Confirm That Utilities Are "on And Working"

[Have Laser-Will Travel]

The phrase has been around forever; lenders want appraisers to state if the utilities are "on and working". I have this as a standing requirement now not only for vacant properties but, on all inspections.

Perhaps it's so generalized that it doesn't impart any liability to the appraiser. But the vagueness is at the same time troubling since it creates an opening for liability and/or charges of misleading statements.

"On" I understand but, "working" implies performance. Why isn't stating that the utilities are "on" simple enough? What does "working" mean? If I say they are 'working' what am I signing off to? At this point, one has to start making interpretations (as is often the case in appraisal) due to what I suspect is a stipulation that was not really thought through and now has become traditional. I think the client may think that I have verified that the utilities are being carried throughout the property and successfully providing functionality to the mechanics. But, that's not something I am qualified to do.

Further, a buyer can rely on the report. The buyer, attorney or state board may not agree to the same interpretation that I come up with. Has anyone else considered the implications of such a requirement? Some have said in the FNMA Cert. #5 the liability is limited however, if I make a statement that extends beyond the limit of liability found in the boilerplate, I think a case can be made for me now being responsible for that statement. Otherwise, if I defend myself by invoking Cert. #5, then I am arguably in conflict since on one hand i said the utilities are "working" and on the other, I am saying in the cert. that my scope doesn't reach that far.

 

[Tom Woolford]

You may be overthinking this: if you flip a light switch and the light comes on, power is on and working. Take a picture and move on. Turn a sink on. Water comes out its on and working. Take a picture. Beyond those observation my liability is limited to those provable observations. The rest of the house? Who knows. They can get an inspector.

 

[Have Laser-Will Travel]

You may be overthinking this: if you flip a light switch and the light comes on, power is on and working. Take a picture and move on. Turn a sink on. Water comes out its on and working. Take a picture. Beyond those observation my liability is limited to those provable observations. The rest of the house? Who knows. They can get an inspector.

What if you hear, "But, Mr. Appraiser, I just bought my house and you said in your report that the utilities were working and I found out the sewer line is cracked and there's sewage pooling in my yard and it's going to cost $15,000 to repair"?

 

[Vermonter]

What if you hear, "But, Mr. Appraiser, I just bought my house and you said in your report that the utilities were working and I found out the sewer line is cracked and there's sewage pooling in my yard and it's going to cost $15,000 to repair"?

The problem is not the with the statement of utilities working.....the problem is the lack of disclosures and disclaimers to go along with it.

 

[Mike Garrett RAA]

Reply with....."I am an appraiser and not a home inspector"

I also like....."utilities were on and all systems APPEARED to be in working order".

 

[jay trotta]

There use to be a Buyers package that Agents handed out, I now believe there is also an email package available which notes a "Home Inspection" time line or a No Inspection clause. There are also Disclaimers that go along with Listings that Clarify the Owners input.
The tail has been wagging the dog for years now, it could have and should have been Clarified years ago, as to what it is we do; it is also part of the Certification & Limiting Conditions in every report. I believe there is truly a lack of reading that follows every report, no matter how much writing you do and the killer to all of this, anyone anywhere can type there Question on the net and get an answer. On the other hand, You need to know the "License Law" within your State for conducting a Home Inspection and the Definition and Limits noted within those laws. In our area, we are most definitely restricted as to how far you can go on observation Testing and Inspection Terms.
Good Luck

 

[Have Laser-Will Travel]

The problem is not the with the statement of utilities working.....the problem is the lack of disclosures and disclaimers to go along with it.

Yes, disclosures and disclaimers would solve it, it seems. I also think if they just dropped 'working" the problem goes away.

Incidentally, once I completed an appraisal and as usual, marked the occupancy as "owner". It turned out to be a case of mortgage fraud and the person meeting me at the property was not the owner. After that I added some disclosures about occupancy. The res. FNMA forms and stipulations are fraught with these generalized requirements when taken literally, are not being met. I mark the 'legal" all the time and if you look in code, you will see that zoning requires permit to be in place for all improvements. That's really a question for building inspector and requires a comprehensive answer. I don't think the originators of these stipulations realize what they are literally asking for...or perhaps they are very sly and leaving the door open so if they decide to take an action, they have a basis.

 

[Vermonter]

Yes, disclosures and disclaimers would solve it, it seems. I also think if they just dropped 'working" the problem goes away.

Incidentally, once I completed an appraisal and as usual, marked the occupancy as "owner". It turned out to be a case of mortgage fraud and the person meeting me at the property was not the owner. After that I added some disclosures about occupancy. The res. FNMA forms and stipulations are fraught with these generalized requirements when taken literally, are not being met. I mark the 'legal" all the time and if you look in code, you will see that zoning requires permit to be in place for all improvements. That's really a question for building inspector and requires a comprehensive answer. I don't think the originators of these stipulations realize what they are literally asking for...or perhaps they are very sly and leaving the door open so if they decide to take an action, they have a basis.

The problem is that so many appraisers just put in the bare minimum so why not ask for it. If every appraiser disclosed what they were able to observe concerning the utilities in the scope of an appraisal "inspection" and disclaim what they couldn't and potential consequences (and the intended user actually read it).....we probably wouldn't be asked.

 

[miktay]

Actually, the problem is with what many have said on this Forum before. Any good lawyer can get around most any "disclosures" we put in our report at the request of any disgruntled new homeowner. Your broken sewer line story is a perfect example.
The day that FHA required us to turn on the dishwasher (and other appliances) and state it was "working" was the day I stopped appraising FHA.
My paltry fee does not cover that much liability.
Good post, OP !!

 

[Tom4value]

Few things to remember here to allow a good night sleep.

1. As was stated, by “working”, you turn on the water and it works. If it is cold out and the house is at a comfortable temperature, the heat works. You are not responsible for how efficient it is. You turn on lights and they work without you getting zapped.

2. Stop using the word “inspect”. That’s what home inspectors do. You “observe” the condition of things using your eyes and nose and make determinations based upon your experience as an appraiser, not an expert home inspector. Your expertise is slightly higher than the average buyer. That’s it. Don’t be afraid to admit in the report.

3. Don’t rely on the boilerplate certifications to protect you. Add your own on the addendum page. You should be adding everything above.

You should also be adding that your client and ONLY your client should rely on your report for the purpose of making a lending decision. In addition to stating that I am not certifying any of the mechanicals, my certification notes that if the buyer wants to verify a value, they are free to hire an appraiser of their choosing. My appraisal (cost approach) is not to be used for insurance purposes.

Of course, trying to not be sued is like trying to keep your car from being stolen. You can’t prevent it. What you can do is make it tougher for them to do it.