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Contract Legal Description Wrong

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Lisle

Member
Joined
Oct 16, 2007
Professional Status
Certified Residential Appraiser
State
New York
Hello All,
If the legal description on purchase contract is incorrect can I proceed with full disclosure and without a corrected contract. Assuming of course that lender is agreeable.
Thanks in advance.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Imo you can, at some point likely the client will send you corrected contract but even if they don't you can still proceed with appraisal disclose and explain ( assuming you are appraising the correct property and the typ/error is in the contract descrpition_)
 

Mark K

Elite Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
You probably can...but I wouldn't submit the report until you get a corrected legal.

As long as you can adequately identify the subject real estate you don't even need a legal for an appraisal. But if they provided one, and it is wrong or you believe it is wrong, the issue needs addressed and corrected before you turn the report in.
 

Lisle

Member
Joined
Oct 16, 2007
Professional Status
Certified Residential Appraiser
State
New York
You probably can...but I wouldn't submit the report until you get a corrected legal.

As long as you can adequately identify the subject real estate you don't even need a legal for an appraisal. But if they provided one, and it is wrong or you believe it is wrong, the issue needs addressed and corrected before you turn the report in.

Originally this was my thinking also. However, upon reconsideration, I believe that as long as the report clearly identifies and correctly describes the subject property, what the contract says makes no difference. I have not been able to cite any guideline that speaks directly to this, such as for contract price and date. Of course this is all subject to lender approval and full disclosure.
 

CindyR

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
i just did one of these. i pointed out in the contract analysis that the legal description was wrong on the contract and the correct legal description is shown above. i would observe this was for a very simple legal description that i was 110% sure i knew the correct legal description. if it was any sort of complex or detailed or questionable legal description then i would ask for a copy of the contract amendment just to be sure we were all talking about the same property.
 

Mark K

Elite Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
However, upon reconsideration, I believe that as long as the report clearly identifies and correctly describes the subject property, what the contract says makes no difference....

It depends on the intended use of the report. If its going to a lender there's a very good chance the underwriter will want the legal description in the report to match the legal in the contract. Same scenario if your client is an attorney and the report might end up as an exhibit in court.

Actually, the more I think about it, I can't think of a situation where I would do it at all. Its your report, your call. Personally, I would not submit an appraisal on a property where the contract doesn't match the legal description in the report.

Legal descriptions are a pretty important part of a transaction; at some point it will have to be corrected, why not now?
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
We are appraising the property, we are not appraising the contract. All we are asked to do is to analyze the contract. Our role is not such to demand changes in a contract

If some appraisers want to stop the appraisal till parties correct something in a contract...here's what can happen, if it can result in a delay that puts borrower in violation of the contract clause that gives the borrower until X days to obtain an appraisal, and if buyer fails to perform seller can keep deposit /and/or buyer loses the deal because contract at that point is considered void.
 

Mark K

Elite Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
If some appraisers want to stop the appraisal till parties correct something in a contract...here's what can happen,...blah, blah, blah, silliness, more blah, blah, blah...


Nobody says stop the appraisal process. Hold off on submitting the report, yes. That's the prudent thing to do. What's it take, 30 minutes, or heaven forbid, even a day, to get a contract corrected and emailed?

In spite of some of 'the world's coming to an end and the appraiser is going to get sued' nonsense scenarios dreamed up by some, they might be thinking about one simple question: "How does an appraiser know for sure what property to appraise if the contract has an incorrect legal description?"

Is it up to the appraiser to determine the 'correct' legal? I don't think so. Where's the appraiser going to get the 'correct' legal and how can he be certain that its correct? If there's a discrepancy between the legal and the stated address (or other identification methods) its important to correct this at the beginning, not later.

Ignoring something like this sounds like something an AVM would do; not a professional, human appraiser.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Nobody says stop the appraisal process. Hold off on submitting the report, yes. That's the prudent thing to do. What's it take, 30 minutes, or heaven forbid, even a day, to get a contract corrected and emailed? In spite of some of 'the world's coming to an end and the appraiser is going to get sued' nonsense scenarios dreamed up by some, they might be thinking about one simple question: "How does an appraiser know for sure what property to appraise if the contract has an incorrect legal description?"
Is it up to the appraiser to determine the 'correct' legal? I don't think so. Where's the appraiser going to get the 'correct' legal and how can he be certain that its correct? If there's a discrepancy between the legal and the stated address (or other identification methods) its important to correct this at the beginning, not later.
Ignoring something like this sounds like something an AVM would do; not a professional, human appraiser.

Holding off on submitting the report is stopping the appraisal process. Who knows how long it can take parties to correct a legal description in a contract...if one party is out of town, travelling, sick or just an idiot attorney it can cause a delay that can void their deal. or lose their deposit. I agree we should not "ignore" it, we would disclose what we found in error in the legal description as part of our contract analysis when we submit the report.

Imo if we analyze the contract and everything is"wrong",, the whole thing is wrong including the wrong property address, wrong tax folio number etc then would be an indication of a problem to degree I would alert the lender. Once I received by mistake a sales contract for another property the same buyer was purchasing at the same time. But if the property address is correct, tax folio number is correct , and only the legal description is wrong, then the correct property is identified with an error in the legal description. Still, everyone runs their own business so if it makes an appraiser uncomfortable for them to proceed its' their call..
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Nobody says stop the appraisal process. Hold off on submitting the report, yes. That's the prudent thing to do. What's it take, 30 minutes, or heaven forbid, even a day, to get a contract corrected and emailed?

In spite of some of 'the world's coming to an end and the appraiser is going to get sued' nonsense scenarios dreamed up by some, they might be thinking about one simple question: "How does an appraiser know for sure what property to appraise if the contract has an incorrect legal description?"

Is it up to the appraiser to determine the 'correct' legal? I don't think so. Where's the appraiser going to get the 'correct' legal and how can he be certain that its correct? If there's a discrepancy between the legal and the stated address (or other identification methods) its important to correct this at the beginning, not later.

Ignoring something like this sounds like something an AVM would do; not a professional, human appraiser.


Mark is correct, although, your statement of limiting conditions says you are not responsible for legal issues.

However, if you send the report to a lender stating the legal on the contract is wrong, they'll fix the contract and then stip you to remove your remark.

Why keep opening files? Address it on the front end, get everyone on the same page, then send the report ONE TIME, without a need to correct for a change in contract.

.
 
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