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WRITING A STATUTORY VALUATION EXPERT REPORT JACK A. WALKER, Q.C. OSGOODE-IPTI EXPERT EVIDENCE CERTIFICATE OSGOODE HALL P.D., TORONTO OCTOBER 31, 2011




Index I)

What is a Valuation Report

II)

Issues that an expert witness should consider when preparing a report (A) Is it my written report or verbal evidence that constitutes the evidence before the tribunal (B) How is my report graded i)

Did it follow Rules of Civil Procedure – s.53.03 (1) and (2)

ii)

Did it follow certain standards set by professional organizations a) USPAP b) Standards prescribed by membership in an organization or professional body c) Purpose in complying or not complying with standards d) Six key standards of a quality appraisal report e) Warning signs of a problem report

(C) Structure of the report (D) Checklist


I) What is a Valuation Report? What is it not - The opinion of value - The opinion of value is the conclusion of the appraiser based upon certain premises, data, reasoning, and opinions that constitute the valuation process - Reports do not appraise

The Appraisal Report is a communication of that opinion to the client and the Court - Similar to a Decision in a Court - It communicates the premises, data, reasoning, and opinions to the client and Court - As such it is subject to critique on its format, presentation, and content as well as the appraiser’s opinion of value.


II) Issues That the Expert Witness Should Consider When Preparing a Report (A) Is it my written report or my verbal evidence that constitutes the evidence before the tribunal? 

Substantive evidence of an expert witness is his oral evidence not his written report (Strezos v. Toronto (1975), 8 L.C.R. 294 p.299

(B) How is my written report graded? i.

Did it follow the Rules of Practice relating to what an expert opinion must contain?

ii.

Did it follow certain standards set by professional organizations?

iii.

Did it follow any standards?


(B) How is my written report graded? i.

Did it follow the Rules of Practice relating to what an expert opinion must contain?

Rules of Civil Procedure s. 53.03 (OAL 745) 53.03 (1) A party who intends to call an expert witness at trial shall, not less than 90 days before the pre-trial conference required under Rule 50, serve on every other party to the action a report, signed by the expert, containing the information listed in subrule (2.1). O. Reg. 438/08, s. 48. (2) A party who intends to call an expert witness at trial to respond to the expert witness of another party shall, not less than 60 days before the pre-trial conference, serve on every other party to the action a report, signed by the expert, containing the information listed in subrule (2.1). O. Reg. 438/08, s. 48.


(2.1) A report provided for the purposes of subrule (1) or (2) shall contain the following information: 1. The expert’s name, address and area of expertise. 2. The expert’s qualifications and employment and educational experiences in his or her area of expertise. 3. The instructions provided to the expert in relation to the proceeding. 4. The nature of the opinion being sought and each issue in the proceeding to which the opinion relates. 5. The expert’s opinion respecting each issue and, where there is a range of opinions given, a summary of the range and the reasons for the expert’s own opinion within that range. 6. The expert’s reasons for his or her opinion, including: i. a description of the factual assumptions on which the opinion is based, ii. a description of any research conducted by the expert that led him or her to form the opinion, and iii. a list of every document, if any, relied on by the expert in forming the opinion. 7. An acknowledgement of expert’s duty (Form 53) signed by the expert. O. Reg. 438/08, s. 48. (OAL p.747) •

Evidence that is fair, objective and nonpartisan

•

Evidence related only to expert’s area of expertise

•

Additional assistance as reasonably requested

•

Overriding duty


ii. Did it follow certain standards set by professional organizations? (a) USPAP – Minimum Standards (1) Competency – Only accept assignments where the assessor has the knowledge and experience to complete the assignment competently. (Standards Rule I-1 to I-6) How?

