UP Standards

2.2.2. Restricted Appraisal Reports. For most acquisitions and all litigation matters, restricted appraisal reports are not permitted.112 These reports cannot be reviewed to the level of detail required for federal acquisition appraisals; the intended user of the report is restricted to the client only,113 a condition that cannot be met for federal acquisition appraisals because it should be anticipated that others such as landowners, legislators, or the courts will be asked to use and rely on the appraisal report. 112 This does not prevent agencies from using restricted appraisal reports performed by internal agency appraisal staff for low value noncomplex acquisitions (in general accordance with the waiver valuation procedures established under the URA) or for internal portfolio valuation purposes. 113…

2.2.1. Oral Appraisal Reports. Oral appraisal reports are not permitted under these Standards. An oral report is inconsistent with the intended use and intended users of an appraisal prepared for federal acquisitions. Even with the appraiser’s workfile available, an oral report does not satisfy agency record-keeping requirements, and cannot be reliably reviewed. The number of intended users of appraisals in federal acquisitions also makes such a practice impossible.

2.2. Appraisal Reports. There are two written reporting options established under USPAP: an appraisal report and a restricted appraisal report. In addition, USPAP permits an appraiser to provide an oral report. For the reasons discussed under Sections 2.2.1 and 2.2.2 below, oral reports and restricted appraisal reports are not permitted under these Standards. The reporting formats set forth under Sections 2.3, 2.4, and 2.5 below are consistent with and/or exceed the requirements for an appraisal report under Standard 2 of USPAP.

2.1. Introduction.These Standards address the content and level of information and analysis required to communicate the results of an appraisal prepared for federal property acquisitions. These Standards are intended to establish requirements for appraisal report content and documentation. These Standards are not, however, intended to establish an absolute requirement for appraisal report formatting. The report formats described in Section 2.3, consisting of a four-part appraisal report for total acquisition appraisals and a seven-part appraisal report for partial acquisition appraisals, are recommended guides that agencies can modify as appropriate for agency needs. Appraisers are cautioned to closely examine their appraisal contract or assignment letter for report formatting requirements, as many agencies mandate report formatting in accordance with the recommendations herein. For…

1.15. Confidentiality. Appraisers’ valuations and supporting appraisal reports are confidential information and appraisers shall strictly abide by the following confidentiality of USPAP’s Ethics Rule:  (1) An appraiser must protect the confidential nature of the appraiser-client relationship.  (2) An appraiser must act in good faith with regard to the legitimate interests of the client in the use of confidential information and in the communication of assignment results.  (3) An appraiser must not disclose confidential information or assignment results prepared for a client to anyone other than: a) the client and persons specifically authorized by the client; b) state appraiser enforcement agencies and such third parties as may be authorized by due process of law; and c) a duly authorized professional peer…

1.14. Appraisers as Expert Witnesses. When contracting for appraisals, it is important to require the individual appraiser with whom the contract is made to actually prepare or be principally responsible for developing the appraisal and the appraisal report, and to be prepared to testify in court if it becomes necessary. There are additional reporting requirements for appraisals prepared for trial purposes (refer to Section 2.2.3 for additional requirements).  The appraiser’s role as an expert witness in litigation carries with it a heavy responsibility that should not be taken lightly no matter how many times the appraiser has testified before. In addition, federal eminent domain cases are generally complex matters involving discovery, depositions, and testimony that require the appraiser to be…

1.13. Supporting Experts Opinions and Reports.  Real estate appraisal is becoming increasingly sophisticated. Preparation of an adequately supported opinion of market value often requires the assistance of consultants with special expertise. Before issuing an appraisal assignment, agencies should attempt to identify the need for such special consultants and make arrangements for such services, either by contracting with the consultant directly or by providing for the appraiser’s retention of the consultant in the appraisal contract. If an agency retains the consultant directly, it should select the consultant in cooperation with the appraiser, who will ultimately have to rely on the consultant’s analysis and conclusions. The agency and the appraiser should jointly determine the scope of work and establish qualification criteria for…

1.11. Special Considerations in Appraisals for Inverse Condemnations. Unlike direct condemnations and other intentional acquisitions, inverse taking or inverse condemnation claims involve a threshold question of government liability. In filing a direct condemnation, the United States expressly acknowledges the actual or proposed acquisition and its obligation to pay compensation. In the inverse taking claim, on the other hand, the United States may contest the landowner’s claim that a taking occurred for which just compensation must be paid under the Fifth Amendment. Accordingly, in an inverse taking claim, the court must first determine whether a taking of property occurred for which just compensation must be paid. Appraisers may be retained to develop opinions in connection with the liability phase, the compensation…

1.10.5. Water Rights. In appraising properties in which water rights contribute to the overall value of the property, the appraiser must recognize that water rights are established under state law. Appraisers should research sales in the same district or drainage basin and take into account water-rights seniority, past demand, drought, past depletion type of use, historic place of use, conversion, and statutory limitations on transferring place of use. There may be many other market factors that should be considered, such as costs of hydrologic and engineering studies as well as legal fees that must be addressed. The appraiser should consult with the client agency and agency counsel to ensure that the characteristics of the water rights that contribute value to…