Definition of client

[Ross (CO)]

State of Colorado's Board of Appraiser's website has a nice printable page with logo and flag, etc. which is a nice statement about just this sort of relationship is played out. I have several copied in my clipboard if a h/o gets all worked up about it......but I have never had to get a page out and give it to someone. I make crystal clear what the client relationship is when I set the appmt., if they should ask me then about getting a copy. If they have a problem with it I suggest they call that lender person and discuss it, and then "call me back if our appmt. (just set) is to be amended". Same thing goes when I am finishing up an inspection and about to leave the door......and they ask if I'll be sending them a copy of the appraisal. I tell them that I will be printing up THEIR copy and presenting it to ABC Lending, with the others (copies), and "BY FEDERAL LAW they must give you your copy......but sometimes that is NOT automatic, so you had better stay in close touch with them and make sure you REQUEST your copy" ! Everybody seems to understand exactly what I say in that regard, and nobody calls me up weeks later to ask yet again, or say that "they paid for one, now give me a copy of it !"......We have already crossed that bridge. So, going back to original poster, the two-fold stuff doesn't hold a lot of water, and you do not discuss appraisal results with h/o when you are done. And, if Joe Homeowner calls you up out of the blue, and wants an appraisal done on his place, and no lender is mentioned, you can certainly ask what he intends to "do" with the appraisal. He just may have full o.k. from some financial institution to engage your services, acquire appraisal, pay for it, and submit it, with h/o's name as client. One of my credit union accounts in town has each h/o proceed just that way, and I do not have to change client names later on. When in doubt, ask plenty of questions !

 

[Charlotte Dixon]

Neil,

Very insightful answer. Looks like it is real cut and dry.

Thanks!

MRM

Well, guess so. Have any of you heard any cases where the borrower sued the appraiser because the appraiser wouldn't give him a copy of the report? I have. The judge said "the heck with your USPAP...the borrower paid for the appraisal...give it to him".....In fact, I've heard of this 2-3 times. I still stand by USPAP, but cringe everytime I'm caught between a rock and a hard place and hope this doesn't happen to me. In a case like this I would certainly hammer the lender to give the borrower a copy of the appraisal, and I mean QUICK!

 

[Anonymous]

Ben,

In the senario you posted above, you stated that the lender didnt order the appraisal, but the borrower did. You need to read AO-10. If you know that the purpose of the appraisal is for lending, you must find out if the lender/transaction will be federally insured. If so, then the lender must engage the appraiser directly. It is the appraiser's responsibility to do this.

Also, what one must consider under USPAP is the useful life of the appraisal. The appraiser must protect the client relationship for the useful life of the appraisal. If the borrower has backed out of the loan and provides you with a copy of a letter that was sent certified to the original client stating that the borrower has withdrawn their application for loan, the useful life of the appraisal is over with that client and you may release the appraisal or perform a new one on the property without the consent of the original client. This senario was confirmed to me by the NCAB about 3 years ago.[/u][/i]

 

[slacker]

MRM - why so bashful of your real name :?:

John, you should always be careful when using your real name on the Internet. You never know who might be looking at it. I'm not going to display it here but just by doing a simple look up I already know were you live, what your appraisers license #, phone number, etc. This is the first step in creating a fake identity. Next thing you know, your credit report has nasty items on it for non payment of hotel rooms in Aruba. You get the picture.

Now, back to the question. I agree with the Judge’s ruling in one of the previous posts. As far as I know, USPAP can’t be found in any State Law as record, can it? I thought that was the difference between a standard and a law. USPAP may be the law among appraisers and our little cliques we belong to but it doesn’t hold much water outside of that. These standards help monitor our members but on the outside, if I pay for something, it’s mine, regardless of what AO-10 has to say about it.

Besides, doesn’t the borrower become one of the clients by initiating the loan process? The request may come from the lender but only as a result of the request from the borrower. I think this whole issue is far from a black and white answer.

And for the record, I have never been to Aruba. Not yet anyway.

 

[Neil (Texas)]

"... However, state laws could take precedence over USPAP in this situation. Therefore, you should contact the pertinent jurisdictions to ensure that USPAP is not in conflict. "

I especially like the part of "pertinent jurisdictions"... The wonderful thing about the USPAP, is that it keeps defining (refining) more and more about less and less, until they have defined nothing about everything.

Face it, ladies and gentlemen, we are being left to our own devices. As said previously, CYA.

 

[bradellis]

To all,

1. The person/entity who engages you is your client. Period. ASB has clarified that many times over.

2. Ben's client is the borrower because they are the ones who ordered the appraisal. Not Ben's fault. Statement 10 apples only to a federally related transaction. If this lender is say, Merrill Lynch, and not a regulated bank, SMT-10 does not apply. (Unless they have a regulated subsidiary subject to this).

