Today's Law As Amended


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AB-624 Real estate appraisers: standards of conduct.(2015-2016)



As Amends the Law Today


SECTION 1.

 Section 11302 of the Business and Professions Code is amended to read:

11302.
 For the purpose of applying this part, the following terms, unless otherwise expressly indicated, shall mean and have the following definitions:
(a) “Affiliate” means any entity that controls, is controlled by, or is under common control with another entity. “Department” means the Department of Consumer Affairs. 
(b) “Appraisal” means the act or process of developing an opinion of value for real property. a written statement independently and impartially prepared by a qualified appraiser setting forth an opinion in a federally related transaction as to the market value of an adequately described property as of a specific date, supported by the presentation and analysis of relevant market information. 
The term “appraisal” does not include an opinion given by a real estate licensee or engineer or land surveyor in the ordinary course of his or her business in connection with a function for which a license is required under Chapter 7 (commencing with Section 6700) or Chapter 15 (commencing with Section 8700) of Division 3, or Chapter 3 (commencing with Section 10130) or Chapter 7 (commencing with Section 10500) and the opinion shall not be referred to as an appraisal. This part does not apply to a probate referee acting pursuant to Sections 400 to 408, inclusive, of the Probate Code unless the appraised transaction is federally related.
(c) “Appraisal Foundation” means the Appraisal Foundation that was incorporated as an Illinois not-for-profit corporation on November 30, 1987.
(d) (1) “Appraisal management company” means any person or entity that satisfies all of the following conditions:
(A) Provides appraisal management services to creditors or to secondary mortgage market participants, including affiliates. Maintains an approved list or lists, containing 11 or more independent contractor appraisers licensed or certified pursuant to this part, or employs 11 or more appraisers licensed or certified pursuant to this part. 
(B) Provides those services in connection with valuing a consumer’s principal dwelling as security for a consumer credit transaction or incorporating such transactions into securitizations. Receives requests for appraisals from one or more clients. 
(C) Within a given 12 calendar month period oversees an appraiser panel of more than 15 state-certified or state-licensed appraisers in a state or 25 or more state-certified or state-licensed appraisers in two or more states, as described in Section 11345.5.
(2) An appraisal management company does not include a department or division of an entity that provides appraisal management services only to that entity.
(3) An appraisal management company that is a subsidiary of an insured depository institution and regulated by a federal financial institution is not required to register with the bureau.
(e) (C)  “Appraisal management services” means  For a fee paid by  one or more of the following: its clients, delegates appraisal assignments for completion by its independent contractor or employee appraisers. 
(1) Recruiting, selecting, and retaining appraisers.
(2) Contracting with state-certified or state-licensed appraisers to perform appraisal assignments. “Appraisal management company” does not include any of the following, when that person or entity directly contracts with an independent appraiser: 
(3) (A)  Managing the process of having an appraisal performed, including providing administrative services such as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and secondary market participants, collecting fees from creditors and secondary market participants for services provided, and paying appraisers for services performed. Any bank, credit union, trust company, savings and loan association, or industrial loan company doing business under the authority of, or in accordance with, a license, certificate, or charter issued by the United States or any state, district, territory, or commonwealth of the United States that is authorized to transact business in this state. 
(4) (B)  Reviewing and verifying the work of appraisers. Any finance lender or finance broker licensed pursuant to Division 9 (commencing with Section 22000) of the Financial Code, when acting under the authority of that license. 
(C) Any residential mortgage lender or residential mortgage servicer licensed pursuant to Division 20 (commencing with Section 50000) of the Financial Code, when acting under the authority of that license.
(D) Any real estate broker licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting under the authority of that license.
(f) (3)  “Appraiser panel” means a network, list, or roster of licensed or certified appraisers approved by an appraisal management company to perform appraisals as independent contractors for the appraisal management company. Appraisers on an appraisal management company’s “appraiser panel” under this part include both appraisers accepted by the appraisal management company for consideration for future appraisal assignments in covered transactions or for secondary mortgage market participants  “Appraisal management company” does not include any person licensed to practice law in this state who is working with or on behalf of a client of that person  in connection with covered transactions, and appraisers engaged by the appraisal management company to perform  one or more appraisals in covered transactions or for secondary mortgage market participants in connection with covered transactions. An appraiser is an independent contractor for purposes of this part if the appraiser is treated as an independent contractor by the appraisal management company for purposes of federal income taxation. for that client. 
(g) (e)  “Appraisal Subcommittee” means the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.
(h) “Consumer credit” means credit offered or extended to a consumer primarily for personal, family, or household purposes.
(i) (f)  “Controlling person” means one or more of the following:
(1) An officer or director of an appraisal management company, or an individual who holds a 10 percent or greater ownership interest in an appraisal management company.
(2) An individual employed, appointed, or authorized by an appraisal management company that has the authority to enter into a contractual relationship with clients for the performance of appraisal services and that has the authority to enter into agreements with independent appraisers for the completion of appraisals.
(3) An individual who possesses the power to direct or cause the direction of the management or policies of an appraisal management company.
(j) “Course provider” means a person or entity that provides educational courses related to professional appraisal practice.
(k) “Covered transaction” means any consumer credit transaction secured by the consumer’s principal dwelling.
(l) “Creditor” means:
(1) A person who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments, not including a down payment, and to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.
(2) A person regularly extends consumer credit if, in any 12-month period, the person originates more than one credit extension for transactions secured by a dwelling.
(m) “Department” means the Department of Consumer Affairs.
(n) (g)  “Director” or “chief” means the Chief of the Bureau of Real Estate Appraisers.
(o) “Dwelling” means:
(1) A residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobilehome, and trailer, if it is used as a residence.
(2) A consumer can have only one “principal” dwelling at a time. Thus, a vacation or other second home is not a principal dwelling. However, if a consumer buys or builds a new dwelling that will become the consumer’s principal dwelling within a year or upon the completion of construction, the new dwelling is considered the principal dwelling for purposes of this section.
(p) (h)  “Federal financial institutions regulatory agency” means the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Federal Home Loan Bank System, National Credit Union Administration, Consumer Financial Protection Bureau,  and any other agency determined by the director to have jurisdiction over transactions subject to this part.
(q) “Federally regulated appraisal management company” means an appraisal management company that is owned and controlled by an insured depository institution, as defined in Section 1813 of Title 12 of the United States Code and regulated by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation.
(r) (i)  “Federally related real estate appraisal activity” means the act or process of making or performing an appraisal on real estate or real property in a federally related transaction and preparing an appraisal as a result of that activity.
(s) (j)  “Federally related transaction” means any real estate-related financial transaction which a federal financial institutions regulatory agency engages in, contracts for or regulates and which requires the services of a state licensed real estate appraiser regulated by this part. This term also includes any transaction identified as such by a federal financial institutions regulatory agency.
(t) (k)  “License” means any license, certificate, permit, registration, or other means issued by the bureau authorizing the person to whom it is issued to act pursuant to this part within this state.
(u) (l)  “Licensure” means the procedures and requirements a person shall comply with in order to qualify for issuance of a license and includes the issuance of the license.
(v) (m)  “Office” or “bureau” means the Bureau of Real Estate Appraisers.
(w) (n)  “Registration” means the procedures and requirements with which a person or entity shall comply in order to qualify to conduct business as an appraisal management company.
(x) “Secondary mortgage participant” means a guarantor or insurer of mortgage-backed securities, or an underwriter or issuer of mortgage-backed securities. Secondary mortgage market participant only includes an individual investor in a mortgage-backed security if that investor also serves in the capacity of a guarantor, insurer, underwriter, or issuer for the mortgage-backed security.
(y) (o)  “State licensed real estate appraiser” is a person who is issued and holds a current valid license under this part.
(z) (p)  “Uniform Standards of Professional Appraisal Practice” are the standards of professional appraisal practice established by the Appraisal Foundation. Foundation for use in a federally related transaction. 
(q) “Course provider” means a person or entity that provides educational courses related to professional appraisal practice.
(r) “Nonfederally related real estate appraisal activity” means the act or process of making or performing an appraisal on real estate or real property for any purpose other than a federally related transaction.
(s) “Standard of valuation practice” means any nationally or internationally recognized valuation standard approved by the bureau.

