Don’t Fear

Do not Fear the AMCs Indemnity Clause - Indemnity Clauses Are Not to Be Feared

…appraiser who claims to NOT SIGN any kind of appraiser employment agreement with an Indemnity Clause in it…

This essay is not positioned as a promotion of AMC’s, which after writing to the end I realized some may believe. I don’t like the AMC business model. But for the time being, we are stuck with AMC’s if one desires to work in the mortgage lending arena. However, some lenders are beginning to realize the AMC business model is proving unworkable and unwieldy, and are moving back to direct assignment placement, or use one of the available ‘portals’ to distribute and accept assignments and reports.

I decided to write this essay today, 9/12/2018, after having a ‘discussion’ with another appraiser who claims to NOT SIGN any kind of appraiser employment agreement with an Indemnity Clause in it. The appraiser gave me a copy of a 19 page User Agreement an AMC wants their panel appraisers to sign. I will show you the actual Indemnity Clause from it below.

If that’s also your position as an appraisal business owner – to not sign an agreement with an Indemnity Clause – prepare to get less work, possibly retire, or move onto something else to do in life. Flipping burgers or being a ‘for hire’ driver come to mind.

The fact is, Indemnity Clauses, plain and simple, protect the ‘employer’ from the bad actions of the other party, whether that person is an employee or independent contractor, as are most appraisers. Almost all employment agreements for any kind of business have such a clause.

Before discussing this further, let me offer this perspective: most appraisers who are in business for themselves generally have very little actual prior business experience. Most often, appraisers have never started, owned or managed a business. Fewer have any kind of specialized education in business. Most appraisers I have met moved into the appraising profession after being an EMPLOYEE in some other kind of business, but not a manager. Employees take orders and provide services. Seldom do employees make decisions that affect the overall business operation.

The fact that appraisers with limited actual prior business experience are fearful of Indemnity Clauses is understood, but misguided.

Let me also say that I’m not a lawyer, and don’t act as one on TV. But over my working life, I have owned and operated 4 businesses and was the general manager of another one. This started with a paper route when in elementary and middle schools, and is now as the owner of two appraisal related businesses at age 71.5. I also READ these clauses, and can comprehend what they say.

NNot long ago, some AMC’s included Indemnity Clauses that were designed to make YOU protect THEM if THEY messed up. Those clauses have been judged to be illegal, and are NO LONGER USED.

Indemnity Clauses nowadays say that if YOU mess up, you will protect (Indemnify) the Employer (such as an AMC) from YOUR bad actions as an appraiser.  That is fair and reasonable. It makes your behavior accountable. These are common and not to be feared.

The AMC’s Indemnity Clause is below. Because it is written in legalize, including a page of ‘definitions’ for various words in the entire Agreement, I have changed ‘User’ to “Appraiser.” I have also redacted the actual AMC name. The ‘Purchaser’ is the AMC’s lender client. This Clause references other parts of the Agreement, which I have not included. Just to make it easier to read, I have separated the sentences:

“APPRAISER INDEMNITY: Appraiser, at Appraiser’s expense, shall defend, indemnify and hold harmless (AMC), its affiliates, the Purchaser and their respective directors, officers, employees, agents and subcontractors, from and against any Claim brought against them to the extent such Claim:

  • alleges, directly or indirectly that any Appraiser Content or other documentation, information or material provided by Appraiser to (AMC) infringes the Intellectual Property Rights of any third Person;
  • relates to or is in respect of the appraisal(s) submitted by Appraiser and such Claim alleges that Appraiser performed or prepared the appraisal(s) negligently;
  • in relation to the injury or death of any Person, damage to or destruction of any property sustained by any Person caused by any act or omission on Appraiser’s part; or
  • is in relation to Appraiser’s use of the Services, except to the extent as (AMC) has indemnified Appraiser pursuant to Section 11(a).
  • (AMC) shall provide Appraiser with:

(i) prompt written notice of the Claim or of any allegations or circumstances known to (AMC) which could result in a Claim;

(ii) all reasonable information and assistance from (AMC) at Appraiser’s expense, which Appraiser may require to defend the Claim; and

(iii) sole control of the defense of the Claim, and all negotiations for the settlement or compromise thereof.

(c) EXCEPTIONS:  One or more of Appraiser’s indemnities set out in Section 5(f) or 11(b) may not be permissible under law in certain jurisdictions and therefore, one or more of Appraiser’s indemnities set out in Section 5(f)or 11(b) may not apply to Appraiser.”

Again, this kind of Indemnity Clause is common. It is part of normal business relationships, everywhere. Although many AMC/Appraiser employment agreements don’t come with 19 pages written in legalize – which many appraisers have trouble digesting.

