Divorces are not easy for anyone involved within the process. Conflict seems to be present at every step of the way. Completing a divorce appraisal is a different experience than completing a normal appraisal – so what should you know before getting started? We sat down with Craig Capilla, trial lawyer with the Franklin Law Group, to further discuss what appraisers should expect when doing a divorce appraisal.
Buzz: What makes a divorce appraisal assignment different from other appraisals?
“At every step of the process, the most important thing to remember when working on a contested divorce assignment is that there will be conflict. In fact, there already is. That is why you’ve been hired. You can be certain at least one party will NOT be happy with your work. It is best to try and make sure that is limited to only one party. Someone else is likely being paid well to find errors in your work. Expect that type of scrutiny and rise to the occasion or steer clear of the work.”
“Some types of work are not for everyone and it is important for an appraiser to understand what they are signing up for before they accept a particular assignment. The most common refrain I’ve heard over my years of prosecuting and defending appraisers is “I wish I wouldn’t have taken that assignment.” There is no shame in walking away from something that isn’t a good fit. However; for those that like the challenge and are ready to put in the effort, divorce work, and litigation work in general, can be a great facet of the appraisal practice.”
Buzz: What are some common traps or errors found in divorce appraisals?
“All too often in a divorce appraisal assignment, it is the accumulation of small errors and omissions that lead to the unraveling of the appraiser’s work. Every decision made, every bit of analysis, is fully under the microscope in a contested divorce assignment – any mistakes get magnified as the process goes on. Add to that the fact the client may not be as sophisticated as other clients for other assignment types and it is a recipe for disaster. As a result, it is critical for the appraiser to be clear, concise, and be extra careful during the development and reporting.”
“That’s not to say that an appraiser should ever be less careful on other types of assignments. USPAP and state law does not change depending on the type of assignment. However, the level of scrutiny aimed at each option certainly changes. Appraisers need to be aware of that going into the process.”
Buzz: What can appraisers do better to limit their liability in a divorce assignment?
“Another area to really limit the exposure to the appraiser is to be very specific about what is being done and why. This means being clear about intended use, intended users, and the Scope of Work description. An appraiser simply needs to be explicit about what is being done and what is not being done to avoid confusion. Once the appraiser has completed that explanation, they should read it again to be certain that it is understandable. This is another circumstance where having someone other than the appraiser to review the work can be very helpful.”
Buzz: What should an appraiser watch for in the development phase of the assignment?
“When working on a divorce assignment, an appraiser should be particularly careful at the subject inspection, paying close attention to who is present and what their purpose or motivation might be. Again, understanding that there is a conflict at the root of the assignment should have everyone on guard, but not necessarily on edge. It is important to remain calm and transparent, but also to be careful not to engage in conversations that might be misconstrued later. All parties to the process likely have an angle and it is critical for the appraiser to not say or do anything that could be later characterized as biased or partial. Another tip: the appraiser should be aware that some parties may not be acting in a forthright manner. I’ve heard stories of an appraiser on an inspection who found out later that the entire walk though was being secretly recorded by the other spouse and the appraiser was completely unaware. Fortunately, nothing significant went wrong but it was a bit of a scare for the appraiser who was forced to try and remember every single thing that was said and done well after the fact.”
Buzz: What is the simplest error to correct or avoid?
“Please, please, PLEASE do not report the opinion of value on a URAR form. If you are absolutely tethered to the use of a form, type your thoughts into a GPAR format. Do not, under any circumstances, use a form with boilerplate language that specifically states the report is intended for a mortgage finance transaction. Use of an inappropriate form is just booking a one-way ticket to a meeting with the state regulators.”
“In addition, an even halfway competent opposing counsel should be able to use the boilerplate language of a lending form to completely unwind the basis of the final opinion of value. There are enough other angles of attack for the other side to pursue, do not give any free points to the other side. Use an appropriate form, or no form at all, when possible.”
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