Protecting My Appraisal Report
Q: "
I was shocked to receive a request from a law firm representing my original lender/client. Earlier this year, I appraised a bank building for this commercial lender client with a loan of about $4.5 million. The law firm wants me to sign a letter allowing the original lender/client to provide my report to four other lenders and authorizing them to rely on my opinion of value as intended users “by implication.”
I couldn’t believe that any reputable lender or their lawyers would make such a request. These other lenders weren’t part of my original assignment and it doesn’t make sense for them to rely on an old report not intended for them.
I drafted a response refusing the request. I stated that the only intended user of my opinion of value is the original lender/client and they are not authorized to provide my report to other lenders. I do not authorize the other lenders to rely on my opinion of value and do not include them as intended users by implication. I recommended that the other lenders obtain an independent opinion of value for their underwriting and investment decisions.
Do you think my response is appropriate? Is there anything else I should say to protect myself?
"
A:
I absolutely think you are right and I also share your confusion as to why sophisticated commercial lenders would be asking you to do this and why they would be wanting to rely upon an old report that was not prepared for them. If these other banks are going to take on some portion of this loan one would think they would want to get their own current appraisal to confirm value before agreeing to do that.
That is not your problem. Confirm this in writing and let them do what they will as long as it does not involve you or your appraisal.
If they wish to retain you to prepare a new report, with a current value, it is up to you to decide whether or not you wish to accept that assignment.