US Court of Appeals Upholds Appraiser’s Testimony; Report Deemed Admissible

01/28/2011 13:23

US Court of Appeals Upholds Appraiser’s Testimony; Report Deemed Admissible FRICS designation adds credibility that the credentials have acceptability On December 1, 2010, the United States Court of Appeals, 5th Circuit found that the 93-acre Plano, TX property (the estate) of Meyer Levy deceased, valued at approximately $25 million by appraiser Jack Friedman FRICS, the Government’s valuation expert, was accurate, dismissing the executors’ claim that the methodology used by Friedman was flawed. According to court testimony, Mr. Levy never applied for property zoning, so the parcel of land was left in a holding pattern as Agricultural space, which the estate states was worth approximately only $5 million and the value on death (Estate Tax Return ) to be taxed should be on $5 million. But the estate received and disregarded purchase offers from interested parties including Centex, Toll Brothers and Shaddock who were willing to pay between $16-25 million, to build luxury homes. Based on those offers, Friedman anticipated that the property would be rezoned and used for residential purposes, and he appraised the land on that basis. The estate contends that Friedman’s use of purchase offers as part of his basis for valuation did not constitute an appropriate method of value, and asserted that Friedman’s assumption that the property would be rezoned improperly relied on hindsight rather than on facts known to the parties at the time. The papers of the US Court of Appeals states: “Because we have already recognized the admissibility of offers under the circumstances of this case, we cannot say that the court abused its discretion in permitting Friedman to refer to such offers, with appropriate contingencies, in his valuation analysis”. “Friedman’s assumption that the property would be rezoned for single-family housing was reasonable. The trial court did not abuse its discretion in admitting Friedman's expert testimony.” -- Abigail E. La Croix