A lender orders an appraisal and the borrower pays for it at closing. The borrower is:
Correct Answer
B) Not automatically an intended user — paying is not the same as engaging
Why this is correct: The 'client' is the party that engages the appraiser. The borrower paying the fee is a common arrangement in lending, but it does not automatically make the borrower a client or an intended user. Intended users are identified at the time of engagement. Why the other choices are wrong: 'Automatically an intended user because the borrower paid the fee' confuses payment with engagement. 'An intended user only for the property description section of the report' is incorrect; intended user status applies to the entire report, not sections. 'The client, since the funds for the appraisal came from the borrower' is wrong; the lender who ordered the appraisal is typically the client. Exam tip: Client = who hired you. Payment source does not change that.
Why This Is the Correct Answer
Paying is not engaging, and the engagement is what creates the client relationship and drives the identification of intended users. The lender ordered the appraisal, defined the intended use, and is the party the appraiser contracted with, so the lender is the client and the borrower is not automatically anything. A borrower can be named an intended user, but only if the client communicates that and the appraiser identifies the borrower as one at the time of the assignment. Choice B states the rule and the reason in the same breath.
Why the Other Options Are Wrong
Option A: Automatically an intended user because the borrower paid the fee
Fee payment is a billing arrangement negotiated for the convenience of the loan transaction and carries no professional significance. If payment created intended user status, an employer paying for a relocation appraisal or a party paying under a court order would automatically acquire rights the client never granted. Intended users are identified from the client communication, not from the ledger.
Option C: An intended user only for the property description section of the report
Intended user status is not divisible by section, because a report is a single communication developed for a stated intended use. Nothing in USPAP contemplates partial users entitled to rely on the property description but not the value opinion. The option is invented, which is often the tell on a certification or user question.
Option D: The client, since the funds for the appraisal came from the borrower
The client is the party that engaged the appraiser, which here is the lender that ordered the work and set the intended use. Treating the payer as the client would misdirect the appraiser's confidentiality duties and would let the borrower dictate scope or demand revisions. Misidentifying the client also propagates errors through the report, since the client identity must be stated in the report and preserved in the workfile.
Who Hired You, Not Who Paid You
Follow the engagement, not the money. The person who signs the order is the client; the person whose funds clear the invoice may be a stranger to the assignment. Payment buys a service for the client, not a seat at the table.
How to use: When a stem introduces a payer, a copy recipient, or an interested party, ask who engaged the appraiser. Then eliminate every option that grants status based on money, receipt, or interest.
Exam Tip
Reliance questions are decided at engagement, not afterward. If an option lets someone become an intended user through a later event, it is wrong.
Common Mistakes to Avoid
- -Equating payment of the fee with engagement of the appraiser
- -Assuming a party who receives a copy of the report is an intended user
- -Adding an intended user after delivery instead of treating it as a new assignment
Concept Deep Dive
Analysis
USPAP defines the client as the party or parties who engage an appraiser by employment or contract in a specific assignment, and intended users as the client and any other parties the appraiser identifies, based on communication with the client, as users of the report. Both determinations are made at the time of the assignment and are documented in the report, which means they are the product of the engagement relationship rather than of money, receipt, or interest in the outcome. A borrower who pays the appraisal fee at closing is funding a cost of the loan transaction, much as the borrower funds the title search and the flood certification without becoming the title company's client. The distinction has consequences: confidentiality obligations run to the client, the intended use shapes the scope of work, and adding an intended user after the fact requires a new assignment rather than a letter granting permission. Lending regulations that entitle an applicant to receive a copy of the valuation also do not convert the recipient into an intended user, since receiving a report and being a party it was written for are different things.
Background Knowledge
You need the USPAP definitions of client, intended user, and intended use, and the principle that intended users are identified at the time of the assignment through communication with the client. You should also know the Confidentiality section of the Ethics Rule, the fact that a borrower's statutory right to receive a copy of the valuation does not confer intended user status, and that adding an intended user later requires a new assignment.
Real-World Application
A borrower who paid for the appraisal at closing asks the appraiser to change a comparable and to send a copy directly to her agent. The appraiser explains that his client is the lender, declines to discuss the report's content or release it without the lender's authorization, and forwards the request to the client.
More USPAP Questions
Which statement best defines a hypothetical condition under USPAP?
According to the Competency Rule, if an appraiser lacks the knowledge and experience to complete an assignment competently, which action is NOT acceptable?
An appraiser runs only the sales comparison approach on a standard tract home and omits the cost and income approaches. Under Standard 1 this is:
A value opinion for a subdivision as if fully built out two years from now is what kind of assignment, and what does it require?
A hypothetical condition differs from an extraordinary assumption in that a hypothetical condition:
An appraiser must disclose in the certification whether they have:
A client-imposed requirement — 'use only comps from our approved list' — is best described as:
Under Standard 1, when developing a real property appraisal, an appraiser must:
The certification required by Standards Rule 2-3 must be signed by:
According to Standard 1, when developing an opinion of market value, an appraiser must analyze:
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam