Real property appraisers will have a new edition of the Uniform Standards of Professional Appraisal Practice (USPAP) to follow beginning January 1, 2024.
The adopted 2024 USPAP draft includes multiple updates. The largest involves an expansion of the USPAP’s ETHICS RULE – meant to clarify the working appraiser’s law-abiding obligation to unbiased and non-discriminatory practices.
Keep reading to learn all the forthcoming changes to the 2024 USPAP edition and what they mean for appraisers.
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What’s changed with the 2024 USPAP Edition?
There are six key updates you should know from the adopted 2024 USPAP draft.
#1: Updated ETHICS RULE with new Non-Discrimination Section, new Advisory Opinions.
The newly adopted USPAP draft includes an extensive update to the ETHICS RULE, with the addition of a fourth prohibition section on Non-Discrimination. Additionally, two Advisory Opinions – Advisory Opinions 39 and 40 – were added to provide additional context for the ETHICS RULE update.
The ETHICS RULE now explicitly defines guidelines for non-discriminatory appraisal practice and uses verbiage more closely aligned with that of three key federal anti-discrimination laws, including:
- The Fair Housing Act (FHAct)
- The Equal Credit Opportunity Act (ECOA)
- The Civil Rights Act of 1866
Advisory Opinion 39 reiterates the guideline that all appraisers are required to understand all applicable anti-discrimination laws at the local, state, and federal levels. It also details how federal anti-discrimination laws are relevant to appraisal and provides additional guidance on the concept of disparate impact.
Advisory Opinion 40 provides appraisers details on the requirements of applicable anti-discrimination laws in the context of residential property appraisals. It also provides further guidance on violations related to using federally protected classes, demographics, and location data in appraisal reporting.
Both Advisory Opinions will replace Advisory Opinion 16.
You can read the ASB’s full rationale for these changes and the new verbiage on pages 12-40 of the final USPAP draft.
#2: Transfers and sales.
The adopted USPAP draft also includes a clarification on the use of the terms "sales” and “transfers.”
The ASB notes that, as questions have persisted on the difference between the two terms over the years, a further distinction was needed.
While a “sale” always includes the transfer of a property. The “transfer” of a property may not always include a sale.
So, the phrase “and other transfers” has been incorporated into the language of multiple USPAP standards.
See the full rationale and new verbiage on pages 42-43 of the final USPAP draft.
#3: Three retiring definitions.
To clarify and streamline terminology, the ASB will retire three definitions used in USPAP.
These terms are:
- Assignment Elements
- Misleading
- Relevant Characteristics
See the full rationale and adopted changes on page 44 of the final USPAP draft.
#4: Three modified definitions.
The ASB will also modify three definitions to clarify and streamline terminology.
The modified definitions apply to these terms:
- Appraiser
- Personal Inspection
- Workfile
See the full rationale and modified verbiage on pages 45-48 of the final USPAP draft.
#5: Other minor edits.
Four adopted minor edits to USPAP verbiage in various sections include:
- Updating minor terms
- Creating consistency between one standard and another
- Solidifying concepts
- Refining meaning
See the full rationale and list of edits on pages 49-53 of the final USPAP draft.
#6: Changes to Advisory Opinion 2.
Finally, the ASB will make changes to Advisory Opinion 2, Inspection of Subject Property.
The update will include the new modified definition of “personal inspection.”
See the full rationale and updated verbiage on pages 54-61 of the final USPAP draft.
What this USPAP update means for appraisers.
In announcing the adoption of the 2024 USPAP update, ASB Chair Michelle Czekalski Bradley noted:
"Conducting this comprehensive review and revision of the ETHICS RULE will benefit the profession and the public. The Board was pleased by the results of this process and feels that this new edition of USPAP will be an asset to appraisers and the public alike who are seeking to gain a better understanding of an appraiser's ethical obligations and requirements under fair housing laws and regulations. Bias and discrimination have never been permitted by our standards, and now that is clear to all who read them."
The new update follows expressed public concern over appraisal bias reports in the media in recent years.
The update also follows action items developed by the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE Task Force). These items are included in PAVE’s March 2022 Action Plan to Advance Property Appraisal and Valuation Equity.
The recommended actions involve further defining non-discrimination obligations in appraisal practice and related measures to prevent valuation bias.
The USPAP update process.
The ASB, one of two independent boards of The Appraisal Foundation (TAF), voted to adopt the new 2024 USPAP edition at its May 5th public meeting. The vote followed a lengthy exposure draft process, spanning five drafts and multiple public comment meetings over a year.
The ASB's USPAP update process mirrors federal rulemaking and allows stakeholders the opportunity to provide necessary feedback, comments, and perspective before changes are implemented.
Participating stakeholders include appraisers, the public, users of appraisal services, fair housing and civil rights advocates, federal and state regulators, the TAF advisory council, USPAP instructors, and other key players.
At the May 5th meeting, Czekalski Bradley reminded attendees:
“It’s a very important process. It takes time and feedback in order to end with the most beneficial language for public trust.”
This USPAP update is the first since the adoption of the 2020-2021 edition in 2019, which was subsequently extended through the end of 2023.
Unlike other editions, the 2024 USPAP will be the first with an effective date, but no expiration date.
ASB reported in 2022 that this change offers “greater flexibility to thoroughly examine proposed changes and respond in a timely manner to a changing marketplace.”
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