Under California appraiser law, does an appraiser have to use an engagement letter for each appraisal assignment?
The answer is “no.” A California appraiser is not obligated to use an engagement letter or other agreement for any kind of assignment (lending or non-lending) under the Real Estate Appraisers’ Licensing and Certification Law or any regulation adopted by the Bureau of Real Estate Appraisers (BREA).
However, there are two potentially relevant requirements pertaining to engagement letters:
- If there is an engagement letter for an assignment, an appraiser is obligated to retain a copy and, if requested by BREA, produce it. That is required under Business and Professions Code section 11328 in the appraiser law. Many appraisers fail to keep copies of them in their work files.
- An appraisal management company must use an engagement letter to retain an appraiser for an assignment and the letter must state the terms of payment. That’s in section 11345.3. The burden is on the AMC, not the appraiser to comply with that requirement.
Even if not required, engagement letters are important! I suggest you develop and use good ones that are adjusted for different types of assignments. For that reason, I offer sample agreements in my new course: Federal and California Laws and Regulations with Real World Relevance. The class also satisfies BREA’s requirement for four hours of CE on federal and California law and regulations.
