Food for Thought:  What Happens When an Owner’s Appraiser Offers an Opinion on Property He’s Never Set a Foot On?

The Second District Court of Appeal recently served a little morsel different from my normal diet of regulatory takings and land use decisions. Tidewater Preserve Master Association, Inc., v. State of Florida, Department of Transportation, ___ So.3d _____, 2021 WL 252068, (Fla. 2d DCA 2021), dealt with the issue of what constitutes a good faith appraisal when a governmental body takes property in a direct condemnation case.

In Florida, public bodies like FDOT can condemn property under Chapters 73 and 74 of the Florida statutes. Chapter 74 provides additional authority to public bodies to take property before the final amount of compensation due the owner is resolved. These powers are called “quick take” powers. Public bodies use Chapter 74 to get title to property so that they can build roads and bridges before the owner receives final payment. To condemn property under these quick take powers, public bodies need to prepare a good faith estimate of value based on a valid appraisal. If approved by the court, the amount of the good faith estimate of value is deposited into the court’s registry, at which time title to the property vests in the government while the owner’s right to compensation vests.

In Tidewater Preserve, FDOT wanted to build new interstate bridges over land and water in Manatee County. FDOT petitioned for an order of taking pursuant to the “quick take” procedure set forth in Chapter 74. Tidewater argued that the court erred in determining that FDOT made a good faith estimate of the value based upon a valid appraisal. It argued that FDOT acted in bad faith because it instructed its appraiser to rely on hypothetical conditions that would limit the size of the “parent tract.” It also argued the appraiser’s methodology of determining the parent tract made his appraisal invalid.

The appellate court wasn’t eating what Tidewater was serving. It stated, “To put it bluntly. . .these arguments find no support in the record.” FDOT’s appraiser, a state-certified general real estate appraiser with thirty-plus years of experience, testified regarding his methodology and reasons for employing it. He visited the site between ten and twenty times over the course of preparing his appraisal.

The appraisal issue concerned the notion of “parent tract.” FDOT’s appraiser considered physical contiguity, unity of ownership, and unity of use to determine the parent tract. It instructed its appraiser to appraise the property under a hypothetical condition: that the bridges were constructed according to FDOT’s plans. He disclosed that hypothetical consistent with the Uniform Standards of Professional Appraisal Practice (“USPAP”).

The court’s decision only served up tidbits of these issues. The property being condemned was owned by a homeowners’ association and included common areas. FDOT condemned four smaller parcels from the larger parent. FDOT’s appraiser concluded that the taking involved a common area. He explained, that while the common area was contiguous to other property, ownership was not unified. More importantly, this common area was put to many different uses, including open space, a marina, a playground, a dog park, and tennis courts, a berm, wall, and landscaping barriers. These uses were distinct from the other uses in the common areas, had separate highest and best uses, and created a separate parent tract from Tidewater’s remaining land.

According to the appellate court, Tidewater’s expert testified “that although he had not yet appraised the property or even actually set foot on it, he had driven past it on the highway multiple times and had reviewed pictures.” (emphasis added). Nevertheless, he testified that the methodology that FDOT’s appraiser used to identify the parent tract was inappropriate. He disagreed with FDOT’s determination of the three factors needed to opine to a parent tract. The court ultimately concluded that one expert’s disagreement with another expert’s chosen methodology was hardly sufficient to establish that either expert’s methodology was “invalid.” At most, Tidewater’s testimony casted doubt on the accuracy of FDOT’s appraisal: and an “inaccurate” appraisal was not the same as a “bad faith” or an “invalid”  appraisal.

Here are my takeaways. Most appraisers have to appraise property under the standards established by USPAP. USPAP allows one appraiser to offer an opinion about the development and communication of another appraiser’s report. That review may not entail a full-blown appraisal. Tidewater’s appraiser may have been attempting this sort of review. It’s also important to remember that USPAP does not require that an appraiser physically inspect a property to complete an appraisal or review another appraiser’s work.

Still, lawyers should always be careful about having an expert testify about a piece of property the expert never visited – or as the court said, not “even actually set a foot on.”

Jay Small practices in the areas of eminent domain, condemnation, property rights, inverse condemnation, and land use law. If you have any questions about how government regulations can affect your property, contact him at (407) 425-9044, by email at [email protected], or follow him on LinkedIn.

This blog and these materials are not intended to provide legal advice. They do not represent the legal opinions of the firm, nor should they be regarded as the legal positions of any client of the law firm of Mateer Harbert, P.A. They are provided for general informational purposes only. These materials should not be used as a substitute for the advice of qualified legal counsel.

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