Appraiser’s Response to LandSafe Appraisal

Appraiser Response to LandSafe Appraisal Services AgreementAppraiser’s Response to LandSafe Appraisal Services Agreement

In April of 2011, LandSafe Appraisal Services, a wholly owned subsidiary of Bank of America, released its “Appraisal Services Agreement” which included, among others, indemnifications of LandSafe Appraisal Services against any liability, and loss of intellectual rights. Many appraisers stood firm and refused to sign the agreement. Heather Fox, a Certified Residential Appraiser in Virginia, CEO of Cross Country Appraisal Inc. and President Elect of VaCAP, responded to LandSafe Appraisal Services with this letter:

To: Landsafe Vendor Panel Management Team

I will not be signing the appraiser agreement. I have known I would not sign this agreement since the moment I first skimmed it, but my reply is long in coming because I wanted to make sure you and other appraisers understand why. Since this agreement is packed so full of problems, this is a fairly time-consuming endeavor and I have not had the time to lay it out. The following is a list of the most glaring violations of Federal and Virginia state law that I see in this agreement.

First, this agreement is extremely coercive. This agreement has nothing to do with an appraiser’s competence and qualification to provide reliable and credible appraisal reports. By forcing appraisers to sign this agreement or else be removed from your appraiser panel, you are withholding future business from appraisers without just cause. Not signing this agreement does not constitute failure to comply with USPAP or committing any error or misrepresentation that would provide satisfactory reason for being expelled from a vendor panel on which these appraisers already reside. We are independent contractors, not employees of LandSafe Appraisal Services. Threatening to withhold business from appraisers already on your panel who have done nothing wrong, but simply will not sign your agreement, is coercion. The Dodd-Frank law specifically prohibits this as copied below.

Section 1124, A-4 states that AMCs must

“require that appraisals are conducted independently and free from inappropriate influence and coercion pursuant to the appraisal independence standards established under section 129E of the Truth in Lending Act. ‘‘(b) RELATION TO STATE LAW. — Nothing in this section shall be construed to prevent States from establishing requirements in addition to any rules promulgated under subsection”

The Commonwealth of Virginia has additional legislation that further explains what is considered coercion in our state. As the Dodd-Frank Bill clearly notes that states may establish their own additional AMC regulation, LandSafe Appraisal Services is required to be in compliance with Virginia law if it wants to conduct business in this state. The Code of Virginia, Title 54-1, Chapter 20.2 covers this topic. Specifically it states the following:

C. No employee, director, officer, or agent of an appraisal management company shall influence or attempt to influence the development, reporting, result, or review of a real estate appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner, including:

  1. Withholding or threatening to withhold timely payment for a real estate appraisal report;
  2. Withholding or threatening to withhold future business from a real estate appraiser
  3. Allowing the removal of a real estate appraiser from a list of qualified appraisers used by any entity without prior written notice to the appraiser. The notice shall include written evidence of the appraiser’s illegal conduct, substandard performance, or otherwise improper or unprofessional behavior or any violation of the Uniform Standards of Professional Appraisal Practice or licensing standards for appraisers in the Commonwealth;
  4. Any other act or practice that impairs or attempts to impair a real estate appraiser’s independence, objectivity, or impartiality;

Second, your agreement clearly violates the concept of appraiser independence. Decisions such as how much E&O insurance to carry, how to protect private information, who should be given information about the financial health of our business, and who should be notified when we are threatened with a lawsuit, are entirely up to the appraiser and appraisal business owner. Signing over our rights to our entire work product to LandSafe Appraisal Services and allowing you to use it however you see fit in perpetuity is anything but appraiser independence. This is simply authorizing the long-term theft of our research and data to be used by third parties without our knowledge or consent. Virginia law specifically prohibits,

“Use, by the appraisal management company, of an appraisal report submitted by an independent appraiser for any other transaction, purpose or use other than for that which the appraisal was prepared”.

Providing you with complete access to our files and office whenever you deem that we should be audited is certainly not independence. Paying for the cost of this inconvenience is certainly not high on the wish-list of independent appraisers either. I would argue that appraisers who sign this agreement are worse than no longer free and independent; they are hostages.

