Appraiser liable to home buyer for negligent appraisal

Torts—Appraiser Liable for Negligence to Buyer

Sage v. Blagg Appraisal Co., 555 Ariz. Adv. Rep 22 (App. Div. I, April 30, 2009) (Justice Johnsen)

REAL ESTATE APPRAISER CAN BE LIABLE TO BUYER ON PURCHASE MONEY MORTGAGE FOR NEGLIGENCE IN PERFORMING APPRAISAL

Buyer offered to purchase seller's home subject to an appraisal. The appraiser allegedly failed to properly measure the home, overestimated the square footage and allegedly gave an inflated and unreasonable appraisal. In reliance upon the allegedly negligently prepared appraisal buyer closed on the house. Buyer learned of a 569 feet discrepancy in the square footage a year and a half later when attempting to refinance. Buyer sued the appraiser alleging she would not have purchased the home if the appraisal had been done appropriately which would have revealed her offer was too high.

Defendant appraiser moved for summary judgment claiming he owed no duty to the seller. The Court of Appeals disagreed finding that Restatement section 552 (Second) of Torts creates the duty when as here the appraiser knows the lender intends to furnish the appraiser to the buyer. To hold otherwise would be to require the buyer to hire her own appraiser to obtain the same information she needs for the purchase that the lender needs.

The appraiser is liable to the buyer for negligence in the appraisal process.