An appraiser is completing a condition analysis for a 1958 ranch-style residence with original plaster walls, hardwood floors, and a masonry chimney with unlined flue. The chimney has efflorescence and spalling brick above the roofline, and the flue has never been lined or inspected. Local code now requires stainless-steel flue liners for all wood-burning appliances. What is the appraiser’s reporting obligation under USPAP Standards Rule 1-2 and Advisory Opinion 11?
Correct Answer
B) Disclose the condition and its potential impact on marketability and value, including estimated cost to cure ($3,200) and remaining economic life of the chimney system.
Standards Rule 1-2 requires the appraiser to 'identify the characteristics of the property that are pertinent to the assignment,' including those affecting value or safety. AO-11 mandates disclosure of material defects observed during inspection — especially those involving health/safety (e.g., unlined masonry flues pose carbon monoxide and fire risks) and marketability. The appraiser must report the condition, its implications, and quantify the cost to cure if supportable (here, $3,200 is a typical liner installation cost per industry cost manuals). Option A violates USPAP by omitting material information; C abdicates professional responsibility; D overgeneralizes — plaster, hardwood, and structural elements remain sound.
Why This Is the Correct Answer
Standards Rule 1-2 requires the appraiser to 'identify the characteristics of the property that are pertinent to the assignment,' including those affecting value or safety. AO-11 mandates disclosure of material defects observed during inspection — especially those involving health/safety (e.g., unlined masonry flues pose carbon monoxide and fire risks) and marketability. The appraiser must report the condition, its implications, and quantify the cost to cure if supportable (here, $3,200 is a typical liner installation cost per industry cost manuals). Option A violates USPAP by omitting material information; C abdicates professional responsibility; D overgeneralizes — plaster, hardwood, and structural elements remain sound.
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