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Senate Engrossed |
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State of Arizona Senate Fifty-fourth Legislature First Regular Session 2019
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SENATE BILL 1333 |
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AN ACT
amending sections 32‑3601, 32‑3605 and 32-3609, Arizona Revised Statutes; repealing section 32-3610, Arizona Revised Statutes; amending sections 32‑3635, 32‑3661, 32‑3662, 32‑3663, 32‑3665, 32‑3668 and 32‑3677, Arizona Revised Statutes; relating to real estate appraisal.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 32-3601, Arizona Revised Statutes, is amended to read:
32-3601. Definitions
In this chapter, unless the context otherwise requires:
1. "Appraisal" or "real estate appraisal" means a statement that is independently and impartially prepared by an individual setting forth an opinion as to the market value of real property as of a specific date and supported by the presentation and analysis of relevant market information.
2. "Appraisal assignment" means an engagement for which a real estate appraiser is employed or retained to act, or would be perceived by third parties or the public in acting, as a disinterested third party in rendering an unbiased analysis, opinion or conclusion relating to the nature, quality, value or utility of specified interests in or aspects of identified real estate.
3. "Appraisal foundation" means the appraisal foundation incorporated as an Illinois not‑for‑profit nonprofit corporation on November 30, 1987.
4. "Appraisal report" means any communication, written or oral, of an appraisal.
5. "Appraisal review" means the act of reviewing or the report that follows a review of an appraisal assignment or appraisal report in which a real estate appraiser forms an opinion as to the adequacy and appropriateness of the report being reviewed.
6. "Appraisal standards board" means the appraisal standards board appointed by the board of trustees of the appraisal foundation to develop, interpret and amend the uniform standards of professional appraisal practice.
7. "Appraisal subcommittee" means the subcommittee of the federal financial institutions examination council created pursuant to 12 United States Code section 3310 and chapter 34A, as amended.
8. "Appraiser qualifications board" means the appraiser qualifications board that is appointed by the board of trustees of the appraisal foundation to establish the minimum education, experience and examination requirements for real estate appraisers.
9. "Complex one to four residential units" means property that is atypical for the marketplace. Atypical factors may include architectural style, age of improvements, size of improvements, size of lot, neighborhood land use, potential environmental hazard liability, leasehold interests, limited readily available comparable sales data or other unusual factors.
10. "Course approval" means the act of the superintendent reviewing course materials to form an opinion as to the adequacy and appropriateness of the course for licensing pursuant to section 32‑3613, certification pursuant to section 32‑3614 and continuing education as prescribed in section 32‑3625 in accordance with the appraiser qualifications board and this chapter.
11. "Department" means the department of financial institutions.
12. "Federal financial institutions examination council" means that agency of the federal government created pursuant to 12 United States Code chapters 34 and 34A, as amended.
13. "Federally related transaction" means any real estate related financial transaction that a federal financial institution's regulatory agency or the resolution trust corporation engages in, contracts for or regulates and that requires an appraisal.
14. "Property tax agent" means an individual who is designated by a person or is an employee of an entity designated as an agent pursuant to section 42‑16001, who acts on behalf of a person who owns, controls or possesses property valued by a county assessor and who receives a fee for the analysis of any matter relating to the review of the valuation of the person's property before the assessor. Property tax agent does not include a person who is admitted to practice law in this state, an employee of the person owning, controlling or possessing the property or an employee of an entity designated pursuant to section 42‑16001, if the employee is performing a secretarial, clerical or administrative support function.
15. "Real estate" means an identified parcel or tract of land, including improvements, if any.
16. "Real estate related financial transaction" means any transaction involving the sale of, lease of, purchase of, investment in or exchange of real property, including interests in property or the financing of property, the refinancing of real property or interests in real property and the use of real property or interests in property as security for a loan or investment, including mortgage‑backed securities.
17. "Real property" means one or more defined interests, benefits and rights inherent in the ownership of real estate.
18. "Registered trainee appraiser" means a person who meets both of the following requirements:
(a) Is registered with the superintendent and meets the appraiser qualifications board's qualifications for trainee appraisers to perform appraisal services only under the direct supervision of a certified appraiser who has met the minimum criteria to be a supervisory appraiser.
