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The central issue for a lender which seeks to obtain a monetary judgment following a foreclosure is the value of the property that was foreclosed. A lender typically engages an appraiser to value the property as of the date of the foreclosure sale and to testify at a deficiency proceeding. To counter the lender’s valuation, the borrower or a guarantor may engage their own appraiser, or they may attempt to testify themselves as to the value of the property. Generally, an owner of property is permitted to testify as to its value. This rule is based on an owner’s presumed familiarity with the characteristics of the property, acquaintance with its uses and purposes and experience dealing with it.

However, the fact of ownership does not, in itself, invariably qualify an owner to testify to the property’s value. The court may exclude the testimony of the owner if (1) the owner lacks sufficient familiarity with the property to give a permissible opinion, or (2) the owner is attempting to testify as an “expert.”

The Owner Lacks Sufficient Familiarity with the Property

The court may exclude an owner’s testimony as to the value of the property if he or she lacks sufficient familiarity with the property. This standard makes sense because one could foresee instances where the rationale behind permitting an owner to testify would not apply. For example, consider a scenario where an individual who resides in Michigan inherits property in Florida. The individual retains ownership of the property but never leaves Michigan to visit  it. In that case, it would offend most people’s notions of fairness to impute to the owner a presumption of familiarity and experience dealing with the property. Thus, while it is generally the case that an owner will have such knowledge, courts will want to make sure that the owner has the requisite experience and familiarity before allowing his or her testimony as to its value.

Similarly, an officer of a company may testify as to the value of the company’s property when, because of his or her experience, management of its affairs and personal knowledge of the property, the officer has acquired information that would be useful in valuing the property. However, the holding of an office in a company alone will not place the officer in the position of having that knowledge of the character and uses of the property. Similar to the rationale behind requiring that an owner of property have sufficient familiarity with the property in order to testify as to its value, a corporate officer must be shown to have knowledge regarding the company’s property and its value sufficient to qualify as a witness. Lenders’ counsel should ensure that they challenge the ability of an owner, or the officer of an owner, to testify as to the value of foreclosed property. Although the court may still allow the testimony, demonstrating a lack of familiarity with the subject property will weaken the credibility of the witness.

The Owner Is Attempting to Testify as an “Expert”

While an owner may testify as to the value of his or her property based on familiarity and experience dealing with the property, the court may exclude the testimony of an owner if the owner is attempting to testify as an “expert.” The Florida Evidence Code provides that a lay witness—i.e., a non-expert—cannot offer opinion testimony when, among other limitations, the opinion requires “special knowledge, skill, experience, or training.” This rule requires the owner-witness to walk a fine line: he or she may testify based on experience with the property but may not testify about the value of property in the area generally, valuation techniques, etc.  It stands to reason that there may be significant overlap between the information on which an owner and an expert might rely, so lenders’ counsel should scrutinize an owner’s testimony as to value and attempt to keep that testimony limited to those factors that are derived from the owner’s experience as an owner of the particular property in question.