Monday 3rd of August 2020

APPRAISAL CERTIFICATIONS, THE WHAT AND WHY

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By now most Condition and Valuation Survey reports include some sort of a certification. However, if a report is intended or claims to be compliant with the Uniform Standards of Professional Appraisal Practice (USPAP), there is specific certification language required.

USPAP Standard 8, Personal Property Appraisal Reporting, Standards Rule 8-3, Certification, states …”A signed certification is an integral part of the appraisal report.

  • The wording of a certification does not have to match the following verbatim, but each of the elements must be addressed:

I certify that, to the best of my knowledge and belief:

  • The statements of fact contained in this report are true and correct.
  • The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.
  • I have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved.
  • I have performed no (or the specified) services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.
  • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
  • My engagement in this assignment was not contingent upon developing or reporting predetermined results.
  • My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
  • My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.
  • I have (or have not) made a personal inspection of the property that is the subject of this report.
  • No one provided significant personal property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual providing significant person property appraisal assistance must be stated).
  • An appraiser who signs any part of the appraisal report, including a letter of transmittal, must also sign a certification.

First of all, USPAP says that the certification doesn’t have to match the following verbatim, but each of the elements must be addressed. Why would someone want to change any required wording provided in a standard? I would highly recommend for any marine surveyor conducting a USPAP compliant condition and valuation survey (appraisal) to consider it a gift and stick with the published wording, verbatim.

As far as the optional items (in parentheses), there are only two items that I have ever needed to change. The first is “I have performed no (or the specified) services”…In my practice this comes up frequently as I routinely do repeat surveys on vessels. I just list the dates and types of surveys below the bullet pointed entry. I also am engaged to do the occasional desk review appraisal, so I end up changing the second to the last bullet point “I have (or have not) made a personal inspection of the property that is the subject of this report”, accordingly.

The last bulleted item deserves some attention. I have performed reviews on other marine surveyor’s appraisal where one or more other surveyors were engaged to perform condition surveys on the vessels. In this case the surveys were attached to the report (and even listed in the report table of content), so the surveyors were required to sign certifications (see item (b) above). But if the survey content was included in the body of the report then the name(s) of the person(s) providing the assistance should be added after the bulleted item.

Regarding item (b) “An appraiser who signs any part of the appraisal report, including a letter of transmittal, must also sign a certification”, is probably something that many surveyors usually don’t see or deal with. Larger appraisal firms typically may have a manager send out a summary of the appraisal on company letterhead, which accompanies the appraisal. In this case the appraiser who performed the appraisal AND the manager would need to sign certifications. As discussed above if another surveyor does a condition inspection and the report is attached to the appraisal then that person needs to sign a certification.

I have seen some certifications signed jointly, but then how do you deal with the all of the “I” statements (I have no personal interest, I have performed no services in past 3 years, etc.).

Based upon item (b) a separate certification must be completed by anyone who signs any part of the appraisal. Because of this the certification needs to be a separate, signed document, either as a separate page of the report or as an attachment to the report. If I am doing a typical Condition and Value Survey format, I usually list the certification as an attachment at the end of the report. If I am doing a report on an appraisal format (usually used for multiple vessels and/or larger appraisals), then I have the certification as a separate page of the report and include it in the report table of contents.

Finally, USPAP requires multiple items to be included in an appraisal, including, but not limited to, stating the scope of work, disclosure of all assumptions, extraordinary assumptions (those that if proven false would affect the value), and hypothetical conditions assumed, stating the appraisal methods and techniques used, stating the reason that one of the three appraisal approaches was excluded, and including the effective date of the appraisal.

Marine surveyors need to be careful with certifications. The USPAP certification states that “My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.” Just saying so doesn’t make it so.

Dana R. Teicheira is a NAMS Certified Marine Surveyor and an ASA Accredited Senior Appraiser in both Appraisal Review and Management (ARM) and Machinery and Technical Specialties (MTS), with a designation in Commercial Marine Surveying. Mr. Teicheira is headquartered in Northern California and can be contacted at 707-769-9171 or by email at dt@maritimesurveyor.com

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