Important Updates

Releases, Readdressing, and New Assignments

Anyone who has been in the appraisal business for any length of time has had a call requesting a report be "transferred" to a new client by changing the name.  This request, referred to as "readdressing" in Uniform Standards of Professional Appraisal Practice (USPAP), is not permitted.  Simply changing the name does not change the original appraiser-client relationship and is considered misleading.  

Most clients desire to have their own name on an appraisal because they want to establish a relationship that provides them all the rights, obligations and liabilities such a relationship places on the appraiser.  However, according to the USPAP Advisory Opinion (AO) 26 it is clear that once a report has been prepared for a specific client and for a specific use, the appraiser cannot "readdress" or "transfer" the report to another party.  

Per Advisory Opinion 26, the best way to handle one of these requests is to consider it a New Assignment.  Doing so establishes a new appraiser-client relationship. This also satisfies the reason why the client requested the appraisal to be "transferred" to their name.

Some considerations that need to be addressed in this new assignment are outlined in Advisory Opinion 27.  First, per the new USPAP requirement in the Conduct Section of the Ethics Rule, the appraiser needs to disclose to the new client, if necessary, any services regarding the subject property performed by the appraiser within the past three years.  The appraiser also needs to be careful not to disclose any confidential information or results that are part of the original assignment.  Confidential information is defined as: those details identified by the first client as private and any particular information provided to the appraiser and not available from any other source.  

A new assignment does not mean that the appraiser needs to start from scratch.  A new inspection may not be required as long as the effective date, scope of work and the intended use are similar.  In this case, the appraiser may accept the new assignment with a retrospective effective date that is the same as the inspection date already made.  Although the results may be the same, this is not considered revealing the first client's assignment results.  

In the past, USPAP suggested in AO 10 that the appraiser obtain a release from the original client before accepting the new assignment.  However, this has never been a USPAP requirement and this Advisory Opinion has since been retired.  

Additionally, in September 2009, HUD released Mortgagee Letter 2009-29; this letter addresses appraisal transfers and client name changes.  If a borrower switches lenders before a loan is closed, the first lender must, at the borrower's request, transfer the case to the second lender.  However, FHA does not require that the client name on the appraisal be changed when it is transferred to the new lender.  Simply changing the client’s name is, as discussed above, a violation of USPAP.  HUD will accept the appraisal from the second lender with the first lender’s name at the top.  

Although "readdressing" is never allowed by USPAP, it doesn't mean that the new client's needs can't be met. With a little effort, understanding and the proper scope of work, the new client can receive a new appraisal with their name at the top.