Mike Kennedy
Elite Member
- Joined
- Sep 28, 2003
- Professional Status
- Certified Residential Appraiser
- State
- New York
Indiana Court: Appraiser Owes No Duty of Care to Seller
The Indiana Court of Appeals ruled May 16 that an appraiser has no duty of care to a seller after he or she appraises a house for much less than the proposed purchase price. The court upheld summary judgment for the appraiser in a case where the seller alleged negligence, fraud and slander of title. The case is BSA Construction LLC v. Jimmie E. Johnson, 49A02-1506-CT-749.
BSA Construction entered into an agreement to sell residential real estate to Lilia Lopez. Lopez received financing from Bank of America pending a final appraisal, which was done by Jimmie Johnson of LandSafe. The purchase price was agreed at $60,000, but Johnson only appraised the property for $50,000 and Bank of America denied financing.
BSA claimed Johnson owed them a duty of care on negligence principles, but the court disagreed, ruling that Johnson’s duty of care was to the bank that hired him, not BSA. “In an arms-length transaction like the one here, we cannot conclude that Johnson had any duty to serve two masters with conflicting interests. Whether Johnson was bound by or aware of the code of ethics of a professional association, or knew that a poor appraisal might be associated with the real estate for some period of time, does not change the fundamental arrangement of the duties at issue here,” Judge L. Mark Bailey wrote for the panel. “Johnson’s duty was to the bank and as a matter of law cannot — because of the contradictory interests at issue — have extended to BSA.”
The Indiana Court of Appeals ruled May 16 that an appraiser has no duty of care to a seller after he or she appraises a house for much less than the proposed purchase price. The court upheld summary judgment for the appraiser in a case where the seller alleged negligence, fraud and slander of title. The case is BSA Construction LLC v. Jimmie E. Johnson, 49A02-1506-CT-749.
BSA Construction entered into an agreement to sell residential real estate to Lilia Lopez. Lopez received financing from Bank of America pending a final appraisal, which was done by Jimmie Johnson of LandSafe. The purchase price was agreed at $60,000, but Johnson only appraised the property for $50,000 and Bank of America denied financing.
BSA claimed Johnson owed them a duty of care on negligence principles, but the court disagreed, ruling that Johnson’s duty of care was to the bank that hired him, not BSA. “In an arms-length transaction like the one here, we cannot conclude that Johnson had any duty to serve two masters with conflicting interests. Whether Johnson was bound by or aware of the code of ethics of a professional association, or knew that a poor appraisal might be associated with the real estate for some period of time, does not change the fundamental arrangement of the duties at issue here,” Judge L. Mark Bailey wrote for the panel. “Johnson’s duty was to the bank and as a matter of law cannot — because of the contradictory interests at issue — have extended to BSA.”
