A state statute governing eminent-domain appraisals conflicts directly with a specific USPAP requirement. What does USPAP provide for this situation?
Correct Answer
B) The Jurisdictional Exception Rule sets aside only the conflicting part
Why this is correct: The Jurisdictional Exception Rule states that if a law or public policy directly conflicts with a USPAP requirement, only the conflicting part of USPAP is set aside. The appraiser must comply with the law and disclose the exception in the report. Why the other choices are wrong: The appraiser does not have to decline all work. USPAP does not always override state law; the exception applies. The appraiser cannot choose based on payment. Exam tip: When law and USPAP clash, follow the law, disclose the exception, and apply the rest of USPAP.
Why This Is the Correct Answer
Option B states the rule accurately: the Jurisdictional Exception Rule sets aside only the conflicting portion. That surgical scope is the defining feature, since USPAP yields no more ground than the law actually requires. The appraiser follows the statute for the conflicting element, continues to apply all remaining USPAP requirements, and discloses the exception in the report. Both halves matter, the narrow void and the mandatory disclosure.
Why the Other Options Are Wrong
Option A: The appraiser must decline all condemnation work
Declining all condemnation work would be an extraordinary response to a situation USPAP explicitly anticipates and provides a mechanism for. Eminent domain assignments are routine appraisal work performed under this rule every day. Withdrawal is warranted for a competency gap or a conflict of interest, not for a legal requirement the standards already accommodate.
Option C: USPAP as a whole always overrides conflicting state statutes entirely
USPAP is a professional standard, not a statute, and it does not override the law of a jurisdiction; the rule exists precisely because the law prevails. An appraiser who followed USPAP into a violation of state condemnation law would have broken the law and, because the rule was available, would not even be protected by the standards. The relationship runs the other way from what this option asserts.
Option D: The appraiser chooses whichever rule pays better
Selecting between conflicting obligations based on compensation would breach the Ethics Rule's requirements of impartiality, objectivity, and independence, and it describes no recognized mechanism at all. Fee considerations never determine which standards apply. The option is included to test whether the candidate recognizes an ethics violation dressed as a practical choice.
Scalpel, Not Sledgehammer
The Jurisdictional Exception is a scalpel, not a sledgehammer. It removes exactly the one requirement the law contradicts and leaves everything else standing. Then you write down what you cut and why, so the reader can see the shape of the hole.
How to use: Confirm there is a genuine legal conflict before invoking the rule, since a client's preference or a lender's guideline is not law. Then choose the option that voids only the conflicting part and requires disclosure. Reject options that discard USPAP wholesale, that elevate USPAP above statute, or that make the choice discretionary.
Exam Tip
Remember that client instructions can never trigger a jurisdictional exception; if the conflict does not come from law, regulation, or public policy, the rule simply does not apply.
Common Mistakes to Avoid
- -Invoking the rule for a client instruction or industry guideline rather than an actual law
- -Setting aside more of USPAP than the conflict requires
- -Applying the exception without identifying the law and the specific portion voided in the report
Concept Deep Dive
Analysis
This question tests the Jurisdictional Exception Rule, USPAP's mechanism for handling a direct conflict between the standards and applicable law. The rule is deliberately narrow in three ways. First, it requires an actual conflict with a law or regulation, meaning compliance with USPAP would violate the law; a mere difference in emphasis, a client preference, or an industry custom does not qualify. Second, it voids only the specific portion of USPAP in conflict, leaving every other requirement fully in force, so an appraiser cannot use one narrow conflict to shed unrelated obligations. Third, it requires disclosure: the appraiser must identify the law or regulation, identify the part of USPAP set aside, and explain the effect on the assignment, so intended users understand what was and was not followed. Eminent domain is the classic setting, because state condemnation law frequently prescribes valuation rules that depart from ordinary appraisal practice, such as requiring the appraiser to disregard project influence on value or mandating a particular treatment of the larger parcel or of severance damages.
Background Knowledge
You need to know the rules that frame USPAP, including the Ethics Rule, the Competency Rule, the Scope of Work Rule, the Jurisdictional Exception Rule, and the Record Keeping Rule, and what each does. For this rule specifically you need the three elements: an actual conflict with law or regulation, voiding only the conflicting portion, and mandatory disclosure identifying the law and the portion set aside. You should also know that client instructions and assignment conditions are not law and cannot trigger the rule.
Real-World Application
Appraising a partial taking where state law requires the appraiser to disregard any change in value caused by the condemnation project itself, an appraiser applies the statutory instruction, cites the statute in the report, identifies the USPAP requirement set aside, explains the effect on the analysis, and complies fully with all remaining requirements.
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:
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