1.2.7.2. Jurisdictional Exceptions. While these Standards generally conform to USPAP,24 in certain instances it is necessary to invoke USPAP’s Jurisdictional Exception Rule to comply with federal law relating to the valuation of real estate for just compensation purposes. Areas of these Standards that preclude compliance with USPAP and therefore require invoking the Jurisdictional Exception Rule are briefly discussed here. 

USPAP’s Jurisdictional Exception Rule simply provides that “[i]f any applicable law or regulation precludes compliance with any part of USPAP, only that part of USPAP becomes void for that assignment.” Further, a Comment in the Jurisdictional Exception Rule states, in part, “When an appraiser properly follows this Rule in disregarding a part of USPAP, there is no violation of USPAP.”25 

As made clear below, the conflicts between these Standards and USPAP that require invocation of USPAP’s Jurisdictional Exception Rule are limited and supported by clearly established federal law, which is further discussed in Section 4. The Jurisdictional Exception Rule should never be invoked lightly or without reference to the overriding federal law, rule, or regulation that requires it. USPAP and these Standards require full and prominent disclosure to avoid misleading intended users (or even casual readers) of the appraisal report. 

While these Standards are not law in and of themselves, they are based on, and describe, federal law (including case law, legislation, administrative rules, and regulations). These Standards have also been specifically incorporated by reference into a number of statutes and regulations, including the regulations that implement the Uniform Act.26 It is clear that the deviations between the requirements of these Standards and USPAP noted below fall under USPAP’s Jurisdictional Exception Rule; the legal authority justifying these exceptions consists of these Standards and the federal case law, legislation, and federal regulations upon which these Standards are based. 

Linking Estimate of Value to Specific Exposure Time. Section 1.2.4 provides that the appraiser shall not link an opinion of market value for federal acquisition purposes to a specific exposure time. The legal basis for this jurisdictional exception to USPAP Standards Rule 1-2(c) and may be found in Section 4.2 of these Standards. 

Consideration of Land Use Regulations and Anticipated Public Projects. Section 1.2.7.3.3 of these Standards provides that the appraiser disregard any changes in a property’s neighborhood brought about by the government’s project. Section 1.4.3 further instructs appraisers to disregard recent rezoning (or the probability of rezoning) of the subject property if such action was the result of the government’s project. Section 4.3.2.4.1 (Exceptions, under Zoning and Permits) explains the legal basis for these instructions. These instructions are contrary to USPAP Standards Rule 1-3(a), which requires appraisers to identify and analyze the effect on use and value of existing land use regulations and probable modifications thereof, and to USPAP Standards Rule 1-4(f), which requires appraisers to analyze the effect on value of anticipated public improvements located on or off site. Therefore, the instructions to appraisers in these Standards in this regard are considered jurisdictional exceptions. 

Specific Legislation and Regulations. Each land acquisition agency has its own rules and regulations relating to its land acquisition activities. While all of these rules and regulations work from a base of the Uniform Act and its implementing regulations, specific agency program activities sometimes make it necessary to adopt rules and regulations that are, or may be construed to be, contrary to USPAP. 

Also, it is not uncommon for Congress to enact specific legislation relating to the acquisition of a specific property or properties to be acquired for a specific public project. In some instances, adherence to the provisions of that specific legislation may require the appraiser to invoke USPAP’s Jurisdictional Exception Rule and/or prepare an appraisal under a hypothetical condition or extraordinary assumption. In such instances, it is the agency’s responsibility to advise the appraiser of the special conditions under which the appraisal is to be conducted, of the specific law requiring the invocation of USPAP’s Jurisdictional Exception Rule, and, if applicable, of the hypothetical condition or extraordinary assumption. 

Any time appraisers confront a potential conflict between USPAP and these Standards or the client’s instructions, they should always analyze the apparent conflict and avoid invocation of USPAP’s Jurisdictional Exception Rule whenever possible. Often, these Standards and the agency’s special appraisal instructions do not require a jurisdictional exception, but rather merely that the appraiser conduct an appraisal under a hypothetical condition or by adopting an extraordinary assumption.