DAR File No. 27131

Commerce, Real Estate

R162-105

Scope of Authority

NOTICE OF PROPOSED RULE

DAR File No.: 27131
Filed: 04/30/2004, 09:37
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Utah Appraiser Licensing and Certification Board has decided to simplify the rules on appraisal trainees and to liberalize the rule on unlicensed trainees inspecting properties in the hope that these changes will make those who are already licensed or certified appraisers more willing to take on trainees, thereby reducing barriers to entry into the appraiser profession. Some minor housekeeping changes are also made.

Summary of the rule or change:

The rule currently provides that a trainee, no matter how experienced, may not inspect a property unless his supervising appraiser is present. The rule change will require the supervisor to be present for only the first 100 residential inspections and the first 20 non-residential inspections, after which time the trainee will be allowed to inspect a property by himself. In addition, the current two-tiered system of "unclassified individuals" and "trainees" is replaced by a simpler one-tiered "trainee" system.

State statutory or constitutional authorization for this rule:

Subsection 61-2b-6(1)(l)

Anticipated cost or savings to:

the state budget:

None--The rules that govern how unlicensed persons become appraisers do not affect State government.

local governments:

To the extent that County Assessors hire unlicensed persons and train them to become appraisers, this rule change would lessen the cost of training those individuals since they would be allowed to inspect properties by themselves after a period of monitoring by the supervisor instead of the supervisor's physical presence being required during the whole training period.

other persons:

For the reasons stated under local government, there would be less supervision costs incurred by any other persons who hire and train unlicensed persons to become appraisers.

Compliance costs for affected persons:

There will be no compliance costs. This rule should reduce the cost to supervisors of training candidates for entry into the profession.

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

This rule amendment relaxes the standards regulating the supervision of appraiser trainees. The amendment will result in reduced costs to appraisers who use trainees, and to consumers who hire appraisers. Pursuant to standards adopted by the Division of Real Estate, the licensed or certified appraiser is ultimately responsible for the work completed by the trainee. Therefore, there does not appear to be any negative fiscal impact to businesses or to the public. The rule filing also contains some technical clarifying amendments - basically the removal of references to the "unclassified individual" category. The rule now refers to those who are "trainees" (individuals with sufficient experience and education who are properly registered with the Division) and those who are not. There appears to be no fiscal impact to businesses as a result of this clarification.

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

Direct questions regarding this rule to:

Shelley Wismer at the above address, by phone at 801-530-6761, by FAX at 801-530-6749, or by Internet E-mail at swismer@utah.gov

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:

06/14/2004

Interested persons may attend a public hearing regarding this rule:

5/26/2004 at 10:00 AM, 160 East 300 South, Room 205, 2nd Floor, Salt Lake City, Utah

This rule may become effective on:

06/15/2004

Authorized by:

Dexter Bell, Director

RULE TEXT

R162. Commerce, Real Estate.

R162-105. Scope of Authority.

R162-105-1. Scope of Authority.

105.1 Transaction value. "Transaction value" means:

105.1.1 For loans or other extensions of credit, the amount of the loan or extension of credit;

105.1.2 For sales, leases, purchases, and investments in or exchanges of real property, the market value of the real property interest involved; and

105.1.3 For the pooling of loans or interests in real property for resale or purchase, the amount of the loan or market value of the real property calculated with respect to each such loan or interest in real property.

105.2 State-Licensed Appraisers. In federally-related transactions, the Utah Real Estate Appraiser Licensing Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and related federal regulations allow State-Licensed Appraisers to perform the appraisal of non-complex one to four residential units having a transaction value of less than $1,000,000 and complex one to four residential units having a transaction value of less than $250,000.

105.2.1 Subject to the transaction value limits in Section 105.2, State-Licensed Appraisers may also perform appraisals in federally-related transactions of vacant or unimproved land that is utilized for one to four family purposes, or for which the highest and best use is 1-4 family purposes, so long as net income capitalization analysis is not required by the terms of the assignment.

105.2.2 State-Licensed Appraisers may not perform appraisals of subdivisions in federally-related transactions for which a development analysis/appraisal is necessary or for which discounted cash flow analysis is required by the terms of the assignment.

105.3 [Unclassified Individuals.]Trainees.

105.3.1 For the purposes of these rules, "trainee" means a person who is working under the direct supervision of a State-Licensed or State-Certified Appraiser to earn points for licensure.

105.3.2 Appraisal-related duties by unlicensed persons. Unlicensed persons who have not qualified as trainees as provided in Subsection 105.3.3 may perform only clerical duties in connection with an appraisal. For the purposes of this rule, appraisal-related clerical duties include typing an appraiser's research notes or an appraiser's report, taking photographs of properties, and obtaining copies of public records. Only those persons who have properly qualified as trainees as provided in Subsection 105.3.3 may perform the following appraisal-related duties: participating in property inspections, measuring or assisting in the measurement of properties, performing appraisal-related calculations, participating in the selection of comparables for an appraisal assignment, making adjustments to comparables, and drafting or assisting in the drafting of an appraisal report. The supervising appraiser shall be responsible to determine the point at which a trainee is competent to participate in each of these activities.

105.3.3 In order to become a trainee, the person must have successfully completed 75 classroom hours of State-approved education in subjects related to real estate appraisal, including the Uniform Standards of Professional Appraisal Practice (USPAP), must have passed the final examination in the USPAP course, and must file a notification with the Division as provided in Subsection 105.3.3.1.

