Litigation & Legal Appraisals
Independent Real Estate Valuations for Litigation, Disputes & Legal Proceedings
When the value of real estate becomes part of a legal dispute, a simple estimate of property value may not be enough.
Lawyers, property owners and other parties may require an independent, well-supported opinion of market value that clearly explains the property, the relevant market evidence and the reasoning behind the valuation conclusion.
Cade Appraisals Inc. provides professional litigation and legal appraisal services for matters involving residential, commercial, industrial, rural, agricultural, investment and other real estate.
Our role is to provide an objective and impartial opinion of value based on professional appraisal analysis and relevant market evidence, regardless of which party retains the appraiser.
What Is a Litigation Appraisal?
A litigation appraisal is a professional real estate valuation prepared when property value is relevant to a legal dispute, negotiation, mediation, arbitration or court proceeding.
These assignments may require a greater level of documentation and explanation than a
valuation prepared for a more routine purpose.
The appraisal should clearly communicate what property interest is being valued, the effective date of the valuation, the market evidence considered and the reasoning supporting the final opinion of value.
Litigation and legal appraisal services may be required for matters involving:
Property ownership disputes
Real estate litigation
Matrimonial and family-law matters
Estate and beneficiary disputes
Shareholder or partnership disputes involving real estate
Expropriation or property-related disputes
Property damage or diminution-in-value matters
Contractual disputes involving real estate
Commercial property disputes
Land and development disputes
Other legal matters where real estate value is relevant
The exact scope of the appraisal depends on the nature of the legal matter and the valuation question that needs to be answered.
Why Independence Matters in a Legal Appraisal
Independence is particularly important when an appraisal may be relied upon in a legal proceeding.
An appraiser is not retained to advocate for a particular property value simply because one side is paying for the report.
The appraiser's responsibility is to provide an independent, impartial and properly supported professional opinion.
The Appraisal Institute of Canada publishes the Canadian Uniform Standards of Professional Appraisal Practice, which establish professional practice requirements applicable to AIC members.
For a litigation assignment, the valuation conclusion should follow from the evidence and analysis rather than from the desired outcome of the client.
Appraisals for Property Disputes
Disagreements involving real estate can arise in many different circumstances.
Two parties may disagree about the value of jointly owned property. Business partners may be separating. Beneficiaries may disagree about the value of an estate property. A contractual dispute may depend partly on the value of a particular real estate asset.
An independent appraisal can help establish a professional opinion of value for the parties and their legal advisors to consider.
The appraisal does not decide the legal dispute.
Its purpose is to provide professional real estate valuation evidence relevant to the matter.
Current & Historical Property Values
Not every legal matter requires today's market value.
In some cases, the important question is:
“What was this property worth on a particular date in the past?”
A litigation appraisal can therefore involve either a current valuation or a retrospective
valuation.
A retrospective appraisal develops an opinion of market value as of a specified historical effective date.
This may require the appraiser to research historical comparable sales, market conditions, property information and other evidence that would have been relevant at that time.
The required effective date should be clearly established before the appraisal assignment begins, particularly when lawyers are involved.
Litigation Appraisals for Real Estate Ownership Disputes
Real estate disputes sometimes occur between co-owners.
One party may want to sell while another wants to retain the property. The owners may disagree about market value, the potential selling price or the value of one party's interest.
An independent appraisal can provide a neutral valuation of the real estate for consideration during negotiations or legal proceedings.
Questions concerning ownership percentages, financial contributions, legal rights or how proceeds should ultimately be divided are legal or financial matters rather than appraisal conclusions.
Estate & Beneficiary Disputes
Real estate can also become a source of disagreement during estate administration.
Beneficiaries may have different opinions about what an inherited home, cottage, farm or investment property is worth.
One beneficiary may want to retain the property while others want it sold.
An independent appraisal can provide professional valuation evidence without relying on the expectations of any particular beneficiary.
Partnership & Shareholder Disputes
Businesses and partnerships may own significant real estate assets.
When a partnership dissolves, shareholders separate or ownership interests are being negotiated, determining the value of the underlying real estate may be an important part of the process.
Depending on the assignment, this may involve:
Commercial buildings
Industrial properties
Investment properties
Multi-residential buildings
Mixed-use properties
Development land
Vacant land
Agricultural properties
Other real estate assets
The appraiser values the real estate interest defined within the appraisal assignment.
Business valuation itself is a separate professional discipline.
Property Damage & Diminution in Value
Some legal matters involve allegations that an event, condition or external influence has negatively affected the value of real estate.
These assignments can be considerably more complex than a conventional property appraisal.
Depending on the circumstances and scope of work, analysis may require consideration of the property's condition, market evidence, relevant dates and how market participants respond to the particular issue.
Where matters involve structural, environmental, engineering or other specialized technical questions, information from appropriately qualified professionals may also be required.
The appraiser's role remains focused on the real estate valuation question.
Litigation Appraisals for Development & Land Disputes
Land and development-related litigation can involve particularly complex valuation issues.
Depending on the assignment, relevant considerations may include:
Zoning
Official plan designation
Permitted uses
Site size and configuration
Access and frontage
Municipal servicing
Environmental influences
Development approvals
Potential redevelopment
Comparable land sales
Market demand
Highest and best use
The appraiser must distinguish between development potential supported by available evidence and possibilities that are speculative or dependent upon approvals that do not currently exist.
