The 2010-2011 edition of USPAP will be
valid for two years, effective January 1, 2010 through
December 31, 2011. The new edition also includes guidance from the ASB in the
form of the USPAP Advisory Opinions and the USPAP
Frequently Asked Questions (FAQs)
There are some significant changes
that will affect Appraisers in the new USPAP including:
>>
Changes to
the Conduct Section of the ETHICS RULE requiring
disclosure of prior appraisals (and other services) in
the preceding 3 years.
By far the USPAP change having the
greatest potential impact on the Appraiser is a new ETHICS
RULE
requirement calling for appraisers to disclose to potential Clients,
any prior appraisals (or other services rendered) of the
subject property, provided in the 3 years immediately
preceding acceptance of the assignment.
This rule
requires disclosure prior to acceptance of the assignment
(or upon discovery - if discovered at any time during the
completion of the assignment). It is also required that the
appraiser disclose this information again in the report
Certification.
In commonly used
“form reports” such as the 1004, a supplemental certification will need to be
added to the report when making this disclosure. While prohibited from “deleting or
modifying” certifications, appraisers are not prohibited
from adding supplementary certifications that do not
constitute deletion or material alteration of existing
certifications.
If an appraiser
has provided a previous service with regard to the subject
property, the appraiser must disclose this information prior
to acceptance of the assignment (or upon discovery) and then
again in the report's certification. Appraisers
should use a statement similar in content to the following:
Sample Comments
I HAVE
PERFORMED A PRIOR APPRAISAL OF THE SUBJECT PROPERTY WITHIN
THE 3 YEAR PERIOD IMMEDIATELY PRECEDING ACCEPTANCE OF THIS
APPRAISAL ASSIGNMENT.
I PREVIOUSLY
APPRAISED THE PROPERTY, THAT IS THE SUBJECT OF THIS
ASSIGNMENT, WITHIN THE 3 YEAR PERIOD IMMEDIATELY PRECEDING
ACCEPTANCE OF THIS APPRAISAL ASSIGNMENT.
I HAVE
PERFORMED A PRIOR SERVICE (note type of service)
CONCERNING THE SUBJECT PROPERTY
WITHIN THE 3 YEAR PERIOD IMMEDIATELY PRECEDING ACCEPTANCE OF
THIS APPRAISAL ASSIGNMENT.
The requirement
does NOT specifically require the appraiser to certify that
no prior appraisals or services were provided in the
last 3 years, however, in
the spirit of the Certification, an appraiser may add
(or the Client might request) a supplemental certification that is similar in content to the
following:
SUPPLEMENTAL CERTIFICATION
DISCLOSURE OF
PRIOR APPRAISAL AND/OR OTHER SERVICES:
I CERTIFY THAT, TO
THE BEST OF MY KNOWLEDGE AND BELIEF:
I HAVE NOT
PERFORMED ANY PRIOR SERVICES REGARDING THE SUBJECT PROPERTY,
AS AN APPRAISER, OR IN ANY OTHER CAPACITY, WITHIN THE 3 YEAR
PERIOD IMMEDIATELY PRECEDING ACCEPTANCE OF THIS APPRAISAL
ASSIGNMENT.
It is likely
that when new standard appraisal forms are developed, a
statement indicating whether or not any prior
services were performed may be included.
In April of
2009, the ASB
published an excellent USPAP Q&A regarding this new
rule. It answers many Frequently Asked Questions and it is
available on the Appraisal Foundation’s website by clicking
this link:
http://www.appraisalfoundation.org/s_appraisal/bin.asp?CID=12&DID=1351&DOC=FILE.PDF
The ASB
just published an additional USPAP Q&A regarding this
new rule
2010 USPAP Q&A's #1-5
Disclosure of any prior services regarding
the subject property, when an appraiser has appraised the
property multiple times.
Disclosure of any prior services regarding the subject
property, when an appraiser has performed services other
than appraisal practice.
Disclosure of any prior services regarding the subject
property before accepting an assignment, when the client had
previously required an appraiser to sign a confidentiality
agreement.
Disclosure of any prior services regarding the subject
property before accepting an assignment, when the appraiser
only works for one client.
Disclosure requirements when an appraiser has NOT performed
services regarding a property in the prior three years.
Please click the
links above to read an informative discussion of several issues that
may arise from this new rule.
Four Quick FAQ's:
Question:
Does this new requirement prohibit me from accepting a
new assignment to appraise a property that I previously
appraised in the last 3 years?
Answer: No
Question:
When I disclose to the Client that I previously appraised
the property, they will likely ask about the prior appraised
value. Can I disclose the prior appraised value?
Answer: No
Question:
Does the initial disclosure have to be in writing?
Answer: The initial disclosure does not have to be
written, however, if the assignment is ultimately completed
it would be a good idea to have documentation (such as an
e-mail) of this
initial disclosure for the workfile.
Question:
Must I
make a disclosure statement "whether or not" I provided any
services in the last 3 years?
Answer: A strict
reading of the ETHICS RULE and related material indicates
that the appraiser must make a disclosure only if
services were provided, however, an appraiser may
decide to make (or Clients may request) a statement indicating whether or not any
services were provided in the prior 3 years.
