The Appraisal Standards Board (ASB) of the Appraisal Foundation has officially released its Third Exposure Draft of proposed changes for the 2016-2017 edition of the Uniform Standards of Professional Appraisal Practice (USPAP), and is seeking public comments on its changes by no later than October 10th.
The Third Exposure Draft focuses on several revisions to the current USPAP guidelines, which include—but are not limited to—the following:
New Definition of “Report”:
The proposed changes to the USPAP’s definition of “Report” are designed to remove the linking of a report to the completion of an assignment, and to highlight the need for a signed certification. If approved, the USPAP’s new definition of “Report” will be as follows:
“Any communication, transmitted to the client or to a party authorized by the client, of an appraisal or appraisal review that includes a signed certification. Comment: Oral report requirements specify that a signed and dated certification be included in the work-file.”
Changes to Report Drafts and the Record Keeping Rule:
The proposed modifications would require appraisers to keep track of communications when they are in contact with the client prior to the submission of the final appraisal report. In addition, the ASB also proposed the following changes:
- Any draft or preliminary communication of assignment results that are not considered to be a final report by the appraiser must be clearly outlined as such. They must also not include a signed certification.
- Replace the word “any” with “all” to help clarify that the appraiser must retain the true copies of all written reports.
- Add a new requirement to the work-file content requiring appraisers to be aware of and comply with all regulations in addition to the USPAP that apply to a given assignment.
- Communications of preliminary opinions and conclusions must be retained in the work-file until superseded by a subsequent communication or report.
- Summaries of oral communications of assignment results must be retained in the work-file until superseded by a subsequent communication or report.
Revisions to Standard 3:
The ASB would overrule a requirement in Standard 3 that requires reviewers to report the effective date of an appraisal review. In addition, the ASB would also align issues in Standard 3 with its other Standards by issuing the proposed changes highlighted below:
- Include a certification requirement in Standard 3-5.
- Add language to Standard 3 to address report forms.
- Change Standards Rule 3-2(d) to better align with Standard 1 by requiring that the property rights appraised (if any) in the work under review be identified by the review appraiser.
Retire All Statements on Appraisal Standards:
The ASB would retire the five remaining Statements on Appraisal Standards, which include the Discount Cash Flow Analysis, Retrospective Value Opinions, Prospective Value Opinions, Reasonable Exposure Time in Real Property and Personal Property Opinions of Value, and Identification of Intended Use and Intended Users.
Revisions to the Confidentiality Section of the Ethics Rule:
Appraisers would be required to take reasonable steps at the onset of an assignment to ensure that clients know that it is their responsibility to identify confidential materials. Clarifications have also been made as to how appraisers must protect confidential information within an office setting.
In addition, the ASB also includes proposed changes that would allow for more open discourse between appraisers when discussing the physical characteristics of a subject property.
To see a full copy of the ASB’s Third Exposure Draft, click here.