Tips in the Mailbox

Over the weekend, along with a stack of the regular mix of bills, political advertisements, and solicitations for contributions, I found the Second Edition, Spring, 2016, APPRAISALBUZZ Magazine.

Quite a mix of articles, some written by folks I've met and know, as several by folks I know from other forums and events. It's different, and worth a read.

The purpose of this post is  to add one additional suggestion to the article authored by yours truly "Litigate This, Five Things to Think About Before Taking the Plunge". As noted in the piece, the list is not exhaustive, and many more points could be added, but I was on a work count limit.

Here's the addition. When working on the terms of your engagement, make sure to negotiate a records retention agreement. The closing orders for some cases require all parties to return or destroy their records related to the case. Of course, this will cause an appraiser trouble with the Uniform Standards of Professional Appraisal Practice, and in some instances, their state law. Make sure the terms of your engagement allow retention of records in such as way to permit you to comply with the Record Keeping Rule, and your state law.

SHOCKING!!: AMC - Appraiser Agreements and Indemnity

Please take a look at the Appraiser Legal Defense and Insurance Blog. They have posted an informative piece about AMC/Appraiser Agreements and the ever-more popular Indemnity Provisions. Their post spotlights an agreement used by TSI Appraisal Services.

They say:

We are receiving many calls from our insured appraisers about AMC agreements. Many of our calls in the last fews days have concerned the TSI Appraisal Services Appraiser Agreement. This agreement is worth looking at because, though more extreme than others in its one-sided wording, it illustrates the typical legal problems for appraisers found in AMC agreements.With regard to the TSI agreement, appraisers are particularly concerned about the indemnity section. Indemnity provisions are a recurring issue with AMC agreements. The bottom line is they are usually an AMC's attempt to shift potential liability by contract from the AMC to the appraiser. Because of the current mortgage crisis, this attempted shifting of liability is occurring more than ever.

...and go on

The first paragraph of section 7 requires, in part, that the appraiser "indemnify, defend, save and hold harmless [TSI] from and against any and all liability, claims, damages, penalties, losses, fines, judgments . . . [and] any other costs, fees and expenses . . . in any way related to . . . [among other things] any appraisal report submitted to [TSI] by Appraiser pursuant to this Agreement." Simply construed, this means the appraiser is promising to pay TSI for any cost or loss of any kind (including criminal or civil fines ordered against TSI) for anything related to an appraisal submitted by that appraiser. This is an unusually broad indemnity provision because TSI could conceivably take the position that the appraiser is required to indemnify TSI for losses caused by TSI itself in handling an appraisal or resulting from TSI's own negligence. For example, if TSI conveyed erroneous instructions to the appraiser which resulted in a problem with the appraisal and the lender client demanded that TSI make up a resulting loss, TSI could conceivably demand that the appraiser pay TSI for TSI's own mistake.

...and how about this gem related to Mortgage Repurchases?

Another significant issue is raised in the second paragraph of section 7. In this part, the appraiser "agrees that if a mortgage lender is required to repurchase a mortgage loan for any reason in any way related to [among other things] . . . any appraisal report submitted by Appraiser pursuant to this Agreement, Appraiser shall pay [TSI] an amount equal to the repurchase price paid by such mortgage lender to repurchase such mortgage loan." The appraiser is further required to "pay the reasonable attorney’s fees of [TSI] incurred in enforcing Appraiser’s obligations hereunder, including, with [sic] limitation, the obligation of Appraiser to pay [TSI] an amount equal to the repurchase price of a mortgage loan as set forth above."

Read the whole thing, PLEASE.