The first Exposure Draft has already arrived.
Despite the fact that USPAP 2020-2021 just went into effect on January 1, The Appraisal Foundation has already published its First Exposure Draft of proposed changes to USPAP 2022-2023, and has hosted the first webinar explaining the draft.
Included in the proposed changes is a revised set of minimum standards which would apply to both Appraisal Reports and Restricted Appraisal Reports, allowing the appraiser to more readily conform to USPAP ethics and competency rules and standards within a narrower Scope of Work. While this issue is primarily to do with real property appraisals, as they frequently utilize the Restricted Appraisal Report option, input from personal property appraisers has also been favorable. As a result of these suggested changes, the Appraisal Standards Board is proposing significant changes to Standards 2, 8, and 10 and the elimination of the two-tier reporting system of Appraisal Reports and Restricted Appraisal Reports. While few personal property appraisers use the Restricted option, any changes to the minimum standards of reporting will certainly have an impact.
Other proposed changes involve the issue of “significant appraisal assistance.” A formal definition has been suggested, along with adding and/or subtracting language from the Scope of Work rule and Standard 8-2 for clarity.
The draft addresses changing technology in regard to the signed Certification of Appraisal Practice Requirement. The ASB has determined that technological advances have not yet impacted the appraiser’s ability to sign the Certification, but is proposing a revision to Standard 8-3(b) as follows. The underlined text comprises the proposed addition.
An appraiser who signs any part of the appraisal report, including a letter of transmittal, must also sign a certification or, if technological changes make a digital signature impractical, an appraiser may indicate acceptance of responsibility for all elements of the certification by entering a password, or by any other generally accepted method of attestation.
Three changes to the Scope of Work have been proposed addressing disclosure requirements, more detail about the level of disclosure, and a clarification about the level of inspection added to the Comment. There has been a great deal of discussion regarding what constitutes an “in-person” inspection of property. Again, this issue applies more to real property appraisals, but may have as-yet-unknown impacts on our discipline as well.
Finally, there are a few additions and amendments to Definitions. The terms appraiser and assignment elements have been revised for clarity. The word evaluation has been proposed for a formal definition. Three terms have been revised: significant appraisal assistance, state, and summarize. It is the revision of these last two terms which has this particular appraiser most excited.
If you heard my USPAP update at the Mid-Year Conference in Dallas last summer, you know that it is my position that USPAP has conflated the commonly understood definitions of the terms “state” and “summarize.” According to the document, to “summarize” was to give a long, full explanation and to “state” was to give a brief – well – summary. It was infuriating to try to parse the language, adding another level of confusion to text that could already be difficult. I brought this issue to the attention of the ASB and am pleased to see that they have agreed to formally define the terms, as they do with any term which differs from the commonly understood dictionary definition.
Per the Exposure Draft, state is proposed to be defined as “to report with a minimum of information” and summarize as “to report with more than a minimum of information.” I’m not sure that these definitions go far enough, however, and plan to suggest some further revision at the next meeting of the Appraisal Foundation Advisory Council.
The full Exposure Draft can be viewed here: https://appraisalfoundation.sharefile.com/share/view/s064d41e4ce54c7ca
We will keep you informed of further Exposure Drafts as they become available, as well as any other news from the Appraisal Foundation. Please continue to send any questions and comments relating to Education to me at appraisaleducation@gmail.com.