Module Seven. Student Learning Objectives. After completing this module you should be able to

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1 Module Seven Appraisal Student Learning Objectives After completing this module you should be able to describe the history of, and regulatory process governing, appraisal practice; recite the application process and educational and experience requirements for trainees, certified residential appraisers and certified general appraisers; describe the post license requirements for registered appraisal trainees and continuing education requirements for all appraiser categories; describe the duties and obligations of a supervisory appraiser; and recite the disciplinary actions that may be imposed on appraisers by the Appraisal Board. Introduction that is to serve as collateral for the loan. Appraisal practice and law have and will continue to change dramatically over time. Major changes have been instituted affecting both the law and the rules. Licensees should have an understanding regarding appraisal practice. The discussion that follows includes only those portions of general concern to real estate licensees. This understanding can help answer many of the questions, and solve many of the problems, that arise when questions regarding an appraisal seem to hinder a transaction. Regulation of the profession The Appraisal Foundation was established by the Federal Financial Institutions Reform and Recovery Act of 1989 (FIRREA). This legislation requires all states to enact appraisal laws and rules consistent with standards established by the Appraisal Foundation. Nationally, all appraisers utilized in federally related transactions are required to be licensed or certified in compliance with education and experience established by the Appraisal Standards Board and Appraiser Qualification Board of the Appraisal Foundation. The Appraisal Standards Board is responsible for authorship of the Uniform Standards of Appraisal Practice, which governs the manner in which an appraisal must be developed and reported. The Appraiser Qualifications Board establishes the educational and experience requirements to become licensed or certified. Chapter 475, part II, of the Florida statutes was created to protect the public and to regulate real estate appraisers in this state. Florida appraisal law must conform to the requirements established by FIRREA in 1989 and is subject to review by the Appraisal Subcommittee. The Florida Real Estate Appraisal Board serves to implement and enforce F.S., part II. 71

2 Appraisal Definitions The following are the more significant definitions used in or referred to in the law: (a) Appraisal assignment denotes an engagement for which a person is employed or retained to act, or could be perceived by third parties or the public as acting, as an agent or a disinterested third party in rendering an unbiased analysis, opinion, review, or conclusion relating to the nature, quality, value, or utility of specified interests in, or aspects of, identified real property. (b) Appraisal report means any communication, written or oral, of an appraisal, appraisal review, appraisal consulting service, analysis, opinion, or conclusion relating to the nature, quality, value, or utility of a specified interest in, or aspect of, identified real property, and includes any report communicating an appraisal analysis, opinion, or conclusion of value, regardless of title. However, in order to be recognized in a federally related transaction, an appraisal report must be written. (c) Certified general appraiser means a person who is certified by the department as qualified to issue appraisal reports for any type of real property. (d) Certified residential appraiser means a person who is certified by the department as qualified to issue appraisal reports for residential real property of one to four residential units, without regard to transaction value or complexity, or real property as may be authorized by federal regulation. (e) Licensed appraiser means a person who is licensed by the department as qualified to issue appraisal reports for residential real property of one to four residential units or on such real estate or real property as may be authorized by federal regulation. After July 1, 2003, the department shall not issue licenses for the category of licensed appraiser. (f) Registered trainee appraiser means a person who is registered with the department as qualified to perform appraisal services only under the direct supervision of a licensed or certified appraiser. A registered trainee appraiser may accept appraisal assignments only from her or his primary or secondary supervisory appraiser. (g) Supervisory appraiser means a licensed appraiser, a certified residential appraiser, or a certified general appraiser responsible for the direct supervision of one or more registered trainee appraisers and fully responsible for appraisals and appraisal reports prepared by those registered trainee appraisers. The board, by rule, determines the responsibilities of a supervisory appraiser, the geographic proximity in which a trainee appraiser is allowed to perform appraisal services, and the maximum number of registered trainee appraisers that may be supervised by an individual supervisory appraiser. Licensees performing appraisals who is not a certified or licensed real estate appraiser or registered trainee real estate appraiser may provide valuation services for compensation. Such persons may not represent themselves as being certified, licensed, or registered as an appraiser. A real estate broker or sales associate may, in the ordinary course of business, perform a comparative market analysis (CMA), give a broker price opinion (BPO), or give an opinion of the value of real estate. However, in no event may this comparative market analysis, broker price opinion, or opinion of value of real estate be referred to or construed as an appraisal. Florida Real Estate Appraisal Board Appraisal Board, consisting of nine members appointed by the Governor, subject to confirmation by the Senate. Four members of the board must be real estate appraisers who have been engaged in the general practice of appraising real property in this state for at least 5 years immediately preceding appointment. 72

