Before agreeing to an appraisal, the appraiser has a prospective interest in the property and managed it two years ago. Which statement is correct?
Correct Answer
A) Disclose both to the client and in each later report certification
Disclose current or prospective interests in the property or parties and services regarding the subject in any capacity during the three years before agreement, with the required client and subsequent certification disclosures. Disclosure does not cure bias or override other legal or assignment conditions. Prior management is a service even though it was not an appraisal; confidentiality requirements for prior work must also be respected.
Why This Is the Correct Answer
Option A is correct because USPAP requires the appraiser to disclose to the client, and in each subsequent report certification, any current or prospective interest in the subject property and any services regarding the subject performed in any capacity within the preceding three years. The prospective interest and the management two years ago both fall within these rules. Disclosure does not cure bias, and confidentiality for prior work still applies.
Why the Other Options Are Wrong
Option B: Disclose the interest; the property management need not be disclosed
Option B, disclosing the interest but not the property management, is wrong because services in any capacity within three years must be disclosed, and management two years ago is a service even though it was not an appraisal.
Option C: Disclose the prior service; the prospective interest need not be
Option C, disclosing the prior service but not the prospective interest, is wrong because USPAP specifically requires disclosure of any current or prospective interest in the subject property.
Option D: Disclose both, after which the appraiser must decline the assignment
Option D, disclosing both and then having to decline the assignment, is wrong because USPAP does not require declining in this situation; the appraiser may proceed after disclosure if they can act impartially and no other law or assignment condition prohibits it.
Interest now, service three
Disclose any interest now or planned, plus any service on the property in the last three years, whatever hat you wore.
How to use: Use this when a scenario lists an interest and a non-appraisal service and asks which must be disclosed.
Exam Tip
Prior services include non-appraisal roles such as management, brokerage or consulting; the look-back is three years before agreeing to the assignment.
Common Mistakes to Avoid
- -Thinking only prior appraisals count as prior services
- -Believing disclosure requires the appraiser to decline the assignment
- -Disclosing only to the client but omitting the certification statement
Concept Deep Dive
Analysis
This question tests USPAP's disclosure duties for interests and prior services. A prospective interest in the property must be disclosed, and so must any services regarding the subject performed in any capacity within the three years before agreeing to the assignment. Property management two years ago is such a service.
Background Knowledge
The Ethics Rule requires transparency about anything that might affect an appraiser's impartiality. Interests in the property or parties and prior services within a three-year look-back must be disclosed before accepting the assignment and stated in the report certification.
Real-World Application
An appraiser is asked to value a rental duplex she managed for the owner two years ago and is considering buying. Before accepting, she tells the client about both, and if she accepts and can remain impartial, she states both in the report certification.
More USPAP Questions
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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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