Appraisal Port user agreement, now what?

[PropertyEconomics]

September 9, 2008​

Dear valued AppraisalPort® user,

There seems to be quite a bit of buzz concerning AP’s new User Agreement. To ensure that we reach as many of you as possible, we’ve asked Neil Olson, FNC’s Chief Legal Officer, to put together some answers to the most common questions. Facts are never as interesting as what the rumor mill produces, but I hope this newsletter will provide some clarity.

• [FONT=Arial, Verdana, Tahoma]What has changed in the new User Agreement? [/FONT]

Although there are several minor changes, the main changes include changing "subscriber" to "user," clarifying how notices are given, and reinstating the language of the 2002 agreement by replacing “litigation” with “arbitration.”

• [FONT=Arial, Verdana, Tahoma]Do the changes to the AppraisalPort User Agreement affect an appraiser's errors and omissions (E&O) insurance coverage? [/FONT]

No. The new User Agreement does not in any way affect an appraiser’s E&O insurance coverage. Errors and omissions coverage is intended to cover the appraiser in the event that he or she makes an error in judgment in the preparation of an appraisal or engages in some other professional error related to appraisal assignments.

Injury to someone else's property (including intellectual property such as software or a website – i.e., Adobe Acrobat or the AppraisalPort website) are covered by general liability insurance, not professional liability insurance (E&O).

• [FONT=Arial, Verdana, Tahoma]Why is the "hold harmless" clause present in the new agreement? [/FONT]

FNC did not change any of the language regarding the “hold harmless” clause in the new agreement. In fact, most companies selling software or offering services or products (i.e. Adobe; FNC; appraisal forms companies) operate under a user agreement, not an employment agreement. Most user agreements contain “hold harmless” clauses. The “hold harmless” clause has a different meaning based on the type of agreement.
There have been a number of questions within the appraiser community regarding the updated AppraisalPort User Agreement. The questions seem to be based on the belief that FNC/AppraisalPort is an appraisal management company (AMC). We are not. While Appraiser Management Companies may engage appraisers through means of an employment agreement, as a technology company, FNC’s is a user agreement, not an employment agreement.
FNC and AppraisalPort provide an automated, secure connection between lender clients and appraisers through which appraisers receive assignments from their clients and through which they deliver their appraisal reports back to their clients electronically.

Because FNC/AppraisalPort is a technology company, not an AMC, they operate under a user agreement. Therefore, there is no need for concern over the lack of E&O coverage as it pertains to the “hold harmless” clause. (see #2 above).

• [FONT=Arial, Verdana, Tahoma]Does this new agreement contain language that will prevent me from participating in the lawsuit against FNC? [/FONT]

No.

• [FONT=Arial, Verdana, Tahoma]Does this new agreement apply retroactively? [/FONT]

No.

• [FONT=Arial, Verdana, Tahoma]Does this new agreement prevent me from suing FNC for any future grievance? [/FONT]

Under the new agreement you may still bring an action against FNC for any future grievance. The difference is that under the new agreement, the dispute would be resolved through arbitration, not litigation.
As always, we welcome your input and hope the information provided allays any concerns.
Thanks and have a great week,
-Kagan
SOOOOO what do you think????

I think .. NO SIGN ... sorry AP ... you are going to lose business.

 

[Workbox]

Where have I read these before???.................... Maybe while I was in China?

 

[McPheeters]

Where have I read these before???.................... Maybe while I was in China?

Your killin me here!!

 

[Bearslide]

More circlular logic and half-truths - if FNC is doing nothing wrong...why does FNC not answer the main question, which is "why is the Appraiser responsible to pay FNC’s legal and/or other costs of FNC's actions." Ahh - therein lies the rub.

The fish is smelling rather rotten around the port , despite the protestations of their legal eagle.

I will trust MY attorney and MY E & O carrier over THEIR hired gun any day of the week. Like THEIR attorney is going to tell the truth, the whole truth and nothing but the truth?? Gimme a break..........

 

[McPheeters]

[[FONT=Arial, Verdana, Tahoma]Does this new agreement prevent me from suing FNC for any future grievance? [/FONT]
Under the new agreement you may still bring an action against FNC for any future grievance. The difference is that under the new agreement, the dispute would be resolved through arbitration, not litigation.
As always, we welcome your input and hope the information provided allays any concerns.
Thanks and have a great week,
-Kagan
SOOOOO what do you think????[/quote]



What do i think? I think I am not smarter than my Contract Attorney. Having said that, reat the red......

 

[Tony V]

Oh yeah....you can still sue....but you also get the honor of paying for their defense lawyers.....to defend them...

From one of the many threads..

.........The problem is not the ORIGINAL report you prepared on your computer. The problem is the possible corruption of that report given to the lender. An E&O company will defend your original report. Let's say that the original report was perfectly fine, but it had items in it that would preclude a property from being purchased by a GSE. Now suppose that those items were removed in the version of the report sent to the lender via AP and the lender ends up having to buy the property back. They think you gave them a bad report. They sue you. An E&O company would defend you, successfully, against a claim by the lender that your report was negligent (remember we are assuming that the original report was good). It was the lender, afterall, that required the use of AP, and presumably knows what they got themselves into. In discovery we find that the original report was corrupted by AP. (AP would have been subpoenaed to produce the original document). The lender loses the suite against you, the appraiser. Miffed, the lender then sues AP for sending them a corrupted file. AP turns around to you, the appraiser, and says you must now defend us because you agreed to indemnify us against claims. What do you the appraiser do now? Flee the county?

