Blog #58: “Anybody Can Complain Against the Appraiser For Any Damn Reason! How Fair is That?!”

INTRODUCTION

Anybody can file a complaint against an appraiser.  That appraiser’s chances of having formal charges filed against him/her are about three percent (3%) in any given year.  However, when the copy of that complaint hits your desk, there is a 100% chance you’ll be less than happy.  The key here is not so much to be able to defend yourself after the fact.  Rather, the key here is to comply with USPAP’s Standards 1 and 2  closely and meticulously before that letter arrives.

WHAT TO DO?

Nevertheless, there are  steps you can take to protect yourself.  Make it clear, in writing, that you are responsible solely to your client and the named intended user(s).  You want to limit your liability and responsibility solely and only to them.  Frankly, USPAP expects you to take this protective and exclusionary step.

To limit your liability solely to the client and intended user(s), USPAP requires you to list both of these.  In the definitions of intended use and intended user, the language of USPAP makes it clear that it is the appraiser, at the time of the assignment, who sets these limitations.  It is not the client who does this (although the appraiser, out of a sense of professional courtesy, should consult with the client on these matters).  Therefore, within the report, make it abundantly clear only the client and the intended user(s) can use or rely on the report and its contents and conclusions. Make it equally clear that the appraiser, not the client, sets the scope of work, as well as the uses to which the appraiser authorizes the client to put the report (and to no other!).    Make it clear that you appraised the property, and then wrote the report, solely for the client’s benefit and use.

BUT THAT’S NOT WHAT FANNIE MAE SAYS!

At this point, you reasonably ask about Fannie Mae Certification #23.  Certification #23 tells you that anyone with a discernible pulse can rely on your report. It is well known that Fannie Mae, the 1,800-pound gorilla all of the 900-pound gorillas are afraid of (appraisers are the 75-pound chimpanzees), arrogantly sets her own rules and USPAP be damned.  Fannie Mae does not allow Appraisers to delete this certification, or even to modify it.  

Should the appraiser make it clear s/he has limited any professional responsibility to the named client and the named intended user(s)?  Did the appraiser make it clear no other party may depend on the appraisal report, etc.? If so, that appraiser has also made it clear that s/he has and will limit professional liability in every way possible. 

Consider this statement:  “The appraiser prepared this appraisal and report solely for the client.  If any party other than the client uses or relies on this appraisal report at any time, for any reason, that user, who does not have the appraiser’s authorization even to possess this appraisal report, does so at his/her/its/their own risk and detriment.  This statement makes it clear the purpose for which the appraiser prepared it, as well as for whom the appraiser prepared it.  If this report does not name you as the client, or as one of the intended users, do not use this report, or the data and/or conclusions in it, for any reason whatsoever.  You have no authorization to do so and the appraiser will not be liable to you if you do”.  Since I am not an attorney, run this disclaimer past legal counsel before you use it, please.

IS ALL THIS LEGAL?

Anybody can file a complaint against an appraiser.  But, for what it is worth, there are numerous court cases out there on this issue of appraiser liability to third parties.  While there is no pattern to these decisions, if the appraiser made it clear to whom s/he was liable (i.e. who the client/intended user(s) were), and there were no other extenuating circumstances, the courts tended to find for the appraiser.  Therefore, limit your liability thru a disclaiming statement such as this monograph suggests.  That just may help you avoid liability in the future.

HERE’S YOUR JOB

As to the fairness of a complaint from a consumer or other non-identified user, note that anybody can complain against any appraiser, at any time, for any reason, about anything.  Therefore, they will complain, and for some really stupid reasons.  It is therefore the appraiser’s absolute responsibility to:

• Have market support for any and all statements of fact in the report;
• Present market support for any adjustments the appraiser chooses to make;
• Have market support for the subject’s physical, economic, and legal characteristics;
• In the report, present market support (e.g., photos) for any negatives (or positives) the appraiser claims about the property;
• Show market support for the site value as if vacant (even if you’re not doing the cost approach);
• Assure your client can replicate in detail your summary of the data in the Cost approach;
• Purchase an E&O policy for more than you’ll ever think necessary;
• Conduct your appraisal business in such a way as to avoid complaints;
• Too many other things to mention in a short blog.

Is it fair that a party who is not the client or a named intended user can bring a complaint against appraiser?  Let this thought buck you up:  that’s why there are attorneys, because anybody can sue anybody else, at any time, for any reason at all.  So, while we are not immune from such frivolous and baseless complaints, neither is anybody else.  The best we can do is to manage our appraisal affairs to minimize our risk.  Therefore we budget for the risks we know we will face, and then insure over the unknown or unknowable risks.  That’s why we have E&O insurance.

CONCLUSION & TAKE-AWAY

Anybody can file a complaint against an appraiser.  So, what is the practical takeaway?  It is that, every day, we appraisers are on our own out there.  Therefore, reading blogs such as this one helps us to understand what we must do to be successful in the business of appraisal.  It also helps us to protect ourselves from “…the slings and arrows of outrageous fortune…”  (thank you, Bill).  And, given that we are on our own out there, we need to know our professional worth and charge for it accordingly.

If I can help you with a complaint or a state charge, contact me, Tim Andersen, at tim@theappraisersadvocate.com.  It will be an honor to work with you!

---