2010 USPAP Changes & Common USPAP/UA Interfaces Federal Agency Update Sponsored by the Appraisal Institute and the International Right of Way Assoc. 1/26/10 Las Vegas Presenter: Michael C. McCall, MAI

New Definitions Purpose: Clarification 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

New Definitions (Cont.) 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.

New Definitions (Cont.) Jurisdictional Exception: an assignment condition established by applicable law or regulation which precludes an appraiser from complying with part of USPAP

Edits to Ethics Rule Introductory Section: Reworded and the caveat for compliance by organizations involved in appraisal has shifted to the individual employed by said organizations.

Ethics Rule Edits – Conduct Conduct: –New Bullet: must not perform an assignment in a grossly negligent manner (Standards Rules already prohibit “careless and negligent manner”) –New Bullet: must not perform an assignment with bias

Ethics Rule Edits – Conduct (cont.) New Requirement: If known prior to accepting an assignment, and/or if discovered at any time during the assignment, an appraiser must disclose to the client, and in the subsequent report certification: –Any current or perspective interest in the subject property or parties involved; and –Any services regarding the subject property performed by the appraiser within the three year period immediately preceding acceptance of the assignment, as an appraiser or in any other capacity.

Ethics Rule Edits – Management –An appraiser must disclose that he or she paid a fee or commission, or gave a thing of value in connection with the procurement of an assignment. Must appear in certification and letter of transmittal. Not necessary to disclose amount

Ethics Rule Edits – Management (cont.) Misleading advertising language clarified Signature: –An appraiser must fix, or authorize the use of, his or her signature to certify recognition and acceptance of his or her USPAP responsibilities in an appraisal or review –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.

Ethics Rule Edits (cont) Confidentiality Section – edited for clarity Record Keeping Section –Requirement for client access to restricted appraisal files deleted

Ethics Rule Edits – Record Keeping (cont.) 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: –State Regulatory Agencies –Compliance with due process of law –Professional peer review –Compliance with retrieval agreements

Edits to Competency Rule Edited and expanded for clarity. Now includes: –Some discussion and description of competency Ability to define the problem Knowledge and experience to complete assignment Recognition of, and compliance with, laws and regulations

Edits to Competency Rule (cont) –Some expanded discussion of how competency may be acquired e.g. Personal study Association with others that have knowledge and experience in the subject matter Retention of others that have knowledge and experience in the subject matter

Edits to Jurisdictional Exception Rule New language : If any applicable law or regulation precludes compliance with any part of USPAP, only that part of USPAP becomes void for that assignment. –Comment: When compliance with USPAP is required by federal law or regulation, no part of USPAP can be voided by law or regulation of the state or local jurisdiction.

Edits to Jurisdictional Exception Rule (cont) Descriptions of laws and regulations edited –Law includes constitutions, legislative and court- made law, and administrative rules and ordinances. Regulations include rules or orders having legal force, issued by an administrative agency. Instructions from a client or attorney do not establish a jurisdictional exception. –Non-Compensable?

Edits to Jurisdictional Exception Rule (cont) 4 NEW REQUIREMENTS 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 –4) Cite in the report the law or regulation requiring this exception to USPAP compliance

Edits to Standard 3 Appraisal Review Standard 3 was reorganized and edited for clarification. No substantial changes to fundamental requirements.

Common Uniform Act Issues Jurisdictional Exception Hypothetical Conditions Scope of Work

Jurisdictional Exception Project Influence –Uniform Act requires appraiser to ignore influence of project in the “before value” –Question of Jurisdictional Exception Addressed in USPAP language. Discussion follows with Q&A examples

Hypothetical Conditions Valuing the property as if the project is complete creates a hypothetical condition While ignoring project influence is not a jurisdictional exception, it is a hypothetical condition Discussion follows with Q&A examples

Scope of Work FHWA requires agency to take the lead in scope of work decision. USPAP requires appraiser to take responsibility Conflict? –No, the decision is a mutually agreed upon process. Discussion follows with Q&A examples.

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