Phony Low-Value Complaints
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ALL unintended users are specifically excluded from any right of reliance on this appraisal report…
Recently, Mr. Steve Kahane, Board Member of the Association of Texas Appraisers (ATA) wrote a great article in WorkingRE. It included several suggestions for Texas to deal with it’s excessive number (70%-75%) of unfounded complaints against appraisers.
An American Guild of Appraisers member in New Jersey who has twice faced this exact kind of complaint abuse reminded me of the article and concurred with its suggestions for his state. Fortunately for our member, New Jersey is not one of those relatively few ‘charge and win at any cost’ over-regulating states. In fact, they are among the best (in my experience) to deal with. They “get it”. They screen and investigate phony low-value complaints as quickly as they can and remove the burden of suspicion from innocent appraisers’ shoulders comparatively quickly. Still, the initial notice is like being gut-shot.
Our member was fortunate. I reviewed the complaints and his work was fully compliant with USPAP in both instances. The over-sell of the false allegations by realty agents in his state made clear that retaliation for not supporting over value priced property was the motivation. Both cases were dismissed early on.
But what is his recourse? Two state licensed brokers falsified complaints. One whom had her State Bar Member attorney husband draft the complaint. In that case the attorney spouse using typical courtroom hyperbole actually helped our members case since there was not even a pretense of impartiality AND most fictitious claims were far beyond the scope any rights of reliability of any party to an appraisal – let alone unintended users.
Was our member supposed to take on the N.J. State Bar for recourse? Was AGA? Would counter complaints to the NJ Department of R.E. against the brokers license simply trigger official cross complaints in civil court? Would such counter complaints induce the original lender to retaliate against our member (again)? In the end, our member had no justice beyond clearing his name and reputation with the state and original lender. The dishonest broker and her ethically challenged attorney spouse get off scot free?
We’ve had numerous similar cases in Texas. Most frequently (so far) involving Keller-Williams brand name-affiliates, where the “managing broker” purportedly ‘directly supervises’ the daily activities of roughly 623 subordinate Dallas-Fort Worth brokers and agents. She opined their agents to have done nothing wrong; and our counter offer to file a complaint against the brokerage at TREC to be ‘bullying’. They even falsely claimed to have written a revocation of the complaint to TALCB (which cannot be revoked by the way). For what it’s worth, I know Keller Williams brokers that are all ethical. The one I described isn’t among them.
For its part, Texas TALCB says it has no legal jurisdiction over brokers filing false complaints; and TREC simply does not care.
Clearly the Governor of the Great State of Texas needs to look into the deliberate TREC Three Monkeys Approach to meaningful real estate licensing and supervision.
In contrast New Mexico quickly investigated and proposed appropriate $1,000 consent penalties to a broker in a similar recent case.
In each case unintended and unauthorized users originated the complaints.
As much as I like Mr. Kahane’s suggestions, some simply run contrary to Texas Law as was explained to me by TALCB. Others will require concerted efforts to get corrective legislation passed. Our hand of support is extended to ATA in this regard. Either through our AGA Texas State Representative; or through AGA National. Ultimately, changing Texas laws has to be a Texas originated movement.
In another state’s civil case where our member sought recompense for legal fees & other damages, a judge queried whether the property owner/sellers were not “third party intended users?” This, despite the USPAP mandatory user statements / identification, and the embedded statement of limiting conditions citing who may or may not rely on the appraisal.
The Texas solutions as well as all other state/national solutions will take some time to lobby & implement. In the meantime, I’d suggest copying and pasting the following in all FIRREA/USPAP addendum forms (name varies with software provider) as Specific Additional Limiting Conditions. Remember I am no attorney, but legally reviewed language doesn’t seem to be providing the necessary protections.
One immediate possible ‘interim fix’ to this problem is to incorporate the following into every report. Boilerplate it. Modify as you think best but remember the intended use/user redundancy is necessary since some judges are or may be redefining use limitations contrary to what we believed our limitations were.
Possible Part Two
Admittedly this is a small step and not a final solution. It is also one that we can all implement today.