SEC. 2.

 Section 11319 of the Business and Professions Code is amended to read:

11319.
 Notwithstanding any other provision of this code, the following shall apply:
(a) The Uniform Standards of Professional Appraisal Practice constitute the minimum standard of conduct and performance for federally related real estate appraisal activity.
(a) (b)  Notwithstanding any other provision of this code, except as provided in subdivision (b), 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  the licensee  shall follow the standards established by the Board of Equalization when fulfilling his or her  the licensee’s  responsibilities for assessment purposes.
(b) (c)  Until January 1, 2020, and notwithstanding subdivision (a), a licensee shall not be required to comply with provisions of  If a licensee is performing a nonfederally related appraisal activity, a standard of valuation practice may be utilized if that practice is disclosed to, and agreed upon, by the client, and if that practice is described in the appraisal. If a licensee utilizes a standard of valuation practice other than  the Uniform Standards of Professional Appraisal Practice that provide a limitation on restricted appraisal reports to intended users other than or in addition to the client if all of the following are met: pursuant to this subdivision, the licensee shall comply with the Ethics, Record Keeping, Competency, and Scope of Work rules of the Uniform Standards of Professional Appraisal Practice contained in the 2014–15 edition of the Uniform Standards of Professional Appraisal Practice.  
(1) The licensee obtains the consent of the client in advance.
(2) The report the licensee prepares is not related to any of the following:
(A) A federally related real estate transaction.
(B) The purchase or refinance of a residential dwelling of one to four units.
(C) A transaction subject to Section 10232.5.
(3) The report does all of the following:
(A) Clearly identifies all intended users.
(B) States that the opinions and conclusions set forth in the report may not be understood properly without additional information that is in the appraiser’s workfile.
(C) States that there may be assumptions that the appraiser has not verified that may significantly impact the appraised value of the subject of the report.