"The Appraisal Standards Board, an independent board of The Appraisal Foundation, published the Fourth Exposure Draft of proposed changes for the 2020-21 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) today. Among several important changes are eased reporting requirements for Appraisal Reports, and allowing multiple intended users in Restricted Appraisal Reports."
Click HERE to read or download the 4th exposure draft.
UPCOMING
WEBINAR:
Learn more about the proposed changes in the Fourth Exposure Draft in this live webinar with Wayne Miller, Chair of ASB, and John Brenan, Vice President Appraisal Issues at The Foundation. Ask questions and get answers. Stay informed and register for this free webinar!
March 14, 2019, 1:00 PM ET
Click HERE to Register for the webinar on the 4th exposure draft.
The block quote below has the executive summary on the 4th exposure draft (please excuse the formatting, as for some reason it did not paste correctly, and the editor is giving me problems, so the section and sentence breaks are continuous). To read the follow the links.
The ASB reports
Source: The Appraisal Foundation/ASBFourth Exposure Draft of Changes for the 2020-21 USPAP Executive Summary Fourth Exposure Draft of Proposed Changes for the 2020-21 USPAP
This Executive Summary is intended to be a brief discussion of each section in the document. Because some readers may not have an interest in every section of the document, the Executive Summary gives an overview to help readers find the sections related to their specific interest(s).For detailed information on proposed revisions and the reasons for the proposals, the ASB encourages readers to review the rationale as well as the specific changes being proposed. As always, the ASB requests readers to submit any relevant comments.Section 1 – STANDARDS (Reporting Options and Comments in Standards Rules)Reporting OptionsIn a move intended to create greater flexibility for how appraisers report assignment results, the ASB proposes two significant revisions to the requirements for Restricted Appraisal Reports in STANDARDS 2, 8 and 10. If adopted, the new requirements will permit additional intended users besides the client for a Restricted Appraisal Report, as long as the other intended users are namedin the report (i.e., not merely identified “by type.”) The second proposed change for Restricted Appraisal Reports is a simplification of warning language that will no longer include a reference to the appraiser’s workfile. In addition to the two new proposed revisions to requirements for a Restricted Appraisal Report, the ASB continues to propose a modified version of revisions to the reporting requirements for an Appraisal Report in STANDARDS 2, 8 and 10. The modifications from the Third to the Fourth Exposure Draft take into account both the reinstatement of the Restricted Appraisal Report and also some edits that were suggested in recent comments to the ASB. In sum, the ASB is proposing a set of changes that are more narrowly focused than those proposed in earlier exposure drafts, which delineated one set of minimum reporting standards that would apply to all appraisal reports. The intent remains to ensure that minimum reporting requirements continue to protect public trust in the appraisal profession, while not creating impediments for appraisers, as they continue to adapt to significant changes in the valuation profession. The ASB intends to further examine the concept of a single set of minimum reporting standards for future editions of USPAP because comments to the exposure drafts have indicated significant support for this idea. Comments in Standards RulesIn the First and Second Exposure Drafts the ASB proposed several actions related to Commentsin the Standards Rules. These actions included deleting some Comments that had duplicate requirements clearly stated elsewhere and incorporating others directly into the Standards Rules. The responses to the First and Second Exposure Drafts indicated these actions were helpful in increasing the clarity of USPAP. In response to stakeholder input, the Third Exposure Draft
