What Are the Requirements for a USPAP-Compliant Art Appraisal Report?
Qualified art appraisers provide USPAP-compliant appraisal reports, which includes a USPAP Certification Statement. Complying with USPAP maintains credibility, legal defensibility, and adherence to ethical and professional guidelines.
While USPAP establishes the minimum standards that appraisers must follow when reporting their findings, Lindsey Owen Appraisals goes a step further and also adheres to the International Society of Appraisers Report Writing Standards.
This guide outlines the key requirements of a USPAP-compliant appraisal report, including reporting formats, required content, disclosure requirements, and ethical considerations.
Types of USPAP-Compliant Appraisal Reports
USPAP recognizes two types of written appraisal reports:
1. Appraisal Report
2. Restricted Appraisal Report
Each type has distinct minimum content requirements.
The Appraisal Report
An Appraisal Report provides a detailed explanation of the appraiser’s research, methodology, and conclusions. It is intended for use by multiple intended users and must contain enough information for any intended user to understand the report properly.
The Restricted Appraisal Report
A Restricted Appraisal Report is more concise and can only be used when the client is the sole intended user or when additional intended users are explicitly named. This format may not contain all supporting rationale for the appraiser’s conclusions. The report must clearly disclose its limitations, warning users that it may lack supporting explanations.
General Reporting Requirements
Every appraisal report—whether an Appraisal Report or Restricted Appraisal Report—must meet the following general requirements:
The Appraisal Must Be Clearly and Accurately Reported
The report must be presented in a way that does not mislead the client or intended users.
The appraiser must ensure that key facts, assumptions, and conclusions are clearly stated.
The Report Must Include Sufficient Information for Intended Users to Understand
The level of detail must match the needs of the intended user(s).
If the report is a Restricted Appraisal Report, the appraiser must ensure that the sole user understands the limitations.
All Assumptions, Extraordinary Assumptions, and Hypothetical Conditions Must Be Fully Disclosed
Any assumptions that affect the valuation must be explicitly stated.
If extraordinary assumptions or hypothetical conditions were used (such as valuing a property as if certain conditions existed), these must be prominently disclosed.
Some Requirements for a USPAP-Compliant Appraisal Report
A USPAP-compliant Appraisal Report must include the following elements:
Identification of Intended Users and the Client
Within a USPAP-compliant appraisal report, the appraiser will identify the client and any other intended users (e.g. CPAs, attorneys, the IRS, etc.), either by name or by category. If the client requests anonymity, their identity should be documented in the appraiser’s workfile rather than included in the report.
Intended Use of the Appraisal
The appraiser must state the intended use of the appraisal report(e.g., for donation, insurance, estate settlement, litigation, etc.).
Identification of the Subject Property
The appraisal must provide sufficient detail to identify the item(s) being appraised, including:
Artist or maker
Title or description
Medium or materials
Dimensions
Condition
Provenance
Any relevant market characteristics
Statement of the Type and Definition of Value
The appraiser must specify the type of value being determined (e.g., Fair Market Value, Replacement Value, Market Value). The source of the value definition must be cited.
Effective Date of the Appraisal
The report must include both:
- The effective date of value (the date the valuation applies).
- The date of the report (when the appraisal was completed).
Scope of Work Summary
The appraiser will summarize the steps taken, research conducted, and analysis performed to develop the valuation conclusion.
Disclosure of Prior Services
The appraiser must state whether they have performed any prior services regarding the subject property within the past three years.
Valuation Analysis and Approach Used
The report must outline the approaches used to determine value:
Sales Comparison Approach
Cost Approach
Income Approach
If any approach was omitted, the appraiser must explain why.
Statement of Assumptions and Limiting Conditions
The report must disclose any extraordinary assumptions or hypothetical conditions used in the valuation. If the appraisal is subject to any limiting conditions, they must be stated.
USPAP Certification Statement
While there is no such thing as a “certified art appraisal,” an art appraiser must sign a USPAP Certification Statement, confirming that:
The appraisal was conducted impartially.
The conclusions are free from bias.
The appraiser has no personal or financial interest in the property.
Ethical and Compliance Considerations
Record-Keeping
USPAP requires appraisers to maintain a workfile for every appraisal. This workfile must include:
A copy of the appraisal report.
Documentation supporting the value conclusion.
Any research, notes, or data used in the analysis.
Avoiding Bias and Advocacy
The Ethics Rule prohibits appraisers from engaging in biased, misleading, or fraudulent practices. Furhtermore, the Ethics Rule prohibits the appraiser’s compensation from being contingent on a pre-determined value conclusion.
Conclusion
A USPAP-compliant appraisal report must contain sufficient information to be clear, accurate, and meaningful to intended users. It must follow strict content and disclosure requirements, ensuring transparency, reliability, and ethical integrity.
By adhering to USPAP standards, Lindsey Owen Appraisals produces credible reports that meet professional and legal standards.
Art Appraisal or Art Advisory Questions?
Contact me at lindsey@loappraisals.com or (312)783-8749.
