By Claudia Gaglione, National Claims Counsel for LIA Administrators & Insurance Services
We continue to see claims alleging that the rural property appraiser failed to adequately identify or report details surrounding a water source. In one claim, the appraiser correctly noted that the property was serviced by a “private water well.” It was later discovered that the well was not located on the property which was appraised. Unfortunately, the well was actually located on an adjacent lot that, at one time, was part of the subject lot prior to the lots being subdivided.
In another matter, the report said the property was serviced by “public water.” While public water lines ran adjacent to the property, they were not connected. The property actually was getting water from a small private well.
In another claim, the report correctly stated the property was serviced by a “private water well.” This claim focused on the quality of the water alleging the well water contained high levels of lead, nitrates, salt and methane and that a variety of costly steps would have to be taken to remedy the problems including the installation of a reverse osmosis system.
We can recommend some disclaimer language that the rural appraiser might consider adding to reports that could help in these circumstances. Specifically drafted language within the report can have a tremendous impact on how easily these claims might be defended.
After making any water source determination, the appraiser should identify the origin of the information reported. In some locations, water source is identified in public records. In other areas, public records are silent and the appraiser has to rely upon MLS. Sometimes information gathered is ambiguous or contradictory. All of this should be clearly explained in the report.
If the appraiser is unable to identify a water source, he/she should never “assume” something is the case. For example, it is never wise to report that a property is serviced by public water because the appraiser knows other homes in the area have a public water source. We have seen many cases where the appraiser assumed something about public utilities only to learn, later, that although utilities were in the area, they were not connected to the property being appraised.
Sample language for the appraiser to consider includes:"The appraiser noted from public records that the property has a private water well. The appraiser assumes this information to be correct, but is unable to independently verify the accuracy of the records reviewed.”
or"The appraiser noted public records are silent with respect to water source. As per the listing agent __________ the property has a private water well. The appraiser assumes this information to be correct, but is unable to independently verify the accuracy of the records reviewed or the information provided. Additional investigation is suggested.”
If language like this is included in the report it would be difficult for a plaintiff to claim they “relied” upon the appraisal when it came down to a definite identification of the applicable water source.
When a property is serviced by a well, we continue to see claims arise after it is discovered that the well is not located on the property appraised, but rather on an adjoining parcel. Other claims have alleged the well needs repair, the well is not large enough to provide adequate supply for the subject dwelling, or the well water is contaminated.
When a property is connected to public water or to a water co-op, we have seen claims because the connection lines need to be serviced. None of these “problems” are the responsibility of the appraiser; however, if the report contains disclaimer language that spells out the appraiser’s actions and obligations, the claim might be easier to defend.
Additional sample language for the appraiser to consider includes the following. Please remember that any disclaimer language always should be tailored to reflect the individual property being appraised:“The appraiser is unable to determine the exact location of the private water well. The appraiser cannot be held accountable if the water delivery system cannot be easily accessed for repair. The appraiser can only conduct a limited inspection of visibly accessible areas. The appraiser did not visually inspect the private water well and cannot confirm whether or not it is functional or adequate for the subject property. The appraiser did not conduct any testing of the well and is not qualified to do so. Inspection by a qualified professional is suggested."
Further to the above, remember that every report should always contain standard language that explains the difference between an appraisal and a home inspection and should further advise that the appraisal was not prepared to disclose the presence of any defective conditions on the property.
We cannot provide any advice that will stop claims from being made; however, including thoughtful, and specific, disclaimer language can be instrumental in getting the appraiser out of a complicated and potentially costly lawsuit.
The previous "Where's the Water" article can be read here.