Fourth Exposure Draft of Changes for the 2020-21 USPAP5 TABLE OF CONTENTSincluded a proposal to revise the structure of the long Comment following the Certifications and to reinstate some of the Comments that had been proposed for deletion. This section of the Fourth Exposure Draft has reinstated some language from the deleted Comments in response to stakeholder input.Section 2 – SCOPE OF WORK RULE After considering responses to the First and Second Exposure Drafts regarding proposed modifications to the Disclosure Obligations section of the SCOPE OF WORK RULE, in the Third Exposure Draft the ASB proposed to add language to the Disclosure Obligations section of the SCOPE OF WORK RULE to address the flexibility afforded the appraiser in the disclosure of scope of work. This section of the Fourth Exposure Draft contains only one change, which proposes the “information disclosed” instead of the “amount of information disclosed.”Section 3 – COMPETENCY RULEIn earlier exposure drafts, the ASB proposed to move the following important Comment from Standards Rules 1-1, 3-1, 5-1, 7-1, and 9-1, and add a slightly edited version to the COMPETENCY RULE. In response to comments to the Second Exposure Draft, the ASB proposed to move the Comment, as follows, into the COMPETENCY RULE; “Perfection is impossible to attain, and competence does not require perfection. However, an appraiser must not render appraisal services in a careless or negligent manner. This Rule requires an appraiser to use due diligence and due care.”This particular Comment currently appears only in the development Standards, but it has been pointed out that it should also apply to reporting. Moving it into the COMPETENCY RULE reduces duplication and, at the same time, broadens the applicability of this important Commentsince the COMPETENCY RULE applies to both development and reporting in all disciplines. Additionally, as a part of the ASB’s efforts in prior exposure drafts to reduce the number and length of Comments in the Standards Rules, the ASB had proposed the following be deleted from the Comment to Standards Rule 1-1(a) as well as related comments in the other development Standards Rules:“For this reason, it is not sufficient for appraisers to simply maintain the skills and the knowledge they possess when they become appraisers. Each appraiser must continuously improve his or her skills to remain proficient in real property appraisal.”The ASB received stakeholder feedback indicating that this concept, although somewhat aspirational, is an important reminder to appraisers that they must keep up with changes in the profession. As such, in this Fourth Exposure Draft, the ASB proposes to move the Comment, as follows, into the COMPETENCY RULE:
Fourth Exposure Draft of Changes for the 2020-21 USPAP6 TABLE OF CONTENTS“It is not sufficient for appraisers to simply maintain the skills and the knowledge they possess when they become appraisers. Appraisers must continuously improve their skills and knowledge to remain competent.” Section 4 – DEFINITIONS Based upon responses received from the First, Second, and Third Exposure Drafts the ASB proposes some modifications and additions to the DEFINITIONS in order to help readers better understand USPAP. The prior exposure drafts proposed to include USPAP terms that differ from or are not found in popular English dictionaries and also, in a few instances, to indicate which popular dictionary definition is meant to be used if there are multiple definitions. In response to stakeholder input, the following changes are being proposed in this Fourth Exposure Draft: •Elimination of previously proposed definitions for AT THE TIME OF THE ASSIGNMENT, DATE OF REPORT, and ENGAGEMENT;•Revisions to the following proposed definitions: APPRAISAL, ASSIGNMENT ELEMENTS, ASSIGNMENT RESULTS, CREDIBLE, MISLEADING, PHYSICAL CHARACTERISTICS, STATE, SUMMARIZE, VALUATION SERVICE, and VALUE; and•The previously proposed term INSPECTION has been renamed PERSONAL INSPECTION to better align with how the term is used in USPAP.Section 5 – Other Edits to Improve Clarity and Enforceability of USPAP In the First and Second Exposure Drafts, the Board proposed several other edits for clarity and consistency. The edits are related to the following three terms or phrases:1.Accept an assignment2.At the time of the assignment 3.Intangible ItemsAs mentioned under Section 4 above, in response to comments received from the Third Exposure Draft, the proposed definition of “At the time of the assignment” has been eliminated. In response to stakeholder input, the proposed changes regarding the other two items continue to be proposed in this Fourth Exposure Draft.Section 6 – Proposed Revisions to ADVISORY OPINION 1, Sales HistoryBased upon stakeholder feedback from the Third Exposure Draft, the Board is proposing further edits to provide additional detail related to an appraiser’s obligation to analyze the listing, contract, and sales history of the subject property. In addition, the Board is proposing corresponding edits that will be made if the changes to USPAP contained in this Fourth Exposure Draft are adopted. Section 7 – Proposed Revisions to ADVISORY OPINION 2, Inspection of Subject Property
