A written real-property appraisal report uses a hypothetical condition but does not disclose it in the report. Under USPAP 2024 Standards Rules 2-1(c) and 2-2, what is the result?
Correct Answer
B) It is deficient; a workfile note cannot replace report disclosure
SR 2-1(c) requires the report to disclose the assignment’s assumptions, extraordinary assumptions, hypothetical conditions and limiting conditions clearly and accurately. SR 2-2(a)(xiii), or 2-2(b)(xv) for a Restricted Appraisal Report, additionally requires clear and conspicuous disclosure of extraordinary assumptions and hypothetical conditions and a statement that their use might have affected assignment results. Merely recording the condition internally is insufficient. Do not assume every undisclosed hypothetical condition necessarily represents an as-is value or make a claim about every possible reader’s understanding.
Why This Is the Correct Answer
SR 2-1(c) requires the report to disclose the assignment’s assumptions, extraordinary assumptions, hypothetical conditions and limiting conditions clearly and accurately. SR 2-2(a)(xiii), or 2-2(b)(xv) for a Restricted Appraisal Report, additionally requires clear and conspicuous disclosure of extraordinary assumptions and hypothetical conditions and a statement that their use might have affected assignment results. Merely recording the condition internally is insufficient. Do not assume every undisclosed hypothetical condition necessarily represents an as-is value or make a claim about every possible reader’s understanding.
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