Reports rendered for governmental lenders pose unique liability issues for appraisers.
This article addresses the pertinent case law and will provide some suggestions to protect the real estate appraiser from liability. In the context of appraisals rendered for the federal government, the appraiser is usually hired by the federal agency, but paid by the borrower. The United States Supreme Court and several Appellate courts across the country have addressed the issue of whether a real estate appraiser who is requested to prepare an appraisal for the federal government is liable to anyone other than the federal government. In Neustadt , the purchaser relied on an FHA appraisal finding no foundation problems at the time of the appraiser's inspection of the property. Once the purchaser moved into the property, the house began to crack due to severe foundation problems.