Work file, How Critical is it?
How Critical is the work file?
I consider the work file responsibilities that are found in USPAP to be the most neglected. Appraisers tend to treat the work file as an after-thought rather than a fore-thought.
Appraiser workfiles largely resemble a hodge-podge of scribblings, notes, dog-eared data sheets, distorted, coffee-stained sketches on legal pads and fast-food napkins. The whole thing is jammed into a file and mostly forgotten.
To me, it is the bad comb-over of documentation. However, after reading this, I hope that you’ll afford it a tad more respect going forward.
What Is USPAP’s Work file Big Picture?
An appraiser must prepare a workfile for each appraisal, or appraisal review, or appraisal consulting assignment. A workfile must be in existence prior to the issuance of any report.
This means no back-filling a wor kfile after the fact.
A written summary of an oral report must be added to the workfile within a reasonable time after the issuance of the oral report.
The language actually conflicts with itself from the section above. “Any report” seems to include an oral report…however, for this Board this means that even if you’re giving a verbal report, you need to be able to produce a written summary of the talking points. A reasonable time won’t be five years after the fact.
The workfile must include:
- the name of the client and the identity, by name or type, of any other intended users;
- true copies of any written reports, documented on any type of media. (A true copy is a replica of the report transmitted to the client. A photocopy or an electronic copy of the entire report transmitted to the client satisfies the requirement of a true copy.);
- summaries of all oral reports or testimony, or a transcript of testimony, including the appraiser’s signed and dated certification;
- all other data, information, and documentation necessary to support the appraiser’s opinions and conclusions and to show compliance with USPAP, or references to the location(s) of such other documentation; and
“or references to the location(s) of other such documentation” can cut both ways. Many appraisers think that they are complying with the workfile requirements by pointing to on?line data storage such as MLS records, assessor records, or county recorder records.
What happens if an appraiser’s access to these records changes?
Your too-bad/so-sad story of “I can’t retrieve my data anymore” won’t cut it.
- a workfile in support of a Restricted Use Appraisal Report must be sufficient for the appraiser to produce a Summary Appraisal Report (for assignments communicated under STANDARDS 2 and 8) or an Appraisal Report (for assignments communicated under STANDARD 10).
This means that even a Restricted Use Appraisal Report must have enough back-story in the workfile to convert it easily into a Summary Report.
For How Long?
An appraiser must retain the workfile for a period of at least five years after preparation or at least two years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires last.
This means that the appraisal you completed in 2005 for which you provided testimony in 2008 regarding that report, means that you’ll be on the hook for that at least until 2013. You had better not have tossed it all in 2010.
Who Should Have Possession?
An appraiser must have custody of the workfile, or make appropriate workfile retention, access, and retrieval arrangements with the party having custody of the workfile. This includes ensuring that a workfile is stored in a medium that is retrievable by the appraiser throughout the prescribed record retention period.
This answers the “or references to the location(s) of other such documentation” question.
If your supervisor, business partner, mother-in-law, or best friend’s dentist insists upon keeping the workfile; make certain that you can access it.
If you’re going to rely on the servers of the MLS, the local assessor, or county recorder; make sure that you can access it throughout the retention period.
Websites come and go. MLS systems are subject to change and sometimes the data goes bye-bye after a set period.
You should be able to reconstruct an appraisal based upon the contents of your work file.
If this isn’t possible, then you haven’t placed enough data in the file.
Preparing a work file is like packing for a long trip. You do it before you leave; its too late if you’ve already left
By Lee Lansford – Illinois Appraiser Newsletters – Volume 4, Issue 11