A lender orders an appraisal and the borrower pays for it at closing. The borrower is:
Correct Answer
D) Not automatically an intended user — paying is not the same as engaging
Paying the fee does not by itself make the borrower the client or an intended user. Client status concerns the engagement, directly or through an agent; intended users are identified by the appraiser on the basis of communication with the client, rather than mere payment or receipt.
Why This Is the Correct Answer
Option D is correct because paying the fee is not the same as engaging the appraiser, and intended users are identified by the appraiser through communication with the client. USPAP states that a party receiving a copy of a report to satisfy disclosure requirements does not become an intended user unless the appraiser identifies that party as one. The borrower is therefore not an intended user merely by paying.
Why the Other Options Are Wrong
Option A: Automatically an intended user because the borrower paid the fee
Option A says the borrower is automatically an intended user because the borrower paid the fee. Payment does not identify a party as an intended user; the appraiser makes that identification as part of the assignment.
Option B: The client, since the funds for the appraisal came from the borrower
Option B says the borrower is the client because the funds came from the borrower. The client is the party that engages the appraiser, here the lender, regardless of where the fee money came from.
Option C: An intended user only for the property description section of the report
Option C says the borrower is an intended user only for the property description section. USPAP does not create partial intended-user status by report section, and payment does not make the borrower an intended user at all.
Paying is not engaging
Follow the engagement, not the money: the party that hires the appraiser is the client, and the appraiser names the intended users. Whoever writes the check does not gain either role by doing so.
How to use: Use this whenever a question links fee payment to client or intended-user status.
Exam Tip
When a fact pattern mentions who paid the fee, treat it as a distractor unless it also shows who engaged the appraiser or whom the appraiser identified as an intended user.
Common Mistakes to Avoid
- -Treating the borrower as the client because the borrower paid
- -Assuming anyone who receives a copy of the report is an intended user
- -Believing intended-user status can be limited to one section of a report
Concept Deep Dive
Analysis
This question tests the difference between who pays for an appraisal and who is a client or intended user. Client status comes from engaging the appraiser, directly or through an agent, and intended users are identified by the appraiser based on communication with the client. Payment of the fee or receipt of a copy does not by itself create either status.
Background Knowledge
In USPAP, the client is the party who engages the appraiser in a specific assignment, and intended users are those the appraiser identifies, based on communication with the client, as users of the report. Borrowers in lending transactions often receive a copy of the appraisal under disclosure rules. Receiving a copy is different from being an intended user.
Real-World Application
A lender orders an appraisal through its appraisal management company, and the borrower pays the fee at closing and receives a copy of the report. The appraiser identifies only the lender as client and intended user, so the borrower's reliance on the report for a renovation budget is not an intended use.
More USPAP Questions
Under USPAP, what are assignment results?
The certification required by Standards Rule 2-3 must be signed by:
Under 2024 USPAP, which statement correctly combines the requirements for an oral real property appraisal report and its workfile?
An appraiser accepts an assignment involving a property type the appraiser has valued once before, years ago. Competency requires:
A Certified General appraiser is asked to value a specialized industrial property for the first time. The appraiser knows a competency gap exists before agreeing to the assignment. What is required if the appraiser proceeds?
Under 2024 USPAP Standard 1, which listed assignment element must be identified in developing a real property appraisal?
An appraiser provided an appraisal of the same property for another client 18 months ago. No confidentiality obligation prevents disclosing the fact of that service. Before agreeing to a new assignment, the appraiser must:
According to USPAP, what is the primary purpose of the Ethics Rule?
An appraiser is asked to determine 'fair market value' for an assignment. According to USPAP, the appraiser should:
Which list gives the sections of the 2024 USPAP Ethics Rule?
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