Third, your indemnification clause is both onerous and illegal in the Commonwealth of Virginia. Our AMC law specifically prohibits an AMC from

“Requiring an appraiser to sign any indemnification agreement that would require the appraiser to defend and hold harmless the appraisal management company or any of its agents, employees or independent contractors for any liability, damage, losses, or claims arising out of the services performed by the appraisal management company or its agents, employees or independent contractors and not the services performed by the appraiser”.

I am not well versed in the AMC laws of other states, but I know that at least some of them have similar laws against this type of indemnification. You, on the other hand, are required to know what the laws are of each state in which you do business, so you should be well aware of the illegality of this part of your agreement. This is a difficult position for you to defend because your non-compliance is either out of ignorance or defiance, and I imagine that neither defense would hold up in a court of law. Further, I find it ironic that your agreement dedicates several paragraphs to making the appraiser liable for any allegations or lawsuits that ever arise from work related to LandSafe Appraisal Services, yet you have already invited a lawsuit by providing confidential information about your panel of appraisers. Your agreement states that,

“Neither Party shall issue any media releases, public announcements and public disclosures, relating to this Agreement or use the name or logo of the other Party, including, without limitation, in promotional or marketing material or on a list of customers, provided that nothing in this paragraph shall restrict any disclosure required by legal, accounting or regulatory requirements beyond the reasonable control of the releasing Party.”

I would argue that releasing the private names and e-mail addresses for all your panel appraisers who have not thus far signed your agreement is a direct violation of your own agreement rules. Appraisers now know who has been successfully coerced into signing the agreement because they need the income, and who has remained firm on our right to operate our business as we see fit as long as we remain within the law and compliant with USPAP. We also know who is on your panel, and how to contact them. This is certainly not private or confidential.

Fourth, your agreement forces us to state that

“Appraiser acknowledges that both Parties were given an equal opportunity to negotiate the terms and conditions contained in this Agreement.”

This is patently false. It is clearly an attempt to protect Landsafe from the charges of coercion that are sure to arise, and it is insulting that you think appraisers are not smart enough to see through this.

In closing, I submit to you that none of this would be necessary if you followed the spirit of the law and paid professional and experienced appraisers the reasonable and customary fees they deserve. Faulty reports, geographic incompetency, and lack of professionalism are what you should expect when you make assignments based on the cheapest price, fastest turn-around time, and most compliant appraiser “sheep” you can find. You will never successfully correct this problem by trying to shift the burden of liability onto the appraiser. Forcing appraisers to sign this agreement will not result in better appraisals and better appraisers. It will only serve to weed out the experienced and professional appraisers who demand the respect and compensation that they deserve. I have been a Landsafe panel appraiser since its inception and a Countrywide panel appraiser since before that. I, like many of your other long-term panel appraisers have noted, am worth more than this agreement reduces appraisers to, and I will not be signing it. I hope that you will reconsider this very bad business before it’s too late.


Heather Fox
CEO/Cross County Appraisal, Inc.

LandSafe Appraisal Services released a somewhat revised version…

In June of 2011, LandSafe Appraisal Services released a somewhat revised version of its Appraisal Services Agreement adding the verbiage “except as otherwise prohibited by law” at the beginning of section 14.1 regarding indemnification. This new verbiage enables LandSafe Appraisal Services to argue that this section of the agreement no longer violates the indemnification restrictions in a few states’ AMC laws.

In response to the revision, Heather Fox wrote:

Dear Sirs:

I see nothing in the amendments to the original agreement that significantly change the impact on appraiser independence and liability. Rather than repeat the time and effort it took to explain the problems the first time, I have copied the text of my original e-mail and specific concerns below. As both an independent appraiser and President-Elect of the Virginia Coalition of Appraiser Professionals (VaCAP), I would like to convey the deep concerns that appraisers across Virginia (and the rest of the country) have with this Landsafe policy. As a long-time appraiser on your panel since the inception of Landsafe, I have more than proved my professionalism and competency. The quality of my work is readily apparent in the many reports I have submitted over the years, and the personal calls I have received from Landsafe reviewers and underwriters thanking me for my thoroughness and attention to detail further support this. I am certain that many of the other appraisers on your panel who have refused to sign this agreement are also excellent appraisers whose track record should be the basis for receiving future work rather than a signature on your agreement. An onerous agreement cannot make a bad appraiser good, nor does it shift the responsibility from you to make sure that your appraisers are reliable, competent, and professional. By forcing appraisers to make this decision, you are weeding out the most careful, diligent, and educated appraisers. Those who sign an agreement that stifles their independence, violates state and federal law, and places incredible liability on appraiser’s shoulders may not be making the wisest decisions during the appraisal process either.

