An appraisal by a certified appraiser is a mandatory requirement when a buyer is using a Federal Housing Administration (FHA) insured loan. The FHA, a division of the U.S. Department of Housing and Urban Development (HUD), requires this appraisal to ensure the property serves as adequate collateral for the loan. The appraisal confirms the property's market value and verifies that it meets HUD's minimum property standards for health and safety. This protects the lender from loss and the FHA mortgage insurance fund in the event of a borrower default.

A. A certified appraisal is not a universal requirement for property transfer; for example, cash transactions or transfers by gift do not legally mandate one.

B. While an appraisal may be conducted for estate tax valuation, it is not a prerequisite for heirs to legally inherit and receive title to a property.

D. In a divorce, an appraisal is a common tool to value marital assets, but it is not a strict legal requirement; the parties may agree on a value.

1. U.S. Department of Housing and Urban Development (HUD). HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook. Section II.A.1.a.i(A) "Applicability." This section explicitly states that an appraisal is required for all properties to be security for an FHA-insured mortgage.

2. Massachusetts General Laws. Chapter 183: Alienation of Land. This chapter governs the transfer of real property in Massachusetts and contains no provision mandating an appraisal for a valid conveyance of title between parties.

3. Ling, D. C., & Archer, W. R. (2018). Real Estate Principles: A Value Approach (5th ed.). McGraw-Hill Education. Chapter 11, "Property and Asset Valuation," discusses the role of appraisals, noting their necessity in most mortgage lending, particularly for federally related transactions like FHA loans, but not for all property transfers.