No. 37677 (Amendment): Rule R162-2e. Appraisal Management Company Administrative Rules

(Amendment)

DAR File No.: 37677
Filed: 05/31/2013 04:34:45 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule is to clarify who is an employee of an Appraisal Management Company (AMC) and the conditions under which an employee could perform an appraisal.

Summary of the rule or change:

This amendment adds a definition for the term "employee" that is derived from the United States tax code and defines the employment relationship for the newly clarified unprofessional conduct provision. The unprofessional conduct provision clarifies that an AMC can act either as an AMC or as an appraisal firm. If acting in the capacity as an AMC, the AMC cannot use its own employee to complete an appraisal assignment. If acting in the capacity as an appraisal firm, the entity cannot use its own employee without first disclosing to the client the capacity in which it is acting. Acting as an appraisal firm or company does not change or impact the requirement that an appraiser who performs the appraisal must be licensed pursuant to Title 61, Chapter 2g.

State statutory or constitutional authorization for this rule:

• Section 61-2e-103
• Subsection 61-2e-102(4)
• Section 61-2e-307

Anticipated cost or savings to:

the state budget:

No new programs or sections will be necessary to implement this rule change. The Division already has the staff and budget necessary to investigate and enforce this requirement. Therefore, the state budget will not have any cost or savings as a result of this rule amendment.

local governments:

Local governments are not required to comply with or enforce the rules governing the appraisal industry. Therefore, no fiscal impact to local government will result from this filing.

small businesses:

AMCs and their clients that are small businesses will be affected by this rule amendment. Requiring the disclosure may result in an increased cost to the AMC; however, the client small business may see savings in its compliance cost because it is being informed of the capacity in which the AMC is acting.

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

AMCs and their clients will be affected by this rule amendment. Requiring the disclosure may result in an increased cost to the AMC; however, the client small business may see savings in its compliance cost because it is being informed of the capacity in which the AMC is acting.

Compliance costs for affected persons:

AMCs and their clients will be affected by this rule amendment. Requiring the disclosure may result in an increased cost to the AMC; however, the client small business may see savings in its compliance cost because it is being informed of the capacity in which the AMC is acting.

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

Any cost an AMC might incur in disclosing to a client the role the entity expects to play in completing an appraisal assignment will vary among companies and cannot be estimated. It is anticipated that a typical AMC will be able to comply with this disclosure requirement by making a one-time amendment to its standard disclosure package. In this situation, there would be no related costs.

Francine 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:

• Ben Jensen at the above address, by phone at 801-530-6603, 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:

07/15/2013

This rule may become effective on:

07/22/2013

Authorized by:

Francine Giani, Executive Director

RULE TEXT

R162. Commerce, Real Estate.

R162-2e. Appraisal Management Company Administrative Rules.

R162-2e-102. Definitions.

(1) "Affiliation" means a business association:

(a) between:

(i) two individuals registered, licensed, or certified under Section 61-2b; or

(ii) an individual registered, licensed, or certified under Section 61-2b and:

(A) an appraisal entity; or

(B) a government agency;

(b) for the purpose of providing an appraisal service; and

(c) regardless of whether an employment relationship exists between the parties.

(2) The acronym "AMC" stands for appraisal management company.

(3) As used in Subsection R162-2e-201(3)(c)(ii), "business day" means a day other than:

(a) a Saturday;

(b) a Sunday;

(c) a state or federal holiday; or

(d) any other day when the division is closed for business.

(4) "Client" is defined in Section 61-2e-102(10).

(5) "Competency statement" means a statement provided by the AMC to the appraiser that, at a minimum, requires the appraiser to attest that the appraiser:

(a) is competent according to USPAP standards;

(b) recognizes and agrees to comply with:

(i) laws and regulations that apply to the appraiser and to the assignment;

(ii) assignment conditions; and

(iii) the scope of work outlined by the client; and

(c) has access, either independently or through an affiliation pursuant to Subsection (1), to the records necessary to complete a credible appraisal, including:

(i) multiple listing service data; and

(ii) county records.

