August 17, 2018
Real estate appraisers, like their companions who work in the real estate industry under different titles, face the same risk of being sued by a homebuyer or seller. With an industry constantly in fluctuation and an unpredictable market, it’s not easy nailing down certain specifics when it comes to liabilities.
There are cases in which an appraiser has committed a mistake and goes under the legal microscope. But whether they have made an error or are alleged of committing an error without proof, they run the risk of a tarnished reputation. This is why having protection like real estate appraisers insurance is so important. But before you set up your policy – or if you’ve started looking already – it’s best to look over some common claims brought against real estate appraisers.
Essential Disclosures and Disclaimers
One main responsibility for an appraiser is to provide information and a valuable opinion that will help the user to understand that opinion in matters of real estate. If an appraiser withholds such disclosures, this could mislead the client and lead to confusion. While an appraiser does have an important position, especially among those who require there insight, they are not experts in every aspect of housing, such as being a home inspector or title attorney.
Fraud and Failure to Provide Quality Services
Consumers obviously need a valid reason to sue. What constitutes a reason to see you? Fraud. This happens when a real estate appraiser falsified their comparable sales or intentionally ignores an attribute that the comparable may have. If you say that it was a little mistake, this can still count as misleading your client, which would allow them to sue you within reason. Fraud is hard to prove, however, and most likely a lender will not sue you for this.
Incompetence: Intentional and Unintentional
An appraiser must correctly use methods and techniques that are a must when producing a credible appraisal. There are certain standards to work by, and if the appraiser does not follow these then they open themselves up to liability claims. If an appraisal isn’t being considered fraudulent, they can still be considered a bad appraisal due to incompetence.
When it comes to non-lending scenarios, appraisers might face a greater risk of being sued because of the number of parties involved in a real estate project. From the homeowner looking for an appraisal because of tax purposes to a landlord and tenant going over lease terms, an appraiser should be educated with the variables in their duties.
About Associations Liability Insurance Agency (ALIA)
The ALIA Team (part of the Riverton Insurance Agency Corporation), specializes in helping real estate professionals find the affordable and comprehensive coverage they need, without the hassle. ALIA dates its roots to 1991 with the founding of FREA, Foundation of Real Estate Associates. In 2013, ALIA was created to work with multiple insurance companies thereby broadening the portfolio of products to customers. In 2017, ALIA was purchased by Riverton Insurance Agency Corp.