The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian realtors were yesterday said to be “very concerned” over a contract they are being required to sign by a Canadian-headquartered company that is taking over the appraisal management process for Scotiabank (Bahamas) and Royal Bank of Canada.

Tribune Business was told that Bahamian realtors, who conduct appraisals of residential property values, were being asked to sign contracts that would completely “indemnify” NAS Valuations Inc against claims and lawsuits initiated by both themselves and appraisal clients.

Real estate sources said other objectionable clauses in the contract, which was heavily slanted in NAS’s favour, included those that required the Bahamian realtor/appraiser to pay all its legal costs should homeowners (any third parties) file a lawsuit against it.

Tribune Business has a seen a copy of the contract that NAS, which is operating via a Barbados-based subsidiary, has sent to Bahamian appraisers in relation to its plans to “operate an Internet-based valuation management system throughout Bahamas”.

The contract, once signed, will give appraisers access to NAS’s system, which is designed to serve “third party clients requiring appraisals and progress inspections on an ongoing basis”.

Those ‘third party clients’ are understood to be the two Canadian banks, Scotiabank (Bahamas) and Royal Bank of Canada, who have both outsourced management of mortgage-related property appraisals to NAS.

Tribune Business sources yesterday expressed concern about whether Bahamian law and regulations allowed NAS to even operate in this nation, given that the Real Estate Act says only Bahamian nationals and foreign permanent residents with a right to work can be licensed as realtors.

“Does this company have a right to do real estate business in the Bahamas?” one realtor source, speaking on condition of anonymity, told this newspaper.

“Also, an appraiser under that contract cannot sue NAS. If they are joined in a legal action, NAS can hire an attorney to represent both it and the realtor at the realtor’s expense. NAS can also come to your office and inspect your files.”

“It’s a contract that we’re not happy with. I don’t know of anybody in favour of it,” said another realtor.

Tribune Business was also told that when NAS first applied for a Business Licence in the Bahamas, it held itself out as a computer software/services company, rather than an appraisals management firm.

Now, rather than Bahamian appraisers dealing directly with Scotiabank and Royal Bank of Canada on property appraisals, they will interface with NAS, who will collect their work, submit it to the bank and be responsible for paying them.

In addition, Tribune Business was told NAS will also seek to ‘categorise’ Bahamian appraisers according to their expertise and specialisation, dividing them into those who will do high, mid and low-end residential valuations respectively.

NAS had been aiming to launch its Internet-based system by mid-November 2013, but this has been pushed back due to realtor “concerns”.

“NAS has been advised that the members of BREA have further questions with respect to the execution of the... agreement provided to you,” the company acknowledged.

“While we have targeted mid-November as the launch date, NAS and its clients appreciate the importance of allowing you and BREA to bring forth any and all concerns.”

An October 23 e-mail from the Bahamas Real Estate Association (BREA) confirmed this, saying: “Members of BREA have raised concerns over the terms of the NAS contract.

“The Appraisal Committee is working for BREA Members to create a list of concerns that members have brought to their attention. Members that have concerns are asked to please send them to the Appraisal Chair.

“In the interim, BREA has asked Scotiabank and RBC to suspend asking BREA members to sign up until the concerns of our Membership have been addressed.”

Franon Wilson, BREA’s president, when contacted by Tribune Business confirmed the concerns of his appraiser members, although he declined to go into detail.

“It’s one that has a lot of appraisers very concerned,” he said of the situation. “They are very satisfied with the relationship they have built up with the banks, and this is putting someone in between them.”

Praising the relationship that BREA had established with both Scotiabank and Royal Bank, Mr Wilson added: “BREA advised both banks that some members had concerns about the agreement, and we advised them we needed time to consult with the members.”

Michael Lightbourne, Coldwell Banker Lightbourne Realty’s president, and head of BREA’s appraisal committee, declined to comment apart from acknowledging that “there are concerns” over the NAS contract.

He added that he wanted to avoid public comment until further discussion with both NAS and its client banks.

BREA is understood to have subsequently hired an attorney to review the NAS contract on its members’ behalf.

Tribune Business has seen a copy of the NAS contract, which confirms how the company can select an attorney to represent both it and the appraiser, and require the latter to pay all legal costs.

“In the event of any third party claim against NAS, NAS shall have the right but not the obligation, exercisable within a reasonable period of time following receipt of the third party claim, to select counsel and to direct appraiser to retain counsel, and instruct counsel to defend the claim,” the contract says.

“Upon selection of counsel, NAS shall have the option but not the obligation to instruct counsel without liability or obligation to appraiser. All costs in relation to NAS’ defence of the third party claim shall be borne solely by appraiser.

“Appraiser may not agree to any settlement of any claim brought by any third party that results in any liability or obligations being incurred by NAS without NAS’ prior written consent.”

Cleveland Palacios, who together with Fred Bowe was said to be Scotiabank’s ‘point man’ on the issue, confirmed the relationship with NAS and the appraisal outsourcing.

He declined to comment further, referring Tribune Business to Scotiabank (Bahamas) spokesperson, Leah Davis. She was working on a response from the bank as this newspaper went to press, while its managing director, Kevin Teslyk, did not respond to an e-mail seeking comment.

Jan Knowles, Royal Bank’s spokesperson, also did not respond to voice messages and e-mails seeking comment.