Voted Best Answer
Jan 14, 2020 - 09:03 AM
FAQs #59, 60, and 61 in the Frequently Asked Questions section of the 2020-21 USPAP publication address this issue as follows:
59. SAMPLE APPRAISAL REPORTS AND THE ETHICS RULE Question: I am a fee appraiser currently seeking to get on the approved list for a prospective client. In order to be considered for approval, this lender requires appraisers to provide sample appraisal reports performed within the past year. Is there a way that I can accomplish this without violating USPAP? Response: In order to provide this information an appraiser must satisfy the Confidentiality section of the ETHICS RULE. This section states:
An appraiser must protect the confidential nature of the appraiser-client relationship. 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. An appraiser must be aware of, and comply with, all confidentiality and privacy laws and regulations applicable in an assignment. An appraiser must not disclose: (1) confidential information or (2) assignment results to anyone other than: • the client; • parties specifically authorized by the client; • state appraiser regulatory agencies; • third parties as may be authorized by due process of law; or • a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation. The Comment further explains that if all essential elements of confidential information are removed through redaction or the process of aggregation, client authorization is not required for the disclosure of the remaining information, as modified. The appraiser in this case has three options:
1. Decline the request to provide the information, or 2. Obtain authorization from the client of each sample appraisal report, or 3. Provide sample reports, but redact all information that should not be provided to anyoneother than the client, such as confidential information or assignment results. 60. PROVIDING SAMPLE APPRAISAL REPORTS
Question: Recently I’ve heard that some appraisers are using a questionable technique to provide sample appraisal reports for prospective clients. These appraisers will redact all confidential information from the report (as required to comply with the Confidentiality section of the ETHICS RULE in USPAP) and send the redacted sample report to a prospective client, but then will follow-up with an additional e-mail that provides the client with all of the information that had been redacted from the sample report. Is this practice acceptable?
Response: No. Although the confidential information and assignment results are not being communicated simultaneously with the initial submission of the sample report, they are nonetheless being communicated in the subsequent e-mail transmission.
The Confidentiality section of the ETHICS RULE does not permit communicating confidential information and assignment results without the client’s consent, even if that information is provided in a separate communication.
61. CONFIDENTIALITY AND SAMPLE APPRAISAL REPORTS
Question: I have found that many prospective clients request samples of my appraisal reports. I’m concerned that I would be in violation of appraiser-client confidentiality by providing them. To alleviate this problem, I’m considering including the following disclaimer in the fine print of my reports:
“The appraiser reserves the right to use this report in its entirety as sample work for the purpose of soliciting prospective clients unless written refusal is received from the client.”
Does USPAP allow me to do this?
Response: No. The client, not the appraiser, determines who may receive the appraisal report. The Confidentiality section of the ETHICS RULE states, in part:
An appraiser must protect the confidential nature of the appraiser-client relationship.
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.
An appraiser must be aware of, and comply with, all confidentiality and privacy laws and regulations applicable in an assignment.
An appraiser must not disclose: (1) confidential information or (2) assignment results to anyone other than:
• the client; • parties specifically authorized by the client; • state appraiser regulatory agencies; • third parties as may be authorized by due process of law; or • a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation.
Including a statement indicating that the report may be used as a sample does not constitute client authorization to distribute copies of the report.
One solution is to obtain client authorization to use each report as a work sample. An alternative solution may be to redact all confidential information from the report before providing it as a sample. The Comment to the Rule states:
When all confidential elements of confidential information, and assignments results are removed through redaction or the process of aggregation, client authorization is not required for the disclosure of the remaining information, as modified.
59. SAMPLE APPRAISAL REPORTS AND THE ETHICS RULE Question: I am a fee appraiser currently seeking to get on the approved list for a prospective client. In order to be considered for approval, this lender requires appraisers to provide sample appraisal reports performed within the past year. Is there a way that I can accomplish this without violating USPAP? Response: In order to provide this information an appraiser must satisfy the Confidentiality section of the ETHICS RULE. This section states:
An appraiser must protect the confidential nature of the appraiser-client relationship. 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. An appraiser must be aware of, and comply with, all confidentiality and privacy laws and regulations applicable in an assignment. An appraiser must not disclose: (1) confidential information or (2) assignment results to anyone other than: • the client; • parties specifically authorized by the client; • state appraiser regulatory agencies; • third parties as may be authorized by due process of law; or • a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation. The Comment further explains that if all essential elements of confidential information are removed through redaction or the process of aggregation, client authorization is not required for the disclosure of the remaining information, as modified. The appraiser in this case has three options:
1. Decline the request to provide the information, or 2. Obtain authorization from the client of each sample appraisal report, or 3. Provide sample reports, but redact all information that should not be provided to anyoneother than the client, such as confidential information or assignment results. 60. PROVIDING SAMPLE APPRAISAL REPORTS
Question: Recently I’ve heard that some appraisers are using a questionable technique to provide sample appraisal reports for prospective clients. These appraisers will redact all confidential information from the report (as required to comply with the Confidentiality section of the ETHICS RULE in USPAP) and send the redacted sample report to a prospective client, but then will follow-up with an additional e-mail that provides the client with all of the information that had been redacted from the sample report. Is this practice acceptable?
Response: No. Although the confidential information and assignment results are not being communicated simultaneously with the initial submission of the sample report, they are nonetheless being communicated in the subsequent e-mail transmission.
The Confidentiality section of the ETHICS RULE does not permit communicating confidential information and assignment results without the client’s consent, even if that information is provided in a separate communication.
61. CONFIDENTIALITY AND SAMPLE APPRAISAL REPORTS
Question: I have found that many prospective clients request samples of my appraisal reports. I’m concerned that I would be in violation of appraiser-client confidentiality by providing them. To alleviate this problem, I’m considering including the following disclaimer in the fine print of my reports:
“The appraiser reserves the right to use this report in its entirety as sample work for the purpose of soliciting prospective clients unless written refusal is received from the client.”
Does USPAP allow me to do this?
Response: No. The client, not the appraiser, determines who may receive the appraisal report. The Confidentiality section of the ETHICS RULE states, in part:
An appraiser must protect the confidential nature of the appraiser-client relationship.
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.
An appraiser must be aware of, and comply with, all confidentiality and privacy laws and regulations applicable in an assignment.
An appraiser must not disclose: (1) confidential information or (2) assignment results to anyone other than:
• the client; • parties specifically authorized by the client; • state appraiser regulatory agencies; • third parties as may be authorized by due process of law; or • a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation.
Including a statement indicating that the report may be used as a sample does not constitute client authorization to distribute copies of the report.
One solution is to obtain client authorization to use each report as a work sample. An alternative solution may be to redact all confidential information from the report before providing it as a sample. The Comment to the Rule states:
When all confidential elements of confidential information, and assignments results are removed through redaction or the process of aggregation, client authorization is not required for the disclosure of the remaining information, as modified.
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