Consider this: AP data mines your appraisals. They sell that data to some entity that relies on it. The data is corrupted and that company experiences a loss. They sue AP for bad data. AP says to you the appraiser, "come and defend us as you agreed to indemnify us against loss"!........................

or am I reading this all wrong???

 

[Offshore]

An E&O company will defend your original report. Let's say that the original report was perfectly fine, but it had items in it that would preclude a property from being purchased by a GSE.

Those 3 letters are somewhat important.

 

[Bearslide]

Oh yeah....you can still sue....but you also get the honor of paying for their defense lawyers.....to defend them...

From one of the many threads..

.........The problem is not the ORIGINAL report you prepared on your computer. The problem is the possible corruption of that report given to the lender. An E&O company will defend your original report. Let's say that the original report was perfectly fine, but it had items in it that would preclude a property from being purchased by a GSE. Now suppose that those items were removed in the version of the report sent to the lender via AP and the lender ends up having to buy the property back. They think you gave them a bad report. They sue you. An E&O company would defend you, successfully, against a claim by the lender that your report was negligent (remember we are assuming that the original report was good). It was the lender, afterall, that required the use of AP, and presumably knows what they got themselves into. In discovery we find that the original report was corrupted by AP. (AP would have been subpoenaed to produce the original document). The lender loses the suite against you, the appraiser. Miffed, the lender then sues AP for sending them a corrupted file. AP turns around to you, the appraiser, and says you must now defend us because you agreed to indemnify us against claims. What do you the appraiser do now? Flee the county?

Consider this: AP data mines your appraisals. They sell that data to some entity that relies on it. The data is corrupted and that company experiences a loss. They sue AP for bad data. AP says to you the appraiser, "come and defend us as you agreed to indemnify us against loss"!........................

or am I reading this all wrong???

No, I think you are reading it perfectly correctly. And let us not forget the other jujube - arbitration. That means no court, no jury - and I'll bet, no discovery - at least none that goes public. Now why would FNC so badly desire arbitration? HMMMMMMMMMMMMMMMMMMMMMMMMMMM???? I mean, if they are as innocent as the dirven snow, why so many ways to put appraisers on the hook? To cover up all those mangled reports? To hide the fact that THEY are converting and the appraiser whose signature is on the report doesn't have a clue what his signature was applied to? Of course, they SAY they aren't - but I have seen the reports that say differently. Oh yes - discovery could be MOST interesting - and they don't want it. WHY?????

 

[Karl]

Here is what I'm finding in this area; many are signing the agreement cause they say they need the work & there is no ENFORCEMENT so why NOT take the chance that nothing will happen,. I'm betting many on this Forum have the same thought. & How do you respond to a 30 year old with wife & kids??? That feels keeping Appraisal Port will give him work. (he does reviews for both Fannie & Freedie) 40% of his work do far this year!! Or a single Mom that has been Certified for 2 years & trying to make it without government assistance??

 

[Mike Kennedy]

Per My E&O Carrier - You read it Correctly

Oh yeah....you can still sue....but you also get the honor of paying for their defense lawyers.....to defend them...

From one of the many threads..

.........The problem is not the ORIGINAL report you prepared on your computer. The problem is the possible corruption of that report given to the lender. An E&O company will defend your original report. Let's say that the original report was perfectly fine, but it had items in it that would preclude a property from being purchased by a GSE. Now suppose that those items were removed in the version of the report sent to the lender via AP and the lender ends up having to buy the property back. They think you gave them a bad report. They sue you. An E&O company would defend you, successfully, against a claim by the lender that your report was negligent (remember we are assuming that the original report was good). It was the lender, afterall, that required the use of AP, and presumably knows what they got themselves into. In discovery we find that the original report was corrupted by AP. (AP would have been subpoenaed to produce the original document). The lender loses the suite against you, the appraiser. Miffed, the lender then sues AP for sending them a corrupted file. AP turns around to you, the appraiser, and says you must now defend us because you agreed to indemnify us against claims. What do you the appraiser do now? Flee the county?

Consider this: AP data mines your appraisals. They sell that data to some entity that relies on it. The data is corrupted and that company experiences a loss. They sue AP for bad data. AP says to you the appraiser, "come and defend us as you agreed to indemnify us against loss"!........................

or am I reading this all wrong???

"As discussed, you are covered (subject to the terms and conditions of the CNA policy) for real property appraisals that you perform for others. Any agreements you make with Appraisal Port is a business decision you must make.

It appears that the agreement does not take into account 'errors' made by Appraisal Port for which Appraisal Port would be held liable. Unfortunately, you may be burdened (assume liability) by the erroneous acts of Appraisal Port.

However, once again, you are covered (subject to the terms and conditions of the CNA policy) for real property appraisals that you perform for others."