An appraiser knows, before agreeing to a new assignment, that the appraiser provided property-management services regarding the subject two years earlier. Assuming no prohibition on disclosing that prior service, what is required?
Correct Answer
C) Disclose it to the client before agreeing and in the certification
The prior-service duty covers services as an appraiser or in another capacity regarding the subject within the three years immediately preceding the agreement. If known beforehand, disclose to the client before agreeing; if discovered later, disclose upon discovery, with the required report certification disclosure. This does not authorize revealing a prior client’s confidential information or assignment results. Resolve any confidentiality restriction before accepting incompatible disclosure obligations.
Why This Is the Correct Answer
Option C is correct because the prior-service rule covers services in any capacity, including property management, within the three years before agreeing to the assignment. When the appraiser knows this beforehand, the disclosure goes to the client before agreeing to perform the assignment, and the report certification must also disclose it. The disclosure concerns the fact of the service and does not permit revealing a prior client's confidential information.
Why the Other Options Are Wrong
Option A: Disclose it only if the earlier service included an appraisal
Option A says to disclose only if the earlier service included an appraisal. The rule covers services as an appraiser or in any other capacity, so property management counts even though no appraisal was done.
Option B: Disclose it if the client specifically asks about the appraiser’s prior work
Option B says to disclose only if the client specifically asks about prior work. The duty is affirmative; the appraiser must disclose known prior services before agreeing to the assignment whether or not the client asks.
Option D: Disclose it if a prior value conclusion differed from the new one
Option D says to disclose only if a prior value conclusion differed from the new one. The trigger is the prior service itself within the three-year period, not whether any earlier value differs, and property management may involve no value conclusion at all.
Three years, any hat
Any hat the appraiser wore regarding the subject, appraiser, manager, broker, or otherwise, within three years must be disclosed. Tell the client before agreeing, then put it in the certification.
How to use: Use this when a question describes an appraiser's earlier non-appraisal involvement with a subject property.
Exam Tip
Note both parts of the duty: disclosure to the client before acceptance and disclosure in the certification. An answer covering only one part is incomplete.
Common Mistakes to Avoid
- -Thinking only prior appraisals need to be disclosed
- -Waiting for the client to ask before disclosing prior services
- -Revealing a prior client's confidential details while making the disclosure
Concept Deep Dive
Analysis
This question tests the Ethics Rule disclosure of prior services regarding the subject property. The duty covers any services performed by the appraiser, as an appraiser or in any other capacity, within the three-year period immediately preceding the agreement to perform the assignment. Property management two years earlier falls within that window, and because it is known before acceptance, it must be disclosed to the client before agreeing and in the certification.
Background Knowledge
The prior-services disclosure helps clients judge potential bias or conflicts. It applies to the three-year period immediately before the agreement to perform the assignment, covers any capacity, and requires disclosure in the report certification as well as to the client. If confidentiality restrictions prevent disclosure, the appraiser must decline the assignment or otherwise resolve the conflict.
Real-World Application
An appraiser who managed a fourplex for its owner two years ago is asked by a lender to appraise it. Before accepting, the appraiser tells the lender about the prior management services, and the signed certification later states that service.
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