– Disclose lack of knowledge - Take necessary steps to complete competently - Describe the lack of knowledge

(2) Developing the Appraisal - Must identify the problem to be solved - Determine scope of work necessary to solve the problem - Complete the research and analysis necessary to produce a credible appraisal


(3) Reporting the Appraisal (Standard Rule 2-1 to 2-4) - Must not be misleading - Contain sufficient information to enable report to be understood - Identify the client and intended users - Describe sufficiently real estate and its characteristics - Interest appraised - Definition and source of value - Effective date of appraisal and date of the report


(3) continued, - Describe the scope of work used to develop the appraisal - Describe information analyzed to appraisal methods and techniques employed - Use of real estate as at date of appraisal and use reflected in the appraisal - Explain highest and best use developed - Set out limiting conditions and assumptions NOTE: Exclusion of the sales comparison approach, cost approach or income approach must be explained.


(4) Certification Each written real property appraisal report must contain a signed certification that is similar in content to the following form: I certify that, to the best of my knowledge and belief:  The statements of fact contained in this report are true and correct.  The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.  I have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved.  I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.  My engagement in this assignment was not contingent upon developing or reporting predetermined results.  My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.


Certification continued..  My analyses, opinion, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.  I have (or have not) made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property.)  No one provided significant real property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual providing significant real property appraisal assistance must be stated.)


(b) Standards Prescribed by Membership in an Organization or Professional Body


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iii. Did it follow any standards? (c) Purpose in complying or not complying with standards • It allows a judge or tribunal member to apply a yardstick to judge the credibility of a report. • If you don’t comply with universal minimum standards then is the report credible? • How does it stand in comparison to a report that does comply? • Example: Clublink v. MPAC and City of Oakville, Tab D


(d) 1. Complete 2. Correct 3. Cogent 4. Consistent 5. Convenient 6. Concise

Six key characteristics of a quality appraisal report:


(e) Warning signs of a problem report • References that can be traced to another report • Piecemeal construction, no cohesiveness • Spelling errors • Incorrect references • Misnumbering pages • Inclusion of plagiarized passages


(C) With Respect to the Structure of the Report (i) Is it legible? (ii) Is it presented in a planned format? (iii) Is it cohesive? (iv) Is its language understandable by the tribunal ? (v) Is it properly indexed? (vi) Does it contain an executive summary? (vii) Does the executive summary relate into the balance of the report? (viii) Does the report make proper use of appendixes?


(D) Check List for a Valuation Report (1) External Requirements (a) S.53.03 Rules of Civil Procedure  (i) Expert’s name and address  (ii) Expert’s area of expertise  (iii) Experience, academic qualifications, employment history  (iv) Instructions to expert by client  (v) Purpose of the opinion  (vi) Each issue in the proceeding to which the opinion relates  (vii) Expert’s opinion on each issue  (viii) Basis upon which opinion determined  (aa) facts upon which the opinion is based  (bb) research conducted by the expert  (cc) list of every document relied upon  (ix) Certification – 4 components  (x) signed


(b) Minimum standards              

(i) If there is an issue with knowledge or the lack thereof must identify (ii) Identify potential users (iii) Identify interest being valued (iv) Effective date of valuation and date of report (v) Use of real estate and use reflected in the appraisal (vi) Highest and best use analysis (vii) Limiting conditions and assumptions (viii) Reference to sales comparison approach, cost approach and income approach (ix) Additional certification (aa) No interest in the property and no personal interest with respect to the parties (bb) Engagement is not contingent upon developing or reporting predetermined results (cc) Compensation is not contingent upon the development or reporting of a predetermined value, etc. (dd) personal inspection (ee) Other parties involved in valuation process


(2) Housekeeping  (a) Are the pages properly numbered  (b) Is the use of defined terms consistent throughout  (c) Are the factual statements properly referenced  (d) Are the quotations properly footnoted  (e) Are the index and page numbers correct  (f) Are the figures and tables properly numbered and indexed  (3) Items to consider in organizing and preparing a report  (a) Use of a glossary for defined terms  (b) Proper use of appendices to minimize the length of the report  (c) Proper use of the executive summary  (i) What is its purpose  (ii) Does it connect itself to the balance of the report


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