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

[TD Morgan]

#14; "The condo project was not originally on the VA approved list and was put on the list during the loan approval process."
IMO; where is the "Due Diligence" on the Lenders part ??

Do you think he should leave the appraiser alone and sue the lender?

 

[jay trotta]

Once I called Zoning. Zoning is a Big word. The personnel I spoke with said "No, does not comply with zoning." Since there were other-a few in the same area, I called back and ask a different person at the Zoning Office to forward the respective ordinances, etc. because I could not find online & needed.
Turns out personnel #1 was not UP on the current information as same had been RE-zoned to allow many years prior.
Sounds like our Tax Dept. where permitted changes rarely are changed-updated from the initial permit.

Simple reason why we are to do Our own due diligence, best advice is to do your own research in person so you can review the correct documents. Can't tell you how many times I had conflicting input from different zoning reps. over the years. Do we know what the "pre-existing" zoning permitted ? there is always more than phone call satisfaction IMO.

 

[jay trotta]

Do you think he should leave the appraiser alone and sue the lender?

Does the Lender not have a staff of Attorney's to Review Documents ?
Chain of command comes to mind ?

 

[jay trotta]

I seriously doubt there is an issue with the zoning. There are likely restrictions from the developer's perspective. To me, it sounds like this should not have qualified for an FHA or VA loan given the requirements for those platforms. You are placing the blame in the wrong area IMO. First the buyer should look in the mirror for someone to blame, then they should reach out to the lender as they never should have lent on the deal.

BTW, unless you have read every part of the PD and the subsequent amendments to the PD (which happens often), you cannot consider yourself fully informed as to the legally permissible uses. Central Florida municipalities are very familiar with this type of property and never would have allowed it to operate in this fashion if it were not legally permissible. It's not like some 3 unit landlord that gets away with some shenanigans, these are well-known property types with professional operators.

*DEFINITION OF MARKET VALUE
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus. "Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." Source: 12CFR34C

Agree with the first portion above, which is supported above; did the Buyer not use a local real estate attorney ?? this would reflect (2) "well informed or well advised"

 

[J Grant]

Frequently Asked Question: Can I Homestead a Condo-Hotel?

Homestead in Florida is a great thing. It is more than just a reduction in Property tax, but even this is a great benefit for any homeowner in Florida. ...

activerain.com

looked this up on line, interesting ! I Am in S FL and thankfully these are not common in my county, the few I did years ago were more like condos with a rental pool - for a true hotel use zoned tourist or transient I would not want to touch it as an appraiser -

Sounds like this person is a friend but trying to advise them from out of state when so much seems to depend on local county or city zoning and then individual condo building docs - you could inadvertently give them wrong advice. IF they think they have cause for damages they should seek a local to where they bought area RE attorney.

 

[Denita Neuenhaus]

I'm not an appraiser and I'm not an attorney. I'm a Realtor. I am stunned that the lender financed this deal with a VA loan. It is extremely obvious when applying for a VA loan that the occupancy requirement has to be fulfilled and that the proposed property is the primary residence of the borrower. There is no way that the borrower wouldn't understand that concept unless he was fraudulently trying to work around the mandatory VA occupancy rules.
It is equally obvious when looking at a condo-tel that those residences can't be used as a primary residence by the owner (check rules). Limiting the number of days an owner can stay in the unit is very prominent within the condo-tel docs and extremely common limitation among condo-tels. It is a major factor when selling those type of units. If the unit was new, then like condo's he has 15 days to check out the rules. If a resale, then 3 days, but there is NO EXCUSE for the buyer/borrower to say "he didn't know" that he couldn't occupy the condo-tel full time as a primary home. To me, it appears he was trying to get a lower rate mortgage with no MI and 100% LTV rather than pay the market rate for a condo-tel mortgage.
Based on the facts as they have been presented so far, I think the buyer/borrower was trying to get one over the lender and got caught. He needs to sell it - take his lumps and hope he doesn't get brought up on fraud charges. Yes, it's fraud to misrepresent any portion of your borrowing status (including the property to be financed) in order to obtain a mortgage loan. The borrower needs an attorney in Florida to help him navigate this. My personal opinion.

 

[Salty]

He knew it could be rented in the hotel pool, but did not know it could not be used as a primary residence and knew that the VA loan requires it, and presumed that the approval of the loan supported such use. Not being an appraiser, he isn't highly sophisticated in such matters. If the appraiser had properly researched the zoning and specified that permanent residency was not allowed, the loan would not have been approved.

Yeah I don't buy it. Its not the appraiser's job to determine this. The appraiser reported the zoning. Done. Who says the appraiser did not properly research the zoning? Why should the appraiser specify anything about permanent residency? Its not the appraiser's concern unless this impacts value. It appears it does not. The appraiser is there to properly value the unit. The buyer could have easily looked up the requirements of this particular zoning code. The appraiser is not preparing a report for a person who needs hand-holding. The report is for the lender. Now, if the buyer had engaged their own appraiser this may be different as the report should be tailored to the intended user.

 

[Salty]

I also don't see how its the lender's fault either. If they made a mistake by using VA so what. The borrower assuming full time occupancy is allowed just because the VA would lend on it is silly. even if that was the case OK then. its not the appraisers onus to say to the VA "Hey - you guys know you can't loan in this right?" Its not the appraiser's job to be the compliance division for the VA.

Perhaps the lender could be liable if they decided to pull the loan after the fact sure. But if everything is closed and done and the lender is willing to suck it up and hold the loan then fine. This is nothing more than a buyer mistake. I think a court would see it that way. Of course all this is meaningless unless we have a huge error on the report that impacts value.

 

[Denita Neuenhaus]

Salty - the lender has QC checks for the mortgage loan - more than just checking the appraisal. There are checks for fraud and yes, sometimes the lender misses it as apparently it was missed in this case. I don't believe that the borrower is innocent at all as there are too many areas on the mortgage app and throughout the process where the buyer/borrower has to attest to the property as a primary residence. There are also many references to the limited number of days in the year (max days) the borrower is allowed to live in the property in the condo-tel docs. This was no accident IMO. That's why the buyer/borrower needs an attorney.

 

[Mike Kennedy]

FLORIDA Tuesday, October 17, 2017

Florida banks beware: A new twist on claims against negligent appraisers

mcdonaldhopkins.com