When Confidentiality Agreements Conflict with USPAP
Q: "I was contacted about submitting a bid for what looks like it could be a solid client relationship going forward. I received their paperwork, and in the stack was a “Confidentiality & Non-Disclosure Agreement.” The way I am reading it, I think there is an issue, but I wanted to see if you agree.
The Agreement states that the “Disclosing Party” (the client) will provide the “Receiving Party” (me) with various documents such as spreadsheets, financial statements, rent rolls, leases, tax returns, income statements, cost projections, blueprints, builder cost estimates, and so on. These are all considered “Confidential Information.” The Agreement goes on to say that immediately upon completing the assignment and submitting my appraisal, I am required to return all of this “Confidential Information” to the client.
I cannot imagine they have not gotten pushback from other appraisers on this before. Obviously, if I rely on any of the financial information they send me, I have to retain it in my workfile. Do you agree?"
A: Yes, I agree. Technically, you do not have to keep everything in your workfile. However, since you have not worked with this client before, I do not know that you can trust them to maintain the documents for the required retention period or ensure that you will have access to them if needed. I would suggest explaining the responsibility you have under USPAP to retain certain documents, along with your duty of confidentiality.
Hopefully, once the potential client understands your position, some reasonable concessions can be made so you can move forward and do business with them.
More "Claudia Says..." Q&A Series