Effective date, date of inspection, date of incident - appraisals can have numerous dates. But knowing the differences and when to use them can make all the difference.

Next time you thumb through your schedule and have a low blood pressure moment because the dates are without mercy, think of the various dates that appraisals can employ. The dates can change as the appraisal assignment changes.

        Assignment Dictates Effective Date

An effective date is the date of value. In the ubiquitous appraisal used for obtaining insurance, the date of inspection is the effective date. Why? If the appraiser inspects an item of jewelry on Monday and renders the report on Friday, then uses Fridays date (date of the report) as the effective date, and the client loses the item on Wednesday, they can obtain insurance on Friday, using the effective date. Then comes a casualty loss claim thus defrauding the insurer.

However, effective dates for appraisals vary and depend on the assignment. In a larceny case, the date of incident will most likely be the effective date. The date of rendering the report might be a year afterwards, but value is determined on the date of incident. If a larceny case has multiple incidents, then the appraisal will have multiple effective dates, each linking an item(s) to a date of incident.

If the appraisal has an incorrect effective date(s), what might be the result? Your appraisal and testimony can be dismissed and not admitted. Or you may be given notice of the erroneous report and redo it - expect a pointed cross examination making it clear that you did not know what you were doing in front of the trier of fact (a judge or jury). Otherwise, you may be crossly examined (pun intended) with a faulty report.

Antique Pocket Watch, owned by author.

        It's a Date

An appraisal report can have multiple dates. The effective date is a mandatory date. In appraisals not to be used for obtaining insurance, the date of inspection should be included. It is also suggested that the date of the report be included. Of course, dates must be titled to avoid confusion.

As an expert witness, dates included in an appraisal are critical. Say a case involves the cause of action for conversion: taking someone's property in a civil case. The effective date is the date of incident. If the value of the item is increasing in the marketplace, then the date of inspection as an effective date will be inflated. In a case involving larceny, the threshold for grand larceny (a felony) and petty theft (a misdemeanor) hinges on value. A wrong date could inflate or deflate the value.

        Slice Through Time

If an appraiser misidentifies an item and is questioned about the problem through litigation, the effective date of the report in question becomes critical. If instrumentation or knowledge was not known at the time the report's representations were made, there is no basis for misrepresentation. In other words, the effective date slices through time for known knowledge.

        Exact Date Required?

Sometimes a transaction critical to determining value falls slightly past the effective date requirement. Let's imagine that a transaction that fits perfectly with the item being appraised occurred in an auction. The problem is the auction occurred the week after the required effective date. If appraisers can report and adjust the value as the market is rising, falling, or stable, then they can use the market information. This is when the appraiser states the effective date as "on or about" plus the effective date and a brief description of the market.

        Prospective Effective Dates

There can be effective dates that are hinged to a future event. In dissolution of marriage cases, several effective dates can be mandatory, depending on the state jurisdiction. Value may be linked the date of separation¹, date of filing,² date of hearing to divide the marital property,³ date of decree,⁴ or the court's discretion.⁵ Discretionary states vary. Kansas uses the date of filing the petition, and so does New York. One state, Maryland, has a discretionary date for value unless the spouses mutually agree to another date. Complicated.

The date of decree and date of hearing to divide the marital property are future (prospective) dates. Thus, the appraiser must value the property as close as possible to the date and then check to determine if the market is changing or stable just before trial.

        Alternate Valuation Date

The estate can, for federal filings, use an alternative valuation date - either six months after the date of death or when the property was distributed, whichever occurs first.⁶ It is important to ask if an alternate valuation date has been selected, and match your effective date to that date.

However, most states do not allow an alternate valuation date and require date of death to be the effective date. Render the report with dual effective dates to comply with federal as well as state jurisdictions if an alternate valuation date was selected by the estate's personal representative.

        What Era?

You will, no doubt, make determinations as to the period an item was made. These dates are not linked to date of value but are important to state. Be careful not to state them so they are possibly confused with dates of value. For example, if the item is an Edwardian era item, state it as such.

        Date Range

There may be assignments without a specific date. It may be a date range, and that is okay. The effective date can be a date range. If the actual date of theft is not known, but it was in October, then a range of values and October effective dates demonstrating the ups and downs of the marketplace can be reported.

        Date Everything

An appraisal's working notes need named dates. It is important to also include dates of resources; to rely on pricing from GemGuide would mandate that the working notes mention which issue was referenced and used.

Written by Bill Hoefer