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.
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