In addition to
disclosure of prior appraisals and other services,
this change also requires disclosure to the Client, prior to
acceptance of the assignment (or upon discovery - if
discovered during the completion of the assignment), about
"any current or prospective interest in the subject
property or the parties involved." It was
previously required that the appraiser disclose this
information ONLY in the report Certification.
Other
significant 2010-2011 USPAP Changes:
>>
Changes to the
DEFINITION of
Assignment:
ASSIGNMENT:
1) an agreement between an appraiser and a client to provide
a
valuation service; 2) the valuation service that is provided
as a consequence of such an
assignment
>>
Changes to the
DEFINITION of
Signature
SIGNATURE:
personalized evidence indicating authentication of the work
performed
by the appraiser and the acceptance of the responsibility
for content, analyses, and the
conclusions in the report
>>
Changes to
the DEFINITION of
Jurisdictional
Exception
JURISDICTIONAL EXCEPTION: an assignment condition
established by applicable
law or regulation, which precludes an appraiser from
complying with a part of USPAP
>>
Changes to
the Conduct Section of the ETHICS RULE to
emphasize what an appraiser must not do – including:
“An appraiser
must not perform with bias.”
“An appraiser
must not perform an assignment in a grossly negligent
manner.”
>>
The Management
Section of the ETHICS RULE now addresses
proper use of and authorization to affix an appraiser's
signature. The implications for management of
appraiser's signature now include:
-
Signature indicates recognition of appraiser's
responsibilities in Appraisal, Review or Consulting
xx assignments (STANDARDS
1-10).
-
Authorization [by the appraiser] of other parties to affix
an appraisers signature.
- Due
care to prevent unauthorized use of an appraiser's
signature.
-
Statement that an appraiser exercising due care to prevent
unauthorized use of his or her signature
is NOT responsible unauthorized use.
-
Requirement that an appraiser not affix the signature
of another appraiser without consent.
>>
The Record
Keeping Section of the ETHICS RULE was
clarified and now includes language setting forth when an
appraiser, with custody of a workfile, must allow access and
retrieval by other appraisers with workfile obligations.
"An appraiser
having custody of a workfile must allow other appraisers
with workfile
obligations related to an assignment appropriate access and
retrieval for the purpose of"
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.
In addition, the
requirement to allow client access to the workfile for a
Restricted Use Appraisal Report was deleted.
>>
Edits to STANDARD 3:
Appraisal Review, Development and Reporting
Standard 3 has been significantly rewritten with the intent
to update and clarify the requirements for appraisal review.
It was not the intent of the ASB to create new appraisal
review requirements or introduce changes to current
practice.
First, STANDARD 3 was divided into 2 sections covering
Development and Reporting respectively, in order to be more
consistent with other STANDARDS. In addition, other
revisions were made to create a more logical and
comprehensive structure that followed the format of other
Standards.
Other revisions were made to clear up common
misunderstandings related to requirements that apply to
reviewers who are providing their own opinion(s) related to
the subject of an appraisal, appraisal review or appraisal
consulting problem.
>>
Edits to the
COMPETENCY RULE
The COMPETENCY RULE has been significantly rewritten and
expanded. The changes did not expand the obligations
of the RULE, but were intended to enhance "clarity and
enforceability." The rule clearly sets forth the
requirements for an appraiser to "exercise proper judgment
in assessing his or her competency" when considering and
completing an assignment.
The rule is divided into 3 sections:
1. Being Competent
Sets forth the requirements for competency
2. Acquiring Competency
Lists requirements for appraisers who determine that they
are not competent, but wish to accept the assignment and
become competent.
3. Lack of Competency
Clearly spells out the appraiser's obligation to withdraw
from an assignment if unable to comply with the requirements
of the COMPETENCY RULE.
>>
Edits to the
JURISDICTIONAL EXCEPTION RULE
The JURISDICTIONAL EXCEPTION RULE has been rewritten and
clarified as it was sometimes misunderstood by Intended
Users and
misapplied by Appraisers.
The RULE was reorganized and specifically identifies four
requirements
imposed on an appraiser when an assignment involves a
jurisdictional exception.
"In an assignment involving
a jurisdictional exception, an appraiser must:
1. Identify the law or regulation that precludes compliance
with USPAP;
2. Comply with that law or regulation;
3. Clearly and conspicuously disclose in the report the part
of USPAP that is voided
by that law or regulation; and
4. Cite in the report the law or regulation requiring this
exception to USPAP
compliance."
The preceding information
is a "summary" of recent changes to USPAP. Appraisers
are directed to the 2010-2011 USPAP Document for complete information
regarding these changes.
Schedule of
California Live 7hr USPAP Update Classes
We encourage you to order
your 2010-2011 USPAP document NOW, even if you are not
required
or don't intend to take a 7-hr USPAP Update Course yet.
Please save your receipt and bring
your copy of 2010-11 USPAP to a future class. AAW
does not require that you purchase USPAP twice (like some
course providers), however, we are required to verify that
USPAP students either purchase the 2010-2011 USPAP - or - have
and retain their own copy of 2010-2011 USPAP.
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