Eminent Domain Report

Yesterday, I spoke at the Appraisal Institute's 42nd Annual Litigation Seminar.  As usual, it was a great event, well attended by many of the top eminent domain appraisers in Southern California.  I spoke about recent developments in a presentation entitled "Eminent Domain: Where Are We, and Where Have We Been?"  [PDF] 

While I am confident that anyone in attendance would tell you I was brilliant, I want to focus today on some issues that arose in Ted Whitmer's presentation entitled Legal Instructions, Litigation & Appraisal Institute Standards.  Ted's firm, Appraiser Defense, focuses on defending appraisers when complaints are made against them, and he provided some great insights into how appraisers should deal with the (apparent) conflicts between legal instructions and USPAP requirements.

Ted's fundamental premise (which I wholeheartedly endorse) is that whenever a conversation starts with "you'll never guess what this crazy attorney asked me to do," the answer is almost always, "so why didn't you do it."  Litigation is not the real world, and appraisers are often asked to make assumptions about things that defy logic, or that simply don't reflect what the appraiser would do in an appraisal assignment absent such an instruction.  The "litigation reality," however, changes an appraiser's normal practice. 

Sometimes, an attorney has a legal theory (about a purportedly comparable sale, about highest and best use, about severance damages, etc.) that he or she is hoping to convince the court is correct.  That legal theory may depend on the appraiser's making certain assumptions that do not exist in the real world. 

Other times, the attorney is giving an instruction because of a ruling the court has already made in the case.  Judges can make bizarre and inexplicable rulings, and when the court rejects what seems to be the most obvious comparable sale, the appraiser must disregard that sale, or his or her opinion will be thrown out of court. 

Ted also explained (in detail and with more eloquence than I could ever muster) how following such instructions need not violate the appraiser's ethical obligations under USPAP.   One key appears in Rule 1-2(g) concerning Hypothetical Conditions, which allows use of a condition where "clearly required for legal purposes." 

If I can get Ted to allow me to link to his presentation, I will.  In the meantime, for a little more information on legal instructions and their interaction with USPAP, here is a portion of a presentation I gave to the Appraisal Institute this past spring on the issue. 

UPDATE, NOVEMBER 24:  I heard back from Ted, and he graciously provided me with a copy of his PowerPoint, Legal Instructions:  Litigation, USPAP & Appraisal Institute Standards to share.  He also suggested that appraisers may want to take a look at his article, Stay out of Trouble.