Appraisers Can Be Liable To Strangers

[Fred]

What is so excellent about this is that by being upheld on appeal it become CASE LAW,

Let’s not wave the “case law” flag so fast. The two court decisions in this thread contradict each other on privity, ie third-party reliance. From the write-ups posted here, it sounds like different jurisidictions with different STATUTORY LAW.

The 4th Circuit used SC law and found no privity.
“…he possesses expertise or special knowledge that would ordinarily make it reasonable for another to rely on his judgment or ability to make careful inquiry, the law places on him a duty of care.”
However, the article did not indicate if there was report language restricting use or whether that would have made any difference.

The GA Court upheld privity and thus said the accuracy of the appraisal was irrelevant
"The remaining issues in this appeal relate to whether Market Value and Fries were negligent in performing the appraisals and are moot."

As the linked article for the first case indicates, some states have laws based on the “Restatement (Second) of Torts,” and that is what really opens professionals up to third-party liability.

 

[jtrotta]

I have two small problems with this situation;

1) in the context of every report is a paragraph that explains "Market Value" etc. - which everyone has an obligation to read, if only they have "common sense"

2) Paragraph 3- two months after the appraisal for $400k - "Private Mortgage Investment (Investment ) bought the mortgage for $200,000 (50% of the so-called appraisal-pretty sharp crew don't ya'll think :question: :question: ). "The Firm, which had NO experience with this type of property- huh, wha, B) (they just stole it fer 50% of the appraiseed value-wha :question: ) *heavily relied upon the "as is" market value- how they only paid 50% of the appraised value, how heavily could they have relied on anythin-duh (there must be some hidden chads somewhere) (see #1-above) as stated in the appraisal report. Now here's where it's gets amussing fer me; *When Smith failed to make any payments on the mortgage, Private Mortgage forclosed and bid at the Forclosure sale -for $125,000 (now thats twice stupid on the same deal-are you jokin me). It then later sold the property for only $60,000 ( thrice stupid :question: :mrgreen: ).


I guess the question comes to mind - is it the Judge or the Jury that came from Uranus on this one :rofl:

"Common Sense" has left the planet - big time :rofl:

h34r:

 

[Jeff Horton]

Originally posted by Terrel L. Shields@Aug 5 2003, 04:23 PM
Clearly we all need to start EXPLICITLY stating WHO the client is WHO is intended user and, in my opinion, reference STD 9....and certainly it helps to do the report RIGHT...

To get this thread head back to a more productive vein here is what I use in my scope on every Appraisal. I just change it to suit the client and need. While nothing is bullet proof, I agree with Terrel. We need to at least try to limit the use of the Appraisal

The Purpose of the this Appraisal is to estimate an Opinion of Value of the property in the present condition in terms of cash or in financial terms equivalent to case.

The intended use of this report is to determine an estimate of the markets opinion of value for the use of the client listed in the report . This report may not to be used by anyone other than the client and his assignees for any purpose.

Intended user The Client @@@@@, is the sole intended user of this report. "Parties who receive a copy of an appraisal as a consequence of disclosure requirements applicable to an appraiser's client do not become intended users of the report unless the client specifically identifies them at the time of the assignment." [excerpt from USPAP Statement 9]. The borrower has not been identified as an intended user by the client.

Re reading this I see a have a conflict I have never noticed before in the "client and his assignees" and "the client is the sole intended user" that I need to correct.

Before I do that lets put our heads together and work on this statement and try to write something we should all use.

 

[Farm Gal]

Jeff:

Temporarily (unil the lenders get on thier high horses and refuse to accept reports with this line )
I believe limiting the use of the report to the specific named Intended User and the addition of "without the express written consent" in some format or other does limit the intended use/user tot hat named party.

sure and they will eventually refuse to accept such limitations ~ UNLESS ALL of us do this consistently and refuse to bow before the wieght of thier need.

I am sure that the response is that "it would create a paperwork nightmare"... but then again would this not eventually put the responsibility right where it belongs? on the shoulders of the person(s) originally ordering the report :twisted:

on the other other hand can you IMAGINE if they decided one had to permit the additional uses every time a loan got sold? Hmm this might not be a bad thing: cost to permit use? $5.00 x20 times per report.... Oh wait there is the AOs that say we can't reassign... :rofl: