Assumptions now missing from USPAP; was it the leprechauns?
If only we could blame the leprechauns for stealing the definition of ASSUMPTION from USPAP. And, maybe if it was the leprechauns, they would’ve left us a pot of gold, but no, it was the ASB.
USPAP 2018-2019 no longer contains a definition for an “ASSUMPTION” and the definition of EXTRAORDINARY ASSUMPTION has been revised. The word assumption appears 85 times in the USPAP Publication, so we may want to agree upon a meaning.
By eliminating the definition for ASSUMPTION, “that which is taken to be true.” We must assume that the definition for ASSUMPTION is the same as that used in general speech and defined by Merriam-Webster’s dictionary:
3 b: fact or statement (such as a proposition, axiom (see axiom 2), postulate, or notion) taken for granted.
When does an assumption become extraordinary? If it’s unwonted, odd, aberrant, or preternatural? I think it’s a postulation! A postulation, according to Webster’s dictionary: 2 a: to assume or claim as true, existent, or necessary: depend upon or start from the postulate of.
There is no definition of extraordinary assumption in Webster’s dictionary. That made it extra important that the ASB create the definition for EXTRAORDINARY ASSUMPTION used in the USPAP and the appraisal profession. The term of art EXTRAORDINARY ASSUMPTION has been redefined in 2018 – 2019 as follows:
EXTRAORDINARY ASSUMPTION: an assignment-specific assumption, directly related to aspecific assignment, as of the effective date regarding uncertain information used in an analysis, of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions.
I would like to humbly make a recommendation to my fellow appraisers; add the definitions of assumption and extraordinary assumption in the addendum section of your appraisal reports. And, if underwriting calls, just explain to them, in simple terms, it’s a postulation!
Stay tuned to our next Food for Thought when we provide a comparison between Extraordinary Assumption and a Hypothetical Condition and examples of when they are respectively appropriate.
Good luck and do good work,
Rich