Real Estate Appraiser Liability for Acts of Others

Type Matter:  Real Estate Appraiser Liability for Acts of Others
Issue:  Can a Supervisory Real Estate Appraiser be held liable for negligence of his/her trainee?
Answer:  Yes

Facts:  1) Appraiser’s Trainee is engaged by mortgage Lender to appraise a parcel of real property in connection with mortgage Lender’s intent to make a mortgage loan. 2) After the Appraiser’s Trainee completed the appraisal report, Supervisor Appraiser, reviewed and signed the appraisal report. 3) In reliance upon the appraisal report, the mortgage Lender makes a mortgage loan secured by the real property at issue. 4) The Borrower eventually defaults on the mortgage loan and the mortgage lender brings claim for negligence and negligent misrepresentation against the Supervisor Appraiser, in his capacity of supervisor, based on an allegation that the appraisal report negligently misrepresented the value of the real property. The mortgage Lender did not bring a claim against the Appraiser’s Trainee.

Result:  The Court permitted the mortgage Lender to proceed with its claims against Supervisor Appraiser based on the theory that as Supervisor of the Trainee he was responsible for the acts of his/her subordinate based on the presumption that Supervisor Appraiser had the right, ability and/or duty to control the activities of Trainee.

Lesson:  When acting as a Supervisory Appraiser, never assume that your Appraisal Trainee has properly completed an appraisal report. Treat the appraisal report as your own creation since applicable law may hold you personally responsible for its contents and conclusions.

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