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Appraisers Can Be Liable To Strangers

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I had seen this elsewhere.. but not with the analysis attached...

Hmmmm.. lookit that <_< :unsure: :(

NOTE(per the article): This ruling DID NOT address what would have happened if the 'theft' of the use of the appraisal opinion had it been specified that the appraisal was intended for use by and only by party "A" for specific use"whatever"....

...methinks I am going to be VERY careful to continue( :twisted: ) to put such 'unneccesary' language into each and every report...

now who was it, that said such words were 'just useless boilerplate'?!?!? :blink:
 
I think that this also supports those of us that believe a narrative report for an individual (that just wants to know how to price the home for sale, or some other non mortgage use) is a good idea. While it won't limit the liability from a third person it will keep them from taking it to he mortgage company and using it to get a loan. Therefore limiting some liability.

This ruling DID NOT address what would have happened if the 'theft' of the use of the appraisal opinion had it been specified that the appraisal was intended for use by and only by party "A" for specific use"whatever"....

Lee Ann, I agree. And are we not supposed to indicate intended user and intended use in every appraisal by USPAP? It may be a state requirement but I put that in every appraisal.
 
A guy I know from Tennessee once told me you can’t hide a sick mule. A $400,000 appraisal followed by a $60,000 sale may not prove the mule was sick…er, the appraisal was negligent, but it is sounds bad. In any case, the lower court found that the mule is sick – negligent misrepresentation. Those two words tend to have the same legal effect as "game over."

The facts are sketchy, but there seem to be issues with hypothetical conditions -“as is” value, when it is both subject to repairs and the appraised (supposedly highest and best) use is not the current use.
The whole deal smells fishy – Corporate insider pay $389,000 financed by own company and company then sells $300,000 mortgage for $200,000.
Maybe its me, but $400,000 for 100-year old fixer-upper house that is supposed going into a “hotel” plan??? :eyecrazy: Anyone heard a story like that before?

Terry, the court is not opening the door to third-party liability. It is just applying the you-can't-hide-a-sick-mule standard. They are sustaining the appraiser liability because of the negligent misrepresentation, but says a carefully prepared, but inaccurate appraisal, is not "negligent" misrepresentation.
“Finally, we caution that we do not intend our holding to expose a professional appraiser to liability for an appraisal of the “as is” market value of a parcel of real estate of real property that is materially inaccurate, but nonetheless had been formulated with due care.

So the case is a good precedent for the 'not-an-exact-science' defense. B)
 
From the article:

However, although the appraisal report states that approximately $50,000 worth of improvements to the house were needed in order to operate the property as a bed and breakfast, the report unequivocally states that the “as is” market value of the property reflects the market value without these improvements.

Well........To me here lies the crux of the appraiser's woes. The appraisal was made 'as is' even though the estimate of value was predicated on a $50,000 improvement to the property in order to turn it into a bed and breakfast.

Somehow I can hear the client say....."We CAN'T do the loan with a 'subject to' appraisal.....Can't you just make it 'as is' and state a 'cost to cure?' Wanna bet?

Sorry......I don't accept the global view that this ruling makes all appraisers liable to third parties......
 
My Conditions were written by two attorney's--and for those who don't like long text addendums--you'd hate reading the paragraphs of legaleze.

However, I've got a funny feeling that if some judge didn't like the way I was dressed that day it (addenda) wouldn't help a bit.

-Mike
 
No disagreement with anything above. However, I fear the bad side is that appraisers being sued by third parties could see this Case Law used against them. The appraisers lawyer will have to rebut the testimony by pointing out the conditions the ruling stated, but nevertheless might be damaging, especially in those restatement situations.

Further, without that explicit language referencing Statement 9, will the courts really accept that the report is solely for the benefit of one party? And I agree entirely with Jeff
supports those of us that believe a narrative report for an individual ....is a good idea

My sub did a report recently to a fellow who wanted to sell his home and just needed to know how much it was worth. Within 2 weeks this character shut down his trucking company, has never paid us or anyone else, and is about to be foreclosed on, but likely will file bankruptcy first....in other words, he wanted the report for something besides selling. What other unintended third parties are hanging out there who will see this report, and possibly, rely upon it? I suspect we will get to suffer more grief over this one in the future.
 
Non payment for private jobs became such a problem at one time that we now must let the potential client know during the initial contact; that we require funds at the time of the inspection. Additionally, we inform them that they'll receive the report when the check clears.

"Sorry," we tell those who question the policy..."non payment by private parties @ one time exceeded 90%--so you can see we had no alternatives."

-Mike
 
lets see now; appraisal @ $400K; after failing to pay - it's bought at $125k and sold for $60k - well at least the courts have even shown us the way to New Math.

Who were the accountants rules they were using - Anderson :question:

who left the dead fish on the language screen, cause this tale is fishy :mrgreen:

ahhh, the american language, showing it's full color & depth - perception of what you say or write is only half the battle, when the battle begins B)


:ph34r:
 
Originally posted by Mike Simpson@Aug 3 2003, 12:01 PM
My Conditions were written by two attorney's--and for those who don't like long text addendums--you'd hate reading the paragraphs of legaleze.

However, I've got a funny feeling that if some judge didn't like the way I was dressed that day it (addenda) wouldn't help a bit.

-Mike
Which is why there's a Court of Appeals and a Supreme Court in each state. Neither of those receives fact testimony, so they can't dislike your tie. (They can, and do, however, dislike your attorney. Choose wisely.)
 
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