Ultimately, USPAP and the Yellow
Book have the same objective:
USPAP Objective: "To promote
and maintain a high level of
public trust in appraisal practice
by establishing requirements for
appraisers."
Yellow Book Objective: "To
protect the public interest and
ensure fair and equitable treatment
of landowners whose property is
affected by public projects."
The process to achieve the mutual
objective is substantially the
same. The two standards have
performance requirements that
demand appraisers to be ethical
and competent, and they both
require record retention to support
the appraiser’s opinions and
conclusions. The two standards
also follow a common basis,
the appraisal process, in the
development and reporting of real
property appraisals and appraisal
reviews.
The Jurisdictional
Exception Rule
There are occasions when the two
standards diverge, and when this
happens, USPAP’s Jurisdictional
Exception Rule may apply. The
Rule states, “if any applicable law
or regulation precludes compliance
with any part of USPAP, only that
part of USPAP becomes void for
that assignment.”
The differences between USPAP
and the Yellow Book that
require invocation of USPAP’s
Jurisdictional Exception Rule are
limited and according to the Yellow
Book, “the legal authority justifying
these exceptions consists of these
Standards and the federal case law,
legislation, and federal regulations
upon which these Standards are
based.” The four instances where
USPAP’s Jurisdictional Exception
Rule applies in federal land
acquisitions are:
• Exposure time.
• Existing and probable
modifications to existing land
use regulations.
• Anticipated public
improvements, located on or off
the site.
• Specific legislation and
regulations.
Exposure Time
As stated in USPAP, exposure time
is the estimated length of time that
the property interest being appraised
would have been offered on the
market before the hypothetical
consummation of a sale at market
value on the effective date of the
appraisal. Moreover, exposure time is
a retrospective opinion based on an
analysis of past events, which assume
a competitive and open market.
The Appraisal Standards Board notes
that when reasonable exposure time
is a component of the definition for
the value opinion being developed,
then the appraiser must also develop
an opinion of reasonable exposure
time linked to that value opinion.
As reasonable exposure time is a
component of market value, the
appraiser must develop a value opinion
to comply with USPAP. On the other
hand, UASFLA states that appraisers
should not link opinions of value to
a specific opinion of exposure time.
The rationale for this jurisdictional
exception is that the federal market
value definition already presumes that
the property was exposed on the open
market for a reasonable length of time,
given the character of the property and
its market.
Existing and Probable
Modifications to Land Use
Regulations
USPAP’s S.R. 1-3(a) states, “(w)hen
necessary for credible assignment
results in developing a market value
opinion, an appraiser must identify
and analyze the effect on use and value
of existing land use regulations (and)
reasonably probable modifications of
such land use regulations.”
This USPAP requirement is also a
jurisdictional exception under the
Yellow Book. The Yellow Book states,
“If the probability of a rezoning,
either positively or negatively, by the
government project for which the
subject property is being acquired,
such impact must be disregarded
under the scope of the project rule.”
The rationale for this exception is that
the government cannot be charged for
the value it created in constructing the
project for which the property is being
For more information, please visit http://www.appraisalfoundation.org/
