Lender SubContractor Agreement - Unreasonable?

[NJAPRAZE]

I recently received a request to join a lender's panel; received their "Independent Contractor" agreement... which largely contained 'standard' provisions... about service expectations, contractor status, maintaining E&O, etc.; however, there were at least two provisions that I crossed out or marked up -> 1) pertaining to indemnification (their existing language included 'everything under the sun' -> I consolidated into "arising from appraisal services," and 2) an entire paragraph pertaining to audits and allowing them access to your premises and files so long as they give you 5 days notice and allow you to escort their agent at all times.

Personally - as a subcontractor - thought the latter was way too invasive; happy to provide them with a copy of my file for them to review... but unabated onsite access --- NOT DOING.

Although there is a provision within the agreement stating that the agreement may be modified only if signed by both parties, I subsequently received a notice that they will not accept modified agreements and to resubmit.

I promptly responded by requesting that my consideration for their panel be withdrawn.

Whether you're an independent single practitioner or manage/own a larger practice -- thought this was a good reminder to make sure you - or a legal expert - read and review the "service level" or "subcontractor" agreements that potential clients may require --- as there could be unexpected consequences (i.e. audit team showing up at a single practictioners house to do an audit with the expectation of 'full access' to your home and files/computer), or they may include unreasonable assumption of liability, imposed legal conditions/requirements [more consistent with an employee they control versus an 'independent contractor' - right?], etc.

 

[Russ Kitzberger]

I received one that wanted to order $500 appraisals and required the contractor to waive jurisdiction for litigation in the appraisers local forum and grant jurisdiction in the lender/client state and City.

So, for a $500 project, you would spend $1,000--5,000 if they decided to file a $125 small claims or $5,000-10,000 if they decided to file a $300-500 local court case. No thank you.

And all that you described.

Usually, I push back with "If your vendors are agreeing to this language, the vendors obviously do not understand their responsibilities under the agreement and basic legal and liability principles or they do not anticipate being in business in the future to answer any claims. Do you trust these persons to make accurate legal determinations about properties in reports and be there to answer questions or claims in the future?"

 

[Mark K]

I have modified or rejected numerous engagement letters/contracts that had indemnification clauses of that nature.

Never seen one where they required access to my files or my premises. That's a big non-starter.

Too many appraisers willingly agree to contract terms that their lawyer or E&O provider would strongly advise against. Desperation I suppose.

 

[Cob]

I have declined to get on lists because of these indemnification clauses, one basically said if a borrower or ANYONE came after them on an appraisal I completed that I would hold them (AMC/Lender) harmless AND I would pay all the legal fees on their end in court, I simply told them I wasn't going to do it and moved on, then for the next couple of days had people calling me and basically harassing me saying, "all the other appraisers just agree to it and NEVER question it." "You're the ONLY appraiser that has brought this up".

My response was, "I am not EVERY other appraiser, I actually read things before I sign them" her reply was, "all that the indemnification clause states is that if I do something illegal that I would need to hold harmless AND I would pay all the legal fees on their end in court." I explained to her that my friend who is an attorney read through it for me and that is NOT what it states and please stop contacting me as I am NOT going to ever be completing appraisal orders for your company if you want me to sign this agreement.

 

[shrubberyvaluation]

I have declined to get on lists because of these indemnification clauses, one basically said if a borrower or ANYONE came after them on an appraisal I completed that I would hold them (AMC/Lender) harmless AND I would pay all the legal fees on their end in court, I simply told them I wasn't going to do it and moved on, then for the next couple of days had people calling me and basically harassing me saying, "all the other appraisers just agree to it and NEVER question it." "You're the ONLY appraiser that has brought this up".

My response was, "I am not EVERY other appraiser, I actually read things before I sign them" her reply was, "all that the indemnification clause states is that if I do something illegal that I would need to hold harmless AND I would pay all the legal fees on their end in court." I explained to her that my friend who is an attorney read through it for me and that is NOT what it states and please stop contacting me as I am NOT going to ever be completing appraisal orders for your company if you want me to sign this agreement.

I guess they also want appraisers that don't read their own report before signing.

 

[Terrel L. Shields]

NOPE nope nope nope...........too many fish is the sea to be taken for a sucker.

 

[Tom D]

i agree, i read all the pages, and sometimes wander what liability appraisers are signing themselves to.

 

[ucbruin]

NOPE nope nope nope...........too many fish is the sea to be taken for a sucker.

That's easy for you to say, Jonah....
You only need 1 (big) fish per month....