Appraiser Liability: Understanding Disclosures and Disclaimers (Save $60)

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The online McKissock course, Essential Elements of Disclosures and Disclaimers ($79/5 hrs. approved continuing education in most states), is available to OREP Members / Affiliates / Working RE Paid Subscribers for administrative costs only ($15.64).  OREP Members / Affiliates / WRE Paid Subscribers – Request your discount link.

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Editor’s Note: There is an unprecedented number of claims and disciplinary actions involving appraisers today. In this environment limiting exposure is not an option. According to appraiser Daniel A. Bradley, SRA, CDEI understanding disclosure obligations and the use of appropriate disclaimers are key to protecting appraisers from unintended liability.

Appraiser Liability: Understanding Disclosures and Disclaimers

by David Brauner, Editor

No one wants to deal with a lawsuit. If you’re insured, the time and worry involved can have serious implications at work and at home. If you’re not insured, a lawsuit can put you out of business. Nothing can make you bulletproof against a frivolous claim but you can limit your chances of trouble and become a better appraiser by understanding the essential elements of disclosure statements and disclaimers.

According to Daniel Bradley, SRA, CDEI, author of the McKissock Education online course, Essential Elements of Disclosures and Disclaimers, one of an appraiser’s basic responsibilities– in addition to providing a credible value opinion, is disclosing information about the subject property to the client and intended users in the appraisal report. “USPAP states that an appraisal report must contain sufficient information to enable intended users to understand it properly. Even if the value opinion in the report is credible and well-supported, a report that does not contain sufficient disclosures may be misleading to the client and intended users. This is true in all types of appraisal assignments but it is especially true in mortgage lending assignments,” said Bradley.

Bradley continues: “Appraisers are required to disclose what they see or know, but at the same time, they are not experts in all fields related to real estate and construction. They are not attorneys, title searchers, contractors, structural engineers or home inspectors. When disclosing property conditions, it is essential for an appraiser to limit his or her liability by using disclaimers that establish the limits of the appraiser’s qualifications and expertise. This is essentially a high-wire act; appraisers need to disclose what they see while at the same time disclaiming responsibility for factors that they are not qualified to determine,” said Bradley.

According to Bradley, there are three basic types of disclosures used in appraisal reports.

  • Those related to the property and/or its location (structural deficiencies, or location adjacent to a chemical plant, for example).
  • Those related to the assignment itself (the extent of the appraiser’s inspection and research, for example).
  • Those related to the appraiser (an appraiser having performed a prior service on the subject property within the prior three years, for example).

Essential Elements of Disclosures and Disclaimers
Bradley says the McKissock course Essential Elements of Disclosures and Disclaimers and others like it increase the credibility of the professional appraiser and promote the highest level of trust in appraisal reporting practices. “Students who complete these courses will grasp the importance of disclosures in ensuring that appraisal reports contain sufficient information and are not misleading to intended users. Students also learn the role of disclaimers in informing intended users about the appraiser’s lack of knowledge in certain areas, as well as helping appraisers limit their liability,” Bradley said.

Disclosures and Disclaimers
Disclosures required by USPAP are highlighted in this course, as well as disclosures for specific situations, including FHA appraisals, environmental issues and property deficiencies. The role of disclaimers in these various situations is explored in depth. Bradley says this course also provides answers to important questions, including:

  • How and where must an appraiser disclose prior services provided on the subject property within the prior three years?
  • How should repair items be disclosed in an FHA appraisal report?
  • How should significant real property appraisal assistance be disclosed?
  • How can an appraiser protect himself or herself when there appears to be mold in the basement?

“While the course is not intended to be a substitute for competent legal counsel, or as a replacement for the advice of other professionals, it is intended to help the appraiser become aware of the limits of his/her knowledge, and stay within those limits when providing disclosures in appraisal reports,” Bradley says.

The bottom line is that appraisers can limit their liability exposure through knowledge- by understanding how to differentiate between disclosures and disclaimers and their duty to disclose; how disclosures and disclaimers can be used together or separately, how to differentiate between extraordinary assumptions and hypothetical conditions, how to identify the requirements for disclosure of significant real property appraisal assistance, by understanding disclosure requirements for scope of work, how to identify assignment conditions and how they affect scope of work and disclosure and more, including the advice in USPAP Advisory Opinion 9. All of these topics are covered in courses such as Essential Elements of Disclosures and Disclaimers.  

Essential Elements of Disclosures and Disclaimers is written by Daniel A. Bradley, SRA, CDEI. Bradley is a Certified General Appraiser in Pennsylvania. He has been a fee appraiser for 23 years, and has been authoring and instructing real estate and appraisal courses for 18 years. He currently serves as Chief Appraisal Officer for McKissock Education.  In this role, he is responsible for review and approval of the company’s appraisal curriculum, for both onsite and online course offerings. He has written a number of courses for McKissock, including Mortgage Fraud: Protect Yourself and The Nuts and Bolts of Green Building. Dan is a 1987 graduate of Clarion University of Pennsylvania. He is also an AQB-Certified USPAP Instructor, an SRA member of the Appraisal Institute, and a holder of the CDEI designation from the International Distance Education Certification Center (IDECC). In addition, he has been active in state appraisal review and enforcement in Pennsylvania for the last several years.


About the Author
David Brauner, is Senior Broker at OREP.org insurance and Editor of Working RE Magazine. He has provided insurance for appraisers and other real estate professionals for over 16 years.

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