I suppose there's two scenarios being discussed here. 1. F/F mortgage loan. The lender will not loan on the property with a LP and the title company will not issue insurance. So basically, its a non-issue. Its not a difficult concept to understand that the appraiser is appraising under the assumption of clear title. No adjustment to the value is warranted. It is reasonable in this instance.
2. You're asked by a client to come up with a value for a property with a $10M lawsuit against it. Unless you know when and how the case will be resolved, attempting to make a WAG re; the value is a waste of time. In reality, no potential buyer would make an offer for such a property. Its nonsense to think that the subject can be credibly appraised. I was involved with a property with a LP filed by the state for condemnation ( I was court appointed appraiser). 1 acre acquisition out of 70, approx. It took 9 years and a trip to the state Supreme Court and sent back for retrial before it was resolved. State vs. Bishop if you're interested. Anyone trying to appraise the property at the start of the case would have NO idea that it would take that long. And any other case can be the same. Its not "too hard", its not possible to try to render a credible valuation; a waste of time.
