Appraisal Standards Board Modifications To USPAP 2016-2017

There have been several important modifications to USPAP.  The Record Keeping Rule was modified.  We have written about the obligation of an appraiser to maintain copies of all reports transmitted to a client.  (Drafts are required to be retained under Appraisal Standards, September 18, 2015).

The Record Keeping Rule requires a workfile for each appraisal.  The workfile must include:

  • true copies of any all 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.)

Note the change.  The appraisal file must maintain copies of “all” written reports.  The Board stated the rationale for the change:

  • replacing the world “any” with the word “all” to clarify that the appraiser must retain true copies of all written reports.

It should be clear that if an appraiser delivers a report to a client, it must be part of the workfile.  It doesn’t matter what it was labeled.  If the report is transmitted to a client, it must be part of the appraiser’s workfile.

The Standard further provides,

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.

New York Law is firmly established.

Once it has been determined that a prior opinion of value exists, it must be produced for use on cross-examination.  It doesn’t matter what label has been put on the prior report: “draft,” “attorney’s work product,” “confidential,” etc. If prepared by the witness, it qualifies as a prior appraisal.

On cross-examination, the rules of evidence allow a party to impeach the credibility of his adversary’s witness through the use of prior inconsistent statements.  “Once a proper foundation is laid, a party may show that an adversary’s witness has, on another occasion, made oral and written statements which are inconsistent with some material part of the testimony, for the purpose of impeaching the credibility and thereby discrediting the testimony of the witness.”  §6-411, Prince, Richardson on Evidence, Eleventh Edition, citing People v Duncan, 46 NY2d 74, 80, cert den 442 US 910, reag dsmd 56 NY2d 646; Larkin v Nassau Electric R.R., 205 NY 267.

Allowing a prior appraisal to be produced provides counsel with a fair opportunity for effective cross-examination, consistent with a party’s constitutional right of confrontation and with Rule 4514 of the New York Civil Practice Law and Rules.

It is well established law in New York that a prior appraisal prepared by an expert witness testifying at trial may be introduced into evidence to impeach the credibility of that witness’s testimony.  Hicksville Properties, Inc. v Bd. of Assessors, 116 AD2d 717, 718 (2d Dept 1986) (“where an unfiled appraisal report was prepared by a party’s trial expert and is consistent with his trial testimony, the unfiled report may be introduced into evidence for impeachment purposes and used to cross-examine the witness”) (citing Swartout v State of New York, 44 AD2d 766, 354 NYS2d 254 (4th Dept 1974); Matter of City of New York (Brooklyn Bridge Southwest Urban Renewal Project), 50 Misc2d 478, 480, 270 NYS2d 703 (Sup. Ct. Spec. Term 1966)).

The only limitation is that the workfile can only be discovered after the appraiser testifies.  Until that time, the file enjoys “conditional immunity from disclosure which is conferred on material prepared for litigation” under CPLR § 3101.  CMRC Corp. v State of New York, 270 AD2d 27 (1st Dept 2000).

But once the appraiser testifies, the prior reports must be produced.  If the prior appraisals are not part of the workfile, it is appropriate to impose sanctions for the spoilation of evidence to the extent of according an adverse inference with respect to the destruction of the draft reports.  Matter of Vill. of Port Chester (Bologna), 95 AD3d 895 (2d Dept 2012).

Posted in Appraisers, Cross Examination, Published Articles, USPAP, Work file
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