3 14-Hour Continuing Education In appointing real estate appraisers to the Board, while not excluding other appraisers, the Governor shall give preference to real estate appraisers who are not primarily engaged in real estate brokerage or mortgage lending activities. Two members must represent appraisal management companies. One member of the Board must represent organizations that use appraisals for the purpose of eminent domain proceedings, financial transactions, or mortgage insurance. Two members of the Board shall be representatives of the general public and shall not be connected in any way with the practice of real estate appraisal, real estate brokerage, or mortgage lending. Two of the members must be licensed or certified residential real estate appraisers and two of the members must be certified general real esta te appraisers at the time of their appointment. Powers of the Board [ ] issuance of licenses, certifications, registrations, and permits; to discipline appraisers in any manner permitted under this section; to establish qualifications for licenses, certifications, registrations, and permits; to regulate approved courses; to establish standards for real estate appraisals; and to establish standards for and regulate supervisory appraisers. The Board has authority to adopt rules pursuant to ss (1) and to implement provisions of law conferring duties upon it. The Board may decide questions of practice arising in the proceedings before it, having regard to the law and the rules then in force. Application process; qualifications for practice necessary qualifications as follows: (a) That the applicant is 18 years of age or older. (b) That the applicant holds a four-year degree from an accredited college or university. (c) The applicant shall indicate whether the applicant is seeking registration or certification. Educational requirements [ ] [61j1- Trainee appraiser Persons desiring to become registered as a trainee appraiser must satisfactorily complete 100 classroom hours, inclusive of examination, of Board approved academic courses in subjects related to real estate appraisal, which shall include the 15- hour National USPAP course or its equivalent, taught by an Appraiser Qualifications Board certified USPAP instructor. A classroom hour is defined as 50 minutes out of each 60 minute segment. Courses may be completed either by classroom instruction or be distance learning; however, when completed by distance learning, written exams must be proctored. If the registration of a trainee expires due to failure to renew, the original 100 classroom hours to become initially registered will be invalid and may not be used to secure another registration. If an initial application to become registered is not received within 2 years after successful completion of the 100 hour pre-registration course, the applicant must take the 15 classroom hour Uniform Standards of Professional Appraisal Practice course. 73

4 Appraisal Certified residential appraiser Persons desiring to become certified as a residential appraiser must successfully complete 200 classroom hours, inclusive of examination, of Board approved academic courses in subjects related to real estate appraisal, which shall include the 15-hour National USPAP course or its equivalent, taught by an Appraiser Qualifications Board certified USPAP instructor. Courses may be completed either by classroom instruction or be distance learning; however, when completed by distance learning, written exams must be proctored. The 200 classroom hours may include the 100 classroom hour requirement for becoming registered. A classroom hour is defined as 50 minutes out of each 60 minute segment. In addition to the educational requirements just cited, applicants for certification as a residential real estate appraiser must have at least a four-year degree. Certified general appraiser Persons desiring to become certified as a general appraiser must successfully complete 300 classroom hours, inclusive of examination, of Board approved academic courses in subjects related to real estate appraisal, which shall include The 15-hour National USPAP course or its equivalent, taught by an AQB certified USPAP instructor. The 300 classroom hours includes the 100 classroom hour requirement for becoming registered as an appraiser and the additional 100 classroom hour requirement for becoming certified as a residential appraiser. A classroom hour is defined as 50 minutes out of each 60 minute segment. Courses may be completed either by classroom instruction or be distance learning; however, when completed by distance learning, written exams must be proctored. In addition to the educational requirements just cited, applicants for certification as a general real estate appraiser must have at least a four-year degree. Experience requirements [ ] [61J ] present evidence satisfactory to the Board that the applicant has the experience required in Section , Florida Statutes, in real property appraisal activity. Acceptable appraisal experience includes fee and staff appraisals, ad valorem tax appraisals, condemnation appraisals, technical review appraisals, appraisal analysis, real estate counseling, highest and best use analysis, and feasibility analysis/study. Experience required by Chapter 475, part II is as follows: Certified residential appraiser Two thousand five hundred (2500) hours of real property residential appraisal experience. Experience claimed must have been accumulated in a time period of not less than 24 months. Residential is defined as one to four residential units. Certified general appraiser Three thousand (3000) hours of real property appraisal experience obtained over a 30-month period. At least 50% (1500 hours) of the claimed experience must be in nonresidential appraisal work and must have been accumulated in a time period of not less than 30 months. Any proportional combination of required reports or hours, as required below will be acceptable as long as the experience for the certified general appraiser is at least 50% nonresidential appraisal work as stated above. There is no maximum time limit as to when experience may be obtained or claimed. Experience must be accounted for on an appraisal experience log, which is to include the following minimum information: type of property, date of report, client name and address, 74

