New York DTF Valuation Standards and Estate, Part III: Avoiding Errors of Omission or Commission

Professional assessors have a duty to a standard of care under federal and state law. New York Department of Taxation and Finance (“DTF”) licensed assessors must take adequate precautions to not commit 1) errors of omission; or 2) commission that would significantly affect a valuation appraisal. All valuation of real property and special property assets of an estate or otherwise, must involve numerous checks during the process to ensure prevention of errors that could affect the value conclusion of an assessment report. Sufficient attention to site inspection should be followed by county recorder record to exhibit due diligence has been practiced so to avoid errors or omissions to the extent no further inspection is required. Evidence that accurate data from reliable sources shows that a value has been ascertained accurately. Only in a circumstance where real property consists of a substantial inventory of assets with value changing characteristics, should repeat onsite inspections be required.

ASB Appraisal Guidelines

The Appraisal Standards Board (“ASB”) of the Appraisal Foundation responsible for the definition and publication of  Uniform Standards of
Professional Appraisal Practice (“USPAP”)
 recognized by the DTF, offers guidelines to
the elements of the inspection process. Advisory Opinion 2 of the ASP guidelines requires that the appraiser identify 1) the real estate to be inspected; 2) the purpose of the appraisal report and its intended use; 3) the data collection process; 4) any conditions or limitations to the appraisal; and 5) the effective date of the appraisal record;

Valuation Methods

New York licensed appraisers apply three (3) main accounting methods in realization of property value: 1) Cost; 2) Direct Sales Comparison; and 3) Income Capitalization (i.e. investment). Precedent case law has determined that the “three appraisal methods do not have to influence the result in every valuation proceeding. It suffices if they are considered,” Cawley v. SCM Corp., 72 NY2d 465, 1988. These three techniques allow for an appraiser to find the discretionary value of a property asset for purposes of taxation and record.

Reconciliation and Reporting

According to the DTF and USPAP standards, “where appropriate, the valuation process must collect, verify, analyze, and reconcile the information necessary to estimate the land value and all related aspects of the asset appearing on the balance sheet and income statement. Terms and conditions of available leases and other land use activities that may require the physical adaptation of the property subject to regulations must be considered in the unit value estimate.

Reporting of the reconciliation process leading to final valuation of a property should exhibit rationale for combined independent valuation methodologies according to USPAP standards. Valuation Information should be readily available to the owner of the property, and on record for purposes of administrative and judicial review should a property be involved in a probate proceeding or litigation matter.

Estate Law Attorney Practice

proceedings can be lengthy, extending distribution of assets for a prolonged
period. Protect your estate and its heirs from probate appraisal of property
assets by contacting a licensed attorney experienced in estate planning
valuation. Ettinger Law Firm is a licensed New York attorney practice
specializing in estate planning and probate litigation. Contact Ettinger Law Firm to schedule a consultation about an estate law matter.

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