Chapter 4

Question 1

An appraiser must promote and preserve the public trust inherent in professional appraisal practice by observing the highest standards of professional ethics.

Answer 1

Ethics rule opening

Question 2

There is a Comment in this section that states that the ETHICS RULE establishes the what of the individual appraiser.

Answer 2

personal obligations and responsibilities

Question 3

The ETHICS RULE is made up of three sections:

Answer 3

Conduct
Management
Confidentiality

Question 4

The Conduct section of this Rule covers four activities:

Answer 4

General conduct
Development
Communication
Disclosure

Question 5

The ethical obligations of USPAP apply to:
Appraisal clients
All of the answers listed
Individual appraisers
Appraisal companies

Answer 5

Individual Appraisers

Question 6

In appraisal practice, advocating the cause or interest of any party or issue is:

Permitted when done by an unlicensed appraiser
Not permitted
Permitted when appropriately disclosed
Permitted when a contingent fee is not involved

Answer 6

Not permitted

Question 7

Bias is permitted in an appraisal as long as the bias is clearly disclosed in the report.
True
False

Answer 7

False

Question 8

Two years ago, the individual represented the seller as a broker in facilitating the sale of a piece of commercial property.
Today, he receives a phone call from a mortgage lender asking him to complete an appraisal on the property for a refinance loan. What are the individual’s obligations under the ETHICS RULE?

Answer 8

Two obligations.

1. Disclose to client he provided real estate brokerage services on the property within the last 3 years
2. Disclosing in appraisal brokerage services were provided within the last 3 years

Question 9

An appraiser is disclosing to a client the fact that she had previously appraised the subject property within the prior three years. When making this disclosure, the appraiser must be careful to:

Provide the date and the value conclusion from the prior appraisal
Obtain a release from the previous client in order to proceed with the new assignment
Transmit a complete copy of the prior appraisal report and workfile to the new client
Not disclose confidential information from the previous assignment

Answer 9

Not disclose confidential information from the previous assignment

Question 10

An appraiser must disclose any service he or she provided regarding the subject property for a period of _________ prior to agreeing to perform the assignment.
Three years
USPAP does not specify a prior time period
One year
Ten years

Answer 10

three years

Question 11

In a real property appraisal assignment prepared for a mortgage lender, an appraiser is permitted by USPAP to base his compensation for an appraisal assignment on:
Whether or not the loan transaction closes
The amount of the value opinion
Reconciling the value conclusion to the high end of the indicated range
Whether or not the report is transmitted to the client by the due date

Answer 11

Whether or not the report is transmitted to the client by the due date

Question 12

An appraiser has been asked to complete an appraisal assignment. The fee is to be paid only if the loan closes. According to USPAP, may the appraiser accept the assignment under these conditions?
No, unless the appraiser receives written permission allowing the transfer of the appraisal to other parties.
Yes, as long as the appraiser clearly discloses the basis of such a contingency in the certification and in any letter of transmittal.
Yes, this is a business decision between the appraiser and the client.
No, the fee arrangement is an unethical contingency arrangement and violates the ETHICS RULE.

Answer 12

No, the fee arrangement is an unethical contingency arrangement and violates the ETHICS RULE.

Question 13

The Confidentiality section of the ETHICS RULE prohibits an appraiser from disclosing confidential information or _________ to unauthorized parties.
Non-confidential information
The appraiser’s personal financial information
Assignment results
Physical characteristics

Answer 13

Assignment Results

Question 14

An appraiser concludes that a subject property has functional inadequacies. This conclusion is:
A conclusion unrelated to value
A physical characteristic and therefore not confidential
An assignment result and must be treated as confidential
An assignment result which may be disclosed to anyone without permission

Answer 14

An assignment result and must be treated as confidential

Question 15

In most cases, an appraiser may share \_\_\_\_\_\_\_\_\_\_ from an appraisal assignment with other appraisers without obtaining the client’s consent.
Physical characteristics
All of these
Confidential information
Assignment results

Answer 15

Physical Characteristics

Question 16

1 of 3
An appraiser prepared an appraisal report in April 2019. He testified in court regarding the value of the property in January 2020. The decision was rendered in February 2020 and was appealed in April 2020. The appellate court heard the case in January 2021 and remanded the case for reconsideration by the lower court. Final disposition of the case occurred in September 2021. At a minimum, how long must the appraiser retain his workfile?
September 2026
April 2024
September 2023
February 2022

Answer 16

April 2024

Question 17

Is an appraiser permitted by USPAP to create a workfile after transmitting the report to the client?
No
USPAP does not specify
Yes

Answer 17

No

Question 18

An appraiser completes an appraisal and transmits the report to the client. The report copy retained in the appraiser’s workfile does not have a signature affixed to it. Is this permissible under USPAP?
Yes, as long as the report that was sent to the client was signed
USPAP does not address this issue
No, a true copy must include a signature
Yes, because there is no USPAP requirement for an appraisal report to contain a signature

Answer 18

No, a true copy must include a signature

Question 19

Which statement best describes the word “competency” as it relates to appraisal practice?
Clients are required to be competent.
It is an ideal, virtually impossible to achieve.
Lack of competency is expected by clients.
It is fundamental to the definition of “appraiser.”

Answer 19

It is fundamental to the definition of “appraiser.”

Question 20

In order to perform an assignment for which an appraiser initially lacks the knowledge and experience to complete competently, the appraiser must:
Refer the appraisal to an appraiser qualified to complete the assignment
Associate with an appraiser qualified to complete the assignment
Ask for more time and reduce the fee
Disclose to the client, prior to agreeing to perform the assignment, the lack of knowledge or experience

Answer 20

Disclose to the client, prior to agreeing to perform the assignment, the lack of knowledge or experience

Question 21

Which of these is NOT one of the steps required by USPAP when an appraiser wishes to perform an assignment for which he or she initially lacks the knowledge and experience?
Disclose the lack of knowledge and/or experience to the client
Take steps necessary to obtain the necessary knowledge and experience
Use a hypothetical condition to complete the assignment as though the appraiser already had the knowledge and experience
Disclose, in the report, the lack of knowledge and/or experience and the steps taken to complete the assignment competently

Answer 21

Use a hypothetical condition to complete the assignment as though the appraiser already had the knowledge and experience

Question 22

Three appraisers work together on an appraisal assignment. What would NOT be an appropriate workfile arrangement under USPAP?
The workfile is posted on the Internet, so that anyone who wants to see it will be able to access it.
The workfile is kept in a neutral location where all three appraisers will be able to access it.
Each appraiser maintains a copy of the workfile.
One appraiser maintains custody of the workfile and the other two appraisers make access and retrieval arrangements.

Answer 22

The workfile is posted on the Internet, so that anyone who wants to see it will be able to access it.

Question 23

The requirement to create and maintain a workfile for an appraisal or appraisal review assignment applies to:
Only trainees or assistants
Appraisers, clients, and intended users
Only licensed or certified appraisers
All appraisers, regardless of credential level

Answer 23

All appraisers, regardless of credential level