No. 36449 (Amendment): Rule R162-2e. Appraisal Management Company Administrative Rules

(Amendment)

DAR File No.: 36449
Filed: 07/09/2012 11:21:12 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this amendment is to implement rules regarding the requirement for an appraisal management company (AMC) to obtain a surety bond, as imposed by the Legislature in H.B. 191, 2012 General Session.

Summary of the rule or change:

AMCs are required to obtain a $25,000 surety bond in order to register or renew a registration in the state of Utah. Deadlines for evidencing compliance with the bonding requirement are outlined. Consequences for failing to comply with the bonding requirement are outlined. Procedures are outlined by which an appraiser may cause the Division to make a claim against an AMC's bond for unpaid fees.

State statutory or constitutional authorization for this rule:

• Subsection 61-2e-204(2)(c)

Anticipated cost or savings to:

the state budget:

The Division anticipates that it has the staff and resources in place to administer these rules as part of the registration and renewal process. Therefore, no impact to the state budget is anticipated.

local governments:

Local governments are not required to comply with or enforce the rules governing appraisal management companies. Therefore, no fiscal impact to local government is anticipated.

small businesses:

Small businesses that are AMCs will incur costs to obtain a bond. Those costs will vary among AMCs, depending on the amount of risk a bonding company assesses a bond applicant to have. These costs were considered by the Legislature in passing H.B. 191; no additional costs to small businesses are anticipated.

persons other than small businesses, businesses, or local governmental entities:

Only businesses are affected by this requirement. No other persons will be required to comply; therefore, no other persons will experience the costs associated with the rule.

Compliance costs for affected persons:

Affected persons will be required to purchase a surety bond in order to comply. Those costs will vary among AMCs, depending on the amount of risk a bonding company assesses a bond applicant to have.

Comments by the department head on the fiscal impact the rule may have on businesses:

These rules implement the surety bond requirements of H.B. 191 (2012 General Session) for appraisal management companies. Any fiscal impact to appraisal management companies, or benefits to appraisers who perform appraisals for those companies, was contemplated by H.B. 191. This rule does not have any fiscal impact beyond that legislation.

Francine A. Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Real Estate
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Jennie Jonsson at the above address, by phone at 801-530-6706, by FAX at 801-526-4387, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

08/31/2012

This rule may become effective on:

09/07/2012

Authorized by:

Jonathan Stewart, Director

RULE TEXT

R162. Commerce, Real Estate.

R162-2e. Appraisal Management Company Administrative Rules.

R162-2e-201. Registration Required - Qualification for Registration.

(1) The division may not register or renew the registration of an AMC that fails to:

(a) comply with any provision of Utah Code Title 61, Chapter 2e, "Appraisal Management Company Registration and Regulation Act";

(b) register with the Utah Division of Corporations and Commercial Code and provide to the division its certificate of existence;

(c) pursuant to this Subsection (4)(a), evidence having secured a surety bond that:

(i) is in the amount of $25,000; and

(ii) provides, throughout the full period of registration, for the division to make a claim:

(A) on behalf of an appraiser; and

(B) for unpaid fees as awarded to the appraiser in a final judgment entered by a court of competent jurisdiction; or

[(c)](d) comply with any provision of these rules.

(2) The division shall schedule a hearing before the board for an AMC that:

(a)(i) applies for registration or renewal of registration;

(ii) has a control person who discloses, or the division finds through its own research, an issue that might affect the control person's moral character; and

(iii) the division determines that the board should be aware of the issue; or

(b) fails to provide an adequate explanation for the AMC's:

(i) plan to ensure the use of licensed appraisers in good standing;

(ii) plan to ensure the integrity of the appraisal review process; or

(iii) plan for record keeping.

(3)(a) An AMC shall register with the division in the name of the legal entity under which it is registered with the Utah Division of Corporations and Commercial Code and conducts the business of appraisal management in Utah and in other states.

(b) An AMC shall notify the division of a dba, trade name, or assumed business name under which the registered legal entity operates in Utah:

(i) at the time of registration; or

(ii) if applicable, immediately upon beginning to operate under such dba, trade name, or assumed business name.

(c) If an AMC changes its registered name, a dba, a trade name, or an assumed business name, the AMC shall notify the division:

(i) in writing; and

(ii) within ten business days of making the change.

(4)(a) The deadline by which an AMC shall demonstrate that the entity has obtained a surety bond pursuant to Subsection (1)(c) is as follows:

(i) For an AMC that applies for registration on or after October 1, 2012, the bond shall be obtained as a condition for initial registration.

(ii) For an AMC that obtained its initial registration prior to January 1 2011 and applies for renewal on or after October 1, 2012, the bond shall be obtained as a condition of the 2012 renewal.

(iii) For an AMC that is not described by this Subsection (4)(a)(i) or (ii), the deadline for obtaining the surety bond shall be January 1, 2013.

(b) Failure to comply with an applicable deadline as outlined in this Subsection (4)(a) shall result in the automatic suspension of an AMC's registration until such time as the AMC provides evidence to the division that it is in compliance with the surety bond requirement.

(c) If an AMC's surety bond lapses or is cancelled during the period of registration, the division shall:

(i) allow the AMC 30 days in which to comply with the surety bond requirement; and

(ii) if the AMC fails to obtain or reinstate a surety bond within 30 days, immediately and automatically suspend the AMC's registration until such time as the AMC provides evidence to the division that it is in compliance with the surety bond requirement.

 

R162-2e-201a. Claims Against an AMC Bond.

(1) To bring a claim against a bond that is held by an AMC pursuant to Section 61-2e-204(2)(c) and Subsection R162-2e-201(1)(c), an appraiser shall:

(a) demonstrate that a court of competent jurisdiction has awarded the appraiser a final judgment against the AMC for the fee(s) claimed;

(b) demonstrate that the appraiser earned the fee(s) claimed and that the AMC has had a reasonable period of time in which to tender payment; and

(c) submit a complaint to the division alleging nonpayment of fee(s):

(i) after a reasonable period of time for payment has passed; and

(ii) no later than 30 days after obtaining a judgment as required under this Subsection (1)(a).

(2) In evaluating whether an AMC has had a reasonable period of time in which to tender payment, the division shall consider the following:

(a) if a payment deadline is specified in the contract that applies to the assignment for which the appraiser claims an unpaid fee, whether the payment deadline has passed; or

(b) if the applicable contract is silent as to a period for payment, whether at least 90 days have passed since the date on which the appraiser submitted a report that complied with the assignment, including all scope of work requirements, as determined by the division in its sole discretion.

 

KEY: administrative proceedings, appraisal management company, conduct, registration

Date of Enactment or Last Substantive Amendment: [June 22, 2011]2012

Authorizing, and Implemented or Interpreted Law: 61-2e-204(2)(c)

 

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