The Quarry, the Statute, and the Competency Gap
A certified general appraiser whose practice is office and retail is asked to appraise an operating sand-and-gravel quarry for a state condemnation proceeding. The state statute requires the report on a prescribed form that omits the scope of work and the appraiser's certification, and requires delivery within 10 days of the inspection. The statute also requires the appraiser to value the property "as though the project did not exist" and to use a state-defined market value. The condemning authority's attorney says the appraiser can just adopt the state form and "skip the USPAP boilerplate." The appraiser has never valued a mineral operation and has no quarry sales data.
1. What does the Competency Rule require before the appraiser accepts this assignment?
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The appraiser must confront the competence gap before accepting. Mineral valuation - reserves, depletion, royalties, specialized equipment, and quarry comparables - is a distinct specialty. The appraiser's office and retail experience does not establish competence for a quarry.
- The appraiser must disclose the lack of knowledge and experience in the report and to the client.
- The appraiser must take steps to become competent: personal study, association with a mineral appraiser or geologist, or use of a specialist's data, as appropriate to the assignment.
- If the 10-day deadline makes it impossible to gain competence, the appraiser must decline. Accepting and "faking it" would violate the Competency Rule and the Conduct section of the Ethics Rule.
- The attorney's instruction to skip the USPAP material does not reduce the appraiser's competence obligation.
2. Which parts of the state requirements can be handled through the Jurisdictional Exception Rule, and how should the appraiser invoke it?
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The Jurisdictional Exception applies only where a law or regulation actually conflicts with USPAP, and only to the extent of the conflict.
- The prescribed state form's omission of the certification conflicts with Standard 2's certification requirement. That part of USPAP may be voided for this assignment, but the appraiser must cite the specific statute or regulation and explain the conflict in the report.
- The omission of the scope of work is likewise a conflict with the reporting requirements. It can be handled the same way, but the appraiser should still describe the scope somewhere in the report if the form permits, and must not pretend the scope is unnecessary.
- The requirement to value "as though the project did not exist" is a valuation premise, not a conflict with USPAP; it is a condition of the assignment and should be stated.
- A state-defined market value must be used if the law mandates it. If it conflicts with USPAP's definition, the Jurisdictional Exception may apply to that definition, but the appraiser must identify the conflict rather than silently substitute a different value.
- "Skip the boilerplate" is not a lawful invocation. The appraiser must identify each conflict, cite the authority, and limit the exception to that conflict.
3. How should the appraiser treat the state form and the 10-day deadline as supplemental standards and assignment conditions?
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Supplemental standards are binding when they are not inconsistent with USPAP; assignment conditions that make a credible appraisal impossible are grounds to decline.
- The state condemnation requirements are supplemental standards. The appraiser must follow them, except for the specific provisions that conflict with USPAP and are covered by a properly invoked Jurisdictional Exception.
- The 10-day deadline is a scope constraint. The appraiser must decide whether a credible quarry appraisal can be completed in that time with the available data and any needed specialist. If not, the appraiser should decline rather than deliver a rushed, unsupported opinion.
- The attorney's instruction to "skip the USPAP boilerplate" is not a supplemental standard and cannot be followed. Only the law's actual conflicts matter.
- The report should state the supplemental standards applied, the jurisdictional exception and its authority, and any scope limitation caused by the deadline.