Is Sharing a Report with a Fellow Appraiser a Violation of USPAP Confidentiality?

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Confidential Information Sharing with Another Appraiser & USPAP

Appraisers routinely share confidential information & communicate assignment results with other appraisers

Appraisers frequently are faced with chances to make mistakes related to confidentiality. The Confidentiality Section of the ETHICS RULE of Uniform Standards of Professional Appraisal Practice (USPAP), as published by the Appraisal Standards Board (ASB) of the Appraisal Foundation and enforced by the North Carolina Appraisal Board, provides the rules for appraisers in North Carolina.

Appraisers often are reminded about and advised how to avoid the pitfalls of communicating with property owners, real estate brokers, lenders (other than the client), and other related parties. However, an additional problem area can be Other Appraisers.

This area surprises some appraisers who mistakenly believe it is acceptable to share a report with a fellow appraiser. In fact, the N.C. Appraisal Board staff and the Appraisal Foundation staff have confirmed the position that an appraiser may not show a report or provide confidential information to another appraiser who has not been engaged in the assignment. Sending your report to a third-party appraiser for proofreading or to “look over and let me know what you think” would be a violation. While some appraisers have argued that they should be able to share their reports with other appraisers and that it actually benefits the client for multiple professionals to provide input into the assignment, allowing for “another set of eyes on the report,” the Foundation staff has determined that there is no “constructive permission” or other type of exception to USPAP that would allow the practice.

While at least one lawyer has argued, “the language addressing confidentiality in USPAP is vague and lacking needed detail,” the plain meaning of the current language requires appraisers to provide confidential information only to the client. While there are a number of exceptions, there is no exception for fellow appraisers.

The Appraisal Standards Board did not include confidentiality in its recent Exposure Draft for changes to the 2016-2017 version of USPAP. However, after a “significant amount of correspondence” related to confidentiality, the ASB now is considering revisions to this area.

In a recent letter to the ASB, the N.C. Appraisal Board explained the situation perfectly by noting that “[a]ppraisers routinely share confidential information and communicate assignment results with other appraisers” and asked the ASB to “either make it clear that this practice is prohibited, or expand the exemptions to confidentiality.”

So, hopefully help is on the way. But for now, we still need to follow USPAP the way it is written. If you feel like you have a need to share confidential information with another appraiser (inside or outside your office), you must obtain authorization from your client before doing so. You might consider obtaining that authorization in writing and having it in your workfile. You might also find that you can handle this matter in your engagement letter.

Mel-BlackMel Black is an attorney, writer, speaker, educator, appraiser & broker. Both his law office, Mel Black Law, & the company he co-owns, BrightPath Education, are located in downtown Raleigh. As an attorney  at Mel Black Law, the majority of Mel’s work is focused on representing professionals before  their  state  licensing  Boards.  Having 11 years’ experience as Director  of the  NC  Appraisal  Board or as an Officer with the NC Real  Estate  Commission, Mel regularly handles matters  before those agencies & is retained by companies, individuals & users of  appraisal and brokerage services to advise on compliance matters and to answer questions on daily practice.

Image credit flickr - michael_swan
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1 Response

  1. Mike Ford Mike Ford says:

    I concur. As written USPAP has no provision for sharing (other than peer review within the context of the certifications and statement of limiting conditions; AND assistance of a professional nature disclosure. Until its more specifically addressed I’d add verbiage that “internal staff; and associates within the appraisal firm may provide quality control oversight & peer review short of appraisal assistance of a professional nature. All are bound by the same confidentiality requirements as the signing appraiser.”
    It may still be a gray area unless the client consents prior to acceptance. Of course if they consent, there is no issue to begin with. It would be wiser for AMCS to include enabling language in their original orders, recognizing how common (and ‘necessary / beneficial’) that this is. Even one man shops have trusted associates whose opinions they value.

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