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FOREWORDAPPRAISAL STANDARDS BOARDFOREWORDThe Appraisal Standards Board (ASB) of The Appraisal Foundation develops, interprets, and amends theUniform Standards of Professional Appraisal Practice (USPAP) on behalf of appraisers and users of appraisalservices. The 2012-2013 Edition of USPAP (2012-2013 USPAP) is effective January 1, 2012 throughDecember 31, 2013.USPAP has five sections: DEFINITIONS, PREAMBLE, Rules, Standards and Standards Rules, and Statementson Appraisal Standards. For convenience of reference, USPAP is published with this Foreword and a Table ofContents. The publication also includes the Advisory Opinions and Frequently Asked Questions (FAQs) asadditional reference materials. These reference materials are forms of “Other Communications” provided by theASB for guidance only and are not part of USPAP.It is important that individuals understand and adhere to changes that are adopted in each edition of USPAP.State and federal regulatory authorities enforce the content of the current or applicable edition of USPAP.History of USPAPThese Standards are based on the original Uniform Standards of Professional Appraisal Practice developed in1986–87 by the Ad Hoc Committee on Uniform Standards and copyrighted in 1987 by The AppraisalFoundation. The effective date of the original Uniform Standards was April 27, 1987. Prior to the establishmentof the ASB in 1989, USPAP had been adopted by major appraisal organizations in North America. USPAPrepresents the generally accepted and recognized standards of appraisal practice in the United States.At its organizational meeting on January 30, 1989, the Appraisal Standards Board unanimously approved andadopted the original USPAP as the initial appraisal standards promulgated by the ASB. Portions of USPAP maybe amended, interpreted, supplemented, or retired by the ASB after exposure to the appraisal profession, usersof appraisal services, and the public in accordance with established rules of procedure.Changes to USPAPOver the years, USPAP has evolved in response to changes in appraisal practice. The ASB has developed aprocess for developing both Standards and guidance based, in part, on written comments submitted in responseto exposure drafts and oral testimony presented at public meetings.GuidanceThe ASB issues guidance in the form of Advisory Opinions, USPAP Frequently Asked Questions (FAQ) andperiodic questions and responses “USPAP Q&A.” These communications do not establish new Standards orinterpret existing Standards and are not part of USPAP. They illustrate the applicability of Standards in specificsituations and offer advice from the ASB for the resolution of specific appraisal issues and problems.The USPAP Q&A is published periodically and available on The Appraisal Foundation website. Thesequestions and responses are compiled and published in the USPAP Frequently Asked Questions. The Appraisal FoundationU-i

FOREWORDContacting the Appraisal Standards BoardThe ASB invites questions about USPAP, commentary on USPAP and proposed changes to USPAP from allinterested parties, including appraisers, state enforcement agencies, users of appraisal services, and the public.If you have any comments, questions, or suggestions regarding USPAP, please contact the ASB.Appraisal Standards BoardThe Appraisal Foundation1155 15th Street, NW, Suite 1111Washington, DC 20005Phone: 202-347-7722Fax: 202-347-7727E-Mail: n.orgU-ii The Appraisal Foundation

FOREWORDAPPRAISAL STANDARDS BOARD2011 APPRAISAL STANDARDS BOARD MEMBERSJ. Carl Schultz, Jr. – ChairBarry J. Shea – Vice ChairDennis L. BadgerDennis J. BlackMargaret A. HambletonRichard KnitterR. Lee Robinette(The 2012-2013 USPAP was adopted by the 2011 Appraisal Standards Board on April 8, 2011.)2010 APPRAISAL STANDARDS BOARD MEMBERSSandra Guilfoil – ChairJ. Carl Schultz, Jr. – Vice ChairRichard L. Borges IIRichard KnitterBarry J. SheaJay E. Fishman (January 1, 2010 – June 30, 2010) Appointed to the Appraisal Practices Boardeffective July 1, 2010 The Appraisal FoundationU-iii

