Letter of Transmittal x Reliance Letter
What is a letter of transmittal? What is a reliance letter?
Are they the same?
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.
• 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.
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.
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.
• 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.