Appraiser sued

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Sent along by the Mickster, this story of a lawsuit brought by a lender who accuses an appraisal company of providing an erroneous value for new construction at 37 Doubling Road

Pallasite Asset Trust of Evanston, Illinois has accused Anthony J. Bisignano and Key Associates and Appraisal Services Inc. of negligence and breach of contract, in a complaint transferred April 1 from Connecticut federal court to U.S. District Court, White Plains.

“The lawsuit is endemic of overzealous lawyers looking for ways to create work for themselves,” Key Associates’ attorney, Thomas B. Decea, said in an email.

“It is what I refer to as predatory litigation – an attorney chasing work rather than allowing those who really need legal help to come to them.”

The Greenwich home, on Doubling Road near Greenwich County Club, is owned by 37 Doubling Road LLC.

The company sought to refinance the property for $4.7 million, according to the complaint, from an affiliate of ShareStates Investments LLC, acting as agent for Pallasite.

The lender agreed to make a loan based on 67% of the property’s value, as shown by an appraisal.

“The appraisal was intended to ensure that if there was a default, the mortgagee would be secured adequately,” the complaint states.

Key Associates valued the property at $6.6 million in December 2017; ShareStates loaned $4.7 million to the property owner in February 2018.

“Thereafter,” the complaint states, 37 Doubling Road LLC “failed to make payments.”

Last year ShareStates hired an expert to reappraise the property; the result, according to the complaint, “was jarring.” The property was allegedly overvalued by $1.8 million.

The Key Associates appraisal did not use the best and most comparable properties for analysis, according to the complaint. It failed to summarize the appraisal methods or the reasoning that supported the conclusions.

Bisignano signed the appraisal and allegedly listed an email address, KeyCONMAN@… (emphasis added in the complaint).

ShareStates’s appraiser valued the property at $4.8 million as of 2018 and $3.75 million currently.