An appraiser previously valued a property for Lender A. Lender B now requests an appraisal of the same property. The appraiser must:
Correct Answer
D) Disclose to Lender B that prior services were performed, without revealing the results
Why this is correct: USPAP's Confidentiality section and the Ethics Rule create two duties: disclose prior services to a new client, but keep the prior assignment's results confidential. The appraiser must inform Lender B of the prior work without revealing the value opinion or report details. Why the other choices are wrong: 'Decline the new assignment because of the earlier engagement entirely' is wrong; prior work does not automatically preclude a new assignment. 'Provide Lender B with a copy of the prior report for reference purposes' violates confidentiality owed to Lender A. 'Disclose the prior engagement to Lender A before speaking with Lender B at all' is incorrect; the appraiser has no duty to seek permission from the prior client. Exam tip: Remember the rule: disclose the fact of prior service, not the content.
Why This Is the Correct Answer
Disclosing to Lender B that prior services were performed, without revealing the results, satisfies both duties precisely. Lender B learns the fact it needs to evaluate whether the prior involvement matters to it, and Lender A's confidential information and the prior assignment results stay protected. The disclosure is made before accepting the assignment rather than buried in the delivered report, since its purpose is to inform the engagement decision. A related point worth knowing is that accepting the second assignment does not permit the appraiser to reuse or reveal Lender A's confidential information, though the appraiser's own general knowledge of the market and of the property may inform the new work.
Why the Other Options Are Wrong
Option A: Decline the new assignment because of the earlier engagement entirely
Prior work on a property does not disqualify an appraiser from a later assignment on it, and treating every prior engagement as an automatic bar would make repeat work on any property impossible. What USPAP requires is disclosure, not abstention, and the appraiser remains free to accept if they can perform without bias. The option is tempting because conflicts of interest are usually resolved by stepping aside, but here the profession has chosen disclosure as the remedy.
Option B: Provide Lender B with a copy of the prior report for reference purposes
Handing Lender B a copy of the prior report discloses the prior client's assignment results and confidential information to a party with no right to them, which is the core breach the Confidentiality section prohibits. It is also the very act the correct answer carves out, since the appraiser discloses that services occurred but not what they concluded. Candidates choose this by reasoning that more information serves the new client, without asking whose information it is.
Option C: Disclose the prior engagement to Lender A before speaking with Lender B at all
No obligation runs to the prior client here, because the disclosure duty is owed to the prospective client and is about informing that party's engagement decision. Asking Lender A for permission would also alert a former client to a competitor's interest in the property, which serves nobody's legitimate interest. Candidates select this by assuming that anything touching a prior engagement requires the prior client's blessing, which reverses the direction the duty runs.
That It Happened, Not What It Said
Two facts, two owners. The fact that you worked on this property belongs to the new client, who needs it to decide whether to hire you. What you concluded belongs to the old client, and it does not travel.
How to use: When a stem involves a prior engagement and a new prospective client, split the question into disclosure and confidentiality before reading the options. The credited answer discloses the existence of prior services to the new client and withholds the results; anything releasing the prior report or seeking the prior client's permission fails one half.
Exam Tip
Timing is part of the answer. The prior services disclosure belongs before acceptance, not in the report, because its purpose is to inform the decision to engage.
Common Mistakes to Avoid
- -Treating the prior services disclosure as something that goes in the report rather than before acceptance
- -Assuming a prior engagement disqualifies the appraiser instead of triggering a disclosure
- -Releasing the prior report or its value conclusion to the new client because the property is the same
Concept Deep Dive
Analysis
Two separate obligations in the ETHICS RULE meet in this fact pattern, and the exam tests whether a candidate can hold both at once instead of collapsing them into one. The Confidentiality section obligates an appraiser to protect the confidential nature of the appraiser-client relationship and to keep confidential information and assignment results from the prior engagement out of the hands of anyone other than that client and the parties USPAP authorizes. The Conduct section carries the prior services disclosure obligation, which requires an appraiser to tell a prospective client, before accepting the assignment, that services were previously performed on the subject property within the stated look-back period, which USPAP has long expressed as the three years preceding acceptance. Those duties do not conflict, because the fact that an engagement occurred is not itself the confidential content of that engagement. The reason the disclosure exists at all is that a prospective client is entitled to know about a prior involvement that could bear on objectivity before deciding whether to engage the appraiser.
Background Knowledge
You need to know the ETHICS RULE's structure and that its Confidentiality section protects confidential information and assignment results while its Conduct section carries the prior services disclosure obligation. You should know that the disclosure is made to the prospective client before accepting the assignment and covers the fact of prior services on the subject property within the stated look-back period, which USPAP has expressed as three years. You also need to know that assignment results and confidential information may be disclosed only to the client and to parties USPAP authorizes, and that disclosing the existence of a prior engagement does not disclose its content.
Real-World Application
An appraiser who valued a small industrial building for a regional bank eighteen months ago is contacted by a different lender considering a refinance of the same property. Before accepting, the appraiser emails the new lender stating that they performed an appraisal of this property within the past three years for another client, and that the prior client's identity, the report, and the value conclusion are confidential and will not be shared. The new lender engages the appraiser, who develops a fresh opinion as of a current effective date without reference to the earlier report in the new file.
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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