In addition to the problems described below, this agreement seeks to control the behavior, attire, payment, and actions of the appraiser in a manner similar to an employee. Appraisers are independent contractors. Your relationship with us is as a client who provides only payment for our services and a 1099 at the end of the year. This appraiser services agreement changes that relationship into an employer-employee arrangement for which you will need to file W-2 forms, begin the appropriate withholdings, and pay unemployment insurance, payroll taxes, etc. provides the following three factors to determine whether someone is an independent contractor or an employee:

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

1.1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2.2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3.3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

VaCAP is prepared to argue that LandSafe Appraisal Services is now the employer of the appraisers who sign this contract. Other coalition members across the country are of similar mind, and we believe that the IRS will be very interested in the increased revenue that this change in relationship will create for them.

I, personally, am an independent contractor and will remain exactly that. I will not sign this agreement.


Heather Fox
President-Elect, Virginia Coalition of Appraiser Professionals
CEO/Cross County Appraisal, Inc.

VaCAP Board
Image credit flickr - Tom Woodward
VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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9 Responses

  1. Avatar Ray says:

    LandSafe could not care less if you sign the agreement or not; the fact is they have thousands of other bottom feeding appraisers that will take the low fee work and sign the agreement.
    Appraisal is now a $15 dollar an hour job…period.
    Those of you that think it’s not are short on your math skills.
    Big banks have the money and they write the rules without exception.
    In short order the “appraisal” we all know will be a thing of the past.
    There will be other less expensive way these big banks will assess their risk.
    We are out of a JOB (not profession) and don’t even know it.

  2. Avatar McZero says:

    Excellent letters! Good appraisers are highly educated, ethical and proud of their profession. There are just too many incompetent bottom feeders out there and so many of us (old timers) are leaving or already have left the profession. I think something will change in the future or maybe I’m just being optimistic. VaCAP and the likes of Heather Fox are giving me some hope. Glad to see some of us are not giving up the fight and throwing in the towel.

  3. Retired Appraiser Retired Appraiser says:

    Pride has a nasty way of sending appraisers to the poor house McZero. If you think you will win back your fees from the largest lobby in the world you’re a dreamer.

    It’s over, the sooner you admit defeat the more respect you will earn from your family members.

    If you really want to kick bankers where it hurts keep an eye out for Finally finished negotiating the purchase of it today. I assure you that it will be an eye opener for the national banking industry.

  4. Avatar McZero says:

    I hear you Retired Appraiser. And yes I am a dreamer…but I’m not the only one 🙂

    I’m still waiting to hear about this new real estate related profession you commented earlier in one of your posts. Waiting to hear about this break we’ll have soon. I sure need one.

  5. Retired Appraiser Retired Appraiser says:

    We are still working on the new business model for appraisers that I promised as well as a newly designed appraiser boycott site. The near collapse of the equities market over the past month has caused delay but we’re still committed to seeing this through.

    The old appraiser’s boycott site was only operational for 2 1/2 months and was down 95% of the time. The host company proved to be completely unreliable. It was however operational long enough to show that there was huge interest in boycotting from appraisers IF they could come up with an alternate source of income. We continue to work on providing this to broke appraisers as well as ex mortgage brokers, ex Realtors, and anyone else who is in search of a new profession that is bank proof and license free.

  6. Avatar Appraiser says:

    Let’s not forget about Appraisal Ports. 150,000 reports a month for “WHAT” That’s $2,250,000. Million of lost revenue.
    Thanks Mr.Cuomo

  7. Avatar Carlos says:

    I’m not sure how some of you can work at $15/hr. I’m a LandSafe appraiser and I’ve done the math. A standard report takes me 5 hours or so to complete. LandSafe isn’t the most generous to work with but there are worse. I get paid way more than $75 a report. If it takes you 15-20 hours to complete a report, then I think you’re probably too old or in the wrong profession. Time to put on your big boy pants and stop crying. The banks and AMCs could care less.


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Appraiser’s Response to LandSafe Appraisal

by VaCAP Board time to read: 8 min