10 LC
36 1680S
The
Senate Regulated Industries and Utilities Committee offered the following
substitute to HB 1050:
A
BILL TO BE ENTITLED
AN ACT
To
amend Chapter 39A of Title 43 of the Official Code of Georgia Annotated,
relating to real estate appraisers, so as to add regulations for the
establishment and maintenance of a real estate appraisal management company; to
correct cross-references; to provide for related matters; to provide for an
effective date; to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Chapter
39A of Title 43 of the Official Code of Georgia Annotated, relating to real
estate appraisers, is amended in Code Section 43-39A-1, relating to the short
title, by revising said Code section as follows:
"43-39A-1.
This
chapter shall be known and may be cited as the 'Real Estate Appraiser
and Real
Estate Appraisal Management Company
Classification and Regulation Act.'"
SECTION
2.
Said
chapter is further amended in Code Section 43-39A-2, relating to definitions
relative to real estate appraisers, by revising said Code section as
follows:
"43-39A-2.
As
used in this chapter, the term:
(1)
'Analysis' means a study of real estate or real property other than one
estimating value.
(2)
'Appraisal' or 'real estate appraisal' means an analysis, opinion, or conclusion
prepared by an appraiser relating to the nature, quality, value, or utility of
specified interests in, or aspects of, identified real estate. An appraisal may
be classified by subject matter into either a valuation or an
analysis.
(3)(A)
'Appraisal management company' means a person who for compensation:
(i)
Functions as a third-party intermediary between an appraiser and a user of real
estate appraisal services;
(ii)
Administers a network of appraisers performing real estate appraisal services as
independent contractors;
(iii)
Enters into an agreement to provide real estate appraisal services with a user
of such services and one or more appraisers performing such services as
independent contractors; or
(iv)
Otherwise serves as a third-party broker of appraisal services.
(B)
'Appraisal management company' does not include:
(i)
Any person licensed to practice law in this state who orders an appraisal in
connection with a bona fide client relationship when that person directly
contracts with an appraiser;
(ii)
Any person that contracts with an appraiser acting as an independent contractor
for the completion of a real estate appraisal assignment and who, upon the
completion of such an assignment, cosigns the appraisal report with the
appraiser who is acting as an independent contractor;
(iii)
Any federal, state, or local government or any of its departments, agencies, or
authorities that order appraisals; or
(iv)
Any person who orders an appraisal on behalf of any federal, state, or local
government or its departments, agencies, or authorities as an employee
thereof.
(4)
'Appraisal management services' means services performed by an appraisal
management company and may include, but are not limited to, such activities as
recruiting appraisers, contracting with appraisers to perform real estate
appraisal activity, negotiating fees for appraisals, receiving appraisal orders
and appraisal reports, and submitting appraisal reports received from appraisers
to clients.
(3)(5)
'Appraisal report' means any communication, written or oral, of an appraisal.
For purposes of this chapter, the testimony of an appraiser dealing with the
appraiser's analyses, conclusions, or opinions concerning identified real
property is deemed to be an oral appraisal report.
(6)
'Appraisal review' means the act or process of developing and communicating an
opinion about the quality of another appraiser's work that was performed as part
of an appraisal assignment, except that an examination of an appraisal for
grammatical, typographical, or other similar errors shall not be an appraisal
review.
(4)(7)
'Appraisal Subcommittee' means the designees of the heads of the federal
financial institutions regulatory agencies established by the Federal Financial
Institutions Examination Council Act of 1978 (12 U.S.C. Section 3301, et seq.),
as amended.
(5)(8)
'Appraiser' means any person who, for a valuable consideration or with the
intent or expectation of receiving the same from another, engages in real estate
appraisal activity on any type of real estate or real property.
(6)(9)
'Appraiser classification' means any category of appraiser which the board
creates by designating criteria for qualification for such category and by
designating the scope of practice permitted for such
category,
including the registration of real estate appraisal management
companies.
(10)
'Appraiser panel' means a group of independent appraisers selected to perform an
appraisal valuation or analysis for an appraisal management
company.
(7)(11)
'Board' means the Georgia Real Estate Appraisers Board established pursuant to
the provisions of this chapter.