5 14-Hour Continuing Education address of appraised property, description of work performed, number of work hours, and signature and license number of supervising appraiser (if applicable). The log and supporting documents shall be retained for a minimum of 5 years after licensure or certification. All work submitted for experience must comply with the Uniform Standards of Professional Appraisal Practice, as defined in Section (1)(o), Florida Statutes. FREAB rule 61J specifies the experience required by s. 475, part II, as follows: Certified residential and documented appraisal reports presented in a format generally acceptable to the appraisal industry. Certified general - Contained Appraisal Reports in a narrative format which comply with the Uniform Standards of Professional Appraisal Practice; or 12 nonresidential Summary or Self- Contained Appraisal Reports in a narrative format which comply with the Uniform Standards of Professional Appraisal Practice as defined in Section (1)(o), Florida Statutes, and 135 non-narrative supportable and documented appraisal reports presented in a format generally acceptable to the appraisal industry. Evidence of appropriate education & experience required applicant must furnish evidence of successful completion of the required education pursuant to Rule 61J or 61J , F.A.C., and evidence of the required experience pursuant to Rule 61J , F.A.C. At the time of filing a notarized application for registration, licensure, or certification, the applicant must sign a pledge to comply with the Uniform Standards of Professional Appraisal Practice upon registration, licensure, or certification, and must indicate in writing that she or he understands the types of misconduct for which disciplinary proceedings may be initiated. [61J (5)] Trainee post-license education [ ] [61j ] must satisfactorily complete one or more Board approved courses which must total at least 45 classroom hours, without duplication of material, inclusive of examination, in subjects including but not limited to: influences on real estate value, legal considerations in appraisal, types of value, economic principles, real estate markets and analysis, valuation process, property description, highest and best use analysis, appraisal statistical concepts, sales comparison approach, site value, cost approach, income approach, valuation of partial interests, and appraisal standards and ethics. All post license courses shall consist of at least 15 classroom hours, defined as 50 minutes of each 60 minute segment. The examination may not be open book, and it must be administered by a permitted instructor. Such courses are provided by nationally or staterecognized appraisal organizations, area technical centers, accredited community colleges, college or universities, state or federal agencies or commissions, or proprietary real estate schools that hold a permit pursuant to s Of the 45 hour post license educational requirement, 15 hours must be the National USPAP course or its equivalent, and must be taught by a nationally certified USPAP instructor. In addition to the 45 hour post license educational requirement, any registered trainee appraiser that completes the 45 hour educational requirement but chooses not to, or fails to, apply for state 75

6 Appraisal certification either as a residential or general appraiser, must complete a separate 3 hour Florida specific law and rules update course. Students failing a Board prescribed post licensing end-of-course examination must wait at least 30 days from the date of the original examination to take another examination. Students re-taking an examination must be administered a different form of the end-of-course examination. A student may retake the end-of-course examination a maximum of one time within one year from the date of the original examination. Otherwise, students must repeat the course prior to being eligible to again take the end-of-course examination. The registration of any registered trainee appraiser who does not complete the Board-prescribed postlicensure educational requirements prior to the second renewal following initial registration is void without further administrative action. Such person may re-qualify to practice as a registered trainee appraiser only by retaking the required education and complying with all other requirements of law to be registered as a registered trainee appraiser. The Board may allow an additional 6-month period after the second renewal following initial licensure for completing the postlicensure education courses for registered trainee appraisers who cannot, due to individual physical hardship, as defined by rule, complete the courses within the required time. Biennial licensing [61j ] By Rule, all appraisal registrations, licenses, and certifications expire on November 30 th of even-numbered years. At least 60 days prior to the end of the registration, license or certification period the department mails a notice of renewal and possible reversion to inactive status to the last known address of the registered trainee, licensee or certificate holder. Any registration, license or certification which is not renewed at the end of the registration, license or certification period prescribed by the department automatically reverts to inactive status. Corporations and partnerships ineligible [ ] issued to a corporation, partnership, firm, or group. However, a licensed or certified appraiser may provide an appraisal report for or on behalf of a corporation, partnership, firm, or group, if the report is prepared by, or under the personal direction of, such appraiser and is reviewed and signed by her or him. Inactive status [ ] [61j ] Voluntarily inactive n applicant for registration as a trainee appraiser, who has otherwise met the registration requirements, may request and obtain registration without the necessity of having designated a licensed or certified appraiser as a primary supervisor. The registration will be designated inactive upon being issued. At any time after obtaining registration as a trainee appraiser, the trainee may request inactive status whenever he or she has no primary supervising licensed or certified appraiser. The request may be made on the Request for Appraiser Change of Status form. This form may be downloaded from the Appraisal Board web site or obtained from the Department of Business and Professional Regulation at 400 W. Robinson St., Orlando, FL

