Intended User for Litigation Appraisal

[xm72mhd]

What I have learned from this thread so far:
You should expect that the expert witness for the other side will do a review of your appraisal. Therefore, you can expect your report to be torn appart if it has not complied with USPAP and state law. If the basic scope of work elements are not properly documented including intended user and intended use, your credibility as an expert may be undermined right off the bat. How the judge/counsel/jury address/decide the legal points of the case may not hinge on whether you adhered to USPAP. But your credibility or ability to be considered "expert" does hinge on whether you adhered to USPAP. Edd, I understand you have been looking for cases where the intended user is one of the legal points being decided in the case. Have you found any? I would not find it surprising if a judge/court found for a side in a case contrary to USPAP's definition of intended user or confidentiality. I think there are cases where judges/courts did not find as we would expect in other types of confidientiality such as doctors, lawyers, CPAs, journalists, or engineers. I don't think that is really the point of USPAP. I don't think that adhering to USPAP protects you from judgements that hinge on points of law that are also addressed by USPAP. But I do think that failure to follow USPAP could cause a judgement against an appraiser.

You make a good point!! Perhaps that is what Steven meant by saying that failure to identify the intended user(s) by name or type might have some connecting to the word "Daubert". I agree that any expert witness needs to be prepared to be dismembered and the failure to include something so obviously required by USPAP, like intended user(s), could prove fatal to an appraiser's credibility in court.

As for my research, I am particularly interested in finding court cases that have interpreted anything about USPAP. So far I have found one. It said the word "feasibility" as used in USPAP has the same meaning as the word does in Webster's and Black's. Along the lines of what you have observed, I have found cases where a judge uses the words of an expert regarding an appraiser's USPAP compliance. I'm still looking.

I have no idea how confidentiality got in here or what it has to do with anything we are discussing. So I should probably shut up about it. It seems to come up like some kind of a mantra whenever we get into court. You're better than I am at reading between the lines. How did confidentiality get into this discussion? What does it have to do with anything?

As for the original question. I still think the attorney should be the intended user and the intended use is litigation for this situation, for reasons other than USPAP. The point I was trying to make is that in case like the one we are talking about the court will care less about USPAP intended user, but will be concerned with the rules of procedure and evidence. Bring up another case and maybe USPAP matters a lot. We never got to purpose, but it sort of sounded like market value. Could be liquidation value though. It's any body's guess who will use it or who will hold the appraiser accountable for what is in the appraisal. Once you publish it under these circumstances it is a runaway. Intended users or otherwise.

Don't fool yourself that only intended users are going to hold you accountable if your appraisal lands in court, but you're ahead of that by recognizing that lack of USPAP compliance begs a credibility question.

Good call. Helpful to us all. Thanks.

 

[Lee Lansford]

2005 USPAP, definition of Intended User:

"The client and any other party as identified, by name or type, as users of the appraisal...report by the appraiser on the basis fo communication with the client at the time of the assignment."

Nothing more...nothing less.

David, re: "all the litigants are Intended Users"; I don't understand your point as it is clear that all litigants are not Intended Users unless so cited in the report of the appraisal.

Andrew, re: your recent posting where you offer that you would not want to have more Intended Users than absolutely required; I agree! (Anyone here interested in adding insurance companies to the "intended users" in the next appraisal communicated on the 1004 w/inclusion of the Cost Approach?)

 

[Carnivore]

Lee,

You raise a good point by bringing up the USPAP definitions:

INTENDED USE: the use or uses of an appraiser’s reported appraisal, appraisal review, or appraisal consulting assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment.

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

I see the issue as being one of an unintended use. What I mean by that is simply the report will have content based upon the Intended user's ability to comprehend what they are reading. For example, if a banker orders an 1004 because of borrower credit, then the subsequent report will be written with minimal level of detail sufficient for a banking professional to understand and meet his/hers intended use. In other words, the idiom of the banking world.

Denis, has suggested, identifying multiple users because there will be many who may rely on the report. I can understand his reasoning, but I thnk its flawed. Most have suggested that the only identified user be the attorney for one of the parties. I agree with that one hundred percent.

