Solidifi User Agreement… all Indemnity Clauses are not created equal…
This is a response to the article that Dave Towne wrote regarding Indemnity Clauses and that they are common in today’s world and appraisers better get used to it. It is also true that all Indemnity Clauses are not created equal and the devil is in the details. This topic came up because of the agreement that Solidifi requires that all appraisers that receive assignments from them must agree to. Let’s delve into the Indemnity Clause which is in that agreement. First the agreement is between Solidifi and the appraiser which is stated on page #1 in the first paragraph and therefore I assume that no other parties are a part of this agreement and the appraiser is the only one that has to agree to it and this is reinforced in section #1.
First we need to understand the definition of the terms used in the Solidifi user agreement.
Party means either Solidifi or User; and Parties means both of them. (User is the Appraiser)
Purchaser means a Person who has ordered an appraisal and which order was submitted to User by Solidifi. ( This most likely would be the lender or Mortgage broker)
User means the appraiser identified on the login screen on the Website (or any of Users employees, independent contractors, affiliates and/or agents). This would be the appraisers.
The following is copied from the Solidifi user agreement: (wherever you see “User” insert the word Appraiser)
Let’s dissect what this Indemnity really says. Remember the definition, User = appraiser, Purchaser = Lender, Parties = Appraisers and Solidifi.
My reading of this is that the appraiser at his/her expense must “hold harmless” and defend Solidifi, purchaser (lender) and a host of others which the appraiser doesn’t even know, against all claims that alleges that any appraisal content or other documentation etc. provided by the appraiser to Solidifi etc. and such Claim alleges that appraiser performed or prepared the appraisal(s) negligently etc. This could be an allegation by the buyer, seller, agent or anyone else and the appraiser would have to pay for the defense of these allegations regardless if the appraisal was or was not deficient in any way.
Earlier in the Solidifi user agreement it stated that the agreement is governed by the laws of the State of New York… I live and work in the state of California, all properties that I appraise are in the state of California. California courts have rendered decisions that buyers, sellers, agents and other parties which are the not the client of the appraiser can not bring lawsuits against the appraiser regarding errors and/or deficiencies in the appraisal report. This was upheld by the appellate court on appeal. Earlier in the Solidifi user agreement it stated that the agreement is governed by the laws of the State of New York. Why would any appraiser in the State of California give up the right to be protected by case law which protects the appraiser from lawsuits of non-clients of the appraiser?
If the lender feels the need for some kind of agreement between them and the appraiser then they should put this in writing to the appraisers.
AMCs are an agent of the lender to find an appraiser and procure an appraisal report and act as a conduit to transport the completed appraisal report to the lender. They are not the client or the intended user of the report.