M id A tlantic Real Estate Journal — Financial Digest — Appraisal — September 17 - October 21, 2021 — 7A A ppraisal
www.marej.com
By Michael J. Acquaro-Mignogna, MAI, SRA, AI-GRS, Mid-Atlantic Valuation Group, Inc. AI promotes state legislation limiting the time in which civil & administrative actions against appraisers can be filed
F
or a recent job search, my son augmented his resume with a video
appraisers, because the clock for filing a suit does not start ticking until the party filing the claim discovers, or should have discovered, the supposed defect in the appraisal. The Uniform Standards of Professional Appraisal Prac- tice (USPAP) requires an ap- praiser to “retain the workfile for a period of at least five years after preparation or at least two years after final disposition of any judicial pro- ceeding in which the appraiser provided testimony related to the assignment, whichever period expires last.” But these appraisals were often per-
formed years ago, so apprais- ers who routinely follow this rule and appropriately purge their files no longer have the ability to adequately defend themselves. A statute of limitations on appraisal claims will provide appraisers a better under- standing of their true exposure to lawsuits. As a result, ap- praisers can take appropriate and more effective risk man- agement steps in the areas of insurance coverage and record retention. Some states – like Minne- sota, Tennessee, Louisiana, Mississippi and Oregon – have
enacted legislation in the last few years that limit the time frame in which appraisal law- suits can be brought. Texas is the latest to enact this type of legislation, which just took effect September 1. Other states – like North Carolina, Kentucky and South Dakota – already had similar laws on their books. Closer to home, the Coalition of Pennsylvania Real Estate Appraisers has been work- ing with a lobbyist and the Appraisal Institute’s govern- ment affairs professionals to enact similar legislation. In late June, HB1255 passed the
Pennsylvania House of Repre- sentatives unanimously, and it moved to the State Senate for consideration. The goal is to get this signed by Governor Wolf as soon as possible. All appraisers who live, work or are licensed or certified in Pennsylvania should support this legislation and contribute to this effort. Keep the momen- tum going by supporting simi- lar legislation in neighboring states and nationwide. We have enough to worry about after more than a year of pandemic-related restric- tions and estimating values in continued on page 28A
he c reat ed showcasing his curricu- lum-des ign and videog- raphy skills. In referenc- ing the back- groundmusic he included in the video, he empha -
Michael J. Acquaro- Mignogna
sized that the music had a public copyright license, com- menting wryly, “because noth - ing sounds better than not getting sued.” I couldn’t agree more. All real estate appraisers would agree, and so does the Appraisal Institute. The AI’s government affairs specialists have been working to enact state legislation limiting the time in which civil and ad- ministrative actions against appraisers can be filed follow - ing the date the appraisal was performed. Here’s the basic issue. For years following the 2005-08 real estate “bubble,” apprais - ers nationwide have been faced with lawsuits from over- ly litigious law firms alleg- ing that defective appraisals were performed for mortgage transactions that have since gone into default. While some of these law firms represent lenders, others bought the rights to sue appraisers from financial institutions that are desperate to recover their losses. Usually, though, the real reason for the default is a significant value change over time or poor underwriting at the time the loan was made. But the appraiser is often the “last one standing” with any connection to these mortgage loans, especially if the original mortgage lender failed during the real estate crash, with no one else left to sue. Lawsuits are also filed alleging that an appraiser’s inflated value resulted in a purchaser bor- rowing or paying too much for a property. Many of these allegedly “bad” appraisals result in complaints to state appraiser regulatory agencies and dis- ciplinary action against ap- praisers. With current law as it is in most places, the “Discovery Rule” results in a nearly infinite statute of limitations for claims against
Principals Michael J. Acquaro-Mignogna, MAI, AI-GRS Gary E. Heiland II, MAI, AI-GRS
Providing Real Property Valuation and Consulting Services in Pennsylvania, New Jersey, Delaware and Maryland
Recent Assignments
99-lot age-restricted subdivision Chester County, PA
148-unit apartment complex Cumberland County, PA
500,000 sf warehouse Franklin County, PA
16,500 sf industrial building Centre County, PA
220,000 sf retail building Allegheny County, PA
98,000 sf office building Lancaster County, PA
20,000 sf industrial building Baltimore County, MD
Proposed 265-unit apartment complex Atlantic County, NJ
Office Locations Wayne, PA (Suburban Philadelphia) ● York, PA (Central PA) www.mvginc.com
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