Texas Gov. Greg Abbott on June 6 signed HB 1939
, legislation that limits the time an appraiser can be civilly sued after an appraisal is completed. It takes effect Sept. 1.
The law requires lawsuits for damages or other relief against appraisers and valuation firms be filed no later than two years after discovery of the facts on which the legal action is based or five years after the date that the appraisal or appraisal review was performed. Lawsuits alleging fraud or breach of contract are not subject to these limitations.
HB 1939 was championed by the Foundation Appraisers Coalition of Texas, which consists of members of the Appraisal Institute’s Texas chapters and other professional appraisal organizations.
New legislation in Minnesota and Texas allows appraisers in those states to perform evaluations. An evaluation is an estimate of the value of real property that is provided to a federally regulated financial institution for use as part of a real estate-related financial transaction for which an appraisal is not required by federal law.
Minnesota Gov. Tim Walz signed SF 1020
on May 6, and the law takes effect Aug. 1; Texas Gov. Greg Abbott signed HB 2533
on June 15, with the law taking effect immediately.
Evaluations performed by appraisers in Minnesota and Texas must be done in accordance with the federal Interagency Appraisal and Evaluation Guidelines, and must contain a disclosure that the evaluation is not an appraisal performed in accordance with the Uniform Standards of Professional Appraisal Practice.
A total of 13 states now allow appraisers to perform evaluations.
Minnesota Gov. Tim Walz on May 6 signed SF 1020
, legislation that, in addition to allowing evaluations as noted above, will require all appraisers in the state to complete continuing education on valuation bias.
As defined in the legislation, valuation bias means “to explicitly, implicitly or structurally select and apply data to an appraisal methodology or technique in a biased manner that harms a protected class as defined by the Fair Housing Act of 1968.”
Appraisers in Minnesota who received their license prior to Sept. 1, will have until Aug. 31, 2023, to complete their required CE. An appraiser who obtains their license after Sept. 1, will have two years from the date in which they receive their license to complete the required course.
The legislation also includes a provision that aligns Minnesota’s requirements for pre-licensing and continuing education delivered over the internet with those established by the Appraiser Qualifications Board in the Real Property Appraiser Qualification Criteria.
The Michigan Department of Licensing and Regulatory Affairs on May 18 adopted a rule
that allows supervisory certified appraisers to have more than three real estate appraiser trainees.
In order to exceed the three-trainee maximum as established by the Appraiser Qualifications Board, a supervisory certified appraiser must have been licensed for more than five years and must obtain approval from the Michigan DLRA. A supervisory certified appraiser is permitted to have up to six trainees at one time, with no more than three of those trainees having less than one year of experience. A supervisory certified appraiser must provide the DLRA with a mentoring plan for each trainee and prepare and maintain trainee progress reports.
California, Colorado, Iowa, Montana, Ohio and Pennsylvania have clarified the number of experience hours that can be satisfied via completion of an Appraisal Qualifications Board-approved Practical Applications of Real Estate Appraisal program.
In California, an aspiring appraiser can receive credit for 50% of the experience hours required for both the Licensed Residential and Certified Residential credentials.
Colorado, Iowa and Montana stated that completion of the respective PAREA programs can be utilized to satisfy 100% of the required experience hour requirements for Licensed Residential and Certified Residential, as well as 50% of the experience hours required to obtain the Certified General credential.
Lawmakers in Ohio proposed a rule that would allow applicants completing a Licensed Residential program to satisfy up to 100% of the experience hour requirements for Licensed Residential, 67% for Certified Residential and 33% for Certified General. Applicants completing a Certified Residential program would receive up to 100% of the required experience hours for both Licensed Residential and Certified Residential and 50% of the hours required for Certified General.
The Pennsylvania Board of Real Estate Appraisers clarified that completion of a PAREA program can be utilized to satisfy 25% of the experience hour requirements for Certified Residential and 15% of the requirements for Certified General.
Fifteen other states have fully adopted Real Property Appraiser Qualification Criteria by reference, so candidates for an appraiser credential should be able to utilize completion of an AQB-approved PAREA program to satisfy up to 100% of the experience hour requirements for both the Licensed Residential and Certified Residential credentials.
The states that incorporate the RPAQC by reference are Arizona, Iowa, Louisiana, Michigan, Minnesota, Mississippi, Montana, New Jersey, North Carolina, North Dakota, Oklahoma, Rhode Island, Tennessee, Texas and Vermont.
Maryland Gov. Larry Hogan on May 30 signed HB 1239
and SB 859
, legislation that creates the Appraisal Gap from Historic Redlining Financial Assistance Program. The law took effect July 1.
The program offers financial assistance to affordable housing developers working in low-income census tracts to help close the appraisal gaps that occur in historically redlined neighborhoods. Developers are eligible to receive funds from the state’s Department of Housing and Community Development to cover any differences in the cost to build or redevelop a residential property and the appraised value of the property.
While more than half of the state legislatures have wrapped up their work for the year, the legislatures in 20 states are in session, and several are considering appraisal-related measures.
California is considering AB 948, legislation that contains multiple provisions related to appraisal bias, including one that would require including a notice in all sales contracts and loan documents that any appraisal must be unbiased and not influenced by improper or illegal considerations. Additionally, the state’s Bureau of Real Estate Appraisers would have to add a check box to its complaint form for use by individuals who believe their appraisal is below market value; BREA is required to collect and report demographic data regarding complaints that allege low valuations. The legislation would make it a violation of the licensing law for appraisers to base their opinions of value on any of the generally recognized protected characteristics, and make it a violation of the California Fair Employment and Housing Act for appraisers to discriminate on the basis of any of the generally recognized protected characteristics. Additionally, the legislation would require appraiser pre-licensing education to include one hour of instruction in “cultural competency” and continuing education to include two hours of “elimination of bias” training and one hour of “cultural competency” education.
Illinois is reviewing HB 93, a measure that would make it illegal for appraisers to “discriminate when preparing a comparative market analysis for residential real estate,” enable an aggrieved party to sue an appraiser in civil court and make the act of discrimination an actionable disciplinary matter for the Illinois Department of Financial and Professional Regulation.
New Jersey is debating AB 5185, legislation that would prohibit appraisers and appraisal management companies from discriminating in the valuation of residential property on the basis of the race, creed, color or national origin of the property buyer or seller. The legislation would authorize the state’s Appraisal Board to suspend or revoke the license, certification or registration of an appraiser or an AMC that is found to have engaged in discriminatory conduct, or to levy a fine or civil penalty against them. Additionally, appraisers and AMCs would be required to provide property sellers with a document informing them of the opportunity to report any suspicion of a discriminatory appraisal.
Pennsylvania is considering HB 1255, a bill that would create a statute of limitations on actions to recover damages from appraisers. Civil lawsuits against appraisers would have to be filed within one year from a person’s discovery of the act or omission giving rise to the action and no later than five years from the date the appraisal was performed.
Wisconsin introduced AB 340 and SB 341, companion bills that would limit the time an individual has to initiate a lawsuit for damages against a licensed or certified real estate appraiser to five years from the date an appraisal report was submitted to a client. The limitation would not apply to an appraiser “who commits fraud or concealment in the performance of real estate appraisal services.”