The Appraisal Institute recently announced that it has published new guidance to help appraisers better understand their role when retained in an arbitration case.
The Institute’s new Guide Note 16: Arbitration addresses how real estate valuation professionals may provide services in arbitration matters as either arbitrators or expert witnesses. To recap, arbitration is an alternative dispute resolution process where the parties in dispute agree to present their case to one or more arbitrators who render a final resolution rather than try their case in court.
According to The Appraisal Institute’s press release, the new Guide Note explores what services a valuation professional can provide in an arbitration matter – and what standards and ethnical rules apply to the different services. The Guide Note explains that an appraiser (or “valuer”) providing a service in an arbitration case may potentially be acting within one of the three “circles” presented in the Uniform Standards of Professional Appraisal Practice’s (USPAP) Advisory Opinion 21:
- Performing an appraisal and/or appraisal review in compliance with certain rules and standards.
- Making arbitral decisions communicated in awards while acting as an appraiser so that certain rules apply, but no standards apply.
- Making arbitral decisions communicated in awards while not acting as an appraiser so that neither rules nor standards apply, other than the duty to not mislead.
Guide Note 16: Arbitration further addresses the expectation of the potential client regarding the appraiser’s role in the arbitration process, and USPAP’s Advisory Opinion 21 also explores this expectation: “In summary, expectation (of the intended user) is the basis for determining when an individual providing a valuation service is acting as an appraiser.”
As stipulated in the new Guide Note, this expectation of the potential client controls the decision – not the intent or preference of the appraiser. The client seeking an appraiser to serve as an arbitrator would do so because of the appraiser’s education, knowledge, and independence.
To view The Appraisal Institute’s new Guide Note 16: Arbitration in its entirety, click here.