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The party or parties who engage an appraiser (by employment or contract) in a specific assignment. (Bold added for emphasis) Assignment is defined as: A valuation service provided as a consequence of an agreement between an appraiser and a client. (Bold added for emphasis) Intended Use is defined as: the use or uses of an appraiser’s reported appraisal, appraisal review, or appraisal consulting assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment. (Bold added for emphasis) Intended User is defined as: the client and any other party as identified, by name or type, as users of the appraisal, appraisal review, or appraisal consulting report by the appraiser on the basis of communication with the client at the time of the assignment. (Bold added for emphasis)
Identification of the client, any other intended users, and the intended use are key elements in all assignments. Because these identifications drive the appraiser’s scope of work decision, as well as other elements of the assignment, they must be determined at the time of the assignment. They cannot be modified after an assignment has been completed. Illustrations: Question #1 An appraiser was engaged by Client A to appraise a property. The appraiser delivered the appraisal report to Client A. The client has decided not to pursue the transaction that generated the need for the appraisal report. The appraiser is contacted by Client B. Client B requests that the original report be readdressed (transferred) by replacing Client A’s name with Client B’s name in the report. Is this acceptable? Answer to Question #1, Illustration for (AO-26) No. Simply changing the client name on the report cannot change or replace the original appraiser-client relationship that was established with Client A. Therefore, this action is misleading. Question #2 How can this circumstance be handled according to Standards? Answer to Question #2, Illustration for (AO-26) The appraiser can consider Client B’s request as a new assignment. In so doing, the appraiser may establish a new appraiser-client relationship with Client B and appraise the property for this new client. Important considerations, i.e., confidential information and other factors are further addressed in AO-27 – "Appraising the Same Property for a New Client". Accepting the assignment from the second potential client is not prohibited by USPAP, assuming any existing confidential information is handled properly. Several parts of the Confidentiality section of the ETHICS RULE are pertinent to this matter. An appraiser must not disclose . . . assignment results prepared for a client to anyone other than the client and persons specifically authorized by the client . . . An appraiser cannot disclose the results of a particular assignment, performed for a particular client, to anyone other than those designated by that client. However, an understanding of the definitions of assignment, assignment results, and client are key to a complete understanding of this requirement. Assignment – a valuation service provided as a consequence of an agreement between an appraiser and a client Client – the party or parties who engage an appraiser (by employment or contract) in a specific assignment Assignment Results – an appraiser’s opinions and conclusions developed specific to an assignment As can be seen in the definitions, both the client and the assignment results are specific to an assignment. If there is a new potential client, valuation services performed for that new client would constitute a new assignment and the assignment results would be specific to that new assignment. Therefore, acceptance and performance of the new assignment to appraise the same property would not be considered revealing the first client’s assignment results to the second client, even if the value conclusions were the same. It should be noted that the value conclusion could easily be different if the effective date or the scope of work changed in any manner. It should also be noted that USPAP requires the appraiser to provide an unbiased opinion of value to each client. Question #3 Why might Client B want their name on the report that was completed for Client A? Answer to Question #3, Illustration for (AO-26) Client B may want to establish an appraiser-client relationship because it provides all the rights, obligations, and liabilities such a relationship places on the appraiser. A prudent method to establish an appraiser-client relationship is to have a written engagement letter or contract with any client at the time of the assignment. The above excerpts are here to briefly answer some commonly asked questions and should not be relied upon solely. One needs to read the Full USPAP |
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