(8)(12)
'Certified appraisal' or 'certified appraisal report' means an appraisal or
appraisal report given, signed, and certified as such by a certified real estate
appraiser. A certified appraisal or appraisal report represents to the public
that it meets the appraisal standards defined in this chapter.
(13)
'Client' means any person who enters into an agreement with an appraiser or an
appraisal management company for the performance of real estate appraisal
activity.
(9)(14)
'Commission' means the Georgia Real Estate Commission created in Code Section
43-40-2.
(10)(15)
'Commissioner' means the real estate commissioner.
(16)
'Controlling person' means:
(A)
An owner, officer, or director of a corporation, partnership, or other business
entity seeking to offer appraisal management services in this
state;
(B)
An individual employed, appointed, or authorized by an appraisal management
company who has the authority to enter into a contractual relationship with
other persons for the performance of appraisal management services and has the
authority to enter into agreements with appraisers for the performance of
appraisals; or
(C)
An individual who possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of an appraisal management
company.
(11)(17)
'Evaluation assignment' means an engagement for which an appraiser is employed
or retained to give an analysis, opinion, or conclusion that relates to the
nature, quality, or utility of identified real estate or identified real
property.
(12)(18)
'Federally related transaction' means any real estate related financial
transaction which (A) a federal financial institutions regulatory agency or the
Resolution Trust Corporation engages in, contracts for, or regulates; and (B)
requires the services of an appraiser.
(13)(19)
'Independent appraisal assignment' means an engagement for which an appraiser is
employed or retained to act, or would be perceived by third parties or the
public as acting, as a disinterested third party in rendering an unbiased
analysis, opinion, or conclusion relating to the nature, quality, value, or
utility of identified real estate or identified real property.
(20)
'Owner' means any person who owns 5 percent or more of an appraisal management
company.
(21)
'Person' means an individual, partnership, limited liability company, limited
partnership, corporation, association, or any other legal or commercial
entity.
(14)(22)
'Real estate' means condominiums and leaseholds as well as any other interest or
estate in land, whether corporeal, incorporeal, freehold, or nonfreehold and
whether the real estate is situated in this state or elsewhere. Such term also
includes any structure or structures equipped with the necessary service
connections and made so as to be readily moveable as a unit or units when such a
structure is affixed to land.
(15)(23)
'Real estate appraisal activity' means the act or process of valuation of real
estate or real property and preparing an appraisal report.
(16)(24)
'Real estate related financial transaction' means any transaction
involving:
(A)
The sale, lease, purchase, or exchange of or investment in real estate or real
property or the financing thereof;
(B)
The refinancing of real estate or real property; and
(C)
The use of real estate or real property as security for a loan or investment,
including mortgage backed securities.
(17)(25)
'Real property' means one or more defined interests, benefits, and rights
inherent in the ownership of real estate.
(18)(26)
'Specialized services' means services, other than independent appraisal
assignments which are performed by an appraiser. Specialized services may
include marketing, financing, and feasibility studies; valuations; analyses; and
opinions and conclusions given in connection with activities such as real estate
brokerage, mortgage banking, real estate counseling, and real estate tax
counseling.
(19)(27)
'State' means any state, district, territory, possession, or province of the
United States or Canada and any sovereign nation or any political subdivision of
such sovereign nation.
(20)(28)
'Valuation' means an estimate of the value of real estate or real
property.
(21)(29)
'Valuation assignment' means an engagement for which an appraiser is employed or
retained to give an analysis, opinion, or conclusion that estimates the value of
an identified parcel of real estate or identified real property at a particular
point in time."
SECTION
3.
Said
chapter is further amended in Code Section 43-39A-6, relating to records
maintained by the Georgia Real Estate Appraisers Board, by revising subsection
(b) as follows:
"(b)
The board shall maintain records so that it may certify the history of
appraisers or
any person issued an appraisal management company registration under this
chapter for a period of up to five years
preceding the date of certification. The board may certify the classification
history of an appraiser
or appraisal
management company based on electronic
data that it maintains. When that electronic data is derived from a paper
record, upon converting the information on the paper record to electronic form
and after verification of the electronic record, the board may:
(1)
Properly destroy the paper record; or
(2)
Retain the paper record for a period of time determined by the
board."
