CMB MAGAZINE cmba-achc.ca spring 2016 | 27
for each additional use of a particular appraisal
report. When a homeowner obtains a copy of an
appraisal completed for a broker or lender, the
appraiser has no control over how that appraisal
may be used in the future and thus, the appraiser
assumes undetermined additional liabilities,
over and above a simple mortgage appraisal.
Improper use
I'm oen told that the owner wants a copy of
the appraisal simply "for their files". e reality
is that homeowners are oen found using
appraisal reports for purposes other than what
the appraisal was originally completed for.
Appraisals completed for mortgage purposes
should only be used for mortgage purposes,
appraisals prepared for legal purposes should
only be used for legal purposes, insurance
appraisals should only be used for insurance
purposes, and so on. e terms of reference
for each use are quite different.
For example: An appraisal is completed for
a lender who wants the value of the significant
outbuildings to be excluded. e homeowner
obtains a copy of that appraisal and years later
uses it to determine a buyout in a marital
separation. e party being bought out assumes
the appraisal represents the full value of the
property and may not realize that the value does
not include the outbuildings. While the appraisal
meets the terms of reference of the lender,
without including the outbuildings it is not
suitable in determining a spousal buyout. As I'll
explain later, if the appraiser had not authorized
the release of this appraisal report, the person
who released it to the homeowner could be
held responsible for any losses incurred by
the parties relying on the report.
Fraud
ese days, appraisers need to be mindful about
fraud, because unfortunately, appraisal reports
are being "altered" or "edited" by fraudsters
more and more. Interestingly, the majority
of fraudulently altered appraisal reports were
obtained without the authorization of the ap-
praiser. An appraiser has a responsibility to help
mitigate appraisal fraud whenever possible.
PIPeda
e various real estate boards closely guard the
MLS comparable information and appraisers are
expected to ensure that some of this data is not
circulated to the general public. In years past,
appraisers would oen provide a broker with
a "homeowner copy" of the appraisal with the
MLS data redacted. Since the enactment of the
Privacy Act (PIPEDA) in 2004, a redacted copy
may not be sufficient to comply with the Act.
appraisal 101
e fee an appraiser charges a broker/lender
for an appraisal is roughly 50 per cent of what
that appraisal would be if prepared directly for
the homeowner. You receive a discount because
brokers and lenders are considered to be "so-
phisticated readers" of appraisal reports.
You've read many appraisal reports before,
you understand the appraisal process, you know
confidentialreport
Stakes