7 14-Hour Continuing Education Involuntarily inactive At any time after obtaining registration as a trainee appraiser the trainee does not have on record with the Department of Business and Professional Regulation the name of a licensed or certified appraiser as a primary supervisor, the registration shall automatically be designated inactive. The registration of a trainee, licensee or certificate holder not renewed at the end of the registration period is automatically designated inactive. [ (3)] An appraiser whose registration, license or certification is designated inactive may request an active registration by completing a Request for Appraiser Change of Status form. If the inactive duration is less than 2 years and does not extend beyond 1 biennial renewal cycle (registration period), no additional education or fee is required. A trainee appraiser, whose registration is designated inactive or whose inactive status extends beyond the biennial renewal cycle, must comply with the education and fee requirements of Rule 61J discussed below. Inactive renewal [ (3)] [61J ] registration, license or certification may be renewed and reactivated upon application to the department accompanied by payment of required fees and satisfactory completion of required education specified by rule. Any registration, license or certification that has been inactive for more than 4 years automatically expires. Any such individual that wishes to again obtain registration or certification must meet all statutory requirements of a new applicant. [61J ] Continuing education [61J ] All registered, licensed and certified appraisers must satisfactorily complete a minimum of 30 hours of Board approved continuing education, without duplication of material, within each renewal period. The 30 hours must include the 7-hour National USPAP course or its equivalent and must be taught by an AQB certified USPAP instructor. A minimum of 3 hours must be dedicated to a review and update of Florida appraisal law and rules, and provide an introduction to other state and federal laws affecting real estate appraisals. Those individuals whose initial registration, license or certification period is less than 12 months are not required to complete the continuing education requirement prior to renewal. Board approved continuing education courses may be satisfactorily completed by classroom attendance or through distance learning. Distance learning courses must be certified by an independent organization approved by the Appraiser Qualifications Board of the Appraisal Foundation, such as the Institute for Distance Education Council (IDEC) or an accredited university or college, in order to be approved by the Florida Real Estate Appraisal Board. Registry of licensed and certified appraisers [ ] The department is required by FIRREA to transmit to the appraisal subcommittee, no less than annually, a roster listing individuals who hold a valid state license or certification as an appraiser. 77

8 Appraisal The department collects from individuals who perform or seek to perform appraisals in federally related transactions, an annual fee as set by the appraisal subcommittee. Fees are transmitted to the Federal Financial Institutions Examinations Council on an annual basis. Office procedures Registration of office location [ ] [61J ] registration, license or certification must furnish in writing to the Department of Business & Professional Regulation each business address from which he or she operates in the performance of appraisal services. Each appraiser must notify the Department of any change of address within 10 days of the change of address. Professional standards [ ] part shall comply with the Uniform Standards of Professional Appraisal Practice. Statements on appraisal standards which may be issued for the purpose of clarification, interpretation, explanation, or elaboration through the Appraisal Foundation shall also be binding on any appraiser registered, licensed, or certified under this part. Supervision of registered trainee appraisers [ ] [61J ] appraisers are subject to direct supervision by a supervising appraiser who shall be state licensed or certified in good standing. The supervising appraiser shall be responsible for the training and direct supervision of the appraiser trainee by: (a) Accepting responsibility for the appraisal report by signing and certifying the report is in compliance with the Uniform Standards of Professional Appraisal Practice. (b) Reviewing the appraiser trainee s appraisal reports, and (c) Personally inspecting each appraised property with the appraiser trainee until the trainee is competent in accordance with the Competency Rule of the Uniform Standards of Professional Appraisal Practice. A registered trainee appraiser is to have no more than one supervising appraiser. Any supervising appraiser, whether acting as a primary or secondary supervisor, may not supervise more than 3 registered trainee appraisers at one time. When supervising any aspect of the appraisal process, a supervising appraiser shall train or supervise appraisers located in: (a) The county where the supervising appraiser s office is registered with the Department and (b) Any county contiguous to the county where the supervising appraiser s office is registered with the Department. An appraisal log must be maintained by the registered trainee appraiser and shall at a minimum include the following for each appraisal: (1) Type of property (2) Date of report (3) Client name and address (4) Address of appraised property (5) Description of work performed (6) Number of hours worked (7) Signature and state license/certification number of the supervising appraiser (8) Separate appraisal logs must be maintained for each supervising appraiser 78