SECTION
4.
Said
chapter is further amended in Code Section 43-39A-7, relating to application for
real estate appraiser classification, by revising said Code section as
follows:
"43-39A-7.
(a)
Any person desiring to act as a real estate appraiser must file an application
for an appraiser classification with the board. All original and subsequent
applications filed with the board shall be in such form and detail as the board
shall prescribe, setting forth the following:
(1)
The name and address of the applicant and the name under which the applicant
intends to conduct business;
(2)
The place or places, including the city with the street and street number, if
any, where the business is to be conducted; and
(3)
Such other information as the board shall require.
(b)(1)
No person shall directly or indirectly engage or attempt to engage in business
as an appraisal management company, directly or indirectly engage or attempt to
perform appraisal management services, or advertise or hold itself out as
engaging in or conducting business as an appraisal management company without
first obtaining a registration issued by the board.
(2)
The registration required by paragraph (1) of this subsection shall, at a
minimum, include the following:
(A)
Name of the entity seeking registration;
(B)
Business address of the entity seeking registration which must be located and
maintained within this state;
(C)
Telephone contact information of the entity seeking registration;
(D)
If the entity is not a corporation that is domiciled in this state, the name and
contact information for the company's agent for service of process in this
state;
(E)
The name, address, and contact information for any individual or any
corporation, partnership, or other business entity that owns 5 percent or more
of the appraisal management company;
(F)
The name, address, and contact information for a designated controlling person
to be the primary communication source for the board;
(G)
A certification that the entity has a system and process in place to verify that
a person being added to the appraiser panel of the appraisal management company
for appraisal services to be performed in Georgia holds a license or
certification in good standing in Georgia pursuant to this chapter;
(H)
A certification that the entity has a system in place to review the work of all
appraisers who are performing real estate appraisal services for the appraisal
management company on a periodic basis to validate that the real estate
appraisal services are being conducted in accordance with the standards for real
estate appraisals established by the board;
(I)
A certification that the entity maintains a detailed record of each service
request that it receives for appraisal services within the State of Georgia and
the name, address, and telephone number of the appraiser who performs the
requested real estate appraisal services for the appraisal management
company;
(J)
An irrevocable consent to service of process; and
(K)
Any such other information as the board shall require.
(3)
The board shall issue a unique registration number to each appraisal management
company.
(4)
The board shall publish annually a list of the appraisal management companies
that have registered pursuant to this chapter and have been issued a
registration number.
(5)
An appraisal management company shall be required to disclose the registration
number on each engagement letter utilized in assigning an appraisal request for
real estate appraisal assignments within the State of Georgia.
(b.1)
Any employee or independent contractor of an appraisal management company who
performs appraisal review services must be an individual who holds a valid
appraiser license or certification issued pursuant to this chapter.
(b)(c)
Notwithstanding any provision of Article 4 of Chapter 18 of Title 50 to the
contrary, all applications, including supporting documents and other personal
information submitted by
applicants,
and
classified
appraisers,
and appraisal management companies as part
of an application filed with the board, shall be confidential. The board shall
deem as public records the following information and shall make such information
reasonably available for inspection by the general public: an appraiser's name,
classification number and status, business name, business address, business
telephone number, type of classification held, and term of classification; the
fact that an appraiser has or has not received a disciplinary sanction; and such
other information pertaining to the classification of an appraiser or approval
of a school, course, or instructor as the board may determine by
rule."
SECTION
5.
Said
chapter is further amended in Code Section 43-39A-11, relating to fees
associated with real estate appraisers classification, by adding a new
subsection to read as follows:
"(n)
The board may through the establishment of rules or regulations require that an
applicant for registration as a real estate appraisal management company provide
proof of financial responsibility in the form of a surety bond, cash or property
bond, or trust or escrow account to secure faithful performance of the standards
required of an appraisal management company under this
chapter."
SECTION
6.
Said
chapter is further amended in Code Section 43-39A-13, relating to the powers of
the Georgia Real Estate Appraisers Board, by revising said Code section as
follows:
"43-39A-13.
