USPAP 2008–2009
Relevant USPAP References
The term “Client” is defined in the DEFINITIONS section of USPAP as
the party or parties who engage an appraiser (by employment or contract) in a specific assignment.
The term “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.
The term “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.
General
The SCOPE OF WORK RULE requires an appraiser to identify the intended use and intended users as part of problem identification. Identifying the intended use and intended users is required to determine the scope of work necessary to develop credible assignment results. The credibility of assignment results is always measured in the context of their intended use.
STANDARDS 1, 3, 4, 6, 7, and 9 require an appraiser to identify the intended use and intended users in the course of developing his or her opinions and conclusions in the assignment. In the context of a real property appraisal, Standards Rules 1-2(a) and (b) (for example) state:
In developing a real property appraisal, an appraiser must:
(a) identify the client and other intended users;
(b) identify the intended use of the appraiser’s opinions and conclusions…
STANDARDS 2, 3, 5, 6, 8, and 10 require an appraiser to state the intended use in the report. In the context of a written real property appraisal report, Standards Rule 2-2(a) (for example) states, The content of a Self-Contained Appraisal Report must be consistent with the intended use of the appraisal… (bold added for emphasis).
In the context of a real property appraisal report (for example), Standards Rules 2-2(a)(i) and (ii) require the appraiser to:
(i) state the identity of the client and any intended users, by name or type;
(ii) state the intended use of the appraisal…
An appraiser identifies the intended use by communicating with the client before accepting an appraisal, appraisal review, or appraisal consulting assignment. The intended use may encompass requirements of intended users other than the client. An appraiser cannot reasonably identify the intended use without having identified the client and communicating with the client or the client’s agent.
Although an appraiser must identify and consider the intended use of the appraiser’s opinions and conclusions, an appraiser must not allow the objectives of the client or other intended users of the report to affect the appraiser’s independence and objectivity. An appraiser must not allow the objectives of a client or other intended users to cause the analysis or report to be biased.
Identification of the Client and Other Intended Users in an Assignment
In order to properly define the problem under study and to understand his or her responsibilities in an assignment, an appraiser must identify the client and other intended users. This is accomplished by communication with the client prior to accepting the assignment.
An appraiser should use care when identifying the client to avoid violations of the Confidentiality section of the ETHICS RULE. The client may be identified as a person or entity, or as an agent of an intended user. In instances where the client wishes to remain anonymous, the appraiser must still document the identity of the client in the workfile but may omit the client’s identity in the appraisal, appraisal review, or appraisal consulting report.
Neither the client nor the appraiser is obligated to identify an intended user by name. If identification by name is not appropriate or practical, an appraiser’s client and the appraiser may identify an intended user by type.
An appraiser’s obligations to the client are established in the course of considering and accepting an assignment. If an appraiser becomes aware of a change in the intended use of the report, the appraiser must consider whether the extent of the development process and type of report initially identified are still appropriate. If they are not, the appraiser must communicate with the client to establish an appropriate basis upon which to proceed.
If the appraiser is contacted regarding an assignment or report by a party other than the appraiser’s client, before responding the appraiser must review his or her obligations to that client. An appraiser may need to review the Confidentiality section of the ETHICS RULE and Advisory Opinions 25, 26, and 27 for guidance.
An appraiser’s obligations to other intended users may impose additional development and reporting requirements in the assignment. It is essential that an appraiser establish with the client a clear and mutual understanding of the needs of all intended users prior to accepting an assignment. An appraiser’s obligation to intended users other than the client is limited to addressing their requirements as identified by the appraiser at the time the appraiser accepts the assignment.
A party receiving a report copy from the client does not, as a consequence, become a party to the appraiser-client relationship.
Parties who receive a copy of an appraisal, appraisal review, or appraisal consulting report as a consequence of disclosure requirements applicable to an appraiser’s client do not become intended users of the report unless they were specifically identified by the appraiser at the time of the assignment.
Disclosure of Client and Other Intended User(s) in an Appraisal, Appraisal Review, or Appraisal Consulting Report
Except when specifically requested not to do so as part of the agreement with the client, an appraiser must disclose the identity of the client and any other intended users in an appraisal, appraisal review, or appraisal consulting report. The purpose of this reporting requirement is to (1) ensure that the client and any other intended users can recognize their relationship to the assignment and report, and (2) ensure that unintended users will not be misled by notifying them that they are neither the client nor an intended user. For example, a statement similar to the following may be appropriate:
This report is intended for use only by (identify the client) and (identify any other intended users by name or type). Use of this report by others is not intended by the appraiser.
If the client’s identity is omitted from an appraisal report, the appraiser must (1) identify the client in the workfile, and (2) provide a notice in the appraisal report that the identity of the client has been omitted in accordance with the client’s request and that the report is intended for use only by the client and any other intended users.
Identification of the Intended Use in an Appraisal, Appraisal Review, or Appraisal Consulting Assignment
Identification of the intended use is one of the assignment elements necessary to properly identify the appraisal, appraisal review, or appraisal consulting problem. Identification of the intended use helps the appraiser and the client make two important decisions about the assignment:
the appropriate scope of work for the appraisal, appraisal review, or appraisal consulting development process; and
the level of detail to provide in the appraisal, appraisal review, or appraisal consulting report.
Disclosure of the Intended Use in an Appraisal, Appraisal Review, or Appraisal Consulting Report
An appraiser can avoid misleading parties in possession of an appraisal, appraisal review, or appraisal consulting report by clearly identifying the intended use in the report and stating that other uses are not intended. For example, a statement similar to the following may be appropriate:
This report is intended only for use in (describe the use). This report is not intended for any other use.
The intended use description provided in the statement must be specific to the assignment.
USPAP 2008–2009 Edition
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