I completed an appraisal in May for a lender. The assignment type was "internal asset review/loan servicing". In July, I was asked by the client to sign a declaration for US Bankruptcy Court regarding my appraisal. I did so after making a few revisions.
I am now being asked to testify in court regarding my appraisal. The initial email from the paralegal had attachments of a different appraisal on the same property (2055 completed by someone else in April) and my declaration. They finally sent my appraisal and declaration, asking me to confirm that they were the documents I prepared. The email stated, "This property is involved in a bankruptcy case and we have been asked by the Judge to secure the appraiser, who completed the attached, to appear as a witness and testify as to the facts you have laid out in the attached as a part of the evidentiary hearing." It asked what compensation I required.
I asked for more clarification regarding what I would be asked to testify about. "You will be asked questions regarding your experience as an appraiser and about the appraisal you prepared for the subject matter property. We will be obtaining a third party appraisal shortly and it will basically be your job to explain to the Court why your appraisal is an accurate representation of the fair market value of the property and the other sides appraisal is not."
It seems like those are two different things - being asked to testify to the facts of my appraisal vs. defending my appraisal against a different one. For what it's worth, the 2055 appraisal they mistakenly sent me was completed before mine and came in $400,000 lower than mine.
I know if they subpoena me, I have to appear, but I have zero interest in testifying in the above situation, even for a fee. I testified once regarding one of my appraisals after being subpoenaed and that was enough for me!
What would you do in this situation? Thanks!
Hi Kelly;
First off they used the appraisal for a use that was not an intended use. You could legitimately have declined everything, but lets assume you'd like to keep the client and go from there. Also sounds like this was ordered by through an AMC.
Signing the Declaration is where the conversation on Expert Witness fees should have started; but it is not too late. EVEN if served with a subpoena, you are under no obligation to give any testimony of a professional nature unless satisfactory arrangements for EW fees have been agreed to. Most judges accept the statement that EW fees have not been agreed upon. IF the client is THAT foolish then the answer to everything after answering what is your name; did you sign the report is "I don't recall". HINT: If you ARE going to ask for EW fees, find out what going rate is BEFORE you have the conversation. I used to charge only $150 and hour with 4 hour minimum plus $75/hr travel time each way, until the two attorneys laughed and paid me from petty cash. I raised my rates to $300 an hour the next day. An AMC or lender client needs to have a check for you in the lobby BEFORE you testify or you will never collect it.
BK is not cut and dry. Its either Chapter 7 or 13. 7 is where the debtor is seeking to wipe out ALL debts; OR where creditors are trying to force liquidation of assets to collect whatever they can.
Usually, though not always, the debtor is trying to show they do not have enough equity to adequately satisfy debt and still have enough leftover for statutory exemption amounts. Chapter 13 is where debtor WANTS to pay (or claims they want to pay) their bills, but they just cannot handle the full total of monthly payments. The Trustee will pro rate debt payments to fit within a specific amount the Trustee believes the debtor can afford. Debtor pays the Trustee and Trustee in turn pays creditors $1.29 a month instead of the contracted amount of $29.32.
OK, the issue in real estate is usually a cram down or a desire to try to keep the house. Cram-down is where the debtors side is showing either the property is not worth more than a certain amount OR they need a court ordered reduction in principal AND / OR payments and interest rate. Attorney from other side will try to portray you as a hired gun, whose integrity is bought and sold to the highest bidder. Don't take it personal. Just be honest , COUNT TO FIVE BEFORE YOU ANSWER ANYTHING! (It drives them crazy); Repeat the question in your own mind, and if it is ANYTHING other than what you can PERSONALLY attest to as FACT, the answer is a respectful "I don't know." I do not recall right now is also perfectly acceptable. Don't attempt to explain away an honest mistake. If you made one, "I don't recall right now" (how that happened). Avoid ANY opinions not DIRECTLY related to statements of facts that you reported in your report!
It is grossly unfair for a client to try to force you to testify if you do not wish to. It IS perfectly ok to say you do not feel competent to sit as an expert witness, never having done it before. Of course I bet the deposition SAID if called you could and WOULD competently testify to whatever you said in it. You may have to settle for "I'm NOT an expert witness, but I'll do my best to answer the Courts questions."
If you really do not WANT to testify, then MY response to the subpoena would be "Satisfactory arrangements for advance payment of my required expert witness fees in the amount of (be high) $375 per hour with a 4 hour minimum (plus travel) have not been made. Receipt of Payment is necessary no less than 48 hours before any scheduled testimony (CHECK WITH an attorney in your state to make sure this is ok). They'll get the message that if called "I do not recall" may be all they get. This IS NOT legal advice! It is merely one appraiser discussing personal & professional experiences with another. Mike Ford, SCREA, AGA, GAA, RAA, Realtor(r); Chairman, National Appraiser Peer Review Committee, American Guild of Appraisers, OPEIU, AFL-CIO. For more info on AGA contact janbellas(at)appraisersguild(dot)org . Good luck Kelly!
