New law prevents unlimited lawsuits against real estate appraisers
MADISON, WI… State Sen. André Jacque (R-De Pere) today had another bill signed into law, an initiative protecting real estate appraisers from liability resulting from services performed many years after the work had been completed without complaint at the time.
“Current law greatly limits the ability of real estate appraisers to adequately defend themselves and places undue hardship on them,” Sen. Jacque said. “The result is lost money and production, legal fees, future insurance premium increases and potential future lost business.”
Sen. Jacque said it could reach a point where records can be difficult to locate, resulting in virtually unlimited risk – and tremendous stress – for these small business persons.
“For example, if an appraiser performed an appraisal on a property in 2003, a third-party could sue the appraiser in 2020 for damages alleged to have arisen out of the 2003 appraisal,” Sen. Jacque said. “The lawsuit could have been allowed under Wisconsin law, because the statute of limitations began at the time of discovery, rather than at the time of performance.”
Sen. Jacque said there are law firms that have purchased the rights to sue appraisers in relation to defaulted mortgages. These firms have not purchased the bad loans themselves, just the rights to sue the appraiser(s) involved.
“The holders of the defaulted mortgage see this as a way to recover some of their losses, with virtually no risk,” Sen. Jacque said. “In some cases, appraisers have been forced to settle these lawsuits just to make them go away and to limit their defense costs.”
Senate Bill 341, co-authored with Rep. Paul Tittl, limits the time a lawsuit can be brought against a real estate appraiser to five years following the date of the report, consistent with other licensed professionals in Wisconsin such as CPAs. The measure also aligns with the Uniform Standards of Professional Appraisal Practice (USPAP) record-keeping requirements, which permit appraisers to destroy records after five years if state law allows.
Sen. Jacque said several other states including Minnesota, Illinois, Oregon, Tennessee, North Carolina, Kentucky, and South Dakota have recently enacted or proposed legislation to limit appraiser liability.
“A statute of limitations that is specific to claims against real estate appraisers will provide the certainty of knowing the time period during which a suit or disciplinary action might be filed,” Sen. Jacque said.
Senator André Jacque represents Northeast Wisconsin’s First Senate District, consisting of Door and Kewaunee Counties and portions of Brown, Calumet, Manitowoc, and Outagamie counties.