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TJ, Esq.
TJ, Esq., Attorney
Category: Real Estate Law
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Experience:  JD, MBA
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My appraisal came in short due to the appraiser not including

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My appraisal came in short due to the appraiser not including 600sq.ft of finished living space on my new construction home. He went by the plans-- that were out of date. He did not want to measure the home--which was open for inspection. We filed a appraisal dispute, but it took too many weeks to get a response--so I asked them to hold and just do the final inspection in order to close. The builder threatened to keep my 10% deposit and default on the contract if I did not close immediately. It was the builder that told me to have the apprasial done--even though the home was not completed with flooring installed. I was forced to close short. by $44,000.

Can I sue the builder for not allowing the appraisal dispute to be completed? I did not want to lose my $75.000 and the custom home I spent 1-1/2 years designing from scratch. I was at the home twice a day for 18 months!
Hello and thank you for allowing me the opportunity to assist you.

Yes, you can sue the builder. You certainly have that right. But I think that you may have intended to ask whether you'd win if you were to sue the builder. Assuming that is your question, then I'll ask you what your contract states. If the contract states that you must close by a certain date, then you would be in breach of the contract if you were to refuse to close by that date. Unfortunately, the builder would not be liable for unrelated ramifications due to his enforcing the contract with you. As an analogy, let's say you and I created a contract whereby I agreed to paint your house and you agreed to pay me $1000. If I paint your house and you pay me, I would not be held liable if your payment to me caused you to bounce a check written to a different person. That surely would not be my responsibility. The same goes for the builder. If you agreed to close by a certain date, and the builder forces you to comply, then he surely would not be held liable for other problems that result from your compliance.

I am truly sorry to give you this bad news, but please understand that it would be unfair to you (and unprofessional of me) to provide you with anything less than an honest response. However, if your concerns were not satisfactorily addressed, then please let me know, and I will be happy to clarify my answer. I do ask that you rate me based upon whether I answered your question, and not based upon whether the answer was good news or bad news. Your positive feedback is greatly appreciated. Thank you for using our service!

If you would like to direct additional legal questions to me in the future, then please type "To VAMD" in the subject line of your question.
Customer: replied 4 years ago.

I agree with your assessment. The one reason I was considering the lawsuit is because the builder said that the home was ready for appraisal and the flooring was not in. The appraiser stated that too much construction was going on for him to measure the "as-built" extra 600 sq. ft of home.


 


I just feel that I the builder would have waited 2 more weeks to allow the flooring to be installed, it would not have appraised short. Then when I filed a dispute to correct the sq. ft. error with as-built drawings--the builder would not allow the required time by the appraiser to complete the dispute.


 


Even the Harris Count Appraisal District Tax assessor had come by a few weeks prior to the bank appraiser and correctly appraised the home to include the as-built extra 600 sq. ft.


 


I just believe the builder forced me to initiate the appraisal before the home was ready and then did not allow the dispute to be resolved.

Hi again.

You pointed out an important fact that would likely prevent any possible claim against the builder. You stated:

"Even the Harris Count Appraisal District Tax assessor had come by a few weeks prior to the bank appraiser and correctly appraised the home to include the as-built extra 600 sq. ft."

So, if you were to sue, not only would the builder argue that he is not responsible for any losses from the bad appraisal, he would also point out that it was possible for the appraiser to include the 600 sq. ft. since the county appraiser did exactly that. So, the builder will argue that your dispute should be with the appraiser and not with the builder. I don't see how you would get around those arguments.

I truly wish that I had better news. I dislike this part of my job. But I have to be honest with you and tell you that I just don't see this potential lawsuit as a winner.
Customer: replied 4 years ago.

The appraiser is under contract with the Bank providing the loan. Can I sue the appraisal company?

Hi again.

Based on what you wrote, you'd have a better case against the appraiser than the builder. But, whether or not you'd win also depends on what you agreed to with the appraiser. It's possible that the applicable contract limits any liability for negligence to the cost of the appraisal. You'll need to review any applicable contract to be sure. However, if the appraiser worked only for the bank, and not you, then you would not likely have recourse against the appraiser because there would be no contract privity. In other words, you can't win a lawsuit against an appraiser for negligence if the appraiser owed you no contractual duties. So, it depends on your relationship with the appraiser, as well as any contractual terms that limit liability.
Customer: replied 4 years ago.

Thanks for your assistance. It was what I expected to hear. The good news is that I planned for this contingency also. My loan was for 5% down--just in case the appraisal came in short. So, the only issue was that I could have kept 5% more in my pocket for upgrades after closing.


 


Thanks again,


 


TJ


 


 

You are quite welcome. Thank you for using our service!

If you would like to direct additional legal questions to me in the future, then please type "To VAMD" in the subject line of your question.
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