The
board, through its rules and regulations, shall have the full power to regulate
the issuance of appraiser classifications
and
registrations, to discipline appraisers in
any manner permitted by this chapter, to establish qualifications for appraiser
classifications
and
registrations consistent with this
chapter, to regulate approved courses,
and
to establish standards for real estate
appraisals,
and to establish standards consistent with this
chapter
for appraisal
management companies operating within the State of
Georgia. Except for conducting an
investigation as provided in this chapter, the board is authorized to enter into
such contracts as are necessary to carry out its duties under this chapter;
provided, however, the board may enter into contracts to assist it in the
conduct of investigations authorized by this chapter only whenever it needs
special legal or appraisal expertise or other extraordinary circumstances exist.
Whenever the board contracts to perform such investigative functions, any such
contractor working on an investigation authorized by this chapter shall be under
the supervision of the board or a duly authorized representative of the board.
Any contractor used by the board shall be knowledgeable in the work area for
which such contractor is retained. A contractor shall not be empowered to
determine the disposition of any investigation nor to make any discretionary
decision that the board is authorized by law to make. Notwithstanding any other
provision of law, the board is authorized to retain all funds received as
collection fees for use in defraying the cost of collection of fees required
under this chapter. Any such funds not expended for this purpose in the fiscal
year in which they are generated shall be deposited in the state treasury;
provided, however, that nothing in this Code section shall be construed so as to
allow the board to retain any funds required by the Constitution to be paid into
the state treasury; provided, further, that the board shall comply with all
provisions of Part 1 of Article 4 of Chapter 12 of Title 45, the 'Budget Act,'
except Code Section 45-12-92, prior to expending any such
funds."
SECTION
7.
Said
chapter is further amended by adding a new Code section to read as
follows:
"43-39A-14.1.
(a)
Each appraisal management company applying to the board for registration shall
designate a controlling person who shall be the main contact for all
communication between the board and the appraisal management company and who
shall also serve as the person upon whom service of process may be made in a
proceeding against the appraisal management company.
(b)
The controlling person designated pursuant to subsection (a) of this Code
section shall:
(1)
Have never had a license or certificate to act as an appraiser refused, denied,
canceled, surrendered in lieu of a pending revocation, or revoked in any
state;
(2)
Be of good moral character, as determined by the board; and
(3)
Submit to a background investigation, as determined by the board.
(c)
Each appraisal management company shall certify to the commission on an annual
basis that it:
(1)
Includes instructions to appraisers in letters of engagement to decline the
assignment in the event the appraiser is not geographically competent or the
assignment falls outside the appraiser's scope of practice
restrictions;
(2)
Has a system in place to verify that the appraiser receiving the assignment
holds a license or registration in good standing in the State of Georgia and has
not had a license or certificate to act as an appraiser refused, denied,
canceled, surrendered in lieu of a pending revocation, or revoked in any
state;
(3)
Has a system in place to perform an appraisal review on a periodic basis of the
work of all appraisers who are performing appraisals for the appraisal
management company to validate that the appraisals are being conducted in
accordance with the standards for real estate appraisals established by the
board;
(4)
Has reported to the board the results of any appraisal reviews in which an
appraisal is found to be substantially noncompliant with the standards for real
estate appraisals established by the board or any state or federal laws
pertaining to appraisals; and
(5)
Maintains records required to be kept by the board that the board is authorized
to inspect.
