Is a Bank required to transfer an Appraisal

We had an applicant who decided to use another bank after the appraisal was completed. The other bank has requested the appraisal be assigned to them. The appraiser who did the report stated as the intended user “the intended user is XXXXX and its assigns and nobody else.” We are willing to transfer the report and have reached out to the appraiser to asked him to remove or change the language. The appraiser states that he can’t change the language because he does not want his appraisals “being passed” around; he does not know the institution and has not been engaged by them before; and that the E&O insurance his company is under will not allow him to change it. The appraiser did state that if he was engaged by the other lender, he would be happy to offer his services at a very reduced price. The question, can we transfer the appraisal regardless of the intended user statement made by the appraiser and against the wishes of the appraiser? The other bank and borrower are not wanting to order another appraisal.

No, you cannot provide the appraisal or a copy of it to the other bank unless state law requires that appraisals be transferable. The appraisal came with the prohibition, and you could be sued if you violate the prohibition. Explain that to your former applicant. Be willing to accept their request to come back to your bank for the loan.

For the future, if your bank wants to be able to transfer appraisals, be sure to make that requirement part of your appraisal engagement letter. Don't be surprised at the number of appraisers who will not accept such a provision.

It has been a while since I went to law school but this statement: "the intended user is XXXXX and its assigns and nobody else.”

If you are XXXXX that gives you the right to assign the appraisal to anyone you feel like. Once the appraisal is delivered to you - you now own it and not the appraiser.

I interpreted "assigns" to be a party to which the loan is transferred. That may have been incorrect, so I defer to Randy's opinion.