8 VALUATION • Q3 2017 www.appraisalinstitute.org
PROTEC TING YOUR BUSINESS AND YOURSELF
Serve and protect
What supervisors need to know about trainees and liability issues
by Peter T. Christensen
There are renewed discussions about the use of appraiser trainees, and they usually focus on the dearth of trainees entering
the profession and how to improve on the
trainee experience. These are very worthwhile
conversations. It’s also important to have a conversation about potential liability issues for
appraisers who supervise trainees so that the
experience is constructive for all parties.
Unfortunately, that wasn’t always the case.
During the heyday of the real estate bubble
we saw situations where appraisers simultaneously supervised 10 or more trainees, and in
some instances supervisors did little more than
scan and sign reports completed by trainees.
Between 2005 and 2007, nearly 25 percent of
claims reported to us involved work done by
trainees. Since then, regulation and increased
lender and state scrutiny have tamped down
these kinds of situations, and the Appraiser
Qualifications Board has implemented standards limiting the number of trainees per
supervisor to three.
Let’s begin that discussion on trainee liability issues.
Supervisors bear the brunt of potential professional liability. Each appraiser who signs an
appraisal report is accountable, which means
that both supervisors and trainees are potentially liable for deficiencies in the report. However, when lawsuits are filed over appraisals
performed with trainee assistance, we find that
the supervisor appraiser and the appraiser’s firm
are almost always named as defendants, but not
always the trainee. This means the burden of
the lawsuit many times falls on the supervisor.
Maintain great work files. On average, a claim is
made 28 months after an appraisal is com-
pleted, by which time a trainee appraiser who
prepared the report in question often has moved
on. For this reason, it’s crucial that supervisors
require trainees to maintain work files that
should be more robust than what’s required by
the Uniform Standards of Professional Appraisal
Practice. Supervisors must have the required
access to work files through the duration of the
statute of limitations established by states for
filing such lawsuits; duration varies by state, but
work files should be accessible for a longer
period than what’s required by USPAP.
Supervisors should require trainees to main-
tain the following items for each assignment:
• Clear notes taken during the field inspection
that address special issues or problems with
the subject property, including property condition and any information supplied by the
• Notes of all conversations with agents, brokers, inspectors and clients.
• Information from public records searches.
• Data for comparable sales used in the report,
with notes detailing the reasons for their
• Data for comparable sales not used in the
report, with notes detailing the reasons for
• All photographs of the property, not just
those included in the report. Digital photography often is stored outside the literal work
file, so make sure it’s safe and easily accessible.
Get the right E&O insurance. Some popular E&O
policies (usually those labeled “individual only”)
do not provide coverage for supervisors who
sign appraisals prepared by trainees. Individual-only policies typically exclude the supervision
of work by other appraisers. Accordingly, if a
supervisor with this policy is sued over an
appraisal completed by a trainee, there is no
coverage for the claim.
who signs an
which means that
and trainees are
in the report.