9 14-Hour Continuing Education Display and disclosure of licensure, certification, or registration [ ] [61J ] All appraisers registered, licensed or certified pursuant to Chapter 475, part II, must disclose and display the appropriate designation in writing in all appraisal reports which are signed by the appraiser. Disclosure of the appropriate designation is required even if the appraisal performed is outside of the scope of registration, licensure, or certification as an appraiser. An appraiser may not sign any appraisal report or certification or communicate same without disclosing in writing that she or he is a state-registered trainee appraiser or state-licensed, statecertified residential, or state-certified general appraiser, as applicable, even if the appraisal is performed outside of the scope of the appraiser s status. The primary or secondary supervisory appraiser of a registered trainee real estate appraiser must sign each appraisal report and certification signed by the registered trainee. The supervisory appraiser of a registered trainee real estate appraiser must disclose her or his appropriate designation and number any time the registered trainee is required to make such disclosures. Advertising [ ] [61J ] All registered, licensed or certified appraisers are to include the appropriate designation and number as required in Section , Florida Statutes, and Rule 61J , Florida Administrative Code, in all advertising. Temporary practice [ ] [61j ] the license or certification of an appraiser issued by another state, if: (a) The property to be appraised is part of a federally related transaction. (b) The appraiser s business is of a temporary nature. (c) The appraiser registers with the Board. (d) The person requesting recognition of a license or certification as an appraiser issued by another state is a nonresident of Florida. In order to register with the Board, the appraiser must: (a) Pay any required fee as established by rule. (b) Provide, or cause the state where the applicant may be licensed or certified to furnish, proof of licensure or certification along with the copies of the records of any disciplinary actions taken against the applicant s license or certification in that or other jurisdictions. (c) Agree in writing to cooperate with any investigation initiated under this part by promptly supplying such documents that any authorized representative of the department may request. If the department sends a notice by certified mail to the last known address of a nonresident appraiser to produce documents or to appear in conjunction with an investigation and the nonresident appraiser fails to comply with that request, the board may impose on that nonresident appraiser any disciplinary action or penalty authorized under this part. (d) Sign a notarized statement that the applicant has read this section and all applicable rules and agrees to abide by these provisions in all appraisal activities. 79

10 Appraisal Nonresident licenses and certifications [ ] Mutual recognition certification authorities of other states, territories, or jurisdictions of the United States to ensure for state-certified appraisers nonresident licensure or certification opportunities comparable to those afforded to nonresidents by this section. Whenever the Board determines that another jurisdiction does not offer nonresident licensure or certification to state-certified appraisers substantially comparable to those afforded to certified appraisers or licensees of that jurisdiction by this section, the Board shall require certified appraisers or licensees of that jurisdiction who apply for nonresident certification to meet education, experience, and examination requirements substantially comparable to those required by that jurisdiction with respect to state-certified appraisers who seek nonresident licensure or certification, not to exceed such requirements as are prescribed in ss and

11 14-Hour Continuing Education Progress Questions: Module Six 1. A certified real estate appraiser is allowed to supervise a. a minimum of four trainees. b. no more than three trainees. c. only one trainee. d. as many trainees of the office business volume requires. 2. An appraiser that fails to renew or to complete required education may be placed in an involuntary inactive status. How many years may the appraiser remain in this status before the license automatically expires? a. 1 b. 2 c. 4 d Geographic limits are placed on the areas within which a supervisory appraiser may provide training for trainee appraisers. These limits do NOT include a. county where the supervising appraiser s office is registered. b. city where the supervising appraiser s office is located. c. any county contiguous to the county where the supervising appraiser s office is registered. d. any county within the state of Florida. 4. A trainee appraiser that wishes to become state certified would have to complete how many additional hours of Board-prescribed education? a. 30 b. 45 c. 60 d The 15-hour National Uniform Standards of Professional Appraisal Practice course may be taught by a. any instructor permitted by the Department of Business Professional Regulation. b. any accredited university or college. c. instructors certified by the Appraiser Qualification Board (AQB). d. proprietary school instructors only. 81

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