2.3.1.7. Statement of Assumptions and Limiting Conditions. Any assumptions and limiting conditions that are necessary to the background of the appraisal shall be stated. Any agency or special legal instructions provided to the appraiser shall be referenced and a copy of such instructions shall be included in the addenda of the appraisal report.116 

If the appraisal has been made subject to any encumbrances against the property, such as easements, these shall be stated. In this regard, it is unacceptable to state that the property has been appraised as if free and clear of all encumbrances, except as stated in the body of the report; the encumbrances must be identified in this portion of the report. 

The appraiser must avoid including “boilerplate” assumptions and limiting conditions. For instance, an assumption that improvements are free from termite infestations is inappropriate in the appraisal of vacant land. Also, assumptions and limiting conditions cannot be used by an appraiser to alter an appraisal contract, assignment letter, or the appraiser’s scope of work. Unauthorized hypothetical conditions, assumptions, or limiting conditions may result in disapproval of the appraisal report. 

In a partial acquisition, the appraiser should identify those hypothetical conditions, assumptions, and limiting conditions that apply to both the before and after acquisition appraisals, those that apply only to the appraisal of the larger parcel before the acquisition, and those that apply only to the appraisal of the remainder. Appraiser assumptions and limiting conditions, as well as client and legal instructions, are discussed in greater detail in Section 1.2 of these Standards.

116 Appraisers must bear in mind that if a client or legal instruction has not been provided to them in writing, it is not considered a binding instruction. Therefore, if the appraiser accepts an oral instruction from the client or legal counsel, the appraiser becomes wholly responsible for it. Reference to a client or legal instruction, a copy of which is not in the addenda of the appraisal report, will not be acceptable justification for acceptance or adoption of the instruction and may result in disapproval of the appraisal report.