1B4 Update Reports
This guideline provides the policy requirements related to updating existing appraisal reports.
1.1 The Federal Government makes decisions on the purchase, lease, development, transfer, and expropriation of real property based in part, on real property appraisals. Real property appraisals used by the Federal Government must therefore meet high standards of documentation, thoroughness and reasoning.
1.2 Provincial, national, and international real estate appraisal organizations have set high professional standards for their members. As a result, PSPC consulted with and developed its real property valuation standards to meet the minimum content adopted by the major organizations of professional appraisers. In the preceding context PSPC signed a Memorandum of Understanding with each the Appraisal Institute of Canada (AIC) and l'Ordre des évaluateurs agréés du Québec (OEAQ).
1.3 PSPC generally requires a Narrative Appraisal Report (1B1), a Short Narrative Appraisal Report (1B2), a Form Appraisal Report (1B3) or an Update Report (1B4). The prominent difference between these reporting formats is the level and depth of information and analysis provided in the report.
2.1 When preparing an Update Appraisal Report, the appraiser must, in addition to adhering to the professional standards outlined by the organization from which he or she is designated, meet the PSPC Policies and Valuation Guidelines outlined in sections 2.0 Policy and 3.0 PSPC Valuation Requirements of this guideline respectively.
2.2 The report must be documented and supported so as to convince an impartial reader of the soundness of the conclusions. The material should be set forth as concisely as possible, in order to achieve effective communication with the reader while conserving the reader's time.
2.3 The appraiser must ensure that his or her appraisal is impartial, objective and does not illegally discriminate or contribute to illegal discrimination through subjective or stereotypical assumptions.
2.4 If, as by prior agreement between the appraiser and PSPC, the report prepared does not meet the minimum content requirements as set out by his or her respective organization, the report is considered a 'limited' or 'restricted' appraisal. The appraiser must make this fact clear to the reader so as not to mislead, including reasons for departure from the usual minimum content required as well as the effect that this departure may have on the final value conclusions of the report.
2.5 If certain information is not obtainable, restricted due to legislation, or considered confidential under privacy constraints, a clear statement must be made in the report as to why it was excluded and how it was verified, as well as that the information represents an arms length transaction. All information in the appraisers file must be available for viewing by the client.
2.6 The Federal Government must retain copyright to the report, and be given authorization to rely on the report for the purpose(s) stated.
2.7 It is not reasonable for any person other than the Federal Government to rely upon the report without first obtaining the written authorization of both the Chief Appraiser or designate, as well as the appraiser responsible for the report.
2.8 The appraiser designated in the Contract for Services shall be no one other than the author (original appraiser or individual approved under contract from the firm) of the original report, and shall be the only signatory of the update report, assuming full responsibility for its contents and conclusions.
2.9 The appraiser designated in the Contract for Services may rely on the original report which is subject to the update, however, re-inspection of the subject property is recommended.
2.10 The report is subject to review for compliance with the Contract for Services, as well as the PSPC Policies and Valuation Standards appearing herein. This must be completed to the satisfaction of the Chief Appraiser or designate.
2.11 The Chief Appraiser or designate holds the authority to revise these guidelines as required on a case-by-case basis. Therefore, instructions included in the Contract for Services shall take precedence over those appearing in this guideline.
3.0 PSPC Valuation Standards
3.1 The update report format need not comply with the format of the original report. For example, often an original report is done in the narrative appraisal report format and the update is done as a short narrative appraisal report.
3.2 The update report must include a cross-reference to the original report and to any previous updates. The update report must expressly incorporate by reference all applicable background data, market conditions, assumptions and limiting conditions that have remained unchanged and that were contained in the original report.
3.3 In the update, the appraiser must address any changes in market conditions and the status of the subject since the effective date of the original appraisal or prior update, and analyze the effect of these changes in arriving at a current value estimate for the subject.
3.4 Unless otherwise specified in the report, all approaches to value developed in the original appraisal must be updated. The data used in the original approaches that is applicable to the updated appraisal must be reanalyzed, along with any new data.
The appraiser must clearly state that the update report can only be relied upon as an extension of the original report and any prior updates. Furthermore, the appraiser should identify if previous updates have been carried out and clarify that the current update does "update" the original report.
3.5 Metric units of measurement (or metric followed by imperial in brackets) must be used throughout the report.
3.6 The following is the recommended content for an update report:
- Title page
- Expanded Letter of Transmittal with reference to or excerpts from the original appraisal concerning the definition of value, the date of the value estimate, the property rights appraised, the approaches used, the reconciliation and value conclusions, etc.
- Specific cross-reference linking the update to the original report and to any previous updates
- Limiting Conditions and Critical Assumptions
- Body of Report
- Identification of the real estate
- Changes in market conditions since the original appraisal or previous update. This includes assessed value, taxes, etc.
- Changes in the subject property since the original appraisal or previous update. This includes repairs, new leases, etc.
- Other information pertinent to the update
- Update on Highest and Best Use
- Update on each appraisal approach applied in the original appraisal
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