Daily Development for
Wednesday, December 6, 1995

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

APPRAISALS;APPRAISER'S LIABILITY FOR NEGLIGENCE: A third party may state a claim for negligent misrepresentation against a real estate appraiser. Schaaf v. Highfield, 896 P.2d 665 (Wash. 1995).

Purchaser brought an action against an appraiser hired by the Veteran Administration alleging that the appraiser conducted a negligent appraisal of the home and that the appraiser did not disclose to him that the house had a leaking roof. The issue addressed by the court is whether a real estate appraiser owes a duty of care in the preparation of appraisals to third parties who are not in contractual privity with the appraiser.

The court concluded that, based on Restatement (Second) of Torts §552, an appraiser does owe such duty of care. The court held that liability of the appraiser extended to the buyer, seller and those involved in the transaction that triggered the appraisal report, but to no one else in the circumstances of this case. The fact that the appraiser was hired by the Veterans Administration does not cancel the appraiser's common law duty of care to the parties to the transaction.

Comment: Remarkably, there are not too many cases finding liability for appraisers under these circumstances. Although many pundits have declared "privity" dead, other cases reported here over time have indicated that privity in fact is alive and well in many contexts. But, appropriately here, the privity issue gets buried.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. Contact Shawn Kaminsky at the ABA. (312) 988 5260.

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.