Changing borrower name issue:

[Brian F]

I recently completed an appraisal for a hard money lender. After delivery, I was asked to change the borrower’s name to an LLC. Upon checking, I discovered that this LLC did not legally exist as of my appraisal's effective date—it was formed several days after my inspection.
The Compliance Concerns:

1. USPAP Standards: Since the entity didn't exist at the time of the appraisal, naming them as a borrower/intended user in the original report seems misleading. Would this legally require a new assignment with a new effective date (and a new inspection) to reflect the current reality of the borrower?
2. Assignment Conditions: We’ve already gone through four budget revisions, each essentially changing the scope of work. Now, they want this name change "retrofitted" into the existing report.
3. Communication Issues: Both the lender and the borrower have bypassed the AMC to call me directly to demand these changes, even after being reminded of the contractual communication protocols.

I’m leaning toward treating this as a new assignment. Simply "swapping names" for an entity that wasn't around for the original effective date feels like a violation of Standard 1. Has anyone dealt with hard money lenders pushing for this? How did you handle the "effective date vs. entity existence" conflict without it becoming a USPAP violation?

 

[glenn walker]

So you saying you need to do another new appraisal to make a name change ? The LLC may be the same person but the lender is normally the client.

 

[Sadie]

Depending on how much you want to keep them as a client, call it a new assignment and explain.

 

[glenn walker]

Calling it a new assignment fine change Name and signature date and be done. Personally we didn't charge for that it's a simple revision and you normally want to keep a potential client. The USPAP police aren't coming just document your work file that lender changed borrowers name to LLC.

 

[Brian F]

So you saying you need to do another new appraisal to make a name change ? The LLC may be the same person but the lender is normally the client.

I'm not sure that's why I'm asking. Just wondering how it is USPAP compliant to do an appraisal on a property as of a certain date, then later, when the entity that didn't exist before suddenly is requested by the lender months later to change the name of the borrower, to one that did not exist at the time of the original inspection. Is that even allowed? Or would it require a new inspection so that the borrower LLC is in existence at the time of an inspection? I know what to do with a lender change; that's easy, it's a new assignment.

 

[Brian F]

Depending on how much you want to keep them as a client, call it a new assignment and explain.

The AMC client is fine, but they have this one lender that is just this way, requesting multiple revisions. The contact at the AMC said my assignment wasn't even the worst one that they've done. I'm keeping the AMC, but seriously considering doubling my fee for this particular hard money lender since I already know that the multitude of revision requests from this lender are a common theme with them, not only with my assignment, but for all the others this AMC gets from them. I don't mind the extra money each time they send over a new budget; it's a new assignment. My proposed double fee is to abate the headache of having to constantly deal with this lender and their onslaught of "revisions," as they call them. I mean, if I bid high enough and they give me the job, it's my fault, right? I'm hoping not to get the job. I mean, I like a challenge and all, but this is bordering on insanity.

 

[TerryRohrer]

I'm not sure that's why I'm asking. Just wondering how it is USPAP compliant to do an appraisal on a property as of a certain date, then later, when the entity that didn't exist before suddenly is requested by the lender months later to change the name of the borrower, to one that did not exist at the time of the original inspection. Is that even allowed? Or would it require a new inspection so that the borrower LLC is in existence at the time of an inspection? I know what to do with a lender change; that's easy, it's a new assignment.

Look at the scope of work rule in USPAP. They talk of "assignment elements" which include things like:

The six key elements for defining the appraisal problem are:

1. Client and Other Intended Users: Identification of who requested the appraisal and who is authorized to use the report.
2. Intended Use of the Appraisal: The purpose for which the report is being produced (e.g., lending, tax appeal).
3. Type and Definition of Value: Establishing the standard of value, such as market value, liquidation value, or investment value.
4. Effective Date of the Appraisal: The specific date for which the valuation applies, which can be current, retrospective, or prospective.
5. Property Identification and Characteristics: The subject property, including physical, legal, and economic characteristics.
6. Assignment Conditions: Any special conditions, such as Extraordinary Assumptions, Hypothetical Conditions, or Jurisdictional Exceptions, which might limit the scope of work.

If any of those change, it has to be a new assignment per USPAP. If not, there is no requirement for a new assignment.

 

[J Grant]

Imo, you are way overthinking this. We appraise properties, not the people who buy them. They must have had a financial or other reason to switch to an LLC as the buyer's name on the contract. Nothing has changed about the subject property, so I fail to see why switching the name of a borrower on a contract calls for a new assignment.

I assume the price is the same?

Simply explain the timelines/dates, the original name, the new LCC name asked to change by the client on X date, and turn it in. At least that is what I would do...on the information given here.

 

[glenn walker]

I

I'm not sure that's why I'm asking. Just wondering how it is USPAP compliant to do an appraisal on a property as of a certain date, then later, when the entity that didn't exist before suddenly is requested by the lender months later to change the name of the borrower, to one that did not exist at the time of the original inspection. Is that even allowed? Or would it require a new inspection so that the borrower LLC is in existence at the time of an inspection? I know what to do with a lender change; that's easy, it's a new assignment.It

Name changes are done all the time with lenders. You keep saying the LLC didn't exist but your doing the appraisal for the Lender not the LLC and you have inspected the property so you just document the new name change and use a new signature date and be done. Nothing's being hidden. But often a borrower on investment property accountant tells them to put in in a LLC or Corporation. Don't complicate it.

 

[Sadie]

I'm not sure that's why I'm asking. Just wondering how it is USPAP compliant to do an appraisal on a property as of a certain date, then later, when the entity that didn't exist before suddenly is requested by the lender months later to change the name of the borrower, to one that did not exist at the time of the original inspection. Is that even allowed? Or would it require a new inspection so that the borrower LLC is in existence at the time of an inspection? I know what to do with a lender change; that's easy, it's a new assignment.

I think there is somewhere in the SOW rule (?) that the borrower is part of the assignment conditions. I agree with you that if the borrowing entity didn't exist as of the effective date, they can't be the borrower. Isn't there an FAQ on this?

Again, if you want to keep them, offer to do a new assignment with a new effective date. It has been my experience that some of the hard $$ lenders can have a problem with USPAP and ethically produced appraisals.