(d)
An appraisal management company doing business in this state shall
not:
(1)
Knowingly employ any person directly involved in real estate appraisal or
appraisal management services who does not hold a license or registration in
good standing in the State of Georgia or who has had a license or certificate to
act as an appraiser refused, denied, canceled, surrendered in lieu of a pending
revocation, or revoked in any state;
(2)
Knowingly enter into any independent contractor arrangement, whether in oral,
written, or other form, with any person for the performance of real estate
appraisal services who does not hold a license or registration in good standing
in the State of Georgia or who has had a license or certificate to act as an
appraiser refused, denied, canceled, surrendered in lieu of a pending
revocation, or revoked in any state;
(3)
Knowingly enter into any contract, agreement, or other business relationship
directly involved with the performance of real estate appraisal or appraisal
management services, whether in oral, written, or any other form, with any
entity that employs, has entered into an independent contract arrangement, or
has entered into any contract, agreement, or other business relationship,
whether in oral, written, or any other form, with any person who does not hold a
license or registration in good standing in the State of Georgia or who has had
a license or certificate to act as an appraiser refused, denied, canceled,
surrendered in lieu of a pending revocation, or revoked in any
state;
(4)
Request or require an appraiser to modify any aspect of an appraisal report
unless the modification provides additional information about the basis for a
valuation, corrects objective factual errors in the appraisal report, or
provides additional information within the appraisal regarding additional sales
provided through an established dispute process;
(5)
Require an appraiser to prepare an appraisal if the appraiser, in the
appraiser's own independent professional judgment, believes the appraiser does
not have the necessary expertise for the assignment or for the specific
geographic area and has notified the appraisal management company and declined
the assignment;
(6)
Require an appraiser to prepare an appraisal under a time frame that the
appraiser, in the appraiser's own professional judgment, believes does not
afford the appraiser the ability to meet all the relevant legal and professional
obligations, and the appraiser has notified the appraisal management company and
declined the assignment;
(7)
Prohibit or inhibit legal or other allowable communication between the appraiser
and a lender, a real estate licensee, or any other person who the appraiser, in
the appraiser's own professional judgment, believes possesses information that
would be relevant;
(8)
Knowingly require an appraiser to take any action that does not comply with
any provision of this chapter and the rules and regulations promulgated by the
board or any assignment conditions and certifications required by the client for
whom an appraisal is being performed;
(9)
Make any portion of its fee or the appraiser's fee contingent on a predetermined
or favorable outcome including, but not limited to, a loan closing or a specific
dollar amount being determined by the appraiser in the appraisal;
(10)
Prohibit any appraiser who is part of an appraiser panel from recording the fee
that the appraiser was paid by the appraisal management company for the
performance of the appraisal within the appraisal report that is submitted by
the appraiser to the appraisal management company;
(11)
Alter, modify, or otherwise change a completed appraisal report submitted by an
appraiser by:
(A)
Permanently removing the appraiser's signature or seal; or
(B)
Adding information to or removing information from the appraisal report with an
intent to change the valuation conclusion; or
(12)
Require an appraiser to provide the appraisal management company with the
appraiser's digital signature or seal; provided, however, that an appraiser
shall not be prohibited from voluntarily providing such appraiser's digital
signature or seal to another person.
(e)
An appraisal management company shall separately state to the client the fees
paid to an appraiser for appraisal services and the fees charged by the
appraisal management company for services associated with the management of the
appraisal process, including procurement of the appraiser's
services.
(f)
An appraisal management company shall be held responsible for the actions of its
controlling person affiliated with such appraisal management company should such
controlling person violate any of the provisions of this chapter or any rules
and regulations promulgated by the board or engage in any unfair trade
practices.
(g)
Whenever the board initiates an investigation as provided for in Code Section
43-39A-22 and the evidence gathered in the investigation reveals an apparent
violation by the appraisal management company of this chapter, of the rules and
regulations promulgated by the board, or of any unfair trade practices,
including, but not limited to, those listed in this Code section, the board
shall file notice of hearing in accordance with Chapter 13 of Title 50, the
'Georgia Administrative Procedure Act.' Whenever an appraisal management
company has been found guilty of a violation of any provision of this chapter or
the rules and regulations promulgated by the board, or of any unfair trade
practices after such hearing has taken place, the board shall have the power to
take any one or more of the following actions:
(1)
Refuse to grant or renew registration to an appraisal management
company;
(2)
Suspend or revoke the registration of an appraisal management
company;
(3)
Impose a fine not to exceed $1,000.00 for each violation of this chapter, of the
rules and regulations promulgated by the board, or of any unfair trade practices
with fines for multiple violations limited to $5,000.00 in any one disciplinary
proceeding or such other amount as parties agree; or
(4)
Take other appropriate disciplinary action as established by the rules and
regulations of the
board."
