ETHICS RULE

An appraiser must promote and preserve the public trust inherent in appraisal practice by observing the highest standards of professional ethics.  

An appraiser must comply with USPAP when obligated by law or regulation, or by agreement with the client or intended users.  In addition to these requirements, an individual should comply any time that individual represents that he or she is performing the service as an appraiser.

Comment: This Rule specifies the personal obligations and responsibilities of the individual appraiser.  An individual appraiser employed by a group or organization that conducts itself in a manner that does not conform to USPAP should take steps that are appropriate under the circumstances to ensure compliance with USPAP.

This ETHICS RULE is divided into four sections: Conduct, Management, Confidentiality, and Record Keeping. The Conduct, Management, and Confidentiality sections apply to all appraisal practice. The Record Keeping section applies to appraisal practice performed under STANDARDS 1 through 10.

Conduct:

 

An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.

An appraiser:

• must not perform an assignment with bias;
• must not advocate the cause or interest of any party or issue;
• must not accept an assignment that includes the reporting of predetermined opinions and conclusions;
• must not misrepresent his or her role when providing valuation services that are outside of appraisal practice;
• must not communicate assignment results with the intent to mislead or to defraud;
• must not use or communicate a report that is known by the appraiser to be misleading or fraudulent;
• must not knowingly permit an employee or other person to communicate a misleading or fraudulent report;
• must not use or rely on unsupported conclusions relating to characteristics such as race, color, religion, national origin, gender, marital status, familial status, age, receipt of public assistance income, handicap, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value;
• must not engage in criminal conduct; and
• must not perform an assignment in a grossly negligent manner.

Comment: Development standards ( 1-1, 3-1, 4-1, 6-1, 7-1 and 9-1) address the requirement that “an appraiser must not render appraisal services in a careless or negligent manner.”  The above requirement deals with an appraiser being grossly negligent in performing an assignment which would be a violation of the Conduct section of the ETHICS RULE.

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.

Management:

An appraiser must disclose that he or she paid a fee or commission, or gave a thing of value in connection with the procurement of an assignment.

Comment: The disclosure must appear in the certification and in any transmittal letter in which conclusions are stated; however, disclosure of the amount paid is not required.  In groups or organizations engaged in appraisal practice, intra-company payments to employees for business development do not require disclosure.

An appraiser must not accept an assignment, or have a compensation arrangement for an assignment, that is contingent on any of the following:

the reporting of a predetermined result (e.g., opinion of value);a direction in assignment results that favors the cause of the client;the amount of a value opinion;

the attainment of a stipulated result (e.g., that the loan closes, or taxes are reduced); or

the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose.

An appraiser must not advertise for or solicit assignments in a manner that is false, misleading, or exaggerated.

An appraiser must affix, or authorize the use of, his or her signature to certify recognition and acceptance of his or her USPAP responsibilities in an appraisal, appraisal review, or appraisal consulting assignment (see Standards Rules 2-3, 3-6, 5-3, 6-9, 8-3, and 10-3).  An appraiser may authorize the use of his or her signature only on an assignment-by-assignment basis.

An appraiser must not affix the signature of another appraiser without his or her consent. 

Comment: An appraiser must exercise due care to prevent unauthorized use of his or her signature.  An appraiser exercising such care is not responsible for unauthorized use of his or her signature.

Confidentiality:

 

An appraiser must protect the confidential nature of the appraiser-client relationship.

An appraiser must act in good faith with regard to the legitimate interests of the client in the use of confidential information and in the communication of assignment results.

An appraiser must be aware of, and comply with, all confidentiality and privacy laws and regulations applicable in an assignment.  

An appraiser must not disclose: (1) confidential information; or (2) assignment results to anyone other than:

• the client;
• persons specifically authorized by the client;
• state appraiser regulatory agencies;
• third parties as may be authorized by due process of law; or
• a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation.

 

A member of a duly authorized professional peer review committee must not disclose confidential information presented to the committee.

Comment: When all confidential elements of confidential information and assignment results are removed through redaction or the process of aggregation, client authorization is not required for the disclosure of the remaining information, as modified.

Record Keeping:

 

An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment.  A workfile must be in existence prior to the issuance of a written or oral report.  A written summary of an oral report must be added to the workfile within a reasonable time after the issuance of the oral report.

The workfile must include:

• the name of the client and the identity, by name or type, of any other intended users;
• true copies of any written reports, documented on any type of media (A true copy is a replica of the report transmitted to the client.  A photocopy or an electronic copy of the entire signed report transmitted to the client satisfies the requirement of a true copy.);
• summaries of any oral reports or testimony, or a transcript of testimony, including the appraiser’s signed and dated certification; and
• all other data, information, and documentation necessary to support the appraiser’s opinions and conclusions and to show compliance with USPAP, or references to the location(s) of such other documentation.

An appraiser must retain the workfile for a period of at least five years after preparation or at least two years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires last.

An appraiser must have custody of his or her workfile, or make appropriate workfile retention, access, and retrieval arrangements with the party having custody of the workfile.

An appraiser having custody of a workfile must allow other appraisers with workfile obligations related to an assignment appropriate access and retrieval for the purpose of:

• submission to state appraiser regulatory agencies;
• compliance with due process of law;
• submission to a duly authorized professional peer review committee; or
• compliance with retrieval arrangements.

Comment: Care should be exercised in the selection of the form, style, and type of medium for records to ensure that they are retrievable by the appraiser throughout the prescribed record retention period.

A workfile must be made available by the appraiser when required by a state appraiser regulatory agency or due process of law.  

A workfile in support of a Restricted Use Appraisal Report must be sufficient for the appraiser to produce a Summary Appraisal Report (for assignments under STANDARDS 2 and 8) or an Appraisal Report (for assignments under STANDARD 10).