Recently, the Appraisal Standards Board (ASB) approved modifications to the USPAP. These changes will be incorporated into the 2010-11 edition of USPAP and associated guidance material which is to become on January 1, 2010.

One of the several changes of interest to the personal property was made to the ETHICS RULE which, by the way, was largely rewritten. The change of interest occurs in the Conduct section of the ETHICS RULE and regards two new disclosure requirements. The appraiser must now disclose (prior to accepting the assignment or whenever discovered) any current or prospective interest in the subject property or parties. The appraiser must also disclose any services performed (in the capacity of an appraiser or otherwise) regarding the subject property over the preceding three years.

The rationale behind this particular change is to allow the client to determine potential conflicts, if any, with past services undertaken by the personal property appraiser regarding the subject property such as having owned, sold, auctioned, appraised, authenticated, restored, brokered, etc. the subject property. For the real property appraiser, such services might include having provided management, leasing, brokerage, auction or investment advisory services.

The specific ETHICS RULE (Conduct Section) language that has been adopted is:

If known prior to accepting an assignment, and/or if discovered at any time during the assignment, an appraiser must disclose to the client, and in the subsequent report certification:

any current or prospective interest in the subject property or parties involved; and
any services regarding the subject property performed by the appraiser within the three year period immediately preceding acceptance of the assignment, as an appraiser or in any other capacity.

Comment: Disclosing the fact that the appraiser has previously appraised the property is permitted except in the case when an appraiser has agreed with the client to keep the mere occurrence of a prior assignment confidential. If an appraiser has agreed with a client not to disclose that he or she has appraised a property, the appraiser must decline all subsequent assignments that fall within the three year period.

This change has generated many questions which the ASB has recently addressed in its April 2009 Q & A. For instance:

I heard about the changes to the Conduct section of the ETHICS RULE and I am concerned. Is it true that I will not be able to reappraise a property for three years after a prior appraisal?
Some of my best clients require me to keep all information regarding any assignments that I perform for them confidential. Will this prevent me from appraising a property for a different client during that three year period?
If I will be conducting an auction [or estate sale] of the subject property after the appraisal, does this have to be disclosed?

The answers the ASB provides for these as well as several related questions are very insightful and worth your review.