New USPAP Q & A October 2009

[LindaSL]

Denis, are you saying for an update you should get a release; however, for a new assignment it is not necessary (even to CYA)?

 

[hastalavista]

Denis, are you saying for an update you should get a release; however, for a new assignment it is not necessary (even to CYA)?

I am saying that there is no reason to get a release to complete a new assignment. There is only a need if it requires the appraiser to disclose confidential information.

An update requires the reference/incorporation of a prior report. If the update is being completed for the same client of the original report, there is no concern about confidentiality; the original client and the update client are the same.

If the update is being completed for a new client, then the update is "incorporating" a report that was originally completed for a different client. "incorporate" means including part or all of the old assignment. And, in an update, that specifically means incorporating the prior value (as the prior value becomes the benchmark for the update).
So, the old value (which I contend is "confidential") and much of the rest of the report is incorporated. BTW, the original report cannot be changed; so the original client's name, etc. is on that report.

An appraiser (typically) cannot disclose confidential information without permission from the client.

So, given the above, the appraiser would have to obtain permission from the original client to disclose the confidential information contained in the first report in order to update the first report and complete the update (new assignment) for the new client.

Now, the new client could skip all that rigmarole if it just ordered a new assignment, period. A new assignment would typically involve a new site-visit and new analysis; however, the results of the analysis may not be any different from the original assignment.

Did I explain myself reasoning clearly? :new_smile-l:
(of course, others may disagree with my reasoning! :laugh

 

[CANative]

Denis...

If the appraiser is doing a new appraisal for a different client then he is not disclosing confidential information or assignment results.

If the appraiser is just changing the name (readdressing) then he is re-selling a prior clients confidential information and assignment results.

The terms of the engagement agreement decide which is which.

 

[LindaSL]

Thanks all!

 

[hastalavista]

Denis...

If the appraiser is doing a new appraisal for a different client then he is not disclosing confidential information or assignment results.

If the appraiser is just changing the name (readdressing) then he is re-selling a prior clients confidential information and assignment results.

The terms of the engagement agreement decide which is which.

It depends on the type of new assignment (IMNSHO); but I don't see any disagreement in what you are saying vs. what I am saying (I'm probably not saying it very well).

In a new assignment that does not require the incorporation of a prior report (with the prior results) that was originally intended for a different client, then there is no conflict or breach of confidentiality as you point out.

However, the GSE update form requires the incorporation of a prior assignment and results as communicated in a prior appraisal report as part of the new "update" report. If one is required to communicate the results of a past assignment (in this case, the entire report) completed for client A for a new assignment (called an update) for client B, I don't see how the first report can be passed on to the new client without getting a release from the old client because the original report has confidential (the value, at a minimum) information.
Carol109 said she'll do an update for client B with client A's permission. I said one does not need client A's permission to take on a new assignment but one would need client A's permission to use confidential information (the original report) in an update assignment for client B if a requirement of the update is to communicate the original results of client A's assignment (which it is).
Client A's permission is not needed to take on a new assignment from B. It is needed if client B's new assignment is an "update" that requires the incorporation of client A's report. The permission needed is not to do a new assignment but to use the confidential information.

Just like we talked about the other day, I think an appraiser can complete a new assignment for client B without any issue (assuming doing so does not conflict with client A's engagement agreement).
I don't think a new assignment is USPAP compliant if the only SOW for the new assignment is a client name-change of an old assignment.
I do think a new assignment's results can be exactly the same as the old assignment and the analysis and communication will look the same except for the effective date and client name.