The Florida Real Estate Appraiser Board held two rule development workshops — one Feb. 9 the other April 4 — to consider new rules that would allow appraisers to use for certain assignments standards of appraisal practice other than the Uniform Standards of Professional Appraisal Practice.
Florida law currently gives the FREAB authority to adopt “standards of professional practice that meet or exceed nationally recognized standards of appraisal practice.” The Appraisal Institute has proposed that the FREAB permit state-certified appraisers to utilize AI’s Standards of Valuation Practice and Valuers’ Code of Professional Ethics when performing consulting services, financial reporting and tax services, portfolio valuation and international services.
In its testimony to the FREAB, AI stated that its proposal would position appraisers to better meet client needs in a cost-effective manner while ensuring that the underlying tenets of appraisal practice — independence, objectivity and impartiality — are maintained.
Legislation under development by Michigan State Rep. David Maturen would make significant changes to how the Michigan Tax Tribunal considers real property tax appeal cases.
The legislation is expected to require the MTT to make its own independent determination and statement of finding of fact relative to the subject property, including: 1) highest and best use; 2) replacement cost; 3) comparable properties; 4) comparable adjustments; and 5) the most appropriate valuation method.
The legislation also is expected to exclude comparable properties from consideration if they 1) have a highest and best use that is different from the subject; 2) were sold under economic conditions significantly different from those of the subject; 3) are vacant; and 4) are subject to a private restriction or covenant that prohibits or limits the current and lawful use of the property by a subsequent transferee.
Development of the legislation was spurred by several recent decisions by the MTT that have reduced the tax assessments of big box retailers by allowing them to utilize market values of vacant store properties as comparable properties — the so-called “dark store” approach. Proponents of the legislation, including the Michigan Association of County Treasurers, claim that dark store appeals have resulted in $47 million in lost property tax revenue.
The bill is expected to be introduced soon for consideration by the Michigan Legislature.
The Appraisal Standards Board on Feb. 10 released an FAQ
that clarifies that a due date is not an assignment condition under the Uniform Standards of Professional Appraisal Practice and that missing a due date is not an actionable USPAP violation.
The clarification was issued in response to an email sent by the Oregon Appraiser Licensing and Certification Board this past September that stated, “Failing to adhere to the assignment condition can be an actionable violation of USPAP and Oregon Statute.”
The Appraisal Institute wrote to the Oregon ALCB in October and stated, “What USPAP does say is that accepting an assignment condition that precludes an appraiser’s impartiality, which limits the scope of work so that the assignment results aren’t credible or limits the content of a report so that it’s misleading, is unacceptable. (Scope of Work Rule, U-14, Lines 441-442.) By accepting and not meeting an agreed upon due date, an appraiser has not automatically done anything that would compromise their impartiality, the credibility of the assignment results or limit the content of a report to such an extent that it is misleading. If an appraiser misses a due date but maintains impartiality, produces credible assignment results and does not limit the content of the report to the point that it is misleading, then no violation of USPAP has occurred.”
Idaho became the 39th state to enact a comprehensive appraisal management company registration and oversight law on March 23 when Gov. Butch Otter signed SB 1318
. The law takes effect July 1, 2017.
SB 1318 is heavily modeled on the federal “Minimum Requirements for Appraisal Management Companies,” which was published by the federal bank regulatory agencies on April 30, 2015.
Under the provisions of SB 1318, AMCs operating in Idaho will be required to pay appraisers for their services within 45 days after the date the appraiser provides the appraisal to the AMC. AMCs also will be required to utilize state-certified appraisers to perform appraisal reviews, and if the review requires a review appraiser to provide an opinion of value, the review appraiser must be licensed in Idaho. AMCs operating within the state will be prohibited from employing or contracting with any appraisers who have had their license refused, denied, canceled, revoked or surrendered in lieu of revocation — unless the license was subsequently reinstated. These same limitations apply to entities, such as appraisal firms, that contract with an AMC.
Legislation to enact similar AMC requirements currently is pending in Iowa, Massachusetts, New Jersey and South Carolina.
