Appraisers continue to express concern to us about potential indemnity obligations under the AppraisalPort user agreement. Short of seeing the indemnity provision taken out, appraisers have asked if we (LIA) can suggest any language for use in their reports relating to this issue. (reprinted with permission)
We have developed the language below. Appraisers may consider including this language in reports they deliver via AppraisalPort if they are concerned about the technology and potential liability under the user agreement. This approach is far from ideal, but it is designed to decrease the likelihood of claims by lender/clients for which AppraisalPort might claim indemnity from the appraiser.
The reason this approach is not ideal is that AppraisalPort/FNC would likely contend it does not constitute a change of the user agreement. The primary intent, however, is to reduce the likelihood of a claim and its possible success.
The lender/client has directed that the appraiser transmit the content of this report via AppraisalPort. Pursuant to its user agreement, FNC/AppraisalPort has disclaimed any warranty that AppraisalPort will be error free, has advised that information reported to and by AppraisalPort may be subject to transmission errors, and has indicated that use of AppraisalPort is at the user's sole risk. Accordingly, the lender/client should make its own determination as to the accuracy and reliability of AppraisalPort for its use. The appraiser makes no representations and specifically disclaims any warranty regarding the accuracy or portrayal of content transmitted via AppraisalPort or its reliability. The appraiser uses such technology at the specific direction and sole risk of the lender/client. At its request, the lender/client may obtain a true copy of the original report directly from the appraiser via email (PDF), mail or other means.
As we have said before, to this date, we have not received a claim against one of our appraisers relating to use of AppraisalPort or received any report of AppraisalPort demanding indemnity from an appraiser. The indemnity provision in the user agreement has existed for several years. Thus, the risk to appraisers appears to be very low.
Nevertheless, it is FNC that is in the best position to gauge the risk, and it has included the broad indemnity language in the user agreement. It is also worth pointing out that the indemnity provision in the user agreement applies to all users of AppraisalPort, not just appraisers -- thus, AppraisalPort/FNC could conceivably demand indemnity from a lender or AMC using the service.