Book 4 - Appraisal Institute of Canada

AdjudicatingThe Standards revisitedBy John Ingram, AACIChair, Adjudicating CommitteeChanges to the regulations governingprofessional practice have led to achange in the types of complaintsthat actually find their way to a hearing beforethe Adjudicating Committee and most chargesreflect only the more serious of ethical andstandards breaches. Except in the rare casesof willful disregard for professional standards,the root causes for complaints can be foundin incomplete or incorrect application ofthe Ethics Standard Rules and the AppraisalStandard Rules. The changes to the regulationshave not changed the underlying issues resultingin complaints.Appraisal Standard RulesWhile all of the Appraisal Standard Rules shouldbe addressed in an appraisal, there are a fewwhich occasionally receive less attention thanthey deserve, which leads to potential errors.In some cases, there is no error in terms of thefacts, but, rather, a failure to clearly communicatethe situation in the report. Either case canlead to subsequent complaints.• SR 6.2.10 and 6.2.11 deal with identifyingall assumptions, limiting conditions andhypothetical conditions. A typical boilerplatearray of assumptions and conditions is usefulin many circumstances, but it is importantto make sure that the standard clauses arerelevant to the case at hand. If they are notrelevant, then they should be removed fromthe report. Case-specific assumptions andconditions need to be clearly laid out so thatit is clear to the client and any other userof the report exactly what the basis for theconclusions has been. There should be aclear understanding between the client andthe appraiser of exactly what assumptions“The Standards, or lackof attention to them,is at the heart of mostprofessional practicecomplaints. “and conditions will be required to properlyaddress the specific case.• SR 6.2.23 and 6.2.24 involve analyzing agreementof sale, option or listing of the propertyas well as any prior sales of the property.These factors are key representations of themarket in which the property is trading. Failto seek out and report them at your peril.Ethics Standard RulesBreaches of some of the Appraisal Standard Rulescan, by extension, lead to allegations of EthicsStandard Rules violations. However, outside ofwillfully disregarding the Standards, or fraud,there are three key areas that lead to problems:• ER 4.2.6 relates to improperly claiming qualifications.The issue often resulting in chargeshas been dealt with before in this space, butit is worth a reminder. Members holding theCRA designation can appraise only individual,undeveloped residential dwelling sites anddwellings containing not more than four selfcontainedfamily housing units. If you areappraising a property outside of this group,simply dropping your CRA designation is notacceptable. The report must be co-signed byan AACI. If you are in doubt about whether aproperty falls within the scope of practice ofa CRA, check with the Institute.• ER 4.2.8 involves refusal to co-operate withthe Institute. In the course of investigating acomplaint, you will likely be asked to providecertain information. To refuse to do this orto delay beyond reasonable amounts of timeprovided will likely lead to a suspension untilthe requirements are met.• ER 4.2.9 deals with creating a workfile foreach assignment. If you are asked for yourworkfile as part of an investigation, there isan expectation that it contains more thana copy of the appraisal report in question.Other key items would include field notes,information on selected comparablesand notes on any conversations or otherproperty-specific data obtained in the courseof the appraisal. Comment 5.9 provides additionaldetail on the expected contents of theworkfile. These workfiles must be retainedfor a minimum of seven years.The Standards, or lack of attention to them,is at the heart of most professional practicecomplaints. This is a brief look, but it highlightswhere some of the more serious areasof concern can arise. For every assignment, itis important to always keep in mind the broadfundamentals reflected in the Standards.Adjudicating CommitteeJohn Ingram, AACI – ChairVesa Jarvela, AACIMichael Wootton, AACIPat Cooper, AACIKenneth Smith, AACIMichael Scichilone, AACITo contact this committee, email:adjudicating@aicanada.caclick here to return to table 0f contentsCanadian Property Valuation Volume 54 | book 4 | 2010 Évaluation Immobilière au Canada 41