Sunday, April 24, 2011

Landsafe Contract

Ok, here is my “two-and-a-half cents” take on this, based on a very quick overview of this “agreement”:

First and foremost, entities such as Landsafe represent large corporations, and are operating and developing complex internal controls and procedures consistent with large, bureaucratic companies. Thus, LOTS of “legalese” and layers of controls, perhaps – at least to some extent – not even caring about the business model (appraisers) they are dealing with. They do not care…they are looking after and operating from their own vested self-interest point of view, and have the resources to do so.

Second, I think it is safe to assume that they do understand and recognize that most appraisers, historically, are small business owner/operators, usually working by themselves, with many working from their homes, and that these appraisers are not likely trained or experienced in understanding either these complex agreements, or they are not equipped to counter them in any effective way – either you “play their game,” or you do not. I believe they are banking (no pun intended) that appraisers will likely just accept these agreements in order to do business, or those who DO understand them and do not like them will NOT agree and thus will not be able or willing to do business with them. So, they are left with those appraisers who are willing to play by their rules.

Further, I also believe they likely recognize (and do not care) that most appraisers will not likely have the financial resources to challenge agreements like this. They are also expecting appraisers to now set up and operate a business model that will require a LOT more internal controls and procedures….at a lot more cost. How many appraisers either can do so, or will be willing to do so? and, those that go along with this put themselves at risk for repercussions if they do not.

Ironically, too, while these requirements will increase costs of running a business, AMCs like this are paying appraisers (and too many appraisers are accepting) dramatically lower fees…. Not a very good business model, ya think?? So, appraisers, IF you want to work with AMCs like this, with all of their requirements, then you darned well had BETTER expect/demand higher fees… or, go out of business very quickly (of course, I also believe that they are likely counting on this, or salivating over the fact that those who do stay in and work with them will likely be operating at the TOTAL control of the AMC!).

As for their “rules,” wow…. Appraisers had better pay close attention to these agreements, and understand what they may be getting themselves into… It appears that entities such as Landsafe are posturing themselves to totally take over the control and functioning of the “independent appraiser’s” business.

Do you really want someone else to take over what you do, and how you do it?

For example, Section 6.6 says they can audit all of your financial records at any time! Who in their right mind gives another business the right to audit how much money they make, where it comes from, etc. – other than say, the IRS??? Why should Landsafe have the right to know what you earn and how much from any source, and/or also what you are spending the money on!!!??

Section 7.1 says that, if you agree to this agreement, you (and they) are not subject to any pending governmental action which could interfere with the performance of obligations under this agreements….but, if you (or they) have already signed this agreement, my take on it is that you (or they) have ALREADY then VIOLATED this agreement, because the agreement appears to be in conflict with at least some provisions of our state’s new – pending – AMC law!

Sections 8.1 and 8.2 basically say that if you agree to accept any assignment, that you are confirming that you ARE competent to complete the assignment, geographically and property type-wise, which effectively removes any responsibility from them for having to ensure that you are competent, and putting all of the liability onto the appraiser.

Here’s a good one: Section 13.3 – you are not allowed to disclose any communications from Landsafe. So, does that mean that if you receive an email or letter from Landsafe instructing you to do something that would violate our AMC law (or any other law or USPAP rule), that you cannot disclose that to any other party, including the DOL? And, if you do, does that make you in violation of their agreement, and thus subject to a lawsuit from them for disclosing “communications” from Landsafe???

Section 13.5 also says that you are not to disclose THIS AGREEMENT to anyone either….so, for those of you who forwarded copies of this agreement to me and to any others, you are ALREADY in violation of this agreement, assuming you have agreed to/signed it.

Section 17.1 says you must maintain copies of records for 10 years!...and, an additional 10 years beyond that if involved in any litigation! This is at least twice as long as USPAP requires…so, be prepared to incur higher storage fees/costs!

Section 19 pertains to the venue for dispute resolution or any trials or legal interpretations….. TEXAS! Texas is usually a very “corporate” friendly environment…. Do they even have any AMC laws at this time??? Does this mean that they cannot be compelled to adhere to WA law (I do not know the answer to this…I am not a lawyer).

So, there is my “take” on this issue….

Stan Sidor, MAI
Vice President, Manager
Kidder Mathews
Valuation Advisory Services

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