The Supreme Court of Florida recently resolved a long disputed issue holding that an appraiser who enters into a contingency agreement with a homeowner is not a disinterested party for appraisal purposes. In Jon Douglas Parrish v. State Farm Florida Insurance Company, the Court found that an appraiser cannot be disinterested if they, or a firm in which the appraiser has an interest, is compensated for services with a contingency fee.
In interpreting the policy requirement that the appraisers be disinterested, the court held that an appraisers financial interest in the outcome – the more the policyholder recovers, the more the appraiser earns – could not render the appraiser disinterested.
The court rejected the policyholder’s argument that the term “disinterested” meant “independent.” To this, the court stated that the terms were different. An individual may be independent but not disinterested and vice versa.
The Court went on to state that neither the amount of the appraiser’s contingency fee, nor the amount in dispute had any bearing on the appraiser being disinterested. In short, if an appraiser’s fee is tied to the outcome of the appraisal, they are not disinterested.
A copy of the opinion can be found here.
This post was originally published through Horst Krekstein & Runyon’s Property in 60 Seconds Newsletter. If you would like to receive future copies of that newsletter, please contact Sean Dever at sdever@hkr.law.