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The USPAP COMPETENCY RULE has been significantly rewritten and expanded. The changes did not expand the obligations of the RULE, but were intended to enhance "clarity and enforceability." The rule clearly sets forth the requirements for an appraiser to "exercise proper judgment in assessing his or her competency" when considering and completing an assignment
Follow up report from the CAR Legislative Day 2010 Conference in Sacramento Ca re Report to CAR Public Policy Committee from Mr. Robert Clark Director of the OREA California Office of Real Estate Appraisal regarding recent changes and modifications of the UAPAP Rules and guidelines and California B&P Code Section 11319 regarding appraisers required competency to do appraisals in the State of California.
B&P Code Section 11319 Notwithstanding any other provision of this code, the
Uniform Standards of Professional Appraisal Practice constitute the
minimum standard of conduct and performance for a licensee in any
work or service performed that is addressed by those standards. If a
licensee also is certified by the Board of Equalization, he or she
shall follow the standards established by the Board of Equalization
when fulfilling his or her responsibilities for assessment purposes....
4/22/2010 - OREA is hereby providing notice of changes to proposed regulations that are the subject of a rulemaking action, published on April 23, 2010 in the California Regulatory Notice Register. Changes to the proposed regulations are identified by strikeout and underline notation in the text of the proposed regulations. Comments on the changes to proposed regulations are due to OREA by 5:00 p.m. on June 7, 2010.
The USPAP Competency Rule requires that, prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must determine that he or she can perform the assignment competently. To be competent, the appraiser must be able to properly identify the problem to be addressed, posses the knowledge and experience to complete the assignment competently, and be able to recognize laws and regulations that apply to the assignment. Competency can apply to geographic area, market area, property type, or appraisal methodology.
Mr Clark pointed out to the members of the committee that there had been numerous complaints filed in his office against pooled appraisers for accepting and attempting to complete appraisals in areas out of their areas of geographic competency. In many cases this practice was resulting in inaccurate appraisals of value based on the pooled appraisers lack of complete knowledge of the properties in a geographic area out side of their areas of expertise. He pointed out to the committee that under the current and modified USPAP rules a appraiser had a legal obligation under the law to make every effort to educate them selves as to the property values in a area prior to rendering a opinion of value if they accept a assignment. He went on to say that that effort should include communicating with local Real Estate agents in the Area including if possible the listing agent to be sure that they had the benefit of that knowledge and expertise as incorporated into their research. He went on to say that if members of the committee or other Realtors found in their practice that California appraisers were not complying with the new USPAP COMPETENCY RULE that they should be reported to his office for investigation, education and possible fines if appropriate. Complaint forms can be dow loaded if needed at http://www.orea.ca.gov/html/enforcement.shtml
Other possible reportable violations
As Realtors we should also make every effort to assist out of town appraisers when needed in helping them become educated and informed as to the needed information and details concerning a subject property associated comps and neighborhood data when necessary. -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
In working a a Realtor to assist and help educate a appraiser as may be necessary it is important to be sure that your actions anc communications do not vilolate Section 11323 of the Business and Professions Code,and to add Article 7 (commencing with Section 1090.5) to Chapter 1 ofTitle 4 of Part 4 of Division 2 of the Civil Code, relating to real estate appraisals,
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
Approved by Governor October 5, 2007. Filed with
Secretary of State October 5, 2007.]
SECTION 1. Section 11323 of the Business and Professions Code is amended to read:
11323. No licensee shall engage in any appraisal activity in connection with the purchase, sale, transfer, financing, or development of real property if his or her compensation is dependent on or affected by the value conclusion generated by the appraisal.
SEC. 2. Article 7 (commencing with Section 1090.5) is added to Chapter 1 of Title 4 of Part 4 of the Division 2 of the Civil Code, to read:
Article 7. Unlawful Influence of Appraisers
1090.5 (a) No person with an interest in a real estate transaction involving an appraisal shall improperly influence or attempt to improperly influence, through coercion, extortion, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan.
(b) Subdivision
(a) does not prohibit a person with an interest in a real estate transaction from asking an appraiser to do any of the following:
(1) Consider additional, appropriate property information.
(2) Provided further detail, substantiation, or explanation for the appraiser's value conclusion.
(3) Correct errors in the appraisal report.
(c) If a person who violated this section is licensed under any state licensing law and the violation occurs within the course and scope of the person's duties as a licensee, the violation shall be deemed a violation of that state licensing law.
(d) Nothing in this section shall be constructed to authorize communications that are otherwise prohibited under existing law.
SEC. 3 No reimbursement is required by this act pursuant to Section 6 of Article XIII B o f the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime of infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to take immediate steps to bring credibility to mortgage lending in California, and to protect consumers and other participants in mortgage transactions from fraudulent and deceitful practices, it is necessary that this act take effect immediately. -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The OREA in this presentation was taking a position that direct informative communication between local real estate agents and appraisers was in the future to be encouraged and in some cases required as a matter of meeting the appraisers professional standard of care and competency when attempting to do a appraisal out side of their area of geographic competency.
This Modification and OREA interpretation of the USPAP rules and guidelines is a good step forward in allowing and encouraging the needed communication between the appraisal community and real estate practitioners to reestablish accurate valuations given the current other complications of the appraisal process.
BY Fred Martin
Century 21 Alpha
Note this blog is not intended to offer legal or accounting advise and is only the opinion of the author
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