ? This is where the issue ultimately land if it gets into litigation, not the zoning or H & B use. The VA borrower should contact his REL and tell them they can have it back LMAO

The hotel/condos in our area do not allow full time living. The owner can use, but not for the full year (per the warranty deed which has specific language as to how many weeks the owner must vacate if they intend to utilize for themselves). They are developed as a hotel and each hotel room is a condo. Some are basic hotel rooms, others are more elaborate with kitchenettes and private bedroom suites. The developer sells each hotel unit off as a condo and then charges a management fee for running the hotel and gets a cut of the rental income. The condo owner gets the percent of income they have agreed to. To the user, they are a hotel. To the owners of each condo, they are an investment.

 

[Terrel L. Shields]

The issue is privity and in some states and circumstance, the buyer has no recourse with the appraiser. In others, they would. I guess I don't understand the nuances of the zoning and why that would prevent someone from living there. Was this habitation an assumed use? Did the appraiser make an assumption of uses?

 

[TMG]

Seems like the buyer should have known, or been warned he couldn't live there full time. I'd sue the Realtors for not disclosing that information. If the buyer had known, there never would have been an appraisal.