ASA Legal & Regulatory Framework 1 — Questions and Answers
Question 1: USPAP is promulgated by which organization?
- The Appraisal Foundation (Correct answer)
- The Appraisal Institute
- The American Society of Appraisers
- The Federal Reserve
Correct answer: The Appraisal Foundation
The Appraisal Foundation, through its Appraisal Standards Board (ASB), develops and issues USPAP.
Question 2: FIRREA, enacted in 1989, requires federally related real estate transactions above threshold amounts to use appraisers who are:
- State-licensed or state-certified (Correct answer)
- ASA-designated members
- MAI-designated appraisers
- Employees of the lending institution
Correct answer: State-licensed or state-certified
FIRREA mandated state licensing and certification programs for real estate appraisers performing federally related transactions.
Question 3: In eminent domain proceedings in the US, the constitutional standard for compensation to the property owner is:
- Just compensation, typically interpreted as fair market value (Correct answer)
- Replacement cost of the property taken
- The owner's subjective value or sentimental worth
- The assessed value for property tax purposes
Correct answer: Just compensation, typically interpreted as fair market value
The Fifth Amendment requires 'just compensation,' which courts have consistently defined as the fair market value of the property taken.
Question 4: Under IRS regulations, a 'qualified appraisal' for tax purposes must be performed no earlier than how many days before the contribution date?
- 60 days (Correct answer)
- 30 days
- 90 days
- 180 days
Correct answer: 60 days
A qualified appraisal for charitable contribution purposes must be conducted no earlier than 60 days before the donation and no later than the tax return due date.
Question 5: The Uniform Standards of Professional Appraisal Practice (USPAP) Ethics Rule prohibits an appraiser from accepting an assignment where compensation is:
- Contingent on reporting a predetermined value (Correct answer)
- Based on a flat fee agreed in advance
- Paid by the party ordering the appraisal
- Higher than local customary fees
Correct answer: Contingent on reporting a predetermined value
Contingent fee arrangements tied to the value conclusion are prohibited because they create a conflict of interest that compromises appraiser independence.
Question 6: Which federal law expanded appraisal requirements and appraiser oversight beyond real estate to include personal property and business valuations in certain contexts?
- The Pension Protection Act of 2006 (Correct answer)
- FIRREA of 1989
- Dodd-Frank Act of 2010
- Sarbanes-Oxley Act of 2002
Correct answer: The Pension Protection Act of 2006
The Pension Protection Act of 2006 tightened qualified appraisal requirements for non-cash charitable contributions, including personal property and business interests.
ASA Legal & Regulatory Framework 1
USPAP is promulgated by which organization?