An appraiser discovers mid-assignment that the property has a complex ground lease she does not know how to analyze. What does USPAP require?
Correct Answer
C) Notify the client and take steps to achieve competency, or withdraw
When a lack of competency is discovered during an assignment, notify the client, take the steps necessary or appropriate to complete the assignment competently, and describe the lack and steps taken in the report. Assistance and study can be appropriate when effective, but they do not override legal credential-scope limits. If competency cannot be obtained for credible performance within applicable requirements, decline or withdraw. Ignoring a material ground lease is not an acceptable shortcut.
Why This Is the Correct Answer
Option C is correct because when an appraiser discovers during an assignment that she lacks the knowledge or experience to complete it competently, she must notify the client and take the steps necessary or appropriate to complete it competently. If the assignment cannot be completed competently, she must decline or withdraw. Study or qualified assistance can be appropriate steps.
Why the Other Options Are Wrong
Option A: Withdraw from the assignment immediately
Option A, withdrawing from the assignment immediately, skips the steps USPAP allows. Withdrawal is required only if competency cannot be achieved, not as an automatic first response.
Option B: Value the property as if the lease did not exist
Option B, valuing the property as if the lease did not exist, ignores a material characteristic and does not address the competency problem. Ignoring a complex ground lease is not an acceptable shortcut.
Option D: Deliver the report as planned with a boilerplate disclaimer paragraph
Option D, delivering the report with a boilerplate disclaimer, does not cure the lack of competency. The appraiser must notify the client and take real steps to complete the work competently.
Notify, fix, or exit
Discover a gap mid-assignment: notify the client, fix the gap, or exit if it cannot be fixed.
How to use: Use this when a question describes a competency problem found during an assignment.
Exam Tip
Choose the answer that includes notification and steps to achieve competency, with withdrawal as the fallback.
Common Mistakes to Avoid
- -Withdrawing without considering steps to gain competency
- -Ignoring a material lease to simplify the work
- -Relying on a disclaimer instead of real competency steps
Concept Deep Dive
Analysis
This question tests the COMPETENCY RULE when a lack of competency is discovered mid-assignment. USPAP requires the appraiser to notify the client, take the steps needed to complete the assignment competently, and describe the lack and steps taken in the report. Withdrawal is required only if competency cannot be achieved.
Background Knowledge
The COMPETENCY RULE covers competency before accepting an assignment and when gaps are discovered during it. Steps to gain competency can include research, study or associating with a qualified professional. The report must describe the lack of knowledge and the steps taken, and legal credential limits still apply.
Real-World Application
Midway through an assignment, an appraiser learns the building sits on a 99-year ground lease with complex escalation terms. She tells the client, brings in an experienced colleague to help analyze the leased fee and leasehold interests, and describes that assistance in the report.
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