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Can I Have An Effective Date Prior To Contract Date

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Fargo1

Senior Member
Joined
Feb 26, 2010
Professional Status
Certified Residential Appraiser
State
North Dakota
Can I have an effective date prior to contract date? Here is the deal:

I viewed the property for a VA appraisal on a new construction. The day after viewing the property the builder wrote up another contract stating the final numbers. I always use the date of the last signature on the contract as my effective date. I was trained that the date the contract was signed is the day they had a 'meeting of the minds'. So I now have an effective date that is one day before the contract date. Then lender wants me to use the original contract date. I told him I can not do this since the contract has changed. So the lender called the VA and the VA said it is a violation of USPAP to have an effective date before the contract date.

Violation or not. The fact of the matter is I viewed the property a day before the final contract was signed. So how am I in violation of USPAP if they are changing the contract after I viewed the property?

On a related note. As I view the addendums, I notice the 'Final numbers' addendum that I stated as the contract date did not have any changes in value from the previous addendum. It only restated the agreed upon purchase price and the down payment. So is that 'final' addendum the date of the contract or is the previous addendum with the last change order the actual date of the contract?

I'm not afraid to stand my ground if the 'final numbers' page is the actual date of contract, but I wonder if the actual 'meeting of the minds' contract was the previous addendum.
 

DWiley

Elite Member
Joined
Apr 4, 2007
Professional Status
Certified Residential Appraiser
State
Tennessee
So the lender called the VA and the VA said it is a violation of USPAP to have an effective date before the contract date.

I would ask for the line number or, if I was feeling spry, I would offer them a $1,000 reward for finding the line number in USPAP where it says that. :)

I can also offer the observation that if one is using a Fannie Mae form, the form states:


Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting


conditions, and appraiser's certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is

$ , as of , which is the date of inspection and the effective date of this appraisal.
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
You have two contracts: One signed before you did the inspection and one after you did the inspection. You could use the original contract on page 1 of the URAR since it was effective as of your inspection date and then report the results of the new contract in an addendum. That way you cover both of them.
 

Fargo1

Senior Member
Joined
Feb 26, 2010
Professional Status
Certified Residential Appraiser
State
North Dakota
You have two contracts: One signed before you did the inspection and one after you did the inspection. You could use the original contract on page 1 of the URAR since it was effective as of your inspection date and then report the results of the new contract in an addendum. That way you cover both of them.

Actually if each addendum/change order is a new contract, there are 5 contracts. There is the original contract, the 3 addendums with change orders, then the 'final numbers' addendum. Which is really just restating the value agreed upon in the 3rd addendum. Right now I am really wondering if that 'Final Numbers' addendum is actually a contract. It doesn't change anything. It just restates the previous contract. But it is a signed and dated document.

I wonder if its correct to use the latest addendum date as the contract date but disclose the 'Final Numbers' addendum. They both have the same final price.
 

nstanbru

Senior Member
Joined
Feb 19, 2009
Professional Status
Certified General Appraiser
State
California
It seems to me, based on what you have posted, that you don't have 5 contracts. There is the original contract with an agreed upon sale price which was never changed. You then have 3 "change orders" in the form of addenda to the contract. Just my opinion, but in order for this to be a completely new contract, the parties would have to make the "original" contract null and void and start all over again with a new contract. They didn't do that. All they did was make a change order (for example, opting for Maple Cabinets instead of Oak) with no other changes in terms. The "final numbers" addendum basically summarized the construction item changes (change orders). This document is not a new contract, it is just an addendum to the original/only contract.
 

Fargo1

Senior Member
Joined
Feb 26, 2010
Professional Status
Certified Residential Appraiser
State
North Dakota
I see what your saying. But since the sale price changed with each addendum, isn't each addendum in effect a new contract? If I were to use the date of the original contract, I would also have to use the sale price indicated in the original contract. Of course then the lender would come back to me and ask me to change the sale price because it changed with the addendums. So the way I see it each addendum is a new contract. Except maybe the last one which is a summary.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
What was the date of the contract given to you at the time of assignment?
 

Fargo1

Senior Member
Joined
Feb 26, 2010
Professional Status
Certified Residential Appraiser
State
North Dakota
Had a nice chat with a guy at the VA. His premise is that I can not have an effect date prior to contract date because the contract is part of the scope of work. If the contract changes the scope of work changes and it is a new appraisal. I can do a new report or an update. But either way, I would need to revisit the property to have an effective date after the contract date.
 

Fargo1

Senior Member
Joined
Feb 26, 2010
Professional Status
Certified Residential Appraiser
State
North Dakota
What was the date of the contract given to you at the time of assignment?

The contract date I had at the time of the assignment was 9/16/2016. My inspection date is 10/26/16. The problem was I knew from talking to the builder that the contract had been changed and a fence was no longer going to be included. So I asked the builder to send me a copy of the latest contract. It was then that I found out there were 4 additional addendums I didn't get from the lender. The last addendum was dated after my inspection date. However, the price never changed with that last addendum.

So keeping in mind the comments about the PA and scope of work above. My scope of work should have been based on the latest addendum prior to my inspection. The guy at the VA said that is what I should be using. If the lender wants anything changed from that its a new assignment.

So I guess my question now is, do I use the contract I received from the lender that I knew was outdated or do I use the latest addendum dated prior to my inspection? In reality, my scope of work was based on that last addendum prior to inspection. Even though I received the actual contract after the inspection I knew the fence was not included and it was never included in my scope of work. The summary addendum seems mostly irrelevant since nothing changed.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I would ask for the line number or, if I was feeling spry, I would offer them a $1,000 reward for finding the line number in USPAP where it says that. :)

I can also offer the observation that if one is using a Fannie Mae form, the form states:


Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting


conditions, and appraiser's certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is

$ , as of , which is the date of inspection and the effective date of this appraisal.

Danny is the man, ignore all others.
 
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