Client / Intended User & Confidentiality

[cejack]

So let's say you have an engagement contract letter for an apprasisal from Bank ABC and they list SBA CDC Lender XYZ as an intended user as well as an "addressee" on the appraisal engagement contract letter, but the engagement contract letter obviously is issued by the Bank ABC only and nowhere does it specify in the letter than anyone other than the bank is the Client.

Buyer's Broker asks about the anticipated due date of the appraisal and I tell them I can't release any of that information without express permission (preferably in writing) from the Client. (My take is the Bank ABC is the only Client in this assignment as they do not specify SBA CDC Lender XYZ as anything other than an "intended user" and an "addressee" in the engagement letter.

SBA CDC Lender XYZ asks about the anticipated due date of the appraisal at the behest of buyer's broker trying to figure out certain things with a private loan and an SBA loan. Totally understandable, but not my problem either.

Furthermore, let's say that you check with Bank ABC before you say anything to anybody and they tell you clear as a bell that you can't share any appraisal assignment information or conclusions or pretty much anything else, including the anticipated future due date of the appraisal assignment, with anyone outside of Bank ABC.

You tell them (buyer's broker and SBA CDC Lender XYZ) again that they are going to have to get any information they are asking for in that regard from Bank ABC.

SBA CDC Lender XYZ sends me an authorization to release the information to the buyer's broker after the buyer's broker thinks that is the appropriate person to ask them to send a request to release the appraiser to discuss that information with the buyer's broker. I explain that they must contact Bank ABC's account officer and I cannot release any assignment information without their permission. I understand many SBA lenders are supposed to be listed as a Client and Intended User from what I see on-line but, unfortunately, this EL does not do that. Only lists the SBA CDC Lender XYZ as an "intended user" and as "addressee" on the Engagement Letter. Perhaps this is an error by the Bank ABC as I have obviously seen other times in other engagements where the SBA CDC Lender XYZ or other similar entity is listed as both a "Client" and "Intended User" and called out as such in the appraisal engagement contract. Nevertheless, "it is what it is" in this case and I don't see it being a good idea to communicate assignment information to anyone here but Bank ABC.

After all this I get an e-mail from SBA CDC Lender XYZ that asks, "You're saying the SBA and SBA Lender XYZ are not listed as intended users?" after I instruct them to seek their information about the due date of the appraisal from Bank ABC and/or their account officer.

Even responding to this question about whether SBA and SBA Lender XYZ are listed as intended users on the engagement contract now would be something that could be in violation of the confidentiality rule. I have no idea if they have a copy of the engagement contract or not. I get engagement contract letters and I do appraisal reports to the specifications of the engagement contract. All other items do not really concern the appraiser.
As far as I'm aware only the "Client" and the "Appraiser" as defined in USPAP have this confidentiality provision applicable and the "Intended User" or "Addressee" (in this case which is the SBA CDC Lender XYZ as the Engagement Letter Contract reads) cannot step into the shoes of Bank ABC as the "Client" just because they are listed as an "intended user" on the engagement contract.

Obviously, SBA CDC Lender XYZ thinks they are the Client which, if you read the engagement contract letter, I'm sure most appraisers here would have severe doubts on that one as the letter clearly is on the Bank's letterhead and authorized directly by Bank ABC to the appraiser and the EL nowhere identifies SBA CDC Lender as anything but an "intended user" and an "addressee" in the Engagement Letter Contract. My best "appraisal lawyer" hat that I can put on tells me "No - SBA and SBA Lender XYZ are not the Client the way this engagement contract reads."

Of course, I have my own opinion on how to proceed and have proceeded accordingly here, but just curious what the other people in this forum think and would do in this situation.

This is a small commercial / industrial property.

 

[andrew81]

There's a lot going on here and have to admit I'm slightly confused. To me the best analogy is an AMC (client) ordering an appraisal for a bank (lender). Although, you mention SBA loans, I am not familiar with the appraisal process as I am a residential appraiser.

With that said, 'client' and 'intended user(s)' are defined the same.

You just seem frustrated with the assignment process. I can't tell you anything you don't already know. Here are some USPAP reminders.

So let's say you have an engagement contract letter for an appraisal from Bank ABC

Client

CLIENT: the party or parties (i.e., individual, group, or entity) who engage an appraiser by employment or contract in a
specific assignment, whether directly or through an agent.

and they list SBA CDC Lender XYZ as an intended user as well as an "addressee" on the appraisal engagement contract letter

Intended user

INTENDED USER: the client and any other party as identified, by name or type, as users of the appraisal or
appraisal review report by the appraiser, based on communication with the client at the time of the assignment.

the engagement contract letter obviously is issued by the Bank ABC only and nowhere does it specify in the letter than anyone other than the bank is the Client.

Only Bank is the client. The engagement contract letter list Lender as an intended user.

An appraiser must not disclose: (1) confidential information; or (2) assignment results to anyone other than:
• the client;
• parties specifically authorized by the client;
• state appraiser regulatory agencies;
• third parties as may be authorized by due process of law; or
• a duly authorized professional peer review committee except when such disclosure to a committee would
violate applicable law or regulation.

Buyer's Broker asks about the anticipated due date of the appraisal and I tell them I can't release any of that information

Assignment results are confidential

ASSIGNMENT RESULTS: An appraiser’s opinions or conclusions, not limited to value, that were developed when
performing an appraisal assignment, an appraisal review assignment, or a valuation service other than an appraisal or
appraisal review.

The due date is not confidential, unless identified by the client in the engagement contract letter or during the appraisal process.

CONFIDENTIAL INFORMATION: information that is either:
• identified by the client as confidential when providing it to an appraiser and that is not available from any
other source; or
• classified as confidential or private by applicable law or regulation

-

There is more that can be said, but, it just seems like a disagreement with the realtor and intended user that you have a firm grasp on and can handle during the normal course of business.

Good Luck

 

[Terrel L. Shields]

Go back to your CLIENT who ordered it and ask for an amended LOE contract. Small Business Administration loans are similar to FmHA where the lender is insured by the government.

In order for the appraiser to identify the scope of work appropriately, the appraisal must identify SBA as the client or an intended user of the appraisal, as those terms are defined in the Uniform Standards of Professional Appraisal Practice SOP 50 10 5(F) Subpart C (USPAP).Jun 1, 2022​

SBA’s Recent Changes to Standards of Operating Procedures - Retail Petroleum Consultants

In today’s market, most financing for complex going-concern valuations of gas station and car wash properties are performed by SBA lenders. The purpose of this article is to address two important…

gasvaluation.com

 

[Carnivore]

Your post is sort of timely for me. My assignment does not involve the SBA. It does involve the Lender and FNMA. It's a FNMA Homestyle Renovation Loan. So I am not doing the assignment for the Purchase.

So you got me thinking. This will be fun and at a great fee. FTR I am not part of the crowd racing to the bottom on fee's to get assignments.

 

[George Hatch]

Another way to explain it is to explain it. This appraisal was engaged by ABC Bank on behalf of XYZ Bank, both of which are intended users of this appraisal.

 

[Elliott]

I had a situation where a 'greenie' wanted to buy an off the grid house. I got the assignment, viewed the property, noted how I saw things, came up with a value and required that the property either connect to the power line 200-yards away or have some kind of permanent heating system and power for the water pump (the existing was based on a few solar panels, portable generator, and a half dozen car batteries). My reason was so it would have a conventional, permanent source of heat and power and it would be marketable when it went through the next foreclosure.

Then my problems started. Mr. Greenie started calling and arguing with me about the adequacy of the 'systems.' I'd listen politely, told him about who my client was and that he should contact his loan people and then they would get in contact with me about the next step. This went on about three more times and they Mr. Greenie started quoting 'he was the intended user,' Consumer Protection Law, Oregon Appraisal Board complaints, and "my lawyer says." I had it. Called the lender and said, to get their borrower under control, and I was only going to communicate with them in writing. Eventually got an apology from the lender and never heard from the 'intended client' again.

 

[Carnivore]

What you did was challenge the Greenies Religion. my sister in law invited me to attend one of her environmental group meetings. What was my first impression at that meeting. Well, I was in a room full of Zealots. You can not challenge their orthodoxy. That is a Cardinal Sin!