More importantly, because of the intended use, the report MUST(in this case) be written in the legal vernacular and with sufficient specific detail to meet the needs of the legal system.

This means the parties to the suit may not comprehend what you have written. Hopefully the clients(the attorney) argument will prevail and it wont matter what his client thinks.

Now, if we can just make common folk and courts understand the "Definition of Value" and its inseverable link to the final opinion!

This certainly does illustrate the nuance within USPAP. Again, thanks for bring the definitions into the thread.

 

[jay trotta]

am in the midst of a court case and our first visit revealed the following;

opposition attempted to get my appraisal/consultation thrown out, via my License doesn't cover the work performed;

"Judges Rule" - don't care, the report (approx. 30 pages) and information stays, as he looked at the opposition reading from a 1 page history of sale data. Supports the theory, the "Judge" rules in his domain as he sees fit, unless the Laws are for a nationwide ruling, I believe we are walking on waffers.

In another case, we have the opposition Attorney requesting everything but the kitchen sink for a meeting today - pre trial, for a divorce case. We had the opportunity to review the opposing appraiser's work, this should be very interesting - no comps within the municipality were used and land sales from 2 years ago were used to boost the value.

I just luv all the variations of interpretations we get here, but in the real world there is No answer - defend your work as best you can and let the chips fall where they may; after all the answer is going to be someone else's "Opinion".

Good Luck

 

[Joker]

Very fine points, Jay. I'd like to ad a couple more real world examples of my own:

An individual wants an unbiased second opinion appraisal on a property he owns jointly with a family member. A case is pending where the property may be ordered sold to cover debts of the family member. My appraisal is a second appraisal. The attorney representing my client refuses to engage any expert (backwoods lawyer) and demands that her client do it. My appraisal is intended for my client only. In this way when I write the report, I don't need to go into detail describing the subject, the neighborhood, etc. My client knows all of that. What he doesn't know is the value. He doesn't know the market. My report is written for that intended user. Will anyone else see the report? Maybe. Do I care? Not really. Will it end up in court? Maybe. But if it does, the judge will only care about one thing.....the value.

Second case:
A CG (not me) was hired as an "expert" to appraise a farm. Road frontage was considered for development, etc., etc. The opposing side hired a local real estate agent/autioneer as their expert. The judge accepted both as experts. One of the things opposing counsel used in cross examation of the CG was adherence to USPAP. A few mistakes were made but none that were very problematic. Of course the real estate agent didn't even begin to comply with USPAP. The jury accepted the real estate agent's testimony and two page appraisal report over the CG's testimony and 30 page report for (in my opinion) these reasons: 1) The agent is level headed, likeable and knowledgeable and 2)The CG became irritated (even cursed) when USPAP was used against him and not the opposition (this showed on the stand), and the report and testimony was dull, boring, and full of USPAP and appraiser gobbleygook.

The bottom line is: use common sense. No one else gives a crap about USPAP except in making appraisers look incompetent.

 

[Fred]

Doug
That's some pretty lame expertise and lawyering. Generally accepted standards apply to the evidence, not the witness. Knowing the rules of evidence works for me. I have gotten the other side's report tossed out quite a bit. Of course, it helps when they are full of crap.

 

[Joker]

You're absolutley right it's lame! But it's also not unusual in the market in which I am located.

Knowing what you know about the rules of evidence, how would you have been successful in denying any of the reports or testimony in the above examples? Especially when the judges are more accustomed to seeing agents give testimony than they are appraisers. Couple that with the fact that the agent/auctioneer advertises everywhere and the jury is convinced via familiarity that the agent/auctioneer is more credible than a dull appraiser and where does that leave us?

 

[xm72mhd]

Generally accepted standards apply to the evidence, not the witness.

Is that the analysis after Daubert? I thought it was reliablity and relevance.

 

[Fred]

Doug,
There is no guaranty of success, but the odds improve if you take a shot. I am not ready to concede that the auctioneer/agent is less qualified. It’s all about the work.

I agree with what you said about the jury. However, the point of Daubert is that judge is responsible for keeping junk science from being heard by juries. I don’t have stats, but I bet juries in value disputes mostly split the difference.