Indiana Gov. Mike Pence signed SB 300
into law on March 21, and provisions of the bill state that requirements of Indiana’s current appraiser licensing and certification law will not apply to:
“The performance of an evaluation of real property by an employee, an officer, a director, or a member of a credit or loan committee of a financial institution, or by any other person engaged by a financial institution, in a transaction for which the financial institution would not be required to use the services of a state licensed appraiser under regulations adopted under title XO of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.”
This new law may allow state-licensed and state-certified appraisers to perform evaluations without having to comply with the Uniform Standards of Professional Appraisal Practice. However, state-licensed and state-certified appraisers are cautioned to check with the Indiana Real Estate Appraiser Licensure and Certification Board and/or legal counsel prior to performing evaluation services that do not comply with USPAP.
The two other states that have allowances for state-licensed and state-certified appraisers are Tennessee and Georgia.
The Business & Occupational Licenses Committee of the Illinois House of Representatives on April 5 unanimously passed HB 5880
, legislation that would prohibit appraisal management companies from requiring appraisers on its panel to pay the national registry fees assessed by the Appraisal Subcommittee.
The bill, which will now be considered by the full House of Representatives, would prohibit AMCs from requiring appraisers to reimburse them for any overhead costs and would prohibit AMCs from reducing their payments of reasonable and customary fees to appraisers to cover any overhead costs.
The Minnesota State Legislature is considering House File 2991 and Senate File 2665
— two bills that would make significant changes to the state’s appraiser and appraisal management company licensing laws.
If enacted into law, these comprehensive bills would introduce five significant changes:
The bills would end the state’s practice of assessing investigatory costs on state-licensed and state-certified appraisers when there is a finding of no violation on the part of the appraiser.
The bills would clarify that entities employing appraisers or ones that have 15 or fewer independent contractor appraisers are not defined as appraisal management companies for the purposes of the state’s AMC oversight and registration law.
The bills would enact state requirements for the payment of reasonable and customary fees, and would establish what methods could be utilized by AMCs as proof that fees paid to appraisers were reasonable and customary and were based on specific factors associated with each assignment.
The bills would require that an AMC separately state to its client the fees paid to appraisers and the fees charged by the AMC for management of the appraisal process.
The bills would require that appraisers be paid for their services within 30 days of the appraisal report being delivered to the AMC or within 30 days of the date the appraisal report is transmitted to the client by the AMC, whichever occurs sooner.
The William Craig Company, an appraisal management company that was based in Auburn, Washington, has closed its doors allegedly leaving around $250,000 in fees unpaid to appraisers. Prior to shutting down, WCCI reportedly offered appraisers the option to be paid in WCCI stock.
Fortunately for appraisers, Washington requires AMCs operating in the state to post surety bonds of $100,000, the highest of any state currently overseeing AMCs. In order for appraisers to make a claim to the Washington Department of Labor for payment from WCCI’s bond, they likely will have to obtain a final judgment from a court and be unsuccessful in collecting on that judgment. It’s also possible that unpaid appraisers may be able to obtain payment directly from the client of the AMC that ordered the appraisal.
Washington Gov. Jay Inslee on March 31 signed SB 5597
into law making it easier for out-of-state appraisers to obtain a Washington appraiser credential.
The new law grants out-of-state appraisers a Washington credential if they are from a state deemed to be in compliance with FIRREA and where requirements for certification or licensing meet or exceed those of Washington.
Previous versions of the bill included onerous background check requirements that far exceeded the minimum requirements for background investigations required by the Appraiser Qualifications Board. The background check provisions were removed after a request from the Appraisal Institute.
Idaho Gov. Butch Otter on March 23 signed into law HB 368
, legislation that changes the definition of “appraisal” and “appraisal assignment” so that it excluded analyses, opinions or conclusions related to the nature, quality or utility of specified interests in, or aspect of, real property.
The changes clarify that an appraisal or appraisal assignment only relates to an opinion or a conclusion of real property value. The new definition should make it easier for appraisers practicing in Idaho to perform certain appraisal consulting-related assignments that do not contain a value opinion, including feasibility studies, market rent opinions, income and expense analyses, land utilization studies and supply/demand studies.