2016-17 Edition of USPAP to Include Revisions

Approximately two years ago, the Appraisal Standards Board of The Appraisal Foundation began the revision process for the Uniform Standards of Professional Appraisal Practice. The process

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included the preparation and release of four exposure drafts, numerous public meetings and the review of extensive comments from interested parties.

The Appraisal Institute submitted comments on each exposure draft and attended all of the ASB’s public meetings. On Feb. 6, 2015, the ASB concluded the USPAP revision process with the adoption of revisions to USPAP that the ASB does not anticipate will significantly change the way that appraisers practice. The revisions that will become effective Jan. 1, 2016 include (revisions indicated in italics):

  • Definitions
    • The following sentences will be added to the Confidentiality section of the Ethics Rule: “An appraiser must take reasonable steps to safeguard access to confidential information and assignment results by unauthorized individuals, whether such information or results are in physical or electronic form. An appraiser must ensure that employees, co-workers, sub-contractors, or others who may have access to confidential information or assignment results, are aware of the prohibitions on disclosure of such information or results.”
    • The following sentence will be added to the definition of Assignment Results: “Physical characteristics are not Assignment Results.”
  • Record Keeping Rule:
    • The Rule will be revised to state, “The workfile must include true copies of all written reports, documented on any type of media.” The revision is the word “all” replaced the word “any”.
    • The Rule also will be revised to state, “The workfile must include all other data, information, and documentation necessary to support the appraiser’s opinions and conclusions and to show compliance with USPAP, or references to the location(s) of such other data, information, and documentation.” The revision is the addition of the words “data, information and.”
  • Standard 3
    • The Standard 3 requirement to identify and report the effective date of an appraisal review will be deleted.
    • Some minor revisions will be made to wording in Standard 3 so that it is more consistent and parallel with the wording used in other USPAP Standards.
  • Reporting Standards
    • Language in the reporting standards (Standards 2, 6, 8 and 10) will be revised to provide that an appraiser must “state the identity of the client, unless the client has specifically requested otherwise….”
    • Language in the Comments to certain reporting standards will include a requirement that in situations where the client requests that the client’s identity be withheld from the report, the appraiser must state in the report that “the identity of the client has been withheld at the client’s request.
  • Standards 2 and 7
    • The word “reasonable will be added to the Comments at the end of Standards Rules 1-2(c) and 7-2(c) so that the Comments will provide: When reasonable exposure time is a component of the definition for the value opinion being developed, the appraiser must also develop an opinion of reasonable exposure time linked to that value opinion.”
  • Statements
    • The five Statements related to appraisal standards that appear in the current edition of USPAP will be retired. A minor amount of Standards related content from the Statements will be added to the Standards Rules and some of the guidance material from the Statements will be moved to Advisory Opinions, specifically:
      • Advisory Opinion 7: Marketing Time Opinions will be revised;
      • Advisory Opinion 33: Discounted Cash Flow Analysis will be added;
      • Advisory Opinion 34: Retrospective and Prospective Value Opinions will be added;
      • Advisory Opinion 35: Reasonable Exposure Time in Real and Personal Property Opinions of Value will be added; and
      • Advisory Opinion 36: Identification and Disclosure of Client, Intended Use, and Intended Users will be added.

What will not be in the next edition of USPAP are any revisions to address long-standing confusion regarding draft reports. After exposing several potential revisions to USPAP that would address this issue, which the ASB has admitted is a problem, the ASB ultimately decided to take no action. In a recent interview with Valuation Review magazine, Barry Shea, the current ASB chair, stated that the issue of draft reports “may or may not be on the table the next go-round, but we don’t know yet.”

Learn more about the 2016-17 USPAP updates on the Appraisal Institute’s website.