SECTION
8.
Said
chapter is further amended in Code Section 43-39A-21, relating to hearings for
sanctions of appraisers, by revising subsections (a) and (b) as
follows:
"(a)
Before the board shall impose on any appraiser
or appraisal
management company any sanction permitted
by this chapter, it shall provide an opportunity for a hearing for such
appraiser or
appraisal management company in accordance
with Chapter 13 of Title 50, the 'Georgia Administrative Procedure Act.' Unless
otherwise agreed to by the board, all such hearings shall be held in the county
of domicile of the board.
(b)
If any
appraiser,
appraisal management company, or applicant
fails to appear at any hearing after reasonable notice, the board may proceed to
hear the evidence against such
appraiser,
appraisal management company, or applicant
and take action as if such
appraiser,
appraisal management company, or applicant
had been present. A notice of hearing, initial or proposed decision, or final
decision of the board in a disciplinary proceeding shall be served upon the
appraiser,
appraisal management company, or applicant
by personal service or by certified mail or statutory overnight delivery, return
receipt requested, to the last known address of record with the board. If such
material is returned marked 'unclaimed' or 'refused' or is undeliverable and if
the appraiser,
appraisal management company, or applicant
cannot, after diligent effort, be located, the real estate commissioner shall be
deemed to be the agent for such
appraiser,
appraisal management company, or applicant
for the purposes of this Code section, and service upon the real estate
commissioner shall be deemed service upon the
appraiser,
appraisal management company, or
applicant."
SECTION
9.
Said
chapter is further amended in code section 43-39A-22, relating to investigations
of appraisers, by revising subsections (a), (d), and (e) as
follows:
"(a)
The board may, upon its own motion, and shall, upon the sworn written request of
any person, investigate the actions of any appraiser, applicant,
appraisal
management company, or school approved by
the board; provided, however, that, whenever a request for investigation
involves an appraisal report which varies from a sales, lease, or exchange price
by 20 percent or less, or, if the appraiser
or appraisal
management company is acting as a tax
consultant, which varies from the tax assessor's value by 20 percent or less,
the board may in its discretion decline to conduct an investigation. Except for
investigations of applicants for appraiser classifications, investigations of
allegations of fraudulent conduct, or investigations of possible violations of
this chapter which have been litigated in the courts or arise from litigation in
the courts, the board shall not initiate an investigation on its own motion or
upon a sworn written request for investigation unless the act or acts which may
constitute a violation of this chapter occurred within five years of the
initiation of the investigation."
"(d)
The results of all investigations shall be reported only to the board or to the
commissioner and the records of such investigations shall not be subject to
subpoena in civil actions. Records of investigations shall be kept by the board
and no part of any investigative record shall be released for any purpose other
than a hearing before the board or its designated hearing officer, review by
another law enforcement agency or lawful licensing authority upon issuance of a
subpoena from such agency or authority or at the discretion of the board upon an
affirmative vote of a majority of the quorum of the board, review by the
appraiser,
or
applicant, or
appraisal management company who is the
subject of the notice of hearing after its service, review by the board's legal
counsel, or an appeal of a decision by the board to a court of competent
jurisdiction; provided, however, if an investigation authorized by this chapter
results in the board's filing a notice of hearing or entering into settlement
discussions with a member of the board, the commissioner shall immediately
notify the Governor or the Governor's legal counsel of such action by the board.
After service of a notice of hearing, the
appraiser,
or
applicant, or
appraisal management company who is the
subject of the notice of hearing shall have a right to obtain a copy of the
investigative record pertaining to the hearing.
(e)
Whenever the board revokes or suspends for more than 60 days an appraiser
classification or a school approval or whenever an
appraiser,
appraisal management company, or an
approved school surrenders an appraiser classification or an approval to the
board after the board has filed a notice of hearing, the board shall publish the
name of such
appraiser,
appraisal management company, or approved
school in its official newsletter."
SECTION
10.
This
Act shall become effective 90 days after the date this Act is approved by the
Governor or becomes law without such approval.
SECTION
11.
All
laws and parts of laws in conflict with this Act are repealed.