DWiley said:
Consider an appraisal done for FHA financing. A report subject to repairs that are required to meet FHA MPS could certainly result in a value that is different from the "as is" value.
Shouldn't all reports be labeled as either "as is" or "subject to repairs" to bring the subject property to the condition of cited comparable properties?
Another consideration is the realities of the insurance industry in settling complaints, as Tim mentioned above juries can render off-the-wall decisions, and courts too for that matter. Here is an example of from a construction case where both the architect and contractor are friends:
A home burned to the ground in the Oakland Hills fire, the owner hired the original architect to redesign and have the home rebuilt. There was a tile deck over a living area, the owners were elderly and the man died during reconstruction, his widow decided to sell the home after completion and move to an assissted living facility, she asked the architect if she could save some money by eliminating the tile deck and replacing it with a cheaper deck, the architect issued a change order replacing the tile with one of the rubberized coverings installed by a roofing contractor. The roofing contractor knew of potential problems with the specified product and had his attorney prepare an informed consent waiver, the waiver was signed by the roofer, the contractor, the architect, and the homeowner. The homeowner sold the home to a third party and the deck leaked and the damages were ascertained at $700,000. The Insurance companies all sat down and divvied up the damages equally, the roofer, contractor, the architect, and the homeowner's insurance all agreeing to throw something less than $200,000 into the pot for settlement. All parties were denied insurance after the loss, the architect retired, the roofer went out of business, the contractor got a job as a superintendent for another contractor.
The insurance company attorneys all saw third party beneficiary rights as potentially vesting in the new buyer, even though that buyer wasn't known, it was known that the owner was going to sell to some third party, so it was definitely foreseeable that she would do so, it was known that there was some intended third party out there somewhere. I think the decision of the insurance companies was wrong, if anything the homeowner was at fault for not disclosing the informed consent waiver she had signed and should have borne all damages, yet all attorneys for the insurance companies decided that it was in their best *financial interests* to settle the case and not risk an off-the-wall jury verdict, but destroying the careers of three men.
An interesting fact here is that Oakland is in Alameda County with notoriously liberal minority jurors, if this situation had occurred a mile over the hill in Contra Costa County with more conservative jurors I have to think their decision might have been different.
