Solar Energy Land Lease Question

[Motown Matt]

I'm also in the tenuous position of being asked for my opinions without contributing to family discord, so I'm walking a fine line between appraiser and relative. I definitely know better than to give the appearance of advising them as a consultant or appraiser, but they want my input nonetheless.

There is no fine line. You ARE an appraiser. They know you are an appraiser. You cannot just take that hat off if you are going to give an opinion (and would you want to for family anyway?). Any information and/or opinion you give them is based on your expertise in appraising, and you are bound by USPAP guidelines, which includes competency. If you give them a value, or implied value based on an income stream, you are doing an appraisal. If you provide them information gathered and give them an opinion to act or not, it's appraisal consulting. There is nothing wrong with either of these, but make SURE that if you are going to perform such work, that you do obtain the competency necessary, or find another appraiser with the competency for this assignment. It is, after all, an assignment, as they expect a result from you, even though they probably already know that it's not your line of expertise.

I am sure you are taking it as such, since they are family, and you are looking out for their best interest. There is a difference between advocating and providing an opinion and/or information to make their own decision in an unbiased manner, or providing an opinion to act on the offer (consulting). You DO want their decision to be the best one in their favor, based on the information you provide them - this is not advocating, it's what all of our clients desire (information from a professional to make a good business decision).

If you really feel conflicted about giving an opinion, find another competent appraiser for an opinion. At least with your knowledge about the appraising field, you can help determine the competency of another appraiser's work. For a 20yr lease, my advice to a relative would be to spend the $ for an appraisal from an appraiser competent in this area. After all, if this ends up being a bad decision in hindsight (who can predict 10-20yrs from now what rents or land use will be), they can't turn this back on you. Not a position I'd want to be in with family, personally.

 

[Terrel L. Shields]

MO...no assignment, no requirement to comply with USPAP as I see it... just let him keep peace in the family and even in a USPAP situation, you only have to disclose your lack of competency and beg off.

 

[Toldya]

Thanks for your input, MO. I was a little surprised that I was only getting helpful responses without any reprimands for not being as knowledgeable (smart, ethical, USPAP compliant, etc.) as someone else. Doggone my family for asking for me to do some research! They should know better than to seek any kind of opinion from the only family member even remotely involved in real estate.

Believe me, I have no intention of getting involved in this project as an appraiser or consultant. I haven't even offered an opinion to my family on the land's resale value, let alone the value of a lease, nor do I intend to. As a matter of fact, I think I'll just go to Utah and sell automobiles until the rest of the family makes their decision in order to avoid a potential conflict of interest.

You've confirmed the reason many people are hesitant to ask questions beyond their scope of expertise on this forum. I was just hoping for some insight along the lines of what I've received from the other respondents.

To those of you willing to offer your insight and knowledge, thank you very much for your time.

 

[Motown Matt]

Thanks for your input, MO. I was a little surprised that I was only getting helpful responses without any reprimands for not being as knowledgeable (smart, ethical, USPAP compliant, etc.) as someone else. Doggone my family for asking for me to do some research! They should know better than to seek any kind of opinion from the only family member even remotely involved in real estate.

Believe me, I have no intention of getting involved in this project as an appraiser or consultant. I haven't even offered an opinion to my family on the land's resale value, let alone the value of a lease, nor do I intend to. As a matter of fact, I think I'll just go to Utah and sell automobiles until the rest of the family makes their decision in order to avoid a potential conflict of interest.

You've confirmed the reason many people are hesitant to ask questions beyond their scope of expertise on this forum. I was just hoping for some insight along the lines of what I've received from the other respondents.

To those of you willing to offer your insight and knowledge, thank you very much for your time.

I'm not trying to steer you away from helping your family at all. I was only commenting on the small portion I quoted from you (maybe should've left out my own personal feelings about it, as they are mine only). You should want the best for your family, even if you can't provide it. USPAP compliance for competency actually goes hand in hand with this concept. In the end, you aren't providing the best service to anyone, friend, family, or any party, if you aren't fully competent. And that is what USPAP is protecting - public trust. I applaud you for trying to find out more information to help out.

 

[Annelle]

Hi Toldya,

I know a great deal about the high desert, including vacant land there, so email me, (if you can) and perhaps I can give you some insight and perhaps other considerations, including trends, etc. And given the changes going on there, it may or may not be in their best interest to lease the property for 20 years, depending on the location of their property. There are considerable ranges in acre values there for a significant number of reasons. There are also several companies that have been approaching people. Is it an actual offer, or a contact letter? If you know more about the area, it makes it easier to make decisions obviously.

 

[CANative]

I'm not trying to steer you away from helping your family at all. I was only commenting on the small portion I quoted from you (maybe should've left out my own personal feelings about it, as they are mine only). You should want the best for your family, even if you can't provide it. USPAP compliance for competency actually goes hand in hand with this concept. In the end, you aren't providing the best service to anyone, friend, family, or any party, if you aren't fully competent. And that is what USPAP is protecting - public trust. I applaud you for trying to find out more information to help out.

An appraiser must comply with USPAP when obligated by law or regulation, or by agreement with the client or intended users. In addition to these requirements, an individual should comply any time that individual represents that he or she is performing the services as an appraiser.

Lines 195-197, Ethics Rule. It doesn't appear that any of the above applies.

 

[Motown Matt]

An appraiser must comply with USPAP when obligated by law or regulation, or by agreement with the client or intended users. In addition to these requirements, an individual should comply any time that individual represents that he or she is performing the services as an appraiser.

Lines 195-197, Ethics Rule. It doesn't appear that any of the above applies.

So let me get this straight. You are saying that if your family, who knows you are a licensed appraiser, asks you for your advice based on the fact that you are an appraiser, that the above doesn't apply? I think it does apply exactly to this instance without any grey area for interpretation.

 

[CANative]

The appraiser "should" comply with any relevant portions of USPAP under these circumstances.

This is a family matter. Not a federally related transaction.

 

[Vernon Martin]

So let me get this straight. You are saying that if your family, who knows you are a licensed appraiser, asks you for your advice based on the fact that you are an appraiser, that the above doesn't apply? I think it does apply exactly to this instance without any grey area for interpretation.

I think you've already belabored your point. Are you trying to help, or are you just trying to be a bully?

 

[residentialguy]

There is no fine line. You ARE an appraiser. They know you are an appraiser. You cannot just take that hat off if you are going to give an opinion .

You can in MN. I just call it a BPO