Fourth Exposure Draft of Changes for the 2020-21 USPAP7 TABLE OF CONTENTSThe Board is proposing edits to reflect changes in the marketplace related to an appraiser’s inspection of a property. In addition, the Board is proposing edits that will be made if the definition of PERSONAL INSPECTION contained in this Fourth Exposure Draft is adopted. There are no other significant changes from what was proposed in the Third Exposure Draft.Section 8 – Proposed Revisions to ADVISORY OPINION 3, Update of a Prior AppraisalThe Board is proposing edits that clarify an appraiser’s obligations regarding confidentiality when performing an update of an appraisal using the “incorporate by reference” option. There are no substantive changes from what was proposed in the Third Exposure Draft. Section 9 – Proposed Revisions to ADVISORY OPINION 28, Scope of Work Decision, Performance, and DisclosureThe Board is proposing clarifying edits to Illustration 2, and to include an additional illustration regarding a scope of work problem related to real property. In addition, the Board is proposing corresponding edits that will be made if the changes to USPAP contained in this Fourth Exposure Draft are adopted. There are no substantive changes from what was proposed in the Third Exposure Draft.Section 10 – Proposed Revisions to ADVISORY OPINION 31, Assignments Involving More than One AppraiserThe Board is proposing edits that will be made if the definition of SIGNIFICANT APPRAISAL ASSISTANCE contained in this Fourth Exposure Draft is adopted. Additional edits are being proposed if the edits to Standards Rules 2-3, 4-3, 6-3, 8-3, and 10-3 in the Fourth Exposure Draft are adopted. There are no substantive changes from what was proposed in the Third Exposure Draft.Section 11 – Proposed Revisions to ADVISORY OPINION 32, Ad Valorem Property Tax Appraisal and Mass Appraisal AssignmentsThe Board is proposing to add an Illustration 5, capturing information proposed for deletion from a Comment to Standards Rule 5-5(a), which the Board concluded was more advisory in nature and better placed in this Advisory Opinion. Additional edits are being proposed based on the potential changes to USPAP in this Fourth Exposure Draft. There are no substantive changes from what was proposed in the Third Exposure Draft.Section 12 – Proposed Revisions to ADVISORY OPINION 36, Identification and Disclosure of Client, Intended Use, and Intended UsersThe Board is proposing edits to this Advisory Opinion to clarify an appraiser’s requirement to make a proper disclosure of the client and other intended users in an Appraisal Report or Restricted Appraisal Report, particularly in cases where the client has requested anonymity from being identified in the report. These changes are newly proposed in this Fourth Exposure Draft.
Fourth Exposure Draft of Changes for the 2020-21 USPAP8 TABLE OF CONTENTSSection 13 –ADVISORY OPINION 38, Content of an Appraisal Report and Restricted Appraisal ReportThe Board is proposing a new Advisory Opinion that will replace Advisory Opinions 11 and 12 if the proposed edits to USPAP in this Fourth Exposure Draft are adopted. Based upon stakeholder input there are a number of changes to this proposed new Advisory Opinion, which has been restructured to compare the reporting requirements under the revised Appraisal Report and Restricted Appraisal Report options. Section 14 – Proposed Retirement of ADVISORY OPINION 4, Standards Rule 1-5(b); ADVISORY OPINION 11, Content of the Appraisal Report Options of Standards Rules 2-2, 8-2, and 10-2; and ADVISORY OPINION 12, Use of the Appraisal Report Options of Standards Rules 2-2, 8-2, and 10-2The Board is proposing the retirement of AO-4 as the existing guidance is viewed as narrowly-focused, and is more appropriately housed where it also currently exists in the USPAP Frequently Asked Questions. There are no changes from what was proposed in the Third Exposure Draft.As stated previously, AO-11 and AO-12 will be retired and replaced with AO-38 if the proposed revisions to USPAP contained in this Fourth Exposure Draft are adopted.
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