What Does a Litigation Appraiser Analyze?
The appropriate analysis depends on the property and legal issue.
Depending on the assignment, consideration may be given to:
Location
Property type
Site characteristics
Building size
Age and condition
Quality of construction
Renovations and improvements
Property use
Zoning and land-use controls
Income and expenses
Leases
Comparable sales
Market rents
Historical market evidence
Current or historical market conditions
Highest and best use
Other property-specific influences
The objective is not simply to arrive at a number. The valuation should explain how the relevant evidence supports the opinion of value.
Comparable Sales in Litigation Appraisals
Comparable sales can become an important area of scrutiny in a legal dispute.
Two appraisers may select different comparable properties or interpret the same market evidence differently.
For that reason, the selection and analysis of comparable sales should be well supported.
An appraiser may consider differences in location, lot characteristics, building size, age, condition, quality, improvements, property use, sale date and other factors affecting comparability.
The strongest valuation analysis is one in which the reasoning can be clearly explained from the underlying market evidence.
What If Another Appraiser Has a Different Value?
This can happen.
Real estate appraisal involves professional judgment, and two properly completed appraisals do not necessarily have to reach exactly the same conclusion.
When valuation opinions differ, the important questions include how the property was analyzed, what information was available, which comparable transactions were selected, what assumptions were made and how the conclusions were supported.
A difference in value does not automatically mean that one report is incorrect.
Appraisal Review & Critique
In some legal matters, a lawyer or client may already have an appraisal prepared by another appraiser.
Depending on the assignment and professional requirements, an appraisal review may be used to evaluate another appraisal report and its analysis.
A review is different from simply disagreeing with another appraiser's conclusion.
The review must itself be completed within the applicable professional standards and appropriate scope of work.
If a review assignment is required, the purpose and intended use should be clearly established before the work begins.
Working With Lawyers
For legal appraisal assignments, communication at the beginning of the assignment is especially important.
Before proceeding, the appraiser may need to confirm:
The client
Intended users of the report
Intended use
Property being valued
Property interest being valued
Required effective date
Relevant legal or factual assumptions
Available property documentation
Required reporting format
Any applicable deadlines
Clearly defining these elements helps ensure the appraisal addresses the actual valuation
question relevant to the legal matter.
Expert Witness Services
Some appraisal assignments may progress beyond preparation of the written report.
Depending on the appraiser's qualifications, the nature of the matter and the requirements of the proceeding, expert evidence may be required to explain the appraisal methodology, market evidence and valuation conclusions.
In Ontario court proceedings, expert witnesses have a duty to provide opinion evidence that is fair, objective and non-partisan, and their duty to the court prevails over any obligation to the party who engaged them. This is set out in Ontario's Rules of Civil Procedure.
This reinforces an important principle of litigation appraisal work: an appraiser's role is to provide professional valuation evidence, not to become an advocate for a client's preferred value.
Types of Properties We Can Value
Legal and litigation appraisal matters can involve many different forms of real estate, including:
Residential homes
Condominiums
Cottages and waterfront properties
Rural residences
Farms and agricultural properties
Rental and investment properties
Multi-residential properties
Commercial properties
Industrial properties
Mixed-use properties
Vacant land
Development properties
Unique or complex real estate
The scope and valuation methodology will depend on the individual property and
assignment.
Frequently Asked Questions About Litigation & Legal Appraisals
What is a litigation appraisal?
A litigation appraisal is an independent professional valuation prepared when the value of real estate is relevant to a legal dispute or proceeding.
Can a lawyer order the appraisal?
Yes. Lawyers frequently retain appraisers in matters where independent real estate valuation evidence is required.
Can you determine what a property was worth years ago?
Yes, where sufficient reliable information is available. A retrospective appraisal can develop an opinion of market value as of a specified historical effective date.
Can an appraisal be prepared for mediation or arbitration?
Yes. Independent appraisal evidence may be useful in negotiation, mediation, arbitration or litigation depending on the nature of the dispute.
What happens if the other party's appraiser has a different value?
Different valuation opinions can occur. The underlying market evidence, assumptions, methodology and reasoning should be examined when considering differences between appraisal conclusions.
Can you review another appraiser's report?
Depending on the nature of the assignment and applicable professional requirements, an appraisal review may be possible. The scope and purpose should be established before proceeding.
Does hiring an appraiser mean the appraiser represents my side?
No. A professional appraiser provides an independent opinion of value. In litigation, maintaining objectivity and impartiality is particularly important.
Independent Valuation Evidence When the Details Matter
When real estate value becomes part of a legal dispute, the strength of an appraisal is not simply the final number.
The market evidence, research, methodology, assumptions and reasoning supporting that conclusion matter as well.
Cade Appraisals Inc. provides independent litigation and legal appraisal services with an emphasis on objective analysis, clear reporting and well-supported valuation conclusions.
Whether the matter involves a property dispute, estate disagreement, partnership dispute, historical valuation or other legal issue involving real estate, we can work with you and your legal counsel to clearly establish the valuation assignment.
Need a Litigation or Legal Appraisal?
Contact Cade Appraisals Inc. to discuss the property, legal matter, required valuation date and appraisal requirements.