USPAP - Frequently Asked Questions!
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Friday, April 14, 2023 in Ask an Instructor, Education
The Uniform Standards of Appraisal Practice (USPAP) materials include a lot of Frequently Asked Questions! There are currently 367 FAQs in the 2020-2021 version of USPAP which has been extended through December 31, 2023. These are included as guidance from The Appraisal Standards Board (ASB) of The Appraisal Foundation to respond to questions raised by appraisers, enforcement officials, users of appraisal services and the public to illustrate the applicability of USPAP in specific situations. While the answers provided may not represent the only possible solution to the issue presented, they can come in handy. They are also indexed, so if you are using the PDF version of USPAP they are easy to find so you can see if there’s an FAQ that addresses your question.
A USPAP instructor’s secret is that we often look to FAQs to provide guidance when asked specific questions. They are neatly organized in groups. The first nine FAQs address USPAP generally, then sections group FAQs related to the Ethics Rule, Record Keeping Rule, Competency Rule and Jurisdictional Exception Rule.
Numbers 127 to 264 look at appraisal development. Many of the FAQs reinforce key definitions in USPAP, like 128 which addresses the difference between clients and intended users by relying on USPAP definitions for these two terms. The client is the party or parties who engage an appraiser by employment or contract in a specific assignment. An intended user is the party identified by the appraiser, based on communication with the client at the time of the assignment, as a user of the appraisal or appraisal review. The FAQ reinforces that a party receiving a copy of an appraisal is not automatically an intended user, which is something an appraiser may need to explain to their client. The level of detail an appraiser includes in an appraisal report may differ based on the needs of the specific client or the intended user of the report. For some types of reports, the intended user and the client might be the same entity.
FAQs 265 to 334 look at appraisal reporting, and the FAQs end with questions on appraisal review and other services an appraiser may offer while acting as an appraiser. A new FAQ in the current 2020-2021 version of USPAP addresses a personal property assignment with multiple appraisers and how appraisers might handle a certification. FAQ 292 states:
Question: I have been hired to coordinate the appraisal of personal property for a large estate. The project will involve four different appraisers. I will appraise the furniture, decorative arts, and residential contents but will subcontract with three other specialty appraisers to appraise the gems and jewelry, fine arts, and automobiles. What is the correct way to prepare the signed certification?
Response: The Comment to Standards Rule 8-3(b) [the reporting standard for personal property] states that appraisers with different specialties may accept responsibility for the parts of the appraisal that are specific to their specialty. USPAP does not prescribe a single correct way to prepare the certification. If the terms of the certification are identical (i.e., if all appraisers have inspected and if none have performed any services within the prior three years), one way to accomplish this would be to state a limitation by each appraiser’s signature (e.g., John Doe for furniture, David Jones for automobiles). Another way to address this would be to include separate certifications from each of the appraisers beginning with language such as, “For the furniture in this appraisal, I certify that,to the best of my knowledge and belief…” Another option is for all appraisers to sign the certification and state in the report who worked on what. Appraisers must remember that in addition to the certification requirement, the Comment to Standards Rule 8-3(b) states, “the role of each appraiser signing the certification must be disclosed in the report.” Clear disclosure of each appraiser’s role helps to ensure that the report is not misleading.”
This type of scenario has been discussed by students in ISA’s recent 7-Hour USPAP Update courses, and it seems that most appraisers prefer to have separate certifications. These make it clear to the client and intended users who worked with what parts. This FAQ also speaks to the flexibility seen in USPAP to give appraisers wiggle room in their reporting so that it meets the needs of each specific project.
FAQ 292 addresses appraisers and is set in a framework of signatures in USPAP – when an appraiser signs a certification, that appraiser accepts full responsibility for all elements of the certification, for the assignment results, and for the contents of that appraisal report. A descriptive element of “who did what” in a certification allows appraisers to accept responsibility just for the parts that relate to their specialty, while separate certification statements can serve a similar purpose.
When viewed as a PDF, USPAP has 368 pages. Most of that is guidance to help appraisers, and those who rely on appraisers, to better understand our practices, both in development and reporting. USPAP FAQs are not a part of USPAP. They provide guidance to show the applicability of Standards – including Standards 7 and 8 which address development and reporting in the appraisal of personal property – and offer advice from the ASB for resolving specific appraisal issues.