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Appraiser has no duty of care to real estate seller

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The Indiana Court of Appeals ruled an appraiser has no duty of care to a seller after he appraised a house for much less than the proposed purchase price. The COA upheld summary judgment for the appraiser in a case where the seller alleged negligence, fraud and slander of title.

BSA Construction LLC 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 thus Bank of America denied financing. BSA appealed the bank’s decision but the bank upheld it.

BSA then filed suit against Johnson in Hendricks County, and the case was transferred to Marion County. Johnson filed for summary judgment and moved to strike numerous evidentiary items BSA had designated. The court granted the motion to strike and summary judgment, and BSA appealed.

BSA claimed Johnson owed them a duty of care on negligence principles, but the COA disagreed, saying 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.”

BSA also claimed Johnson’s appraisal amounted to fraud, but Bailey wrote that BSA never took any action after the appraisal after Johnson was appointed and the risk of an unfavorable appraisal was already known to BSA.

Finally, BSA claimed slander of title, but Johnson did not affect BSA’s ownership of the property, just the monetary value.

The case is BSA Construction LLC v. Jimmie E. Johnson, 49A02-1506-CT-749.

 

 

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  • Fix is in
    Real Estate Appraisers are God's whom work for the banks, they pretend to be neutral but the banks hire them to go to the address to be appraised. Thus the money comes from the banks. The Court just validated that consumers have no rights and consumers deserve no value. Lesson the be learned here is banks control Indianapolis.
  • It appears the court does not understand USPAP
    I read the whole court judgement paper. It seems that the court does not understand that the appraiser is not an advocate of any party. The court says that the appraiser can not serve two masters who have conflicting interests. Therefore, the appraiser has no duty of care to the seller. That sounds like as if the bank/lender sues the appraiser, the appraiser would lose. The reality is that the appraiser is independent. He does not serve any master. He advocates no one's interest but the public interest. His duty is to develop creditable value opinion, which is not to please any party or advance any party's interest or gain, including the lender's. The concept of intended user was not mentioned in the court judgement, either. The appraiser should only be liable up to the fee he accepted as the payment. The appraiser developed his value opinion. This opinion is not mandatory for any party to accept. The bank has the full freedom to disagree and ignore the appraiser's opinion. In fact, it is not even mandatory for the lender to reply on an appraisal to lend a mortgage loan if it is not a federally regulated transaction. If the bank chooses to be regulated under the federal rules, then the banks forfeits its right to complain when the result of the rule, such as an unfavorable appraisal, is not in its favor. As for any other party, other then the client of the appraisal and the intended user, the appraisal is not done for you. You have no rights in its. For the seller BSA to sue the appraiser because of his unfavorable value opinion, it is like for the Plaintiff to sue the judge and court because they lost the lawsuit, and to sue the congress because they made the law, and to sue the founding fathers because they founded this country in such a judicial system and to sue his own parents because they gave birth to him which made his suffering possible.

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    1. The voices of the prophets are more on blogs than subway walls these days, Dawn. Here is the voice of one calling out in the wilderness ... against a corrupted judiciary ... that remains corrupt a decade and a half later ... due to, so sadly, the acquiescence of good judges unwilling to shake the forest ... for fear that is not faith .. http://www.ogdenonpolitics.com/2013/09/prof-alan-dershowitz-on-indiana.html

    2. So I purchased a vehicle cash from the lot on West Washington in Feb 2017. Since then I found it the vehicle had been declared a total loss and had sat in a salvage yard due to fire. My title does not show any of that. I also have had to put thousands of dollars into repairs because it was not a solid vehicle like they stated. I need to find out how to contact the lawyers on this lawsuit.

    3. It really doesn't matter what the law IS, if law enforcement refuses to take reports (or take them seriously), if courts refuse to allow unrepresented parties to speak (especially in Small Claims, which is supposedly "informal"). It doesn't matter what the law IS, if constituents are unable to make effective contact or receive any meaningful response from their representatives. Two of our pets were unnecessarily killed; court records reflect that I "abandoned" them. Not so; when I was denied one of them (and my possessions, which by court order I was supposed to be able to remove), I went directly to the court. And earlier, when I tried to have the DV PO extended (it expired while the subject was on probation for violating it), the court denied any extension. The result? Same problems, less than eight hours after expiration. Ironic that the county sheriff was charged (and later pleaded to) with intimidation, but none of his officers seemed interested or capable of taking such a report from a private citizen. When I learned from one officer what I needed to do, I forwarded audio and transcript of one occurrence and my call to law enforcement (before the statute of limitations expired) to the prosecutor's office. I didn't even receive an acknowledgement. Earlier, I'd gone in to the prosecutor's office and been told that the officer's (written) report didn't match what I said occurred. Since I had the audio, I can only say that I have very little faith in Indiana government or law enforcement.

    4. One can only wonder whether Mr. Kimmel was paid for his work by Mr. Burgh ... or whether that bill fell to the citizens of Indiana, many of whom cannot afford attorneys for important matters. It really doesn't take a judge(s) to know that "pavement" can be considered a deadly weapon. It only takes a brain and some education or thought. I'm glad to see the conviction was upheld although sorry to see that the asphalt could even be considered "an issue".

    5. In response to bryanjbrown: thank you for your comment. I am familiar with Paul Ogden (and applaud his assistance to Shirley Justice) and have read of Gary Welsh's (strange) death (and have visited his blog on many occasions). I am not familiar with you (yet). I lived in Kosciusko county, where the sheriff was just removed after pleading in what seems a very "sweetheart" deal. Unfortunately, something NEEDS to change since the attorneys won't (en masse) stand up for ethics (rather making a show to please the "rules" and apparently the judges). I read that many attorneys are underemployed. Seems wisdom would be to cull the herd and get rid of the rotting apples in practice and on the bench, for everyone's sake as well as justice. I'd like to file an attorney complaint, but I have little faith in anything (other than the most flagrant and obvious) resulting in action. My own belief is that if this was medicine, there'd be maimed and injured all over and the carnage caused by "the profession" would be difficult to hide. One can dream ... meanwhile, back to figuring out to file a pro se "motion to dismiss" as well as another court required paper that Indiana is so fond of providing NO resources for (unlike many other states, who don't automatically assume that citizens involved in the court process are scumbags) so that maybe I can get the family law attorney - whose work left me with no settlement, no possessions and resulted in the death of two pets (etc ad nauseum) - to stop abusing the proceedings supplemental and small claims rules and using it as a vehicle for harassment and apparently, amusement.

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