An easement may materially limit the subject site’s usable building area. It is absent from the assessment record. What should the appraiser do?
Correct Answer
D) Investigate the easement and analyze its effect as needed
Relevant property characteristics depend on the identified appraisal problem, type and definition of value, and intended use. A potentially material easement is not irrelevant merely because an assessment record omits it or it cannot be seen from the street. Perform the investigation and analysis needed for credible results and communicate material findings and limitations appropriately.
Why This Is the Correct Answer
Option D is correct because USPAP requires the appraiser to identify, from sources reasonably believed to be reliable, the property characteristics relevant to the type and definition of value and intended use, including legal characteristics. A potentially material easement must be investigated and its effect analyzed as needed for credible results.
Why the Other Options Are Wrong
Option A: Ignore it unless the client specifically asks for it to be analyzed
Option A ignores the easement unless the client asks for analysis. Identifying relevant characteristics is part of the appraiser's scope obligations, so a potentially material easement cannot be dropped just because the client did not mention it.
Option B: Treat the assessment record as proof that no easement exists at all
Option B treats the assessment record as proof that no easement exists. An assessment record may be incomplete, and its silence does not establish that an easement is absent.
Option C: Exclude it because it cannot be seen from the street in front
Option C excludes the easement because it cannot be seen from the street. Legal characteristics such as easements are often not visible, yet they can still materially affect use and value.
Physical, legal, economic, location
Relevant characteristics include location plus physical, legal and economic features; an easement is a legal characteristic even when it is invisible.
How to use: Use it to check whether an issue falls within the characteristics the appraiser must identify.
Exam Tip
Answers that excuse ignoring a material item because it is unrecorded, unseen or not requested by the client are usually wrong.
Common Mistakes to Avoid
- -Relying solely on assessment records for legal characteristics
- -Ignoring items the client did not mention
- -Considering only what is visible during inspection
Concept Deep Dive
Analysis
This question tests the USPAP requirement to identify relevant property characteristics, including legal characteristics such as easements. Relevance depends on the type and definition of value and the intended use, not on whether a record lists the item or whether it is visible. A potentially material easement requires investigation and analysis.
Background Knowledge
USPAP Standard 1 requires identifying the subject's location and physical, legal and economic characteristics relevant to the assignment. Easements are legal characteristics that can restrict use, such as limiting where buildings may be placed. Appraisers rely on reliable sources and disclose material findings and limitations.
Real-World Application
During research, an appraiser sees a utility line crossing a lot on a survey, but the county assessment record shows no easement. The appraiser reviews available title or survey documents, considers how the easement limits the building envelope and reflects the effect in the analysis.
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Under 2024 USPAP Standard 1, which listed assignment element must be identified in developing a real property appraisal?
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According to USPAP, what is the primary purpose of the Ethics Rule?
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Which list gives the sections of the 2024 USPAP Ethics Rule?
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