Five changes in the 2010-2011 USPAP you should know about.
Prior Assignment Disclosure
* An appraiser must disclose to the client and in the Report Certification any services regarding the subject property provided as an appraiser or in any other capacity during the three years prior to accepting a new assignment. (Management Section of the Ethics Rule)
* The disclosure must be made prior to acceptance or upon discovery.
* Disclosure does not require identification of the prior client or appraisal results.
* The disclosure to the client must be documented in the appraiser's workfile.
* This is not a prohibition against reappraising a property.
* Why this is important: This is a new requirement! The disclosure will allow a prospective client to know, at the time of the assignment, whether the appraiser is performing, or has performed other services with regard to the property, such as property management, leasing, brokerage, auction or investment advisory services. This will allow the client to determine potential conflicts, if any. The client should have an opportunity to evaluate this information before the appraiser is engaged.
* What you need to do: Be sure to notify clients when necessary and make the appropriate disclosure in the Certification. For example: "I have appraised this property in the three years prior to accepting this assignment."
Use of an Appraiser's Signature
* An appraiser can authorize the use of his or her signature to certify recognition and acceptance of his or her USPAP responsibilities. (Management Section of the Ethics Rule)
* An appraiser may authorize the use of his or her signature only on an assignment-by-assignment basis.
* An appraiser must not affix the signature of another appraiser without his or her consent.
* An appraiser must exercise due care to prevent unauthorized use of his or her signature. An appraiser exercising such care is not responsible for unauthorized use of his or her signature.
* The language that a signature is a digitized image controlled by a personal identification number, or other media, where the appraiser has sole personal control of affixing the signature was eliminated from the Definitions section.
* Why this is important: The use of signatures has been a heated topic with lots of misunderstandings. The change seeks to clarify and establish requirements for appropriate management of an appraiser's signature. On a practical basis, appraisers are not in violation of USPAP if their electronic signature is misappropriated when the appraiser has used due care to protect the signature image.
Workfile Access and Retrieval
* An appraiser having custody of a workfile must allow other appraisers with workfile obligations related to the assignment appropriate access and retrieval. Specifically covered is access and retrieval for submission to state appraiser regulatory agencies; compliance with due process of law; submission to a duly authorized professional peer review committee; or compliance with retrieval arrangements. (Record Keeping section of the Ethics Rule)
* Why this is important: The change clarifies that appraisers must cooperate with other appraisers who participated in the assignment, including trainees, to allow workfile access. This is a big deal for appraisers who leave an office and need old files.
* The obligation to allow the client access to the workfile for a Restricted Use Appraisal Report was removed from the Record Keeping section of the Ethics Rule.
* Why this is important: While seldom exercised, clients have the right to your files when you prepare a Restricted Use Appraisal Report. However, this requirement was removed because client access to the workfile is unnecessary in light of the existing requirement that all appraisal reports contain sufficient information to enable the intended users of the appraisal to understand the report properly.
Competency Obligations Specified
* Competency requires
i. the ability to properly identify the problem to be addressed;
ii. the knowledge and experience to complete the assignment competently; and
iii. recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment. (Competency Rule)
* For assignments with retrospective opinions and conclusions, the appraiser must meet the requirements of the Competency Rule in effect at the time of the assignment, rather than as of the effective date.
* If the assignment cannot be completed competently, the appraiser must withdraw from the assignment. (The appraiser can still use personal study, association with an appraiser, or retention of others to acquire necessary competency.)
* Why this is important: The changes make explicit some of the unstated obligations of competency. The identification of the requirements for competency provides a framework for determining when an appraiser is competent for an assignment.
* The requirements for review appraisal have been entirely rewritten. The revisions
i. separate and expand the development and reporting requirements;
ii. create a more logical and comprehensive structure;
iii. provide flexibility for the broad and diverse nature of appraisal review; and
iv. organize and clarify the requirements that apply to a reviewer providing their own opinion of value, review opinion or consulting conclusion. (Standard 3)
* The new Standard does not change current appraisal review practice or create new appraisal review requirements.
* Why this is important: The requirements for review appraisal were not consistent with the other requirements of USPAP and not always applicable to contemporary appraisal review practice.
In addition to the changes to the Ethics and Competency Rules and Standard 3 outlined above, appraisers are advised to review the Jurisdictional Exception Rule. The extensive changes are intended to improve clarity and understandability, but only a few obligations were created or removed. For more detailed information on the changes to USPAP, visit The Appraisal Foundation Web site at www.appraisalfoundation.org.
By Gregory J. Accetta, MAI
GREGORY J. ACCETTA, MAI, is a former chair of the Appraisal Standards Board, which is responsible for amending and interpreting the Uniform Standards of Professional Appraisal Practice. He is a Certified USPAP Instructor and an appraisal education developer for the Appraisal Institute, Risk Management Association and MBREA. His appraisal practice is focused solely on providing independent commercial appraisal review services. He can be reached at 401-527-3407 or GAccetta@cox.net.
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|Author:||Accetta, Gregory J.|
|Publication:||Valuation Insights & Perspectives|
|Date:||Sep 22, 2009|
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