After reading, and comprehending, the Clause above, and you still won’t sign it, you might want to notify area appraisers that they can expect to see an uptick in potential business from the AMC. Then toss your clipboard onto the campfire, smash your laser measurer with a sledge hammer, and back out of appraisal work. Oh… and also notify the AMC about your position.

Dave Towne
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on

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7 Responses

  1. Kimberly Pugh DeFilippis on Facebook Kimberly Pugh DeFilippis on Facebook says:

    Bad spelling and legal advise. Not a good combination.

  2. Mike Ford Mike Ford says:

    Dave, as one who is also an apparent unintended practitioner of the Noam Chomsky School of Spelling, I didn’t notice if there were any spelling errors or not. It is your message that is of importance to me.

    The clause you cited doesn’t appear onerous to me. However nearly all that I have seen also have verbiage suggesting or stating that the indemnification to the AMC by us is unlimited and could even be argued if the error or claim originates because of the amc’s actions. THOSE are clauses I’d object to.

    The only real criticism is the inference that one is unsophisticated or ignorant if they don’t ‘do what everyone else is doing’ in business today. Especially as appraisers.

    We have all heard the LO Lament “You are  the ONLY appraiser that has ever asked me for a ratified contract in over 900 years in the business. Everyone else completes the appraisals without it.”

    What others do or don’t do doesn’t dictate how I run my business. There is plenty of non loan work out there.

    Yesterday was a $1,250 day for 2 1/2 hours in court. Today will be a minimum of $1,000 to possibly $2000 for depositions. Last week was $2,500 for 5 hrs of depositions. The combined $3,750 from last weeks depo and yesterdays testimony was on top of a two part $4,000 appraisal fee already paid (the appraisal part took much longer but still not a bad rate). This isn’t a brag-too many others earn MUCH more.

    It IS however a reminder that wasting time with low paying, high maintenance clients takes away from time that can be spent far more productively. One sided indemnifications are a warning sign of such a client.

    If ALL appraisers objected to these clauses, they would disappear over night.

  3. Avatar Koma says:

    Dave, Thanks for your input, whether or not I agree with your input it is the fact that someone (Mike too) is talking about important things that effect our industry.

    As for spelling please let’s not get petty and I do see you state you are NOT a lawyer so kudos for stating that.

  4. Avatar Ralph says:

    Better yet stop being lazy appraisers and find non AMC clients, many lenders will deal with you directly on a rotational basis and many now use the Mercury platform get off your butts, hustle a bit and you can stop signing up for broken, cheap paying 2 day turn time AMC’s. But if you you keep signing up you only have yourself blame!

    • Baggins Baggins says:

      Sounds good in theory but if you approach the management platforms like an outsider, you quickly see how they promote amc’s and are tight lipped about which lenders are facilitating direct assignments. I’d bet on the other side of the desk the downside for lenders who use those systems is they’re constantly hounded by amc’s. Although mercury and others won’t share a lead for who’s direct with appraisers, it’s quite likely they share those leads with amc’s.

      More bias which injures the appraiser profession from the tech crew. These mercury fees are relentless and completely unfair. That is supposed to be lender side operational costs.

      The majority of middle man be it the clerks or the amc’s or the tech platforms, just gimmicks who do nothing to support our industry and sell us out on every turn.

      Dare you to post a list of 10 lenders whom engage in truly fair rotational direct assignment, and also pay all tech fees. It’s an impossible challenge.

      Dave, whom indemnifies me?

  5. Avatar Jan Roseberry says:

    In 1996, Owcen asked for signature on contract with indemnify language. Consulted my E & O insurer and local attorney — did not sign and have continually refused to sign. As a result, lost the second highest volume client but have never looked back — gross income has increased every year. Clients that require this are typically lower paying, pains in the butt! If appraisers refused this kind of nonsense, we would not have the problems that exist. I can just imagine paying legal fees for some of these loan officers!

  6. Avatar don says:

    Indemnity is for an insurance company. Appraisal contractors need to know that they can not only collect a fee but also collect all costs defending that fee.

    Part, a major part of running a business is collecting your fees. charging differing amounts for differing problems, charging differing amounts for similar problems, with differing clients, is a necessary talent.

    Collecting $1,250 / hour for a partial days work illustrates the week, or month later of going to the county legal library to research an collection or a property problem.

    Appraisers or any true business manager will describe the contractual duties (scope), limits and responsibilities before starting the contract. Use an ENGAGEMENT letter. Use your own TRANSMITTAL letter.

    don,  U.T.B.A. (used to be appraiser)


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Don’t Fear

by Dave Towne time to read: 4 min