Record Keeping…Forever?

Q: "This is just a general question about record keeping. I know I have to keep my files for 5 years to be USPAP compliant but a buddy of mine just got sued for an appraisal he did about 10 years ago. He destroyed his work file long ago and is really worried. My question is, should I be keeping my files for 10 years or longer, just to be sure?"

A: While I wish every appraiser would keep all their files forever, I know that is not practical and that it could be very expensive. We find that most claims are filed within 36 months of the date the appraisal was prepared. As a result, the vast majority of claims fall within the 5 year period. Claims made on reports more than 5 years old are rare. If claims are made it seems that, most of the time, the report in question is barely over 5 years old. I always tell appraisers that you will probably be safe if you keep the files for 5 years as required. If you want an extra layer of caution, keep the files for 6 years. Of course, I can’t promise that you will never be sued on an older report, as in the situation facing your friend, but the odds are pretty high against it.

Would you like Claudia to manage your liability concerns?