This is the exact question that I was asked recently.
“Are all North Carolina, county, ad valorem, real estate appraisers subject to the Uniform Standards of Professional Appraisal Practice (USPAP)?”
This could be a very short blog post. The answer to the question is, “no”. But a different question, “Should all North Carolina county ad valorem appraisers comply with USPAP?” leads to a more in depth discussion. The answer to that question is, “yes”. I believe if you act as an appraiser, you should comply with USPAP.
To understand why appraisers should comply with USPAP, a little history is useful. In 1986, nine leading professional appraisal organizations (one being the IAAO) formed an Ad Hoc Committee on the Uniform Standards of Professional Appraisal Practice (USPAP) in response to the crisis in the savings and loan industry. In 1987, the Committee established the Appraisal Foundation to implement USPAP as the generally accepted set of appraisal standards in the United States. These organizations recognized the importance of ensuring that appraisals are based upon established, recognized standards.
Check out this 1990 news article for more about the role of appraisers in the S&L crisis.
USPAP is a set of ethical and performance standards for all types of appraisers, including real estate, personal property, business, and even those of us involved with appraisal for property tax purposes. But being “subject” to USPAP implies that an appraiser falls under some authoritative rule that dictates they must follow USPAP. My answer to the initial question in this post is based on the fact that there is no single law or rule that oversees all appraisers. And neither USPAP nor The Appraisal Foundation is an enforcement agency. Remember this rule: The only time an appraiser is required to follow USPAP is when the appraiser is obligated by law, regulation, or agreement.
Individuals may choose to comply with USPAP at any time. In fact, the Ethics Rule in USPAP recommends that individuals comply with USPAP anytime they perform a service as an appraiser. Therefore, in cases where USPAP is not required, it’s up to individual appraisers or organizations to decide if they want to either voluntarily be subject to USPAP, or in the case of an organization – require their members to conform to USPAP standards. As an example of how law would require compliance, through FIRREA the federal government mandates USPAP compliance for state-licensed and state-certified appraisers involved in federally-related real estate transactions. This is what requires the existence of the NC Appraisal Board and the requirements of the Board on fee appraisers. For an example of how something other than law can require USPAP compliance, IAAO requires their members to follow USPAP. Many professional or certifying appraisal organizations require their members to follow USPAP. There is no law, regulation, or agreement requiring all county ad valorem appraisers to follow USPAP.
If an ad valorem appraiser happens to also be certified by the NC Appraisal Board or is an IAAO member, they must follow USPAP anytime he or she performs an appraisal practice assignment (if they are acting an appraiser), and for all appraisal and appraisal review assignments. It would be up to each of those appraisers subject to USPAP standards to know if they are performing an appraisal service that is subject to USPAP.
I think it’s helpful here to give the definition of Appraiser from USPAP.
Appraiser is defined as one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.
Comment: Such expectation occurs when individuals, either by choice or by requirement placed upon them or upon the service they provide by law, regulation, or agreement with the client or intended users, represent that they comply.
Do NC property tax appraisers meet that definition? I believe our appraisers are expected to perform valuation services competently and in a manner that is independent, impartial, and objective. I like that definition. But meeting that definition doesn’t mean you must comply with USPAP. Confusing? Just keep in mind that the definition above is part of USPAP. And USPAP is not a law or enforcement agency and the only time an appraiser is required to follow USPAP is when the appraiser is obligated by law, regulation, or agreement.
So what would it mean if an appraiser chose to comply with USPAP? I think it’s a good idea. And apparently so does the enforcement agency that has general and specific supervision of property tax appraisal in our state. NCGS 105-289(d) provides that the NC Department of Revenue is that supervising agency. The NCDOR has created optional, higher levels of achievement for appraisers and made successful completion of the 15-hour National USPAP Course a requirement for level II and III appraisers. The NC Association of Assessing Officers has also recently made the 15-hour National Course a requirement for their assessor and appraiser certification program. But keep in mind, these levels or certifications are above the minimum legal requirements, hence not required by law. And the fact that one has successfully completed a USPAP course does not make an appraiser subject to USPAP.
Certainly an appraiser who aspires to achieve these higher levels doesn’t mind being expected to perform valuation services competently and in a manner that is independent, impartial, and objective. If you are an appraiser who is at this point, and you choose to comply with USPAP, here’s the bottom line. Review the 7 bullet points on page 7 of the USPAP document, just prior to the Ethics Rule that we looked at earlier. These 7 obligations are part of the Preamble. In order to comply with USPAP, an appraiser must meet these 7 obligations. Combine that list with a sound understanding of USPAP that you’ll be introduced to in the 15-hour National USPAP Course, and you are on the road to USPAP compliance. Nothing to it!
I’m making it sound easy, when it is not. Here’s a bit of information to help ease the load. I’ve been taking USPAP update courses for many years, and became an AQB Certified USPAP Instructor earlier this year. Whether we are learning the Uniform Standards of Professional Appraisal Practice or we are learning appraisal itself, whether it’s your first year or your thirtieth, it takes a long time to see and learn it all. Quite simply, all of it hasn’t happened yet.
I encourage your comments and questions!