UP Standards

4.2.1.1. Date of Value.The date of value is generally determined by law (or a legal instruction, for the appraiser’s purposes) based on the nature of the acquisition.206 • In most direct acquisitions (such as voluntary purchases), the date of value should be as near as possible to the date of the acquisition—typically the date of the appraiser’s last property inspection.207  • In “quick-take” condemnations involving a declaration of taking, the date of value is the earlier of (1) the date the United States files a declaration of taking and deposits estimated compensation with the court, or (2) the date the government enters into possession of the property.208  • In “complaint-only” straight condemnations in which no declaration of taking is filed,…

4.2.1. Market Value Definition.  The federal definition of market value is based on Supreme Court cases that establish and explain the market value standard as the measure of just compensation.201 It applies to all types of federal acquisitions that involve payment of just compensation, whether or not condemnation may be involved.202 In most situations, the market value measure “achieves a fair ‘balance between the public’s need and the claimant’s loss.’”203 Thus, while the “Court has never attempted to prescribe a rigid rule for determining what is ‘just compensation’ under all circumstances and in all cases[,] market value has normally been accepted as a just standard.”204 These Standards follow the practical, objective, clear, and administrable rule of market value as the…

4.2. Market Value Standard.Under established law, the measure of just compensation is the market value of the property acquired. As stated by the United States Supreme Court, just compensation “means in most cases the fair market value of the property on the date it is appropriated. Under this standard, the owner is entitled to receive what a willing buyer would pay in cash to a willing seller at the time of the taking.”199 The Supreme Court has often repeated this “clear and administrable rule for just compensation: ‘The court has repeatedly held that just compensation normally is to be measured by “the market value of the property taken at the time of the taking.”’”200 As a result, these Standards require…

4.1.5. About the Sixth Edition.As noted, this is the sixth edition of the Uniform Appraisal Standards for Federal Land Acquisitions. With the passage of 16 years since publication of the previous edition, some topics of great importance in past decades have become less significant, and some issues that were controversial or unsettled have been resolved by the courts. Of course, some valuation problems remain as vital today as in years past. And while the underlying legal principles are unchanged, recent court rulings contain practical examples of how to apply the underlying law to actual valuation problems. Therefore, this Section includes case studies and citations to instructive court opinions. Most of these citations are eminent domain cases, which are often difficult…

4.1.4. Defining Property Interests. An appraiser cannot develop an opinion of market value for just compensation purposes without knowing what, exactly, the United States will acquire.187 A legal description identifies a property’s precise physical or geographic location. The property interest or interests to be acquired must be described with equal precision. The nature and extent of any property interest being acquired is determined by the acquiring agency, as delegated by Congress—not the appraiser, the landowner, or the courts.188 Under federal title regulations, the property interest must be sufficient for the government’s purpose in acquiring it,189 balanced against “the Government’s natural desire and duty to deplete the public purse no further than necessary in carrying out its projects”190 and other considerations…

4.1.3. Federal Law Controls.Just compensation is determined in accordance with federal rather than state law.177 Both appraisers and attorneys must correctly apply federal law as it affects the appraisal process in the estimations of market value, recognizing that federal and state laws differ in important respects. Appraisals for federal acquisitions must follow the appropriate legal standards.178 Most appraisals for federal acquisitions involve straightforward application of established legal standards to the facts.179 But some valuation problems require nuanced legal instructions to address complicated or undecided questions of law.180 If the correct legal standard is unclear, agencies may find it prudent to procure a dual-premise appraisal.181  Federal courts have jurisdiction to determine title (ownership) questions in federal condemnation proceedings, but sometimes refer…

4.1.2. Market Value: The Measure of Just Compensation.To ensure a fair, objective and practical standard, federal courts have long held that market value is normally the measure of just compensation.173 The market value measure “has an external validity which makes it a fair measure of public obligation to compensate the loss incurred by an owner as a result of the taking of his property for public use.”174 The “appraiser’s function is to assist…in [the] determination of just compensation by furnishing an opinion of market value.”175 Opinions of market value for federal acquisition purposes must follow federal law to provide a fair measure of just compensation. Otherwise, “a finding on the value of a [property interest] that ‘is derived from the…

4.1.1. Requirement of Just Compensation.Federal acquisitions entail different appraisal standards than other types of valuation problems because they involve payment of just compensation, and the meaning of just compensation is a question of substantive right “grounded upon the Constitution of the United States.”165 Because only the United States Supreme Court can make binding interpretations of the Constitution,166 questions with respect to just compensation must be resolved under federal common law—that is, case law.167 These questions most frequently arise in federal condemnation cases. As the Supreme Court observed: “Our jurisprudence involving condemnations…is as old as the Republic and, for the most part, involves the straightforward application of per se rules.”168 Those rules form the basis of these Standards. While most of…

4.1. Introduction to Legal Foundations.This Section explains the legal foundations for Sections 1, 2, and 3. It is written for both lawyers and non-lawyers—including appraisers, who must correctly apply federal law in the development, reporting, and review of market value appraisals in federal acquisitions. This Section discusses the legal standards that govern many recurring valuation problems, and provides guidance on specialized appraisal issues that are unique to federal acquisitions. The legal foundations discussed here hold significance even for those who are not bound to follow these Standards but must adhere to the federal law these Standards summarize and explain. 

3.8. Certification. The technical appraisal review report shall include the reviewing appraiser’s signed certification statement consistent with the certification requirements in Standard 3 of the current edition of USPAP and the following statements related to these Standards:  • The appraisal review was developed and the review report prepared in conformity with the Uniform Appraisal Standards for Federal Land Acquisitions.  • My analyses, opinions, and conclusions were developed and this review report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice, and complies with those areas of the Uniform Appraisal Standards for Federal Land Acquisitions that might require invocation of USPAP’s Jurisdictional Exception Rule (see scope of work for details).  • Review appraisers should also include any additional…