Observations & Summary Comments
Changes to the 2018-2019 edition of the Uniform Standards of Professional Practice (USPAP) began with the Appraisal Standards Board (ASB) issuance of the Discussion Draft in January 2016. The twelve-page document was exploratory in nature, intended to encourage feedback from all stakeholders to facilitate identification and or clarification of potential areas of improvement within the various sections of the USPAP document.
After receiving responses to the Discussion Draft, on April 13, 2016 the ASB issued the First Exposure Draft of Proposed Changes for the 2018-2019 edition of USPAP, containing eight sections – some topics retained from the Discussion Draft and some new proposed edits.
On August 16, 2016, the ASB issued the Second Exposure Draft containing the eight proposed content changes in the First Exposure Draft with additional recommendations resulting in a total of eleven sections of proposed changes.
On December 7, 2016, the ASB issued the Third Exposure Draft containing the same eleven proposed topic changes contained in the Second Exposure Draft and one additional proposed change. Deadline for written public comments is January 27, 2017 followed by a public meeting scheduled for February 3rd in Dallas, Texas, after which the ASB intends to finalize the proposed changes for the 2018-2019 edition.
The final list of proposed changes are as follows:
- Definition of report
- Definition of assignment, intended use, and intended user
- Definitions of assumption and extraordinary assumption
- STANDARD 3 – Dividing into STANDARD 3, Appraisal Review, Development and STANDARD 4, Appraisal Review, Reporting
- STANDARD 6 – Dividing into STANDARD 5, Mass Appraisal, Development and STANDARD 6, Mass Appraisal, Reporting
- Standards Rules 7-2(c), SR 7-5, and 8-2(v)
- Standards Rule 8-3
- Advisory Opinion 37, Computer Assisted Valuation Tools
- Illustration in Advisory Opinion 21, USPAP Compliance
- Edits to Advisory Opinion 31, Assignments Involving More than One Appraiser
- Edits to Advisory Opinion 1, Sales History
- Edits to Advisory Opinion 32, Ad Valorem Property Tax Appraisal and Mass Appraisal Assignments
The following is a synopsis of the proposed edits from the most recent Third Exposure Draft and a look at some relevant changes in the proposed edits from the Discussion Draft and subsequent Exposure Drafts.
- Definition of Report. This has been an on-going issue without resolution for several USPAP updates so I was glad to see the ASB revisit the definition of report to help resolve the challenge enforcement officials and other regulators encounter when dealing with appraisers who issue multiple reports in an assignment but disavow responsibility for prior iterations because they were not transmitted “upon completion of the assignment” as specified in the current USPAP definition of Report. The proposed edits in the First and Second Exposure Drafts linked the definition of a report to when the report is communicated with a signed certification as well as revising the Record Keeping Rule addressing an appraiser’s obligations in retaining such communications.As originally proposed, when an appraiser signs a certification they are representing to the client that the document is a report. Additionally, any communication of preliminary assignment results must be clearly identified as such. Unfortunately, in the Third Exposure Draft the ASB moved entirely away from that initiative and instead changed the purpose of the edit to clarify that a client may authorize other parties to receive a report.
- Definition of Assignment, Assignment Conditions, Intended Use, and Intended User, and related edits to the Competency Rule. The purpose of the proposed edits is to clarify the time frame referred to by “at the time of assignment” within the current definition, which has caused confusion in the industry. To clarify, the proposed edit would revise the USPAP definition of assignment to only refer to the valuation service, not the agreement.
- Definition of Assumption and Extraordinary Assumption. After recommending in earlier Exposure Drafts the introduction of new terms – Specific Assumption and General Assumption, the ASB is now proposing to delete the definition of Assumption and revise the definition of Extraordinary Assumption.
- Standard 3. The proposed edits split Standard 3 into separate development and reporting standards, consistent with Standards 1 and 2, Standards 7 and 8, Standards 9 and 10. If the proposed edits are adopted, the definition of Standard 3 will be revised, Standard 3 will be the appraisal review development standard and Standard 4 will become the appraisal review reporting standard.
- Standard 6. Similar to the proposed edits to Standard 3, the proposed edits to the Mass Appraisal Standard will split into Standard 5 and 6, with Standard 5 being Mass Appraisal Development and Standard 6, Mass Appraisal Reporting.
- Standards Rules 7-2 (c ), SR 7-5, and 8-2 (v). Since the term Market Value is seldom used in personal property valuations, the ASB is proposing removing the term from these standards.
- Edits to the Personal Property Certification in Standards Rule 8-3. As currently written, each personal property specialist signing the certification is responsible for all aspects of the appraisal. The proposed revision adds disclosure of roles each appraiser has in an assignment, limiting their responsibility to their respective role, not all roles/assignment results.
- Advisory Opinion 37, Computer Assisted Valuation Tools. With the significant evolution in AVM development and applications, this Advisory Opinion (AO-37) is being created to distinguish between AVMs addressed in Advisory Opinion 18 and the new technologies that have evolved since AO-18 which was adopted by the ASB in 1997 and appeared in the 1998 version of USPAP to provide guidance in the use of AVM software.
- Illustrations in Advisory Opinion 21, USPAP Compliance. This revision involves revision of existing graphics contained within AO-21, modified to help clarify the relationship between Valuation Services and Appraisal Practice.
- Edits to Advisory Opinion 31, Assignments Involving More than One Appraiser. These edit provide illustrations to help clarify what constitutes significant appraisal assistance.
- Edits to Advisory Opinion 1, Sales History. The ASB is proposing to revise AO-1 to better clarify both the term “analyze” and appropriate application with updated examples applicable to various scenarios within appraisal practice.
- Edits to Advisory Opinion 32, Ad Valorem Property Tax Appraisal and Mass Appraisal Assignments. These edits provide clarification that ad valorem taxation assignments include both appraisal assignments and mass appraisal assignments, provide guidance and illustrations for the respective disciplines.
As previously noted, the current written comment period ends January 27th. The public meeting is scheduled for February 3rd in Dallas, Texas.
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