3. As to judges ordering copies of appraisals be given to borrowers- no problem. The jurisdictional exception rule covers that. Just do what the court orders.

Have fun,

Brad Ellis, IFA, RAA
National Director NAIFA

 

[slacker]

The wonderful thing about the USPAP, is that it keeps defining (refining) more and more about less and less, until they have defined nothing about everything.

Watch the plagiarism. That looks familiar? It is a good one though.

“Every man gets a narrower and narrower field of knowledge in which he must be an expert in order to compete with other people. The specialist knows more and more about less and less and finally knows everything about nothing.”
-- Konrad Lorenz

 

[Anonymous]

Bradellis wrote:

2. Ben's client is the borrower because they are the ones who ordered the appraisal. Not Ben's fault. Statement 10 apples only to a federally related transaction. If this lender is say, Merrill Lynch, and not a regulated bank, SMT-10 does not apply. (Unless they have a regulated subsidiary subject to this).


Not so Brad, Merrill Lynch sells loans on the secondary market, of which the largest buyer is Fannie? How about the other buyers? If it is being sold on the secondary market it will fall under the federally related clause. If the lender was merrill lynch, or whom ever, the question must be asked, will this loan stay in house, until paid off? Or will it be sold?

 

[Ben Vukicevich SRA]

Bill,


First, although you may not believe it and it doesn't sound rational, FNMA/FHLMC, FHA and VA are not federally-related transactions and do not come under all that OCC lingo.

Second, I don't care where the loan ends-up. I don't have a crystal ball. My Intended User is that Client/Lender for that mortgage transaction (Intended Use).

As I stated in the previous post, I solved the problem to make USPAP happy. Look at the URAR. Look at the Lender/Client line. I placed the lender's name in there followed by a slash with the borrower's name there as they are the Client as they engaged me. It's all USPAP happy and the stupid lender will probably never notice.

Now if the lender calls back and demands that the borrower's name be removed from the Lender/Client line. The solution is again very simple. I call the borrower to get a "release" and make the lender the client and state in the report that it was initially prepared for the borrower but has been transferred to the lender. But as I said, we're dealing with a mortgage broker here and I don't think that they will even notice the correct USPAP wording I placed in the Lender/Client line.

Remember, I've had no contact from the lender at all which is the key to this problem.

Ben

 

[Tom Hildebrandt]

Just as several posters have noted, the law can override USPAP since each state makes its own rule for adopting USPAP.

Each state legislature, each appraisal board, each regulatory agency, each judge and each attoney can and probably does have different interpretations on this issue. Accordingly, the legal issue can not ever be resolved, that is why we have courts and job security for attorneys.

However, the issue as a practical matter is not that hard to resolve. Your client is the person (or legal entity) that is the primary user of the appraisal and who defines the purpose (value definition) and the intended use of the appraisal. Without knowing these key elements, you can not even contemplate doing an appraisal assignment because you can not know what the scope of work or the reporting requirements might be for the specific assignment.

So regardless of who calls or contacts you, you must find out the purpose and use of the appraisal. First ask the person who contacts you. If you get a call from a property owner who says I need an appraisal so I can know the value of my house for asset planning, that individual will be your client. He, working with you establishes the necessary scpe of work and the reporting requirements. If the same individual tells you that the lender said he needs an appraisal to get the loan process started, the lender is your client as the lender requirements, along with your professional judgement, will determine the necessary scope of work and the reporting requirements.

If the same individual says I need the appraisal so I can decide whether to apply for the loan, but I want appraisal to be used by the banker if the value is there, you need to explain that you can provide the report to him for the one purpose, but you can not readdress it with out full disclosure that the lender was not the client and that it is unlikely that the lender would accept the report under those conditions.

If the person who contacts you does not know the answer to the simple question "why do you need an appraisal?" but has been told by someone else that they need an appraisal, you need to talk to the other person.

Remember, the client (primary user) can designate other intended users if he wishes and additional uses. It is your job to find out what, if any, other users or uses may be entailed in the assignment and if any of those uses/users might need an expanded scope of work or reporting requirements and whether any of those poses ethical problems for you.

If you can not determine who the client is after several discussions with the various parties (or what other uses/users may be involved in the work), it is time to turn down the assignment and move on to smarter clients.

During the course of these discussions, you can determine who is going to pay. But at least as far as USPAP is concerned, that is up to you. You need to make that decision after considering with state law, your clients policies and your business practices.

This really is pretty simple, it only gets complicated if you try to work backwards after you have already accepted an assignment.

Regards

Tom Hildebrandt GAA