California Gov. Gavin Newsom on Sept. 28 signed into law
AB 948, legislation that contains multiple provisions related to appraisal bias. Beginning July 1, all residential sales contracts must include a statement promising that appraisals are unbiased and not influenced by improper or illegal considerations. Refinance transactions must have the same statement included within the loan documents provided to borrowers.
Additionally, the state’s Bureau of Real Estate Appraisers must change its complaint form to include a way for individuals to note their belief that their appraisal was below market value; BREA is required to collect data regarding complaints that allege low valuations and report its findings to the state legislature on or before July 1, 2024.
Further, the legislation makes it a violation of licensing law for appraisers to base their opinions of value on any of the generally recognized protected characteristics and makes 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. Beginning Jan. 1, 2023, appraiser pre-licensing education must include one hour of instruction in cultural competency, while continuing education must include two hours of elimination of bias training and one hour of cultural competency instruction.
“We applaud Gov. Newsom for signing AB 948, which will require real estate appraisers to complete qualifying and continuing education in cultural competencies and the elimination of bias,” said Appraisal Institute President Rodman Schley, MAI, SRA. “The Appraisal Institute recognizes that unconscious bias is human and exists in various forms, and no profession is immune from it. We need to educate ourselves about potential bias and how to interrupt it, and the state of California is taking a great step in ensuring this happens. Creating a more equitable housing environment is a top priority for the Appraisal Institute, and we will continue to work with the state of California and other states to identify solutions that will effect positive change.”
Pennsylvania and Wisconsin are both considering legislation to create a statute of repose that would limit the time lawsuits could be filed against appraisers. Nine states already have enacted such legislation.
The Pennsylvania House of Representatives on June 24 unanimously passed
HB 1255, legislation that would create a statute of limitations on actions to recover damages from appraisers. If the legislation becomes law, most civil lawsuits against appraisers would have to be filed within one year from the discovery of an act or omission that gives rise to the action and no later than five years from the date the appraisal was performed. This bill is being considered by the state Senate.
Wisconsin is considering
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 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.” SB 341 awaits consideration by the full state Senate while AB 340 is pending in the Assembly Housing and Real Estate Committee.
Appraiser regulatory officials in multiple states are debating whether to accept completion of an Appraisal Qualifications Board-approved
Practical Applications of Real Estate Appraisal, known as PAREA, to satisfy the experience requirements for licensed residential credentials and certified residential appraiser credentials.
Further, 15 states have fully adopted by reference the AQB’s Real Property Appraiser Qualification Criteria, known as RPAQC. PAREA is part of RPAQC.
Colorado, Iowa, Montana and Ohio have definitively stated that completion of PAREA programs can satisfy up to 100% of the required experience hour requirements for licensed residential and certified residential credentials, and up to 50% of the total experience hours required to obtain the certified general credential.
Appraiser boards in New Mexico and Utah are in the rule-writing process, which should result in full acceptance of PAREA.
Aspiring appraisers in California can receive credit for 50% of the experience hours required for both the licensed residential and certified residential credentials by completing the appropriate PAREA program.
The Pennsylvania Board of Real Estate Appraisers clarified its position that completion of a PAREA program can satisfy 25% of the experience hour requirements for certified residential and 15% of the requirements for certified general.
The states where RPAQC is incorporated by reference are Arizona, Iowa, Louisiana, Michigan, Minnesota, Mississippi, Montana, New Jersey, North Carolina, North Dakota, Oklahoma, Rhode Island, Tennessee, Texas and Vermont. Because PAREA is part of RPAQC, it should be permissible for aspiring appraisers in these states to satisfy their experience hour requirements in a manner equivalent to how others satisfy experience requirements through the supervisor/trainee model.