(b) Accepts assignments only from the registered trainee appraiser's supervisory appraiser.
19. "Review appraiser" means a person who engages in the activity of reviewing and evaluating the appraisal work of others from the perspective of an appraiser, generally for compensation as a separate skill. This includes the function of reviewing an appraisal report or a file memorandum setting forth the results of the review process.
20. "Standards of professional appraisal practice" means the uniform standards of professional appraisal practice adopted by the superintendent promulgated by the appraisal standards board of the appraisal foundation.
21. "State‑licensed or state‑certified appraiser" means a person who develops and communicates appraisals and who holds a current, valid license or certificate issued under this chapter.
22. "Superintendent" means the superintendent of financial institutions.
23. "Supervisory appraiser" means a state‑certified appraiser who has a supervisory appraiser designation and who:
(a) Has been in good standing for the last three years in the jurisdiction in which the registered trainee appraiser practices.
(b) Has not been disciplined in a manner that affects the supervisory appraiser's eligibility to engage in appraisal practice in any jurisdiction in the last three years.
(c) Directly supervises registered trainee appraisers by doing the following:
(i) Accepting responsibility for an appraisal by signing and certifying that the appraisal complies with the uniform standards of professional appraisal practice.
(ii) Reviewing and signing all registered trainee appraiser reports.
24. "Value" means the monetary relationship between properties and those who buy, sell or use those properties.
Sec. 2. Section 32-3605, Arizona Revised Statutes, is amended to read:
32-3605. Superintendent; duties; powers; immunity
A. The superintendent shall adopt rules in aid or in furtherance of this chapter.
B. The superintendent shall:
1. In prescribing standards of professional appraisal practice, adopt standards that at a minimum are equal to the standards prescribed by the appraisal standards board.
1. Adopt standards for appraisal practice that is regulated by this chapter. The standards at a minimum shall be equivalent to the standards of professional appraisal practice.
2. In prescribing criteria for certification, adopt criteria that at a minimum are equal to the minimum criteria for certification adopted by the appraiser qualifications board.
3. In prescribing criteria for licensing and registration, adopt criteria that at a minimum are equal to the minimum criteria for licensing and registration adopted by the appraiser qualifications board.
4. Further define by rule with respect to state‑licensed or state‑certified appraisers appropriate and reasonable educational experience, appraisal experience and equivalent experience that meets the statutory requirement of this chapter.
5. Adopt the national examination as approved by the appraiser qualifications board for state‑certified appraisers.
6. Adopt the national examination as approved by the appraiser qualifications board for state‑licensed appraisers.
7. Establish administrative procedures for:
(a) Processing applications for licenses and certificates, including registration certificates.
(b) Approving or disapproving applications for registration, licensure and certification.
(c) Issuing licenses and certificates, including registration certificates.
8. Define by rule, with respect to registered trainee appraisers, and state‑licensed and state‑certified appraisers, the continuing education requirements for the renewal of licenses or certificates that satisfy the statutory requirements provided in this chapter.
9. Periodically review the requirements for the development and communication of appraisals provided in this chapter and adopt rules explaining and interpreting the requirements.
10. Define and explain by rule each stage and step associated with the administrative procedures for the disciplinary process pursuant to this chapter, including:
(a) Prescribing minimum criteria for accepting a complaint against a registered trainee appraiser or a licensed or certified appraiser. The superintendent may not consider a complaint for administrative action if the complaint either:
(i) Relates to an appraisal that was completed more than five years before the complaint was submitted to the superintendent or more than two years after final disposition of any judicial proceeding in which the appraisal was an issue, whichever period of time is greater.
(ii) Is filed against a person who is a staff person of the department of financial institutions and the person is a licensed or certified appraiser and the complaint is against the person's license or certificate and relates to the person's performance of duties. This item applies to a contract investigator who is under contract with the department for the performance of an appraisal review as defined by the uniform standards of professional appraisal practice.
(b) Defining the process and procedures used in investigating the allegations of the complaint. The superintendent shall consolidate complaints that are filed within a six-month period of time if the complaints are against the same appraiser, relate to the same appraisal and property and are filed by an entity that is subject to the mandatory reporting provisions of the Dodd‑Frank Wall Street reform and consumer protection act (P.L. 111‑203; 124 Stat. 1376). Complaints that are consolidated pursuant to this subdivision must be considered and adjudicated as one complaint.