FOREWORDPast Appraisal Standards Board Officers and Members1989 Board MembersCharles B. Akerson - ChairJohn J. Leary - Vice ChairSherwood DaringtonDaniel A. Dinote, Jr.John L. Gadd1990 Board MembersJohn J. Leary - ChairSherwood Darington - Vice ChairDaniel A. Dinote, Jr.John L. GaddCharles B. Akerson1991 Board MembersJohn J. Leary - ChairSherwood Darington - Vice ChairDaniel A. Dinote, Jr.John L. GaddCharles B. Akerson1992 Board MembersJohn J. Leary - ChairSherwood Darington - Vice ChairDaniel A. Dinote, Jr.John L. GaddRitch LeGrand1993 Board MembersRitch LeGrand - ChairSherwood Darington - Vice ChairDaniel A. Dinote, Jr.John L. GaddJohn J. Leary1994 Board MembersSherwood Darington - ChairDaniel A. Dinote, Jr. - Vice ChairTim LebermanJohn J. LearyRitch LeGrand1995 Board MembersSherwood Darington - ChairTim Leberman - Vice ChairDaniel A. Dinote, Jr.W. David SnookLaurie Van CourtU-iv1996 Board MembersW. David Snook - ChairLaurie Van Court - Vice ChairStephanie ColemanTim Leberman1997 Board MembersW. David Snook - ChairLaurie Van Court - Vice ChairStephanie ColemanKenneth J. KaiserTim Leberman1998 Board MembersTim Leberman - ChairKenneth J. Kaiser - Vice ChairStephanie ColemanYale KramerW. David SnookLaurie Van Court1999 Board MembersKenneth J. Kaiser - ChairTim Leberman - Vice ChairYale KramerLawrence E. OfnerW. David SnookLaurie Van Court2000 Board MembersKenneth J. Kaiser - ChairYale KramerLawrence E. OfnerW. David SnookRichard A. SouthernLaurie Van Court*No Vice Chair2001 Board MembersKenneth J. Kaiser - ChairRichard A. Southern - Vice ChairThomas O. JacksonCarla G. GlassLawrence E. OfnerDanny K. Wiley2002 Board MembersDanny K. Wiley - ChairLawrence E. Ofner - Vice ChairCarla G. GlassThomas O. JacksonKenneth J. KaiserRichard A. Southern2003 Board MembersDanny K. Wiley - ChairLawrence E. Ofner - Vice ChairGregory J. AccettaCarla G. GlassPaula K. KonikoffDawn M. Molitor-Gennrich2004 Board MembersDanny K. Wiley - ChairCarla G. Glass - Vice ChairGregory J. AccettaPaula K. KonikoffDawn M. Molitor -GennrichLawrence E. Ofner2005 Board MembersCarla G. Glass - ChairGregory J. Accetta - Vice ChairJames D. CannonPaula K. KonikoffDawn M. Molitor-GennrichDanny K. Wiley2006 Board MembersGregory J. Accetta - ChairPaula K. Konikoff - Vice ChairJames D. CannonCarla G. GlassDawn M. Molitor-GennrichWilliam J. Pastuszek, Jr.Danny K. Wiley2007 Board MembersGregory J. Accetta - ChairNoreen Dornenburg - Vice ChairPaula K. KonikoffDawn M. Molitor-GennrichWilliam J. Pastuszek, Jr.William Henry Riley The Appraisal Foundation

FOREWORDPast Appraisal Standards Board Officers and Members - Continued2008 Board MembersSandra Guilfoil - ChairPaula K. Konikoff - Vice ChairGregory J. AccettaRichard L. Borges IIRichard KnitterWilliam Henry Riley III2009 Board MembersSandra Guilfoil - ChairJ. Carl Schultz, Jr. - Vice ChairRichard L. Borges IIJay E. FishmanRichard KnitterBarry J. Shea The Appraisal FoundationU-v

