Loading

Understanding Appraisal Workfile ReQUIREMENTs A Division Advisory

In three minutes or less, you will learn how to be compliant with the Record Keeping Rule.

What rule of the Uniform Standards of Professional Appraisal Practice (“USPAP”) has the greatest frequency of noncompliance?

It’s the Record Keeping Rule.

In 2019, roughly 48% of the complaints investigated by the Division of Real Estate ("the Division") were non-compliant with the Record Keeping Rule of USPAP. The Board of Real Estate Appraisers ("the Board") and the Division want to achieve better compliance with the Record Keeping Rule.

Workfile Requirements

An appraiser must prepare a workfile for each appraisal or appraisal review assignment.

Preparation of the Workfile

An appraiser should not wait to prepare a workfile upon receiving the notification by the Division that a complaint has been filed against their license. The workfile must be in existence prior to the issuance of any report or other communication of assignment results.

For an oral report, a written summary must be added to the workfile within a reasonable time after the issuance of the oral report.

Contents of a Workfile

To be compliant with the Record Keeping Rule, the workfile must include:

  • The name of the client and identity, by either name or type, of any other intended user;
  • True copies of all written reports;
  • If relevant, summaries of all oral reports or testimony (or transcript of the testimony) including the appraiser’s signed and dated certification; and
  • All data, information, and documentation that are necessary to support the appraiser’s opinions and conclusions or references to the location of such data, information, or documentation.

DATA, INFORMATION, AND DOCUMENTATION EXAMPLES

The list below is by no means an exhaustive list but is meant to provide illustrations of standard data, information, and documentation included in the workfile.

  • Any data regarding the Subject
  • Any paired sale analysis
  • Notes from the Discussion with any Real Estate Professional
  • Details of Comparable Sales
  • Any Building Plans
  • Any Cost Data
  • Any Data Considered but not Used

For Restricted Appraisal Reports and Oral Appraisal Reports, the workfile must include sufficient information, data or documentation for the appraiser to produce the appraisal report. It must also include a signed and dated certification.

Retention Period of the Workfile

Workfiles must be retained for at least 5 years or 2 years after the final deposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires later.

Avoid Common Workfile Mistakes

To be compliant with the Record Keeping Rule of USPAP, an appraiser should avoid committing these common mistakes:

  • Workfile has missing data or documents necessary to support the appraiser’s opinions and conclusions;
  • Workfile is prepared after the assignment is completed or upon notification of a complaint sent by the Division;
  • Data is stored in a location that is not retrievable during the retention period;
  • There is no workfile for canceled assignments; and
  • The signed and dated certification is missing.

Noncompliance with Record Keeping Rule

Failure to be compliant with the Record Keeping Rule may result in discipline from possible violations of the Record Keeping Rule and the Ethics Rule of USPAP.

Follow a New Series of Common Appraisal Practice Issues

The Division conducts a significant amount of work product reviews every year through investigations and licensure applications. As part of the Division’s effort to better achieve compliance with frequently violated rules and for more meaningful communication, a new series regarding the most common appraisal issues seen by the Division has been developed for licensed appraisers.

Resources

This has been an advisory of the Division of Real Estate.

If you have questions please contact the Division at dora_realestate_website@state.co.us.