The Uniform Standards of Professional Appraisal Practice (USPAP) are a set of quality control standards applicable for real estate, personal property, business, and mass appraisal. Promulgated by the Appraisal Standards Board (ASB) of The Appraisal Foundation, USPAP represents the generally accepted and recognized ethical and performance standards for the appraisal profession in the United States.
History of USPAP
Early Development
USPAP was established in 1987 as a response to the savings and loan crisis, which exposed significant flaws in appraisal practices. This collaboration between nine appraisal organizations aimed to standardize the appraisal process and mitigate risk.
Legislative Adoption
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) recognized USPAP as the standard for federally related transactions. This legislative endorsement solidified USPAP’s role within the industry, ensuring adherence to standardized ethical and performance benchmarks.
Key Components of USPAP
Definitions and Rules
The USPAP document includes definitions, rules, and ten standards. These components encompass:
- Ethics Rule: Ensure integrity, impartiality, objectivity, independent judgment, and ethical conduct.
- Record Keeping Rule: Establish guidelines for record retention.
- Competency Rule: Guarantee the appraiser’s competency in the specific area of the appraisal.
- Scope of Work Rule: Define the necessary extent of research and analyses in an appraisal assignment.
- Jurisdictional Exception Rule: Allow deviations in case of conflicting laws or regulations.
Standards
- Standards 1-6: Address real property appraisal development and reporting.
- Standards 7-8: Apply to the appraisal of personal property.
- Standards 9-10: Concern the valuation of businesses and intangible assets.
- Standard 11-13: Focus on mass appraisal practices often used by government entities.
Applications of USPAP
Real Estate
USPAP-compliant appraisals are crucial in real estate transactions, ensuring transparency, fairness, and consistency.
Financial Institutions
Lenders rely on USPAP standards to mitigate risk and ensure the accuracy of property valuations, crucial for mortgage approval processes.
Government Agencies
USPAP standards are indispensable for government-related appraisal work such as tax assessment and eminent domain actions.
Special Considerations
Compliance and Updates
USPAP undergoes periodic updates every two years by the ASB. Appraisers must stay current with these changes to maintain compliance and uphold the integrity of their work.
Certification
Certified Appraisers are required to pass the National Uniform Licensing and Certification Examination, which tests knowledge of USPAP standards.
Related Terms
- Appraisal: The process of evaluating the value of a property.
- Appraiser: A professional who conducts appraisals.
- FIRREA: Federal law mandating adherence to USPAP for federally related transactions.
FAQs
What is the purpose of USPAP?
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References
- The Appraisal Foundation. Uniform Standards of Professional Appraisal Practice (USPAP).
- Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).
Summary
The Uniform Standards of Professional Appraisal Practice (USPAP) serves as the foundational framework ensuring ethical and performance standards in the appraisal industry. Through its comprehensive and regularly updated guidelines, USPAP fosters reliability and integrity within real estate, personal property, business, and mass appraisals, benefiting diverse stakeholders including financial institutions and government entities.
