Question:

My client’s attorney has told me to invoke the JURISDICTIONAL EXCEPTION RULE to avoid mentioning in my appraisal report an underground storage tank (UST) that I know exists in the property. The attorney did not provide any reference or citation of law or public policy justifying this action. Can I follow the instruction from this attorney, who is representing my client?

Response:

No. Use of the JURISDICTIONAL EXCEPTION RULE is triggered by a conflict between the requirements of USPAP and the law or public policy requirements of a jurisdiction, not by client discretion.

The JURISDICTIONAL EXCEPTION RULE states:

If any part of these Standards is contrary to the law or public policy of any jurisdiction, only that part shall be void and of no force or effect in that jurisdiction.

This Rule is known as the “savings clause,” available when a part or parts of USPAP are contrary to law or public policy. The first sentence of the Comment to the Rule states:

The purpose of the JURISDICTIONAL EXCEPTION RULE is strictly limited to providing a saving or severability clause intended to preserve the balance of USPAP if one or more of its parts are determined to be contrary to law or public policy of a jurisdiction.

The second paragraph in the Comment also provides explicit descriptions of “law,” “public policy,” and “jurisdiction” that appraisers can use to determine whether a client’s instruction to invoke a jurisdictional exception is acceptable. It is important to note that the parameters described in the Comment apply whether the assignment is an appraisal, appraisal review, or an appraisal consulting assignment, or the type and definition of value is market value (or some other value opinion), and for any intended use.

An attorney’s instruction, without specific citation of law or public policy, is not the equivalent of law or public policy. Attorneys may offer legal opinions, but legislative bodies and courts make law, and public bodies, such as regulators, make public policy. While an attorney is an expert in the practice of law, it is the court that decides if the facts in a matter support an attorney’s representation of how established law applies to a specific set of facts.

Absent the citation of law or public policy, which should be identified in the report together with the part or parts of USPAP disregarded in the assignment, the attorney’s instruction is not acceptable as a basis to disregard a part or parts of USPAP applicable in the assignment.