How Long to Keep Files?

Most claims against appraisers involve appraisals performed within 3 years of the date the claim is made. However, as real estate values continue to decline in certain areas and as foreclosure rates remain high, we are seeing more claims about older appraisals and seeing some claims about appraisals that are more than 5 years old.

When we get a claim about an appraisal that is more than 5 years old, we often find out that the appraiser no longer has his or her work file. Now, this is perfectly understandable given that record-keeping requirements generally only specify that a work file should be kept for 5 years and given that many appraisers lack the space to store older files. However, when we have to defend an old appraisal, it's also true that the appraiser is almost always better off if he or she still has the work file. For example, the file might contain a key piece of information such as a note indicating the source of information or photographs showing the condition of the property at the time of appraisal. Accordingly, given that we are seeing more claims against appraisers and more claims based on older appraisals, we believe it is prudent for appraisers to keep their files for longer than the minimum 5 years. We generally think 7 or 8 years would provide a better margin of safety for the appraiser.