USPAP violations

[CANative]

What, exactly, is a USPAP violation and who can determine violations of USPAP?

 

[ctapraser]

found this, as far as who determines the violations...that would be the USPAPians​

COMMONLY ENCOUNTERED USPAP VIOLATIONS
I. Overview: The following list of USPAP violations are those most commonly encountered by the
Board’s staff appraiser-investigators when investigating complaints filed with the Board. This list is
given for informational purposes only and does not constitute legal advice or instructions on how to
properly comply with USPAP or properly complete an appraisal assignment.​

II. Most Commonly Encountered USPAP Violations

:

A. Sales Comparison Selection of Comparable Properties​

​

. Failing to select and/or support the

selection of comparable sales using recognized methods and techniques. Examples include:
1. Leaving the subject’s neighborhood when sales data is readily available in the immediate
neighborhood;
2. Searching by price;
3. Utilizing sales of superior quality, superior site characteristics, and/or superior amenities
when more similar sales to the subject were readily available; and
4. Lack of documentation in the workfile for the comparable sales and search criteria
selected.
B. Market Analysis​

​

. Providing a market analysis of sufficient depth to be credible for the intended

use. Examples include:
1. Delineation of neighborhood boundaries;
2. Not identifying the relevant characteristics criteria of the neighborhood; and
3. Failing to identify market trends, including the analysis of and the effect, if any, of bank
owned (“REO”) properties and/or the analysis of current listings in the neighborhood.
C. Sales History​

​

. Failing to report and analyze all agreements of sale, options and listings, current

as of the appraisal’s effective date, or the sales history of the subject property for three years
prior to the effective date. Commonly found violations also include failure to report and analyze
prior listings of the subject when the listings would have a significant effect on the credibility of
the assignment results and the failure to reconcile this data with other data in the report.
D. Sales Comparison Adjustments​

​

. Failure to support adjustments in the sales comparison

approach in a market value appraisal based on recognized methods and techniques. Examples
include:
1. Developing paired sales analysis but not documenting in the appraisal report and/or
workfile;
2. Utilizing “rules of thumb” adjustments without documenting market-based support; and
3. Misrepresenting in the report that a method and technique was utilized when in fact it
was not.
E. Cost Approach​

​

. Failure to develop and/or support cost new, estimate of site value, and the

estimate of accrued depreciation. Examples include:
1. Stating that certain methods or techniques were relied upon but they were not actually
performed;
2. Reliance on County Appraisal District estimates of site value without a proper basis; and
3. Unsupported estimates of effective age and/or economic life.
08/2013
F. Certification Misrepresentations​

​

. Failing to comply with the representations made in the

certifications signed and included in the appraisal report. Examples include:
1. Stating in the certification that you inspected the subject property when in fact you had
not; and
2. Failing to identify persons that contributed significant assistance to the appraisal report.
G. Boilerplate Language​

​

. Failing to edit canned statements or boilerplate to avoid conflicting,

inappropriate, and/or incorrect statements so as to produce a misleading appraisal report. An
example includes making statements not applicable to the appraisal.
H. Site Analysis​

​

. Failing to identify, analyze, and/or report the relevant characteristics of the site

and improvements of the subject property in sufficient detail. Examples include:
1. Failing to report and describe the specific and accurate zoning for the subject property;
2. Failing to accurately calculate the subject’s gross living area (GLA) of the main dwelling
and/or not misrepresenting the GLA by including the area of auxiliary living units,
enclosed patios, and/or converted garages;
3. Failing to report and analyze easements on the property; and
4. Failing to report and analyze the existence of detrimental site conditions on adjacent
properties.
I. Highest and Best Use​

​

. Failing to provide an adequate analysis, rational and/or support of the

appraiser’s opinion of highest and best use.
J. Communication of Assignment Results​

​

. Failure to communicate the assignment results in

sufficient detail to enable the intended users to understand the appraisal report properly.
Examples include:
1. Failing to adequately describe remodeling or repairs to the subject property;
2. Failing to report and describe additional features of the property such as a swimming pool
and/or barns; and
3. Failing to reconcile the quality and quantity of data available and analyzed within the
approaches, and failing to reconcile the relevance of the approaches, methods and
techniques used to develop an opinion of value.
K. Workfile​

​

. Failing to maintain a workfile containing all data, information and documentation

necessary to support the appraiser’s opinions and conclusions and demonstrate compliance with
USPAP. Examples include:
1. Failure to make retrieval arrangements with another party if the appraiser does not have
custody of the workfile; and
2. Failure to make a workfile available when required by a state regulatory agency.
L. Scope of Work​

​

. Failing to develop, apply, and/or disclose a credible scope of work (including

extraordinary assumptions and/or hypothetical conditions). Examples include:
1. Not disclosing the scope of work actually performed; and
2. Not stating the extraordinary assumptions and/or hypothetical conditions relied on in the
assignment.​

08/2013


​

 

[CANative]

But when do these things become USPAP violations?

 

[Metamorphic]

My understanding is the become violations when the state board carries a complaint to an administrative law judge and receives a supportive judgement. Just like any other law they are "accusations" till they're upheld in court.

 

[Blueprint]

What USPAP guideline have you been accused of violating?

 

[Tim Hicks (Texas)]

Only the state boards can sanction an appraiser for a USPAP violation.

 

[Dan Umstead]

What about states that do not recognize USPAP?

 

[Don Clark]

My understanding is the become violations when the state board carries a complaint to an administrative law judge and receives a supportive judgement. Just like any other law they are "accusations" till they're upheld in court.

Not in Virginia. The Virginia Real Estate Appraiser Board has the right and duty to determine USPAP violations and violations of state regulations under the Administrative Processes Act. But, anyone can file with the Richmond, Virginia Circuit Court and appeal the decesion if theydo so within 30 days. If no appeal, then the boards decision stands. North Carolina has similar authority, and a similar appeal process. It is likely, and I have looked into this, that very few of the boards decisions are reveresed as long as the board follows the authority given to them and does not violate ones constitutional rights. The process is such in Virginia that if the board believes there is a violation, after investigating the complaint by a state investigator of the Department of Professional and Occupational Regulation, if there is prima facia evidence of a violation, the board may offer a consent agreement. If the accused turns that down then an Informal Fact Finding Conference is held. All parties can subpoena witness's, have an attorney present, or hire someone like me as a USPAP Expert to assist them at the IFFC. A member of the VREAB will chair the IFFC. After the IFFC makes a decision it then goes to the full board. When the board hears the case, the member that held the IFFC has to leave the room. Then the board discusses and then votes on the findings. They can uphold the findings, modify the findings, set or modify any monetay penalty, or throw out the case entirely. I have attended many IFFC's on behalf of appraisers, and many full board meetings and have seen all the above transpire.

To answer the baisc question.....it is a USPAP violation when the board finds that it is.

 

[Don Clark]

What about states that do not recognize USPAP?

And what state would that be? A state that does not recognize USPAP would not be permitted to have any appraiser engage in the appraisal of a Federally Regulated Transaction. To confirm that go to [url]www.ASC.gov[/URL]

 

[Lee Lansford]

What about states that do not recognize USPAP?

Which state might that be?