A Restricted Appraisal Report under Standard 2 may only be used by:
Correct Answer
A) The client and additional intended users identified by name
For a Restricted Appraisal Report, additional intended users must be named; identifying them only by type is insufficient. The use restriction includes the client and those named users. Receipt of a copy or an informal designation does not automatically confer intended-user status.
Why This Is the Correct Answer
Option A is correct because a Restricted Appraisal Report may be provided when the client is the only intended user or when additional intended users are identified by name. The report must clearly and conspicuously limit its use to the client and the named intended users.
Why the Other Options Are Wrong
Option B: Any party later designated without report identification
Option B allows any party later designated without identification in the report. Intended users of a Restricted Appraisal Report must be named, and informal later designation does not confer intended-user status.
Option C: Each person who receives a copy of the report
Option C extends use to each person who receives a copy. Receiving a copy does not make someone an intended user; use is limited to the client and named users.
Option D: Users identified by a broad type, such as lenders
Option D identifies users by broad type, such as lenders. For this report option, additional intended users must be identified by name, so identification by type is insufficient.
Restricted means named
A Restricted Appraisal Report is limited to the client plus additional users identified by name, not by category.
How to use: Use it to reject choices that define users by type, receipt or later designation.
Exam Tip
Watch for answers describing users by category, such as lenders or investors. That is the key trap for this report option.
Common Mistakes to Avoid
- -Identifying additional users by type instead of name
- -Assuming anyone with a copy is an intended user
- -Forgetting the required restriction statement
Concept Deep Dive
Analysis
This question tests who may use a Restricted Appraisal Report. USPAP allows this report option when the client is the only intended user or when additional intended users are identified by name. The report must state a restriction limiting its use to the client and the named intended users.
Background Knowledge
USPAP Standard 2 provides two written report options for real property appraisals: the Appraisal Report and the Restricted Appraisal Report. The Restricted Appraisal Report may contain less detail and is limited to the client and any additional intended users named in the report. Intended users are identified by the appraiser based on communication with the client.
Real-World Application
An attorney engages an appraiser for an estate matter and wants the trustee, by name, to rely on the report as well. The appraiser prepares a Restricted Appraisal Report naming the client and the trustee and includes the required use restriction.
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