What’s Ahead for 2014?
BY DAVID LAYNE, SR/WA
On February 1st, the Appraisal Standards Board adopted
changes to the Uniform Standards of Professional Appraisal
Practice (USPAP). The changes become effective on January
1, 2014 and will be incorporated in the 2014-2015 edition.
The Appraisal Standards Board is also considering changes to
Advisory Opinion 13, Performing Evaluations of Real Property
Collateral to Conform with USPAP; and revisions to Advisory
Opinion 21, USPAP Compliance.
The adopted revisions to the USPAP include the following:
Assignment Results: The revised definition clarifies that
assignment results include opinions or conclusions and are
not specifically limited to the value conclusion in an appraisal
assignment or to the final opinion of the quality of another
appraiser’s work in an appraisal review assignment.
Scope of Work: The revised definition clarifies and aligns
(i.e., adds “appraisal or appraisal review”) the scope of work
definition to the Scope of Work Rule.
Preamble: Sometimes individuals work as appraisers and other
times they work in other occupations, such as a broker, attorney
or property manager. This raises questions as to when specific
USPAP Rules and Standards apply. The Preamble edits clarify
when an individual is acting as an appraiser and what activities
fall under what USPAP section.
Conduct section of the Ethics Rule: The Conduct section
requires that an appraiser disclose any current or prospective
interest in the subject property and any services performed
regarding the subject property in the past three years. The
disclosure to the client occurs prior to or when discovered, as
well as in the certification. In assignments where there is no
report, only the initial disclosures to the client are required.
There is no additional certification requirement.
Competency Rule: This requires that an appraiser be
competent to perform the assignment, or acquire the necessary
competency, or withdraw from the assignment. However, the
Competency Rule does not expressly require the appraiser to act
competently in the given assignment. The sentence “In all cases,
the appraiser must perform competently when completing the
assignment” will be added to the 2014-2015 USPAP.
Reporting Requirements: Currently, there are three written
report options for real property and personal property appraisal
assignments The updated USPAP will have two written report
options for real property and personal property appraisal
assignments (Appraisal Report and Restricted Use Appraisal
Report). The two written report options for intangible property
appraisal assignments will remain the same, as Appraisal
Report and Restricted Appraisal Report. The edits will improve
consistency among the Standards.
Standards Rule 3-5. Currently, Standard 3 does not require a date
of the appraisal review report. This oversight will be corrected with
the addition of “and the date of the appraisal review report.”
Retirement of Standards 4 and 5. With the retirement of
Standard 4: Real Property Appraisal Consulting, Development
and Standard 5: Real Property Appraisal Consulting, Reporting,
most assignments that are currently appraisal consulting will
become either appraisal or appraisal review assignments with
additional components. The additional components will still
be subject to the Ethics Rule, the Competency Rule and the
Jurisdictional Exception Rule.
Revisions to Advisory Opinion 11, Content of the Appraisal
Report Options of Standards Rules 2-2 and 8-2 and Advisory
Opinion 12, Use of the Appraisal Report Options of
Standards Rules 2-2 and 8-2: As the report options changed,
Advisory Opinions 11 and 12 required changes.
This information has been summarized from the Appraisal
Standards Board’s 2013 Summary of Actions Related to
Proposed USPAP Changes, issued on February 1, 2013. For
more information, visit www.appraisalfoundation.org.
David Layne, SR/WA
David Layne, SR/WA, is the owner of Layne Consulting
Services in New York Mills, NY. He is an Appraiser
Qualification Board Certified USPAP instructor
and has more than 30 years of experience in right
of way appraisal, appraisal review, relocation
assistance, asset management and organizational
management. With advanced degrees in business and
adult education, David holds designations with the
American Society of Appraisers and the Institute of
Assessing Officers. He is a certified general real estate
appraiser in New York State.