What must a Restricted Appraisal Report contain prominently?
Correct Answer
D) A use restriction limiting who may rely on it
Why this is correct: A Restricted Appraisal Report contains less detail and analysis than a Summary Report. To prevent misunderstanding by unintended users, USPAP Standard 2 requires that it contain a conspicuous use restriction that clearly limits reliance to the client only. Why the other choices are wrong: A statement that all three approaches were used is not required; the scope of work determines the approaches. The name and address of every intended user is required, but the defining prominent feature is the use restriction. A complete summary of all data analyzed is characteristic of a Self-Contained or Summary Report, not the abbreviated Restricted Report. Exam tip: The 'restriction' is in the name. The most prominent thing in a Restricted Report must be the statement restricting who may use it.
Why This Is the Correct Answer
A Restricted Appraisal Report must prominently state a use restriction limiting reliance to the stated intended user, since its abbreviated content cannot be understood properly by others.
Why the Other Options Are Wrong
Option A: A statement that all three approaches were used
No report option requires all three approaches. Scope of work determines which are necessary for credible results.
Option B: The name and address of every intended user
The option is available only where the client is the sole intended user, so a list of multiple users would indicate the wrong option was chosen.
Option C: A complete summary of all the data analyzed
A complete summary of data analysed is characteristic of an Appraisal Report. The Restricted option abbreviates precisely that content.
For the Client's Eyes Only
For the Client's Eyes Only. The content is thin because the reader already knows the assignment.
How to use: Confirm the client is the sole intended user before choosing this option. Any additional user rules it out.
Exam Tip
The abbreviated content is permitted because the workfile carries the support. That workfile obligation is not reduced by the report option.
Common Mistakes to Avoid
- -Using the option where additional intended users exist
- -Omitting or burying the use restriction
- -Assuming the abbreviated report permits an abbreviated workfile
Concept Deep Dive
Analysis
A Restricted Appraisal Report is the abbreviated reporting option, and what makes it workable is that it is written for the client alone. Its content requirements are minimal because the appraiser may rely on the workfile for supporting detail and on the client's own knowledge of the assignment — which means a reader who is not the client has no way to understand it properly. USPAP therefore requires a prominent use restriction: a statement that the report is restricted to the stated intended user, that the appraiser's opinions and conclusions may not be understood properly without additional information in the workfile, and that the report should not be relied upon by anyone else. The corollary is that the option is available only where the client is the sole intended user; where others will use the report, the fuller Appraisal Report option is required. The distractors describe requirements that do not attach: no approach requirement, no address listing, and no complete data summary — the last being precisely what this option omits.
Background Knowledge
USPAP provides Appraisal Report and Restricted Appraisal Report options. The Restricted option is available only where the client is the sole intended user, contains abbreviated content, and must prominently state a use restriction.
Real-World Application
An appraiser preparing an internal portfolio review for a single client uses the Restricted option and states the use restriction prominently on the first page.
More USPAP Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
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