Source: https://www.sanantoniorealestatelawyer.com/stigma-damages-can-a-real-propertys-bad-reputation-result-in-damages/
Timestamp: 2019-04-23 01:56:37+00:00

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Sometimes a property’s history or other outside influence creates an adverse public perception. This negative impact translates to diminished value or marketability based upon perceived risk or other emotion.
Stigma damages essentially constitute “damage to the reputation of the realty.” Smith v. Carbide & Chems. Corp., 226 S.W.3d 52, 55 (Ky.2007). They “represent the market’s perception of the decrease in property value caused by the injury to the property.” Jennifer L. Young, Stigma Damages: Defining the Appropriate Balance Between Full Compensation and Reasonable Certainty, 52 S.C. L. REV. 409, 424 (2001).
More simply, the concept of stigma damages relates to the decreased desirability of a property due to a condition that no longer exists. It is the unquantified potential that subjective purchasers will be less willing to buy the property (or unwilling to pay fair market value) even after the an adverse condition has been repaired or remedied.
Texas courts have allowed stigma-damage awards in real estate cases. See Country Village Homes, Inc. v. Patterson, 236 S.W.3d 413, 443-44 (Tex.App.-Houston [1st Dist.] 2007, pet. filed) (construction defects); Perry Homes v. Alwattari, 33 S.W.3d 376, 385-86 (Tex. App.-Fort Worth 2000, pet. denied) (defective foundation); Smith v. Levine, 911 S.W.2d 427, 434 (Tex.App.-San Antonio 1995, writ denied) (defective foundation); Terminix Int’l v. Lucci, 670 S.W.2d 657 (Tex.App.-San Antonio 1984, writ ref’d n.r.e.) (termite damage).
Proof of stigma damages almost always requires reliable expert testimony. Key word: RELIABLE.
The Texas Supreme Court recently affirmed that stigma damages are recoverable in Texas. See Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch, No. 13-0084 (Tex. Aug. 22, 2014). However, expert appraisal testimony must be sufficiently reliable in its methodology to support and sustain such an award. In Mel Acres, the Court performed a careful analysis of the appraiser’s method of employing the sales-comparison approach. This analysis determined that the expert misapplied the approach, and therefore rendered unreliable testimony. Mel Acres is a great starting point for understanding how Texas courts will consider evidence supporting a claim for stigma damages.

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