A Special Edition of the TAR DIGEST Newsletter
Our TAR Legal & Ethics Hot Line attorneys wanted to clarify one of their Hot Line Questions-and-Answers published in the most recent TAR DIGEST. The question involved providing the appraiser with a copy of the contract. Their clarification follows:
This is to clarify the response provided in the June 9, 2009 TAR Digest regarding whether it is permissible to give an appraiser a copy of the executed contract. Pursuant to the 2008-2009 Uniform Standards of Professional Appraisal Practice,
When the value opinion to be developed is market value, an appraiser must, if such information is available to the appraiser in the normal course of business:
(a) analyze all agreements of sale, options, and listings of the subject property current as of the effective date of the appraisal; and
(b) analyze all sales of the subject property that occurred within the three (3) years prior to the effective date of the appraisal.
Note that this does not necessarily mean that the contract should be provided by the real estate agent. If the agent does provide the appraiser with a copy, however, the agent should first secure the permission of all parties to the contract. This is because the parties to the contract may deem the contract to contain confidential, personal information.
The other party involved in this issue is the lender. If the appraiser is hired by the lender and the lender requests that the agent provide a copy of the contract to the appraiser, it is acceptable to do so once the agent has the consent of all parties to the contract. If possible, it would be a better practice for the agent if the appraiser is provided a copy of the contract by the lender. This would allow everyone to receive the information they need and will prevent the agent from inadvertently upsetting either the parties to the contract or the lender. As far as the Home Valuation Code of Conduct is concerned, it specifically states that this is permitted. Specifically, it prohibits the lenders or a third party authorized by the lender from “providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase transactions may be provided.“ Section I.B.(6) of the Home Valuation Code of Conduct. (Emphasis added).
The regular edition of the TAR DIGEST will be still be published early next week.