Indemnity Clauses – Redux
- USPAP Third Exposure Draft - August 4, 2022
- Appraisers Should Voluntarily Follow ANSI for Desktops? - July 25, 2022
- Desktops Are Being Done WRONG! - July 12, 2022
It’s been an interesting ride down the fearfulness side of many appraisers since last week’s essay I wrote about Indemnity Clauses.
But I’ve also received praise from some of the best well-known people in this industry who understood the position I took, and complemented me for presenting the info. That means far more than the diatribes I get from folks who shake in their boots and don’t bother to fully read what is presented.
As I wrote to someone last week, what I should have included in my essay, and will do so now is that if you can’t (or won’t try to) understand any kind of employment agreement presented to you by an AMC, a direct lender, or even another larger appraisal firm who wants your service for a special project, then just send the agreement to your E&O provider and ask for advice from them. If they won’t do that for you, then you’ll have to hire an attorney who specializes in labor law and understands legalize.
I really love the negative responses from appraisers who say “I will never sign an Indemnity Clause,” or “I was told that Indemnity Clauses are dangerous,”, or present to me an article written 24 years ago that warned about the extremely hazardous Indemnity Clauses that existed at the time, but have been vastly changed and modified to comply with current law since then.
Another well-known Chief Counsel for an E&O provider wrote an essay last year describing what to look for in Indemnity Clauses, including adverse issues. You need to fully read his presentation to know that Indemnity Clauses are not, by themselves, bad karma, to be avoided at all costs. These are common in all types of employment agreements these days, so you’d better get used to seeing them.
Know this: some are written better, or more simply, than others filled with Harvard Law School legalize.
Absolutely, early versions of Indemnity Clauses within employment agreements demanded that the appraiser was fully responsible to defend everyone else connected to a particular assignment, regardless of who did what. Those kinds of Indemnity Clauses have been judged faulty and are basically illegal now. Some states have laws saying so.
A primary duty of an appraiser is to be a careful and thorough analysist. Analysists capture a wide amount of data from different sources, examine it, codify and comprehend it, and then articulate what was found into a report someone else can use for a decision.
Yet what I’ve found happens so often is appraisers see one word or one sentence (in essays, articles, blog posts, etc.) that triggers a negative reaction, and then fail to fully read and comprehend what was presented, or examine all the data so that a full understanding can be made. Or maybe their line of thinking is stuck in 1994, and have not moved on.
I’ll end by repeating what I wrote above and last week: more and more of our clients are requiring appraisers sign employment agreements with included Indemnity Clauses. It’s the litigious era we live in. You either sign, or get put out to pasture.
If at first you don’t understand what is presented, get a professional to explain in plain language what you are expected to do, and what you will expect from the client. It’s in the employment agreement.