(6)(a) "Employee" means an individual:

(i) whose manner and means of work performance are subject to the right of control of, or are controlled by, another person; and

(ii) whose compensation for federal income tax purposes is reported, or is required to be reported, on a W-2 form issued by the controlling person.

(b) "Employee" does not include an independent contractor who performs duties other than at the discretion of, and subject to the supervision and instruction of, another person.

(c) For purposes of applying Subsection R162-2e-401(1)(g), an appraiser who completes an assignment is considered to be an employee of the AMC that offers the assignment if:

(i) this subsection (a) describes the employment relationship between the appraiser and the AMC; or

(ii) pursuant to this subsection (a), the appraiser is an employee of a company:

(A) that is wholly owned by the AMC; or

(B) in which the AMC owns a controlling interest.

(7[6]) "Select" means:

(a) for purposes of composing the AMC appraiser panel, to review and evaluate the qualifications of an appraiser who applies to be included on the AMC's appraiser panel; and

(b) for purposes of assigning an appraisal activity to an appraiser:

(i) to choose from the AMC's appraiser panel an individual appraiser or appraisal entity to complete an assignment; or

(ii) to compile, from among the appraisers included in the AMC's appraiser panel, an electronic distribution list of appraisers to whom an assignment will be offered through e-mail.

( 8[7]) The acronym "USPAP" stands for Uniform Standards of Professional Appraisal Practice.

 

R162-2e-401. Unprofessional Conduct.

(1) An [AMC]entity that is registered or required to be registered with the division as an AMC pursuant to Section 61-2e-201 commits unprofessional conduct if the entity[AMC]:

(a) requires an appraiser to modify any aspect of the appraisal report, unless the modification complies with Section 61-2e-307;

(b) unless first prohibited by the client or applicable law, prohibits or inhibits an appraiser from contacting:

(i) the client;

(ii) a person licensed under Section 61-2c or Section 61-2f; or

(iii) any other person with whom the appraiser reasonably needs to communicate in order to obtain information necessary to complete a credible appraisal report;

(c) requires the appraiser to do anything that does not comply with:

(i) USPAP; or

(ii) assignment conditions and certifications required by the client;

(d) makes any portion of the appraiser's fee or the AMC's fee contingent on a favorable outcome, including but not limited to:

(i) a loan closing; or

(ii) a specific dollar amount being achieved by the appraiser in the appraisal report;

(e) requests, for the purpose of facilitating a mortgage loan transaction,

(i) a broker price opinion; or

(ii) any other real property price or value estimation that does not qualify as an appraisal;[ or]

(f) charges an appraiser:

(i) for a service not actually performed; or

(ii) for a fee or cost that:

(A) is not accurately disclosed pursuant to Subsection R162-2e-304(1)(a)(ii); or

(B) exceeds the actual cost of a service provided by a third party[.];

(g) uses or retains an employee to complete an appraisal assignment without first disclosing to the client that the appraiser is an employee of the company, such that the company is acting in the capacity of an appraisal firm rather than as an AMC pursuant to Utah Code Subsection 61-2e-102(4); or

(h) when acting in the capacity of an AMC pursuant to Utah Code Subsection 61-2e-102(4), uses or retains an employee appraiser to complete an appraisal assignment.

(2) An AMC commits unprofessional conduct and creates a violation by the appraiser of R162-2g-502b(1)(f)[107.1.6] if the AMC requires the appraiser to:

(a) accept full payment; and

(b) remit a portion of the full payment back to the AMC.

 

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

Date of Enactment or Last Substantive Amendment: [September 26, 2012]2013

Authorizing, and Implemented or Interpreted Law: 61-2e-102(4); 61-2e-103; 61-2e-305; 61-2e-[304]307; 61-2e-402(1)

 

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