Two recent cases involving false real estate appraisals have held that the appraisers are liable only to their own clients, and possibly to others whom the appraisers might expect to rely on the appraisals. This general principle may also be of some comfort to lawyers who render opinions for their clients.

In one of the cases, Decatur Ventures LLC v. Daniel, 485 F.3d 387 (7th Cir. 2007), a borrower sued a lender’s real estate appraiser who submitted several appraisals with inflated estimates. The facts of that case could be made into a novel or TV movie. As Chief Judge Frank Easterbrook of the 7th U.S. Circuit Court of Appeals explained it, Michael Stapleton had made Trent Decatur “a terrific offer.” Stapleton had plans to locate “undervalued” homes, arrange to borrow more than 100 percent of the price, and use the surplus to fix up the properties so they could be rented. Stapleton promised to provide the down payment, do the repairs and locate the tenants, and Decatur “could put his foot up on the desk and wait for the rentals to roll in,” so that he could make the mortgage payments. Easterbrook commented: “Like most offers too good to be true, this was not true.”

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