An appraisal is developed for a lender but the borrower is named as an intended user. What follows?
Correct Answer
A) The report must be written to serve both users
The appraisal report must satisfy the applicable reporting requirements for its identified intended users, so an identified borrower’s information needs matter along with the lender’s. The lender remains the client, and the appraiser retains responsibility for appropriate scope and impartial conclusions. Intended-user identification is distinct from confidentiality authorization for a particular release. A Restricted Appraisal Report can have additional intended users identified by name when its conditions and other applicable requirements are met; additional users do not automatically dictate one option.
Why This Is the Correct Answer
Option A is correct because USPAP requires a report to contain sufficient information to enable the intended users to understand it properly, so the borrower's needs matter along with the lender's. The lender remains the client, and the appraiser keeps responsibility for scope and impartial conclusions. Naming the borrower changes who the report must serve, not who controls the work.
Why the Other Options Are Wrong
Option B: The borrower gains the right to direct the work
Option B says the borrower gains the right to direct the work. Being an intended user gives no authority over the assignment; the appraiser decides the scope of work and remains impartial.
Option C: The report must be a Restricted Appraisal Report
Option C says the report must be a Restricted Appraisal Report. Adding an intended user does not dictate a report option; a Restricted Appraisal Report can name additional users when its conditions are met, and an Appraisal Report is also available.
Option D: The lender ceases to be the client of record
Option D says the lender ceases to be the client of record. The client is the party that engages the appraiser, and the lender keeps that role even when the borrower is also named as an intended user.
Client hires, users read
The client hires the appraiser; intended users read and rely on the report. Adding a reader does not change who hired you.
How to use: Use this when a question asks what changes after adding an intended user.
Exam Tip
Watch for answers that turn an intended user into a client or give that user control over the work.
Common Mistakes to Avoid
- -Treating an intended user as a second client
- -Believing additional intended users require a Restricted Appraisal Report
- -Confusing intended-user status with permission to receive confidential data
Concept Deep Dive
Analysis
This question tests the difference between a client and an intended user and what naming an additional intended user changes. The report must contain enough information for each intended user to understand it properly. Naming the borrower as an intended user does not shift client status or give the borrower control.
Background Knowledge
In USPAP, the client is the party that engages the appraiser, while intended users are the client and any other parties the appraiser identifies as using the report. Reports must be written so that the identified intended users can understand them properly. Identifying an intended user is separate from authorizing release of confidential information to that party.
Real-World Application
A lender engages an appraiser and asks that the borrower also be named as an intended user. The appraiser writes the report so both the lender and the borrower can understand it, while taking direction on the assignment only from the lender as client.
More USPAP Questions
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An appraiser proposes to assume there are no hidden defects. Which fact would characterize that assumption as extraordinary under the USPAP 2024 definition, rather than justify dismissing it as routine boilerplate?
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Previous Question
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Next Question
An appraiser reconciles sales comparison ($450,000) and cost ($470,000) at 70% and 30%, for a final value of $456,000. Within the sales comparison approach, Comparable 2 carries 40% of the weight. The appraiser then finds a $12,000 adjustment error that overstated Comparable 2's adjusted price; nothing else changes. What is the corrected final value?