Divorce Appraisal Ethics

[neo]

Hi,

When I got divorced, my attorney made it a significant focus that the appraiser knew which attorney hired him and that it was a joint appraisal, but the appraiser did not know which client the attorney represented. Hence, when the appraisal happened, the appraiser did not know if I was represented by the attorney that hired him or the if the attorney that hired him was representing my ex.

I have a friend going through a divorce, and that principle does not seem to be on the radar for either of the attorneys in my friend's case. Not only does the appraiser know who is represented by which attorney, but the attorney and that attorney's client had extensive communication with the appraiser prior to the appraiser being hired.

Is there a written standard about this anywhere? Is there an industry practice when it comes to a joint appraisal that the appraiser should not know who is represented by the hiring attorney in order to preserve the credibility of the appraisal?

Thanks

 

[Mike Kennedy]

2020-21_USPAP.pdf (columbiasociety.org)

"This ETHICS RULE is divided into three sections: Conduct, Management, and Confidentiality, which apply to all appraisal practice.

CLIENT: the party or parties (i.e., individual, group, or entity) who engage an appraiser by employment or contract in a specific assignment, whether directly or through an agent.

INTENDED USER: the client and any other party as identified, by name or type, as users of the appraisal or appraisal review report by the appraiser, based on communication with the client at the time of the assignment.8

INTENDED USE: the use(s) of an appraiser’s reported appraisal or appraisal review assignment results, as identified by the appraiser based on communication with the client at the time of the assignment.7

CONDUCT: An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests. An appraiser: • must not perform an assignment with bias; • must not advocate the cause or interest of any party or issue; • must not agree to perform an assignment that includes the reporting of predetermined opinions and conclusions;

MANAGEMENT: An appraiser must not agree to perform an assignment, or have a compensation arrangement for an assignment, that is contingent on any of the following: 1. the reporting of a predetermined result (e.g., opinion of value); 2. a direction in assignment results that favors the cause of the client; 3. the amount of a value opinion; 4. the attainment of a stipulated result (e.g., that the loan closes, or taxes are reduced); or 5. the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose."

 

[neo]

Thanks Mike.

I think my question is more about work practices to support these ethical standards. Like a teller counting money so the customer can see even if the ethical standard is don't short change the client.

Is it a standard to protect the integrity of the appraisal and remove even the appearance of potential conflict by keeping the appraiser ignorant of which party is represented by the attorney that hires the appraiser in a joint appraisal?

 

[glenn walker]

Thanks Mike.

I think my question is more about work practices to support these ethical standards. Like a teller counting money so the customer can see even if the ethical standard is don't short change the client.

Is it a standard to protect the integrity of the appraisal and remove even the appearance of potential conflict by keeping the appraiser ignorant of which party is represented by the attorney that hires the appraiser in a joint appraisal?

 

[Meandering]

Hi,

When I got divorced, my attorney made it a significant focus that the appraiser knew which attorney hired him and that it was a joint appraisal, but the appraiser did not know which client the attorney represented. Hence, when the appraisal happened, the appraiser did not know if I was represented by the attorney that hired him or the if the attorney that hired him was representing my ex.

I have a friend going through a divorce, and that principle does not seem to be on the radar for either of the attorneys in my friend's case. Not only does the appraiser know who is represented by which attorney, but the attorney and that attorney's client had extensive communication with the appraiser prior to the appraiser being hired.

Is there a written standard about this anywhere? Is there an industry practice when it comes to a joint appraisal that the appraiser should not know who is represented by the hiring attorney in order to preserve the credibility of the appraisal?

Thanks

Why would an independent, unbiased appraiser need to know who the attorney's client is?

The appraiser has no obligation to anyone who is not the appraiser's client.

.

 

[glenn walker]

Hi,

When I got divorced, my attorney made it a significant focus that the appraiser knew which attorney hired him and that it was a joint appraisal, but the appraiser did not know which client the attorney represented. Hence, when the appraisal happened, the appraiser did not know if I was represented by the attorney that hired him or the if the attorney that hired him was representing my ex.

I have a friend going through a divorce, and that principle does not seem to be on the radar for either of the attorneys in my friend's case. Not only does the appraiser know who is represented by which attorney, but the attorney and that attorney's client had extensive communication with the appraiser prior to the appraiser being hired.

Is there a written standard about this anywhere? Is there an industry practice when it comes to a joint appraisal that the appraiser should not know who is represented by the hiring attorney in order to preserve the credibility of the appraisal?

Thanks

No there is no written standard except when the ethics standard has been breached and in what you describe, only the appraiser doing the report knows if he is or isn't crossing a line. With that being said I have done many over the years where I knew both attorneys. Also some attorneys tell their client to engage their own appraiser and the attorney is names as a user but not the client. As far as attorneys they are not under USPAP and their ethics guidelines are not the same as ours. As far as AN INDUSTRY practice in divorce appraisals there is no such thing, the appraiser has to decide if he/she can create a scope of work which allows him/her to create a credible report.

Think about it this way YOU are not part of this divorce yet you are getting invoked in your friends appraisal issues, Should you recuse yourself ? because you are too close emotionally and are also using your own divorce as a model case ? I would say yes, how your attorney handled your divorce has nothing to do with this case. In reality in divorces each attorney is representing his/her client, if one disagrees with the appraised value, he/she can order a second one by a different appraiser.

I have been in court cases where up to three appraisals were done by three different appraisers and were all used to argue value. The truth is there was no correct number because the guys X-wife just wanted to extend the financial pain and agony. It went on for over two years and finally the Judge basically just told the two parties to settle it or he would do it for them.

My advice is never get involved in friends, family in-laws or outlaws real estate issues. You will always lose and its not possible to be objective or unbiased. ETHICS is like ****ography - Let me look at the photo and i will tell you But if I'm Italian it will be A work of Art - The same with ethics, each appraiser and each attorney has to search his/here soul ( if he has one ) and then determine if any harm or damage is being done to his client.

 

[glenn walker]

Why would an independent, unbiased appraiser need to know who the attorney's client is?

The appraiser has no obligation to anyone who is not the appraiser's client.

.

Many people involved in a divorce tell the appraiser who their soon-too be X-attorney is using. In one smaller City I work I know all 5 attorneys and 90% of the time one or both are involved in a divorce when the people live in that particular small city. Its not a big deal, the same attorneys also belong to the same golf club and play together. As far as who is the Client not all attorenys ask to be the Client. Sometimes, I am engaged and asked to name the person I am doing the report for to be named the Client and their Attorney as an-intended user. This is done so the appraiser can be paid directly COD by the owner and the attorney has no financial liability if his client doesn't pay their bills. I just did one last month like that, attorneys client was a slow pay and he told me to make her teh Client and to only trake a money order or cash at the door : ) LOL

 

[Alsie35]

*SNIP*

I have been in court cases where up to three appraisals were done by three different appraisers and were all used to argue value. The truth is there was no correct number because the guys X-wife just wanted to extend the financial pain and agony. It went on for over two years and finally the Judge basically just told the two parties to settle it or he would do it for them. *SNIP*

This happens in just about every contested divorce to some degree (though the genders in your example may be reversed). In 99% of the cases they ultimately settle after one - or both - parties have run out of $$$ to pay their lawyers. Then they settle for something that would have been reasonable 2 years earlier, before each side accumulated $150K in legal fees. Only the lawyers make $$$ in divorce cases. I am not comfortable intruding into other people's personal agony and would not do a "divorce appraisal" for ANY amount of $. That's just my preference. Yours may vary, and obviously, someone has to do them. But it won't be me. I have done some simple estate appraisals. There I can feel like I am helping people.

 

[Alsie35]

Normally when an attorney hires an expert in a proceeding, the first thing he does is tell the expert who the client is. I don't see how that can be avoided (or why you would want to given the possible additional confusion not doing it might cause). Having said that, each state has different rules so your mileage may differ. But normally something like this would wind up in a 'battle of the experts' in the courtroom, with the more persuasive one winning the day.

 

[glenn walker]

Normally when an attorney hires an expert in a proceeding, the first thing he does is tell the expert who the client is. I don't see how that can be avoided (or why you would want to given the possible additional confusion not doing it might cause). Having said that, each state has different rules so your mileage may differ. But normally something like this would wind up in a 'battle of the experts' in the courtroom, with the more persuasive one winning the day.

Unfortunately its called billable hours, two years ago I did the estate appraisals for a local Family Law Attorney, who was well known in the community. Over the years I realized that 80% of all his clients were women and they all tended to brag about how hard he fought for them. He also had his all little gaggle of minions , otherwise known as hey my clients husband is a real dirt bag so get me some big numbers.

Funny: The one question I have been asked over the years is if I have ever been asked to do a low appraisal by anyone? I respond with yes probably 5 or 6 times and it was always requested by a scorned wife or lover who wanted to Bankrupt the no good dirt bag that she had caught cheating on her.

One was a Second or Third Trophy Wife of a Big Name Banker, who most everyone on here would know if I mentioned his name ( Clue ) he was Italian. She was a Hollywood Actress 25 plus years younger than him. Anyway his Trophy Wife's Attorney called me and I was all in until he mentioned what her last name was and I was like hey is that the actress and same wife of one of the biggest mortgage bankers in America ? The attorney says yes it's his sons wife. I am like OK but this is going to be a very large fee and paid COD. He says fine and gives me her contact number. Ring-Ring- Hello this is Such and Such -Hi MS -X I am the appraiser, She responds with Ok but first I have to tell you that his appraisal came in at around $6,000,000 and I want yours to be no more than $4,000,000. I am like Mrs-X it doesn't work that way, the value is whatever it is and- I cannot accept orders with pre-determined Values. She says fine sounds like my Husband or his minions have already paid you off and got to you . Then she says how much did he pay you to try and slip into my house ? I am like please I have never spoken to your husband much less received any payment from him or anyone else.

Anyway I called her attorney back and informed him that I could not accept the assignment. The attorney was cool and said no problem, I get it because She is a real high maintenance client but she also has a lot of money. This same attorney 20 years later ended up as a legal analyst at one of the major Los Angeles & New York Cable news channels.

P.S. I quit doing divorce or family law appraisals about 5 years ago, they can get real messy, and time consuming. I also only do Bankruptcy Appraisals when they are COD- Cash-no checks, no money orders hard cold cash.