Navigating the details of appraisal documents requires a clear understanding of their purpose and implications. Among the key documents are the letter of transmittal and reliance letter, each playing a distinct role in the appraisal process. Here are some differences between the two:
What is a letter of transmittal?
A letter of transmittal is a document that accompanies another document, such as a report, contract, or proposal. It introduces the main document and provides some context or explanation for it. A letter of transmittal is not the same as a reliance letter, which is a specific type of letter used in property appraisals in Canada.
What is a reliance letter?
- A reliance letter is an extension of the original appraisal report.
- It grants authorization to a third party (other than the intended user at the time of the assignment) to use or rely on the appraisal report.
- Essentially, it allows a third party to rely on the conclusions and information contained in the original appraisal report.
When is a reliance letter needed?
A reliance letter may be requested by a lender, a lawyer, an accountant, or another party who has an interest in the property or the transaction.
Common scenarios include:
- A lender requesting to use the appraisal for underwriting purposes, even though the report was initially prepared for the property owner or a different lender.
- A report originally prepared for matrimonial purposes being used for refinancing (or vice versa).
- A report initially prepared for financing purposes being considered for estate settlement.
Need a reliance letter for a WesTech appraisal? Contact our office with the report details and the party that needs to rely on it. We will confirm what is required and the fee.
What are the risks and considerations of issuing a reliance letter?
- When an appraiser issues a reliance letter, they are exposing themselves to potential liability from both the original client and the third party.
- The appraiser must obtain consent from the original client and release from the original intended user before issuing a reliance letter.
- The appraiser must also ensure that the reliance letter does not modify or contradict the original appraisal report, and that it clearly states the scope and limitations of the reliance.
- The appraiser should charge an appropriate fee for issuing a reliance letter, as it involves additional work and risk.
As you can see, a letter of transmittal and a reliance letter are two different documents with different purposes and implications. If you need an appraisal report or a reliance letter for your property, you can rely on Westech Appraisal's expertise and local market knowledge. We are your trusted appraiser of choice, offering you a high-quality service and a professional experience. Contact us today to learn more about our appraisal services and how we can help you.
