Statute of limitations for appraisals
Why You Should Keep Your Workfile for 7 to 8 Years
By Peter Christensen, Liability Insurance Administrators, www.liability.com
In 2013, many lawsuits against both residential and commercial appraisers continue to relate to appraisals performed years ago at the peak of the real estate price bubble, 2005 to mid-2008. These lawsuits are filed by borrowers, lenders, investors or the FDIC and typically allege that an appraiser’s inflated value resulted in the plaintiff borrowing, paying or loaning too much money. The plaintiff blames its loss on the appraiser and sues for damages.
When reporting a claim like this to our office, one of the most common questions a defendant appraiser will ask us is about the applicable statute of limitations. The question is usually something like: “I did the appraisal in 2005, more than five years ago. I threw out the workfile because USPAP only requires me to keep files for five years. Won’t the lawsuit be dismissed based on the statute of limitations?” The answer to that question is almost always “probably not.”
The purpose of this Claim Alert is to clear up misconceptions that appraisers read and hear regarding statutes of limitations and to advise appraisers about the importance of retaining workfiles well beyond USPAP’s bare minimum recordkeeping requirement. A good workfile is the appraiser’s defense tool kit when a claim comes in. Without that workfile in hand, the appraiser’s defense counsel will usually be hampered in his or her ability to defend a claim. Our advice on this issue is simple: keep your workfile for seven to eight years (unless a longer period is required under USPAP’s special requirement for assignments where the appraiser has provided testimony). The discussion that follows should help you understand why.
My comment: Worth reading. You can be sued at any time, for anything, by anybody. Be careful out there. Have I always kept my files for over 5 years? No. Three years ago I significantly downsized my office at got rid of a lot of appraisal files over 5 years old. Mistake!!!
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