FOREWORDREVISIONS TO USPAP AND USPAP ADVISORY OPINIONSAfter the publication of the 2010-11 edition of USPAP, a series of five exposure drafts were released to obtainfeedback on possible modifications for the 2012-13 edition. On April 8, 2011, the Appraisal Standards Board(ASB) approved and adopted modifications to the 2012-13 edition of the Uniform Standards of ProfessionalAppraisal Practice (USPAP). These modifications include:1.Revisions to DEFINITIONS of “Client,” “Extraordinary Assumption,” and “HypotheticalCondition,” as well as moving the definition of “Exposure Time” from STATEMENT ONAPPRAISAL STANDARDS NO. 6 (SMT-6) to the DEFINITIONS section - The definitionof client was revised to further clarify the proper application of the term client and to facilitatein the proper identification of the Client in assignments. Adding the concept of the effective dateof the assignment results to the definitions of Extraordinary Assumption and HypotheticalCondition will reduce misunderstanding and misapplication of both terms. The definition ofExposure Time has been moved from SMT-6 to the DEFINITIONS section which will enhancethe usability of USPAP.2.Creation of a new RECORD KEEPING RULE and Related Edits to the Conduct Sectionof the ETHICS RULE - The Board heard concerns about the location of record keepingrequirements within the ETHICS RULE. After exposing the concept of moving record keepinginto a separate rule, it was determined that record keeping should be a separate Rule. However,a provision was added to the ETHICS RULE so that anyone who willfully or knowingly violatesthe RECORD KEEPING RULE is also in violation of the ETHICS RULE.3.Revisions Relating to Development and Disclosure of Exposure Time Opinion - In order toassure that intended users understand the context in which the opinion of value is developed, theBoard has adopted revisions to make it a clear requirement that reasonable exposure time mustbe reported in all assignments in which an opinion of reasonable exposure time must bedeveloped. As clarified in the 2012-13 edition of USPAP, exposure time must be developed“When exposure time is a component of the definition for the value opinion being developed.”4.Revisions to Standards Rules 2-3, 3-6, 5-3, 6-9, 8-3 and 10-3 (signed certificationstatement) - The 2010-11 edition of USPAP initiated the requirement to disclose any servicesregarding the subject property performed by the appraiser within the prior three years in thereport certification. Another requirement of USPAP is the appraiser must disclose in thecertification either the presence or absence of any current or prospective interest regarding thesubject or the parties involved. To improve consistency, for the 2012-13 edition of USPAP theBoard is requiring that prior service(s) regarding the subject property be treated similarly in thecertification as current/prospective interests are treated.5.Revisions to STANDARDS 7 and 8: PERSONAL PROPERTY APPRAISAL,DEVELOPMENT and REPORTING - The changes to STANDARDS 7 and 8 were, in largepart, the result of the work of an appointed task force made up of personal property appraisers. Ithad been several years since a comprehensive review had been made of STANDARDS 7 and 8,and after a thorough review, the task force made numerous recommendations to the Board, mostof which were adopted by the Board.6.Revisions to Advisory Opinion 21, USPAP Compliance - The revisions to Advisory Opinion21 were made in response to questions and concerns from appraisers, appraisal clients andstate appraisal regulatory officials. Advisory Opinion 21 (AO-21) contains a series ofquestions with responses along with illustrative examples. The illustrations in AO-21 werereviewed and updated or replaced as necessary to provide relevant guidance regardingwhen USPAP applies.U-vi The Appraisal Foundation

FOREWORDAdministrative edits were also made to USPAP and all guidance material, including the USPAP AdvisoryOpinions and USPAP Frequently Asked Questions, for conformity and consistency. The details of the changesto the 2012-13 edition of USPAP can be read on the Appraisal Foundation’s website,www.appraisalfoundation.org in a document entitled 2011 Summary of Actions Related to Proposed USPAPChanges. The Appraisal FoundationU-vii

FOREWORDTABLE OF CONTENTSUNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICEDEFINITIONS .U-1PREAMBLE.U-6ETHICS RULE.U-7RECORD KEEPING RULE .U-10COMPETENCY RULE.U-11SCOPE OF WORK RULE.U-13JURISDICTIONAL EXCEPTION RULE .U-15Standards and Standards RulesSTANDARD 1: REAL PROPERTY APPRAISAL, DEVELOPMENT.U-16STANDARD 2: REAL PROPERTY APPRAISAL, REPORTING.U-22STANDARD 3: APPRAISAL REVIEW, DEVELOPMENT AND REPORTING .U-31STANDARD 4: REAL PROPERTY APPRAISAL CONSULTING, DEVELOPMENT .U-39STANDARD 5: REAL PROPERTY APPRAISAL CONSULTING, REPORTING .U-42STANDARD 6: MASS APPRAISAL, DEVELOPMENT AND REPORTING.U-46STANDARD 7: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT .U-57STANDARD 8: PERSONAL PROPERTY APPRAISAL, REPORTING .U-62STANDARD 9: BUSINESS APPRAISAL, DEVELOPMENT .U-71STANDARD 10: BUSINESS APPRAISAL, REPORTING.U-75Statements on Appraisal StandardsStatements on Appraisal Standards (SMT) are authorized by the by-laws of The Appraisal Foundation and arespecifically for the purposes of clarification, interpretation, explanation, or elaboration of the UniformStandards of Professional Appraisal Practice (USPAP). Statements have the full weight of a Standards Ruleand can be adopted by the Appraisal Standards Board only after exposure and comment.Each Statement is labeled as to its applicability to the various appraisal disciplines. The abbreviations are: Real Property – RPPersonal Property – PPIntangible Property – IP (includes business interests)All disciplines – ALLSTATEMENT ON APPRAISAL STANDARDS NO. 1 (SMT-1) .U-81STATEMENT ON APPRAISAL STANDARDS NO. 2 (SMT-2) .U-82STATEMENT ON APPRAISAL STANDARDS NO. 3 (SMT-3) .U-85STATEMENT ON APPRAISAL STANDARDS NO. 4 (SMT-4) .U-87STATEMENT ON APPRAISAL STANDARDS NO. 5 (SMT-5) .U-89STATEMENT ON APPRAISAL STANDARDS NO. 6 (SMT-6) .U-90STATEMENT ON APPRAISAL STANDARDS NO. 7 (SMT-7) .U-92STATEMENT ON APPRAISAL STANDARDS NO. 8 (SMT-8) .U-93STATEMENT ON APPRAISAL STANDARDS NO. 9 (SMT- 9) .U-94STATEMENT ON APPRAISAL STANDARDS NO. 10 (SMT-10) .U-98U-viii The Appraisal Foundation

DEFINITIONSUNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE1as promulgated by theAppraisal Standards Board ofThe Appraisal Foundation2345DEFINITIONS6For the purpose of the Uniform Standards of Professional Appraisal Practice (USPAP), the followingdefinitions apply:78910APPRAISAL: (noun) the act or process of developing an opinion of value; an opinion of value.(adjective) of or pertaining to appraising and related functions such as appraisal practice orappraisal services.Comment: An appraisal must be numerically expressed as a specific amount, as a range ofnumbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion ornumerical benchmark (e.g., assessed value, collateral value).1112131415APPRAISAL CONSULTING: the act or process of developing an analysis, recommendation, or opinion tosolve a problem, where an opinion of value is a component of the analysis leading to the assignment results.Comment: An appraisal consulting assignment involves an opinion of value but does not havean appraisal or an appraisal review as its primary purpose.16171819APPRAISAL PRACTICE: valuation services performed by an individual acting as an appraiser, including butnot limited to appraisal, appraisal review, or appraisal consulting.Comment: Appraisal practice is provided only by appraisers, while valuation services areprovided by a variety of professionals and others. The terms appraisal, appraisal review, andappraisal consulting are intentionally generic and are not mutually exclusive. For example, anopinion of value may be required as part of an appraisal review and is required as acomponent of the analysis in an appraisal consulting assignment. The use of othernomenclature for an appraisal, appraisal review, or appraisal consulting assignment (e.g.,analysis, counseling, evaluation, study, submission, or valuation) does not exempt anappraiser from adherence to the Uniform Standards of Professional Appraisal Practice.2021222324252627282930APPRAISAL REVIEW: the act or process of developing and communicating an opinion about the quality ofanother appraiser’s work that was performed as part of an appraisal, appraisal review, or appraisal consultingassignment.Comment: The subject of an appraisal review assignment may be all or part of a report,workfile, or a combination of these.31323334APPRAISER: one who is expected to perform valuation services competently and in a manner that isindependent, impartial, and objective.Comment: Such expectation occurs when individuals, either by choice or by requirementplaced upon them or upon the service they provide by law, regulation, or agreement with theclient or intended users, represent that they comply.13536371See PREAMBLE and Advisory Opinion 21, USPAP Compliance.USPAP 2012-2013 Edition The Appraisal FoundationU-1

DEFINITIONS38APPRAISER’S PEERS: other appraisers who have expertise and competency in a similar type of assignment.3940ASSIGNMENT: 1) An agreement between an appraiser and a client to provide a valuation service; 2) thevaluation service that is provided as a consequence of such an agreement.41ASSIGNMENT RESULTS: an appraiser’s opinions and conclusions developed specific to an assignment.42Comment: Assignment results include an appraiser’s:43 4445 46opinions or conclusions developed in an appraisal assignment, such as value;opinions of adequacy, relevancy, or reasonableness developed in an appraisal review assignment;oropinions, conclusions, or recommendations developed in an appraisal consulting assignment.47ASSUMPTION: that which is taken to be true.4849BIAS: a preference or inclination that precludes an appraiser’s impartiality, independence, or objectivity in anassignment.50BUSINESS ENTERPRISE: an entity pursuing an economic activity.5153BUSINESS EQUITY: the interests, benefits, and rights inherent in the ownership of a business enterprise or apart thereof in any form (including, but not necessarily limited to, capital stock, partnership interests,cooperatives, sole proprietorships, options, and warrants).54CLIENT: the party or parties who engage, by employment or contract, an appraiser in a specific assignment.55Comment: The client may be an individual, group, or entity, and may engage and communicate withthe appraiser directly or through an agent.525657CONFIDENTIAL INFORMATION: information that is either: 5859 6061626364656667identified by the client as confidential when providing it to an appraiser and that is not availablefrom any other source; orclassified as confidential or private by applicable law or regulation*.*NOTICE: For example, pursuant to the passage of the Gramm-Leach-Bliley Act in November 1999, somepublic agencies have adopted privacy regulations t

2012-2013 electronic Publications Order online at www.appraisalfoundation.org or call 800-348-2831 e-Uniform StandardS of ProfeSSional aPPraiSal Practice (USPaP) Now you can purchase the 2012-2013 USPAP Electronically! Right at your finge