With the passage of Dodd-Frank many states are working to enact legislation that requires appraisal management companies (AMC) to register with the appropriate state regulatory body. While many states have already passed AMC legislation other states are trying to determine what language should be included.
A key issue that has come to light recently is the adoption of indemnification language by AMCs. This is an attempt to require that independent appraisers indemnify or hold harmless AMCs. LandSafe is one example of an AMC that includes such language in their agreements with independent appraisers. States considering AMC legislation should consider adding language to the bill that would prohibit one-sided indemnification clauses. More than a dozen states already have language in signed legislation.
A sample from Vermont legislation reads “[r]equiring an independent appraiser to enter into an agreement requiring the independent appraiser to defend, to indemnify, or to hold harmless the registrant or other third party for the development, use, or contents of a real estate appraisal. This subdivision shall not affect a licensee’s or a registrant’s professional liability to consumers or to other licensees or registrants.”
More information will be available soon on this blog and in the GAD Reaction Center.