Costs are damages if they are reasonably foreseeable in the making of a contract. Where a person relies upon the promise of another, and incurs costs as a result, the costs and reliance create a binding contract, which if breached, grants the injured party the right to recover their costs as damages.
If the costs were incurred after the bank stated that the loan was a "go," then those costs are recoverable against the bank in a breach of contract action (which could be as easy as suing in small claims court, dependent upon the amount of costs involved). If the costs were incurred before the bank stated that the loan was a "go," then those costs are not recoverable, because there was no reliance upon the bank's promise to fund the loan.
Of course, it's also possible that the bank may have made some other promise prior to the payment of the appraisal fee, upon which the borrower relied, and which would entitle the borrower to recover the appraisal costs as damages. But, that's what the borrower must prove to a court: (1) what did the bank promise; (2) when did the bank make the promise; (3) did the borrower rely on the bank's promise; and (4) what damages/costs did the borrower incur after relying on the bank's promise.
I think that covers the issue.
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