Advisory Opinion 27: Appraising the Same Property for a New Client [view]
AO-27 addresses the issue of what to do when an appraiser has previously appraised the property and is then asked by a different party to appraise the same property. This request from the second party might come right on the heels of the first appraisal, or it could be months or perhaps even years after completion of the original appraisal.
AO-27 Specifically States: The Issue or question: "After an assignment has been completed and the report has been delivered, and appraiser may be asked to "readdress" (transfer) the report to another party. Does USPAP allow an appraiser to "readdress" (transfer) a report by altering it to indicate the new recipient as the client or additional intended user when the original report was completed for another party."
The ANSWER: Quote " No. Once a report has been prepated for a nameed client(s) and any other identified intended users and for an identified intended use, the appraiser cannot "readdress" (transfer) the report to another party." end quote
That said: An appraiser may certainly accept an assignment from another client on the same property. There is no prohibition in USPAP on that. However, one of the critical issues in this situation is how the appraiser handles confidential information. That issue is addressed in AO-27, which looks to the Confidentiality section of the ETHICS RULE for guidance. If a prior assignment included confidential information, its disclosure to a different client without the prior client’s authorization violates the ETHICS RULE. This is a good time to recall the definition of confidential information.
CONFIDENTIAL INFORMATION: information that is either:
- identified by the client as confidential when providing it to an appraiser and that is not available from any other source; or
- classified as confidential or private by applicable law or regulation
A common misunderstanding among appraisers about appraising the same property for a new client is the need for obtaining a release from the first client. This is not a USPAP requirement. In fact, using a release can create additional issues for the appraiser to resolve. The only “release” that might be required is the authorization of the prior client to use confidential information in the new assignment. Again, these issues are addressed in AO-27, and it is well worth your time to carefully read this Advisory Opinion.