title search obligations as appraiser

[JT1974]

PL, you're right about appraisers' "obligations," but it seemed to me that the required task didn't even need a title report; one just had to check public records, and how hard is that nowadays?

I think you guys are missing the point. It seems everyone is getting hung up on the ownership of the 4 lots, when in fact that is a completely separate issue.

The OP stated that four of the lots were not being held as collateral by the lender. That has NOTHING to do with the ownership of the four lots. The OP also stated that the four lots were subject to a construction loan.

Let me illustrate where I think the majority of posters are missing the point. The subdivision developer could have still "owned" all 42 lots and pledged 38 of them as collateral for a development loan with the remaining 4 lots as collateral for a contruction loan. This appears to be the case that the OP was talking about.

Now, could someone tell me exactly how researching the sales history of the 42 lots would show anybody that four of the lots were no longer being held as collateral for the development loan? I'll give you the answer.......IT CAN'T.

The bottom line is that the banker screwed up and is trying to pass blame on the appraiser. The banker ordered an appraisal of 42 lots and that is what they got. End of story.

For further clarification.................see post #2.

 

[Howard Klahr]

JT,

As noted by the OP, the lots that represent the subject in the appraisal were owned by the developer. Four of the lots were no longer collateral for the developer's loan. You are working with the assumption that the developer and the builder are the same. Based on the information supplied by the OP it appears that the developer and the builder are not the same. Therefore, there would have been a sale of the lots. This sale would be reflected in the public records. If the lots were only under contract, that would have been obtained from the sales office.

that 4 of the lots specified in the engagement had been taken down into construction loans by the builder and/or sold (to homebuyers).

Either way, USPAP requirements include identification of the property being appraised as well as a three year sales history. Just to adhere to these requirements, the scope of work would include identification of who owned what lots based upon information from public records.

While who owns what is not a valuation issue, it is a reporting requirement in this situation.

 

[JT1974]

JT,

As noted by the OP, the lots that represent the subject in the appraisal were owned by the developer. Four of the lots were no longer collateral for the developer's loan. You are working with the assumption that the developer and the builder are the same. This is very common in my market. Based on the information supplied by the OP it appears that the developer and the builder are not the same. Possibly. Therefore, there would have been a sale of the lots. Possibly. This sale would be reflected in the public records. Possibly. If the lots were only under contract, that would have been obtained from the sales office. Again, POSSIBLY.

I have been lied to by bankers, developers, Realtors and other appraisers. I have also seen plenty of unrecorded sales over my career. Transfer of ownership interest in an LLC (with the only asset being the real estate) is quite common in Wisconsin. These sales don't "show up" at the register of deeds.



Either way, USPAP requirements include identification of the property being appraised as well as a three year sales history. Just to adhere to these requirements, the scope of work would include identification of who owned what lots based upon information from public records.

And if the appraiser did what you outline in the paragraph above, there shouldn't be a problem.

While who owns what is not a valuation issue, it is a reporting requirement in this situation. I agree.

This is a good topic of discussion.