(c) Defining the process and procedures used in hearings on the complaint, including a description of the rights of the superintendent and any person who is alleged to have committed the violation.
(d) Establishing criteria to be used in determining the appropriate actions for violations.
11. Communicate information that is useful to the public and appraisers relating to actions for violations.
12. Issue decrees of censure, fix periods and terms of probation and suspend and revoke licenses and certificates pursuant to the disciplinary proceedings provided for in section 32‑3631.
13. At least monthly transmit to the appraisal subcommittee a listing of all appraisal management companies that have received a state certificate of registration in accordance with this chapter.
14. Report on the disposition of any matter referred by the appraisal subcommittee or any other federal agency or instrumentality or federally recognized entity reporting any action of a state‑licensed or state‑certified appraiser or appraisal management company that is contrary to this chapter.
14. Investigate and assess potential law or order violations and discipline, suspend, terminate or deny registration renewals of appraisal management companies that violate laws or orders. The superintendent shall report violations of appraisal-related laws or orders and disciplinary and enforcement actions to the appraisal subcommittee.
15. Transmit the national registry fee collected pursuant to section 32‑3607 to the appraisal subcommittee.
16. Establish the fees in accordance with section 32‑3607.
17. Receive applications for state licenses and certificates.
18. Maintain a registry of the names and addresses of persons who are registered, licensed or certified under this chapter.
19. Retain records and all application materials submitted to the superintendent.
20. Publish on the department's website a current list of supervisory appraisers and registered trainee appraisers.
21. Perform such other functions and duties as may be necessary to carry out this chapter.
C. The superintendent may accept and spend federal monies and grants, gifts, contributions and devises from any public or private source to assist in carrying out the purposes of this chapter. These monies do not revert to the state general fund at the end of the fiscal year.
D. The superintendent may impose a civil penalty pursuant to section 32‑3631.
Sec. 3. Section 32-3609, Arizona Revised Statutes, is amended to read:
32-3609. Confidential records
Except as otherwise provided by law, the following records are confidential:
1. Questions contained in any examination administered by or for the superintendent or in any examination submitted to the superintendent for course approval.
2. Questions asked and the answers of individual examinees, except that the superintendent shall provide the grades of each examinee for public inspection and copying.
3. Appraisal reports or appraisal reviews and supporting documentation deemed confidential under the uniform standards of professional appraisal practice edition adopted by the superintendent.
4. All documents associated with a complaint as prescribed by section 6‑129.
Sec. 4. Repeal
Section 32-3610, Arizona Revised Statutes, is repealed.
Sec. 5. Section 32-3635, Arizona Revised Statutes, is amended to read:
32-3635. Standards of practice; unprofessional conduct
A. A registered trainee appraiser or a state‑licensed or state‑certified appraiser shall comply with the standards of professional appraisal practice adopted by the superintendent.
B. An appraisal or appraisal report shall not be issued by a real estate appraiser unless it meets the appraisal standards established by this chapter and rules adopted pursuant to this chapter.
C. An appraisal review report shall clearly indicate the nature of the review process undertaken and shall separate the review function from any other functions.
D. All federally related appraisals shall be in writing.
E. Failure to pay the fees and expenses authorized by section 32‑3632, subsection B is unprofessional conduct as defined by the uniform standards of professional appraisal practice.
Sec. 6. Section 32-3661, Arizona Revised Statutes, is amended to read:
32-3661. Definitions
In this article, unless the context otherwise requires:
1. "Appraisal" means the act or process of developing an opinion of the value of real property in conformance with the uniform standards of professional appraisal practice published by the appraisal foundation, or any other definition used in state or federal laws.
2. "Appraisal management company" means a corporation, partnership, sole proprietorship, subsidiary or other business entity that directly or indirectly performs appraisal management services, regardless of the use of the term "appraisal management company", "mortgage technology provider", "lender processing services", "lender services", "loan processor", "mortgage services", "real estate closing services provider", "settlement services provider" or "vendor management company" or any other term, and that does any of the following:
(a) Administers an appraiser panel of at least sixteen state‑licensed or state‑certified appraisers in one state who are independent contractors or at least twenty‑five state‑licensed or state‑certified appraisers in at least two states who perform real property appraisal services in this state for clients.
(b) Receives requests for real property appraisal services from clients and, for a fee paid by the client, enters into an agreement with one or more independent appraisers to perform the real property appraisal services contained in the request.
(c) (b) Otherwise serves as a third‑party liaison of appraisal management services between clients and appraisers.
3. "Appraisal management services" means any of the following:
(a) Recruiting, selecting and retaining appraisers.
(b) Contracting with state‑licensed or state‑certified appraisers to perform appraisal agreements.
(c) Managing the process of having an appraisal performed, including providing administrative services such as receiving appraisal orders and appraisal reports, submitting completed appraisal report reports to creditors and secondary market participants, collecting fees from creditors and secondary market participants for services provided and paying appraisers for services performed.
(d) Reviewing and verifying the work of appraisers.
4. "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, but does not include an examination of an appraisal for grammatical, typographical or other similar errors that do not communicate an opinion related to the appraiser's data collection, analysis, opinions, conclusions, estimate of value or compliance with the uniform standards of professional appraisal practice.
5. "Appraiser" means a person who is licensed or certified as an appraiser pursuant to this chapter and who performs valuation services competently and in a manner that is independent, impartial and objective.
6. "Appraiser panel":
(a) Means a network, list or roster of state‑licensed or state‑certified appraisers approved by an appraisal management company to perform appraisals as independent contractors for the appraisal management company. For the purposes of this subdivision, an appraiser is an independent contractor if the appraiser management company treats the appraiser as an independent contractor for federal income tax purposes.
(b) Includes both appraisers accepted by the appraisal management company for consideration for future appraisal assignments in covered transactions or for secondary mortgage market participants in connection with covered transactions and appraisers engaged by the appraisal management company to perform one or more appraisals in covered transactions.
7. "Client" means a person that contracts with, or otherwise enters into an agreement with, an appraisal management company for the performance of real property appraisal services.
8. "Controlling person" means any of the following:
(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 who is employed, appointed or authorized by an appraisal management company and who has the authority to enter into a contractual relationship with clients for the performance of appraisal management services and to enter into agreements with independent appraisers for the performance of real property appraisal services.
(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.
9. "Real property appraisal services" means the practice of developing an opinion of the value of real property in conformance with the uniform standards of professional appraisal practice published by the appraisal foundation.
10. "Relocation management company" means a business entity whose exclusive business services are not for mortgage purposes and include the relocation of employees as an agent or contractor for the employer or the employer's agent for the purposes of determining an anticipated sales price, as defined by the worldwide employee relocation council, of the residence of an employee being relocated by the employer in the course of its business.
11. "Uniform standards of professional appraisal practice" means the uniform standards of professional appraisal practice promulgated by the appraisal foundation and adopted pursuant to this chapter.
Sec. 7. Section 32-3662, Arizona Revised Statutes, is amended to read:
32-3662. Registration
A. A person shall not directly or indirectly engage or attempt to engage in business as an appraisal management company, directly or indirectly perform 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 superintendent pursuant to this article, regardless of the entity's use of the term "appraisal management company" or "mortgage technology company" or any other name.
B. A person who wishes to be registered as an appraisal management company in this state must file a written application with the superintendent on a form prepared and furnished by the superintendent and pay a fee in an amount to be determined by the superintendent. The registration required by subsection A of this section shall include:
1. The name, residence address, business address and telephone number of the applicant and the location of each principal office and branch office at which the appraisal management company will conduct business in this state.
2. The name under which the applicant will conduct business as an appraisal management company.
3. The name, residence address, business address and telephone number of each person who will have at least a ten percent ownership interest in the appraisal management company as a principal, partner, officer, director or trustee, specifying the capacity and title of each person.
4. If the person seeking registration is a corporation that is not domiciled in this state, the name and contact information for the company's agent for service of process in this state.
5. A certification that the person seeking registration has a system and process in place to verify that a person being added to the appraiser panel for the appraisal management company's appraisal management services in this state holds a license or certification in good standing in this state.
6. A certification that the person seeking registration has a system in place to review the work of all independent appraisers that are performing real property appraisal services for the appraisal management company on a periodic basis to confirm that the real property appraisal services are being conducted in accordance with uniform standards of professional appraisal practice.
7. A certification that the person maintains a detailed record of each service request that it receives and the independent appraiser that performs the real property appraisal services for the appraisal management company.
8. A certification that the person seeking registration has a system in place to train those who select individual appraisers for real property appraisal services in this state to ensure that the selectors have appropriate training in placing appraisal assignments.
9. An irrevocable consent to service of process.
10. A certification that allows the superintendent to examine the books and records of the appraisal management company and a written agreement that requires the appraisal management company to submit reports, information and documents to the superintendent as required by rule.
11. Any other information required by the superintendent deemed reasonable in scope and content and necessary for the implementation and administration of this chapter.
C. The superintendent may deny the application for an initial issuance or renewal of an appraisal management company registration if the applicant has been convicted of a felony or as otherwise prescribed by this chapter.
Sec. 8. Section 32-3663, Arizona Revised Statutes, is amended to read:
32-3663. Exemptions
This article does not apply to:
1. A department or unit within a financial institution that is subject to direct regulation by an agency of the United States government or of this state and that receives requests for the performance of real estate appraisals from the financial institution and then assigns such requests to an appraiser who is part of the financial institution's appraiser panel.
2. A corporation, partnership, sole proprietorship, subsidiary or other business entity that employs real estate appraisers exclusively on an employer and employee basis for the performance of all real property appraisal services in the normal course of its business and that is responsible for ensuring that the real property appraisal services being performed by its employees are being performed in accordance with the uniform standards of professional appraisal practice and federal and state law.
3. A relocation management company in the course of employee relocation pursuant to its relocation policy.
Sec. 9. Section 32-3665, Arizona Revised Statutes, is amended to read:
32-3665. Expiration of registration
An initial registration granted by the board department pursuant to this article is valid for one year from after the date on which it is issued. Registration renewals are valid for two years.
Sec. 10. Section 32-3668, Arizona Revised Statutes, is amended to read:
32-3668. Owner requirements
A. An appraisal management company applying for registration may not be owned by a person or have any principal of the company who has had any financial, real estate or mortgage lending industry license or certificate refused, denied, canceled, revoked or voluntarily surrendered in this state or in any other state. This requirement may be waived by appeal and at the discretion of the superintendent.
B. Each person that owns, is an officer of or has a financial interest in an appraisal management company in this state shall:
1. Be of good moral character.
2. Apply for a valid fingerprint clearance card issued pursuant to section 41‑1758.03.
3. Certify to the superintendent that the person has never had any financial, real estate or mortgage lending industry license or certificate refused, denied, canceled, revoked or voluntarily surrendered in this state or in any other state. This requirement may be waived by appeal and at the discretion of the superintendent.
Sec. 11. Section 32-3677, Arizona Revised Statutes, is amended to read:
32-3677. Review of disputes
A. Except within the first sixty days after an independent appraiser is first added to the appraiser panel of an appraisal management company, An appraisal management company shall not remove an appraiser from its appraiser panel, or otherwise refuse to assign requests for real property appraisal services to an independent appraiser, without notifying the appraiser in writing of the reasons for the appraiser being removed from the appraiser panel of the appraisal management company.
B. An independent appraiser that is removed from the appraiser panel of an appraisal management company for alleged illegal conduct, a violation of the uniform standards of professional appraisal practice or a violation of state licensing standards may file a complaint with the superintendent for a review of the decision of the appraisal management company, except that the superintendent may not make any determination regarding the nature of the business relationship between the appraiser and the appraisal management company that is unrelated to the actions specified in subsection A of this section.
C. If an independent appraiser files a complaint against an appraisal management company pursuant to subsection B of this section, the superintendent shall investigate the complaint within a reasonable time.
D. If the superintendent determines that an independent appraiser did not commit a violation of law, a violation of the uniform standards of professional appraisal practice or a violation of state licensing standards:
1. The superintendent shall order that the appraiser be added to the appraiser panel of the appraisal management company that was the subject of the complaint without prejudice.
2. The appraisal management company may request a hearing pursuant to title 41, chapter 6, article 10.