• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

What is the liability risk in an appraisal

Status
Not open for further replies.

Tim Schneider

Thread Starter
Member
Joined
Feb 8, 2007
Professional Status
Certified Residential Appraiser
State
Wisconsin
I have been thinking about how much risk ($ wise) there is in an appraisal. Is the worst case scenario that a property you did a report on gets foreclosed, then sold for less than the loan, and you are sued for the difference? If a borrower has a loan at bank A, you do a report for bank A, then the borrower goes to bank B, are now off the hook with bank A?
 

Tom Woolford

Elite Member
Gold Supporting Member
Joined
Nov 20, 2005
Professional Status
Certified Residential Appraiser
State
Florida
About 20 years ago I got hit with a suit from a National, basically subprime lender that went out of business. They sued every Appraiser on their roster for loans that went Tango Uniform due to poor lending decisions ( Loans to divorcing couples etc). The suit was for the actual loss, PLUS costs, PLUS interest at the contract rate. If you do an appraisal, and they do not do the loan, you would still probably be liable to the owner IF the loan was turned down for a Value issue where you came in too low and they could prove it. But, I'm not an Attorney, so what do I kow?
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Appraisals have a ton of liability. There is a criminal liability provision in
your cert for 1004s, et al. Its not worth doing appraisals for a
low fee and its not worth doing appraisals that aren't Foghorn
Leghorn, "Talkin Big A-America son", honest, and red white and
blue.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
One appraiser ended up having to go to the Supreme Court back in the 80's over a drive-by. Another had to defend the appraisal of a sting of convenience stores. Think what their costs would have been if they didn't have E&O.

You can (and probably will) be sued at some point.
 

TEL2002

Elite Member
Joined
Jan 16, 2002
Professional Status
Retired Appraiser
State
Louisiana
Does anyone have stats on how many suits are filed against appraisers each year? Would an interesting number.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
There is a lot of risk in doing appraisals.

I would think it depends on your scope of work and the date of the appraisal. If the appraisal is done for Bank A and then Bank B uses the same appraisal and Bank B was not an inteded user. I would think that bank B needed to order a new appraisal. Why else no name transfer and no recerts on appraisals.

Just my thinking.
 

Roscoeman

Member
Joined
Aug 18, 2005
Professional Status
Certified Residential Appraiser
State
Oregon
There is a huge liability in appraising...

Just got dismissed from a lawsuit with prejudice and it went on for one and a half years.

Anybody can sue you for anything and any amount!
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Think what their costs would have been if they didn't have E&O.
If I had my druthers, I would rather defend my self than have an E & O defend me....they are defending THEMSELVES, not you...I only want the E & O to pay the judgment if I lose.

Just got dismissed from a lawsuit with prejudice and it went on for one and a half years.
mine lasted two years and one month...they never got past first base but kept refiling and refiling. Once it was plead before the US Court of Appeals in January it was June before they made a decision to uphold the lower court.

I suspect the average appraiser is sued at least once every 15-20 years and has at least one complaint filed against them to the state. Our average annual complaints are nearly 5% of all appraisers, so it has to be a frequency of about once in 20 years on average. Lots of suits do not result in complaints to the state. Lots do.
 
Last edited:

Kathleen Bryce

Sophomore Member
Joined
Apr 6, 2006
Professional Status
Certified Residential Appraiser
State
Florida
There is a lot of risk in doing appraisals.

I would think it depends on your scope of work and the date of the appraisal. If the appraisal is done for Bank A and then Bank B uses the same appraisal and Bank B was not an inteded user. I would think that bank B needed to order a new appraisal. Why else no name transfer and no recerts on appraisals.

Just my thinking.

Um... Ray?

What do you think the uproar over Cert #23 was all about.

We are liable for the entire food chain... All the way to the poor house!
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
There are liability issues that most have never even considered, IMO.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks