Evidence Without Experts: Property Issues

Vol. 3, No. 4

Cindy Perusse is a family law attorney and mediator with Perusse Family Law & Mediation Services, LLC, located in Minneapolis, MN, and Denver, CO. She is a graduate of the ABA Family Law Trial Advocacy Institute. This article draws on her many years of experience representing a wide variety of family law clients in the courtroom. Her website is www.perusselaw.biz.

 

  • When a client does not have the budget to hire an expert, the only option is to do the best you can without one. Fortunately, finding values for property is now much easier thanks to the Internet.

 

Today there are reliable publications and websites that can assist the client and attorney in proving the value of the most common types of property subject to division in a divorce. There also are some limits on obtaining accurate valuation of marital property through the “do-it-yourself” route, however. For those assets whose values cannot easily be determined with resources readily at hand, the assistance of an expert is essential.

As you research value, it is important to keep in mind the rules of evidence regarding expert testimony. Federal rule 702 states in relevant part:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training or education, may testify thereto in the form of an opinion or otherwise . . . (Emphasis added.)

Clients can take solace in knowing that experts are not required at trial. In fact, experts should only be used if they will be helpful to the judge or jury in determining the value of an asset. In addition, FRE 701 and 704 allow non-experts to give their opinions on contested matters, even if the opinion goes to the ultimate issue.

In many states, the client, as owner of the item of property, is able to testify as to an opinion of the value of that item. Client testimony, together with some documentation to back it up, may be all you need to prove value. Although you won’t need an expert, you will need to get past any objections to the introduction of your evidence. If you can get by the evidentiary hurdles below, you can get your property value exhibits admitted into evidence.

 

Anticipated Evidentiary Objections

1. Authentication. The first objection may be that the document has not been authenticated. Federal Rules of Evidence (FRE) 90 I and 902 govern authentication. FRE 90 I (a) states that evidence is authenticated if there is “evidence sufficient to support a finding that the matter in question is what its proponent claims.”

FRE 901 (b) then provides a list of potential ways that a litigant can satisfy this standard. Perhaps the easiest way to authenticate a document or data is under FRE 901(b)(1), which simply stares that a witness with personal knowledge testifies that the document is what it is claimed to be.

An alternative is 90l (b)(4), which refers to distinctive characteristics. This rule states that evidence may be authenticated by appearance, content, substance, internal patterns, or other distinctive characteristics, taken in conjunction with circumstances.

A website posting found at a distinctive Web address might be enough to satisfy the evidentiary burden of showing authenticity. The burden then shifts to the other side to challenge the authenticity. You may be able to forgo this examination of your client if the document you wish to admit is “self-authenticating” under FRE 902. Rule 902 says that extrinsic evidence of authenticity as a condition precedent to admissibility is not required with respect to the following:

****

(4) Certified copies of public records.
(5) Official publications. Books, pamphlets, or other publications purporting to be issued by public authority.
(6) Newspapers and periodicals. Printed materials purporting to be newspapers or periodicals.

 

You may also apply FRE 201 (b), Judicial Notice, to authenticate the kind of evidence discussed in this article. The rule allows a fact to be introduced into evidence if the truth of that fact is so notorious or well known, or so authoritatively arrested, that it cannot reasonably be doubted. The source does not necessarily have to be produced in court, but just identified by the witness as the website used to find the evidence of value for the property-although a printout of the website data is more helpful.

2. Hearsay. Most of the evidence presented on property will be based on our-of-court statements offered to prove value. There are some exceptions that will help get around the hearsay objection. FRE 803(8)8 addresses public records or reports: records, reports, statements or data compilations for a public office on matters as to which there was a duty to report. This rule could apply to tax assessor statements for real property or other government records.

FRE 803(17) is an exception for market reports and commercial publications. If the evidence you wish to present is a marker quotation, tabulation, directory, or other published compilation and is generally used or relied upon by the public or persons in particular professions, you will get by the hearsay objection. Many of the forms of data discussed below for real estate, automobiles, and stock fir nicely into the hearsay exception FRE 803(17).

3. Relevance FRE 401, 402. You will not draw an objection if you make sure the information in the documents you intend to use bears on the value of the property at issue.

4. Original document/best evidence FRE 1002. To prove the content of a writing, the original is required with some exceptions, most notably, duplicates (FRE 1003) and public records (FRE 1005). This rule applies most commonly to contracts, wills, leases, and things of that nature where the actual terms of the document itself are debated. You can expect that a copy of a buy-sell agreement for a business and a purchase agreement for an automobile or home may be objected to under FRE 1003. Have originals of those types of documents available.

 

Ordinary Marital Assets and Do-It-Yourself Evidence of Value

Marital Home

1. Comps. FRE 803(17) or 701 and 704(a). Aside from paying for an appraisal, the best way to show the value of a marital home is to look at what similar homes have sold for in your client’s neighborhood during the previous six to eight months. Comparable home sales or “comps” are strong indicators of what the client’s home is likely worth on the marker. Comps are the basis for setting a listing price. Moreover, a large part of the appraisal process consists of looking at comps. Ultimately, there may not be a big difference between the values through an appraisal versus a comp.

Many websites provide sales data for residential housing. Two of the most reliable places to find home sales prices in your client’s community are Realtor.com, hosted by the National Association of Realtors (NAR), and any local real estate company website. Real estate brokerages and the NAR share property data through membership in a multiple listing service {MLS). The information provided through the MLS is submitted directly by Realtors®, is current and accurate, and is the primary means by which people research the real estate market today.

The client can pick our three comps from a website of choice and print out the results for use as an exhibit. Authenticating website data under 901(b)1 can be done by showing that (l) the witness typed in the Web address, (2) logged into the sire, (3) reviewed what was there, and (4) testified that the printout or other exhibit fairly and accurately reflects it.

Testimony by the client as to the characteristics of the marital home, the range of prices for comparable sold homes, and the client’s opinion as to estimated market price of the marital home, based on those sold properties, is reasonable proof of value of that property. A hearsay objection can be overcome with FRE 803(17) for marker reports.

Avoid websites such as www.Zillow.com or www.Trulia.com. These sites are third-party listing portals. They are not members of the Multiple Listing Service. Zillow and Trulia do not get information directly from Realtors® or sellers, but piece together information from individual brokerages or real estate agents, resulting in incomplete or inaccurate listing data.

2. Property tax statements. FRE 901(7), 902(4), 803(8) and (14). Property tax statements sent out each year to homeowners state the fair market value (FMV) of a residential property. In reality, most assessed values are a percentage of FMV (typically 80 to 90 percent), but some localities calculate it based on other factors.

Assessors monitor local sales activity as a means to establish market values for neighborhood properties. Considerations include square footage, number of rooms, and the presence of any pools or garages. If your county uses FMV as the assessed value, a property tax statement will be solid evidence for your client.

The drawback with a tax assessor statement is that in some counties it can be very different from the market value. There may be no inspection made of the property to determine features of the home that may affect the market price up or down.

Also, exemptions can reduce the assessed value. Examples of exemptions include the homeowner’s being a widow or widower, senior citizen, handicapped, blind, a veteran, or that the property is homesteaded.

Use of a property tax statement as an exhibit would necessarily be accompanied by testimony from the client as to any exemptions that artificially reduce the market value or any improvement that increases the value above that assessed to the property. Though an appraisal is usually better, absent one, the assessment might be quite valuable. Use FRE 901(7), and 902(4), to authenticate, and FRE 803(8) and (14) as the exceptions to hearsay. An original won’t be necessary under FRE 1003 and 1005.

 

Timeshares

Applicable federal rules are FRE 803(17) and 902(8). Timeshares are notoriously difficult to value and even harder to sell. There are hundreds of websites that claim to be able to sell your timeshare for the highest price. For purposes of gathering admissible evidence of property value, there are a couple of popular websites that will provide information as to what a timeshare might be worth.

Timeshares are auctioned on eBay. Browse the site, www.ebay.com, for the category real estate. Then choose timeshares. On the timeshares page, there is a tab for sold listings. If your client can find two or three recently sold timeshares in the same resort, of comparable size, location on the resort, and week of availability, that would be akin to a residential home comp and would be decent evidence of value of the timeshare. Present the exhibits and testimony in the same manner as you would real estate comps. Also, most timeshare resorts have their own website with inventory for sale listed, or the timeshare resort resale office may be able to provide a market price estimate for the particular property.

FRE 902(8) may work to authenticate a letter from the timeshare resort if it is notarized and acknowledged. The eBay printouts may qualify as a market report under FRE 803(17) for the hearsay exception.

 

Business

In some cases, the value of the client’s business is simply the wort11 of its hard assets (furnishings, equipment, and cash), less debt. In that instance, a balance sheet may suffice. If your client’s business is larger, valuing or appraising a business is more complex. There are decisions to make about which valuation approach to use (i.e., market, income, or asset approach). There also is goodwill to consider. Perhaps part of the business is nonmarital. Maybe there are discounts to apply for lack of control or marketability. Myriad variables make it nearly impossible to come up with a value without the input of a professional business appraiser.

If you are up against a wall, however, and need to use something, try offering the buy/sell agreement if there is one. A buy/sell agreement is generally negotiated at the outset of the business venture and sets forth the purchase price for the selling partner’s share of the company.

Personal financial statements may indicate the value of a business as well. Usually as part of a loan application, the financial statement will list all assets along with the net value of those assets. If signed by both parties to the divorce, the document would dear many of the objections that may be raised about relevance, authenticity, or hearsay. Perhaps there was a recent offer to buy or sell the business. If so, that proposal could provide an indication of the market price of the business.

Any of these documents can be authenticated by FRE 902(1). Since the documents are contracts, this might be an instance where a best evidence or original document objection may be sustained if the diem does not provide the original contract. To overcome a hearsay objection to any of these contracts, use the business record exception of 803(5); recorded recollection, or 803(6); records of regularly conducted activity, or the catch-all exception of 807.

 

Household Items

You know you have a high-conflict case when the parties go to trial over dishes and furniture. If you have parties who cannot amicably divide personal property, there are sources to get an estimate of value for many household items.

Craigslist (www.craigslist.com) is a widely used website on which people post items of all kinds that they want to sell. It is a nationwide site, so you can choose your state, city, and county to narrow your search. Your client can browse under the section for sale and choose from the various categories of property. A list of items will appear with photos and sale prices offered by sellers. Since buyers and sellers can and do negotiate on the final sales price, you won’t know the actual sales price for any item, but it can provide a ball-park estimate of value.

Another useful site for finding prices for personal property is eBay. The site provides information on sold items. Go to www.eBay.com and shop by category. For example, if you choose the category furniture, you can tailor your search by material (e.g., metal and glass, wood, etc.), color, condition, and number of pieces. You can further narrow your search to a particular brand name by entering that in the search box. A list of items for sale populates. Within that list, you can click a tab at the top of the page for just the sold items. You will then have a list with photos, description, and final prices paid for each item. Although Craigslist has local listings, eBay can only narrow the geographic search to the United States.

The Salvation Army website, www.satruck.org, provides a donation valuation guide for a variety of furniture, kitchen appliances, housewares, and clothing. The drawback is that the prices on the list are nominal values, perhaps even less than what the item might sell for at a garage sale. If you are looking for a quick price-reference point for used household items though, this site could help with the tedious task of placing values on the property.

The information from the websites can be authenticated through FRE 901 (b) 1 in the same way as real estate comps. The distinctive e-mail address and colors and features of eBay or Craigslist also can be used under FRE 901 (b)(4) to show that the document is authentic.

As for a hearsay objection, research your state case law to see if your courts have spoken on the issue of hearsay using information from places, such as Craigslist or eBay. At least one court has allowed a lay witness to rely on hearsay information as a basis for an opinion as to the value of property. In Brenton v. Sloan’s United Storage and Van Co., 42 N.E.2d 945 (Ill. App. 1972), a plaintiff was allowed to establish familiarity with furniture based on knowledge of prevailing prices of such items established through shopping with friends, window shopping, browsing newspaper advertisements, and hearing radio advertisements.

 

Automobiles

For automobiles, FRE 901(b)1, 902(6), 803(17) may apply. The value of new and used cars and trucks and recreational vehicles can easily be found through two main sources: Kelley Blue Book and guides produced by the National Automobile Dealers Association (NADA).

Kelley Blue Book, www.kbb.com, features 20 years of used car values on more than 10,000 models of cars, trucks, and vans. The client simply inputs his or her zip code and year, make, model, and mileage of the vehicle. The prices in Kelley Blue Book are separated into trade-in and private-party trade values. As a general rule, dealerships don’t give top dollar on a trade-in , and that price is often lower than the private party price. So, the private-party sale is more often used as indicative of true market value of a used car.

The paper version of the Kelley Blue Book is available in bookstores, auto supply stores, and other locations. Kelley also publishes an early model guide for vehicles dating as far back as 1946.

NADA is the largest publisher of vehicle pricing and information for new and used cars, classic cars, motorcycles, ATVs, boats, personal watercraft, snowmobiles, RVs, and manufactured homes. Like Kelley Blue Book, NADA has a free website, www.nadaguides.com, that works much the same way as the Kelley site. The client chooses make, model, and year of the vehicle and enters mileage. The site will report a range of prices for both retail and trade-in, based on the general condition of the vehicle. Kelley Blue Book and NADA are the two top authorities in vehicle pricing used by consumers and auto dealers.

The printed version of the Kelley Blue Book or NADA guides would be self-authenticating under FRE 902(6). One could argue that the same information at www.kbb.com or www.nadaguides.com would be self as well. FRE 803(17) is an easy response to a hearsay objection on car values.

 

Stocks

Stocks are typically held in mutual funds or brokerage accounts whose values are noticed in quarterly fund statements. The client can research any stock in the parties’ portfolio by accessing the brokerage website. The printouts of those stock quotes can be used as an exhibit and introduced through your client.

If your client wants to research stock prices outside of the brokerage websites, the NASDAQ website is available to anyone without membership or fee. Go to www.nasdaq.com for a wealth of information on the stock market. Also, the good old-fashioned newspaper has stock prices listed in the financial pages. Stock quote exhibits can be authenticated under FRE 901 (b) 1 or 902(6). They also can be admitted as a market report exception to hearsay.

Privately held stock must be discovered directly through the company. I had a client who owned shares of the Green Bay Packers football team. This is not a publicly traded stock. It can’t be traded or sold, and there are no dividends paid. Each share is worth 25 cents upon redemption by the franchise. The stock is worth nothing but the joy of owning part of the Green Bay Packers. In one case, the opposing parry, the ex-wife, was not convinced that the stock lacked value, so we presented information from the Packers’ website about stock ownership, along with the client’s Green Bay Packers offering letter. It was admitted over authentication objections by rule 901(b) I and hearsay exception FRE 803(6) and (17).

 

Valuations That Require Expertise

Sometimes there are important marital assets whose values are not easily determined, and the do-it-yourself approach will not suffice to prove value. Those assets are traditional pensions and stock options.

 

Pension

A traditional, defined-benefit pension is one such asset for which an expert should be hired to do a valuation. The complexity is due to the fact that there are many varieties of pension plans offered to public and private company employees. Also, specific statutes and case law govern when and how state, federal, and military pensions can be divided.

Further, pension funds are held in a pooled account, not an individual account, as are 401 (k)s and IRAs. Most require a minimum number of years of employment or minimum age before benefits vest or mature.

If part of the pension was earned before the marriage and part during the marriage, a very specific mathematical formula must be applied to determine the marital portion of the benefit. Once that interest is figured out, then the present value must be determined. The present value is what a pension payout would be worth if given to the client today, instead of at retirement age. The calculation considers mortality rates, expected retirement age, and discounts, among other things. If there is a dispute over a pension and no expert to present evidence on value, a court will likely order the pension to be divided with a QDRO at the date of retirement.

 

Stock Options

Stock Options are another asset that has no free or easy method for determining value. Options are a form of compensation to an employee. An employer may award stock options as compensation for past, present, or future services or as an incentive to remain with the company. Stock options from an employer give the employee the right to buy a specific number of shares of the company stock during a time and at a price that the employer specifies.

The value of stock options are often measured by a pricing model that takes into account the stock price, the exercise price, the maturity date, the prevailing interest rates, the volatility of the company’s stock, and the company’s dividend rate. Options can be vested or unvested, qualified and nonqualified. Tax consequences vary as well and must be considered in valuing this type of property. Like pensions, if there is no evidence of an accurate value for options, a court will likely divide them in-kind between the parties.

 

Conclusion

It is wise to consult experts to prove the value of complicated assets, such as stock options, business interests, or pensions. Valuation of more routine assets can be proved without experts. If property agreements cannot be reached, then use your client’s personal knowledge to establish value. Prepare your client to testify to the basis of the opinion and the underlying facts considered in formulating the opinion. Use the many free resources that are available and create exhibits. Make a checklist of the rules of evidence that apply and be prepared to use them. You will then be successful in proving the value of marital property in your case.

 

Note

This article was previously published as “Evidence Without Experts: Property Issues” by Cindy Perusse in the Fall 2013 issue of Family Advocate, published by the ABA Section of Family Law. Copyright 2013 © by the American Bar Association. Reprinted with permission. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Advertisement

Westlaw Practical Law Ad
LawPay Ad
Techshow 2014 Ad
GPSolo Spring Meeting Ad

  • About GPSolo eReport

  • Subscriptions

  • More Information

  • Contact Us

GPSolo Is Your Home Ad