105.3.3.1 Trainee Notification. Prior to performing any of the appraisal-related activities for which points will be claimed toward licensure, a trainee must file with the Division a notification in the form required by the Division. In addition to any identifying information about the trainee required by the Division, the notification shall contain the name and business address of the appraiser(s) who will supervise the trainee in the performance of the appraisal-related duties, and shall be signed by the supervisor. The notification shall also contain the course names, course provider names, and course completion dates for the 75 hours of education required by Subsection 105.3.3. The original course completion certificates shall be submitted to the Division with the notification.

105.3.3.2 Except as provided in Subsection 105.3.3.3, no experience points will be granted toward licensure for trainee experience that is claimed to have been earned prior to the date the notification was filed with the Division.

105.3.3.3 Until five years after the effective date of this rule, points that were earned prior to the effective date of this rule may be claimed and will be awarded to applicants who are able to document those points on the forms required by the Division, notwithstanding the fact that the points were earned prior to the date a trainee notification was filed with the Division.

105.3.4 Supervising Appraisers. A trainee may have more than one supervising appraiser.

105.3.5 Residential Property Inspections. A trainee must be accompanied by a supervising State-Licensed Appraiser, State-Certified Residential Appraiser, or State-Certified General Appraiser on all inspections of residential property until the trainee has performed 100 inspections of residential properties in which both the interior and the exterior of the properties are inspected.

105.3.6 Non-Residential Property Inspections. A trainee must be accompanied by a supervising State-Certified General Appraiser on all inspections of non-residential property until the trainee has performed 20 inspections of non-residential properties in which both the interior and the exterior of the properties are inspected.[105.3.1 Unclassified individuals who have not yet accumulated 100 experience points and who have not successfully completed the education required for licensure may perform the following duties under the direct supervision of a state-licensed or state-certified appraiser: typing an appraiser's research notes; typing an appraisal report; accompanying an appraiser on an inspection visit to a property; assisting an appraiser in measuring a property; taking photographs of specific properties selected and inspected by the appraiser; performing routine calculations; and obtaining copies of assessment records, deeds, maps, and data from real property data bases relating to properties selected by the appraiser.

105.3.1.1 The unclassified individual may accumulate the first 100 experience points with each duty listed in the following table being worth 20% of the total points awarded from the Appraisal Experience Points Schedule under Section 104-18.1. or 104-18.2. not to exceed the maximum number of points awarded for each property. Applicants must have experience in at least five of the following categories and no more than one-third of the experience can come from any one of the following categories.

(a) type an appraiser's research notes - 20% of total points

(b) type an appraisal report - 20% of total points

(c) accompany an appraiser on an inspection visit - 20% of total points

(d) assist an appraiser in measuring property - 20% of total points

(e) take photographs of specific properties selected and inspected by the appraiser - 20% of total points

(f) perform routine calculations - 20% of total points

(g) obtain copies of assessment records, deeds, maps and data from real property databases relating to properties selected by the supervising appraiser - 20% of total points

105.3.1.2. Unclassified individuals who have not yet accumulated 100 experience points and who have not successfully completed the education required for licensure may not participate in: selecting comparables for an appraisal assignment; making adjustments to comparables; drafting an appraisal report; and, except when working in the presence of a state-licensed or state-certified appraiser, inspecting a property that is the subject of an appraisal or that may be used as a comparable in an appraisal, or measuring a property.

105.3.2. Unclassified individuals who have accumulated 100 experience points and have successfully completed at least 30 hours of the education required for licensure may act in the capacity of an appraisal "trainee" under the direct supervision of a state-licensed or state-certified appraiser. A "trainee" is permitted to have more than one supervising appraiser.

105.3.2.1. An appraiser "trainee" may, under the direct supervision of a state-licensed or state-certified appraiser, participate in selecting comparables for an appraisal assignment, participate in making adjustments to comparables, draft appraisal reports, and when working in the presence of a state-licensed or state-certified appraiser, inspect a property that is the subject of an appraisal or that may be used as a comparable in an appraisal, and measure a property.]

105.3.[2.2.]7 Points for Licensure. [The unclassified individual who is a "trainee"]A trainee may accumulate [the ]experience points [with]for each duty listed [in the following table being worth]below at the rate of 33.3% of the total points awarded from the Appraisal Experience Points Schedule under Section 104-18.1[.] or 104-18.2[.], not to exceed the maximum number of points awarded for each property. ["]Trainee["] experience must be earned in at least three of the following categories. [and no] No more than one-third of the[ir] experience points submitted toward licensure may[can] come from any one of the following categories[.]:

(a) participat[e]ion in selecting comparables for an appraisal assignment - 33.3% of total points

(b) participat[e]ion in making adjustments to comparables - 33.3% of total points

(c) drafting appraisal reports - 33.3% of total points

(d) [when working in the presence of a state-licensed or state-certified appraiser]as provided in Sections 105.3.5 and 105.3.6, inspecting a property that is the subject of an appraisal or that may be used as a comparable in an appraisal, and measur[e]ing the property - 33.3% of total points as long as both an interior and exterior inspection of the property is performed. No points will be granted for inspections that do not include both an interior and an exterior inspection.

105.3.[3.]8 [All experience points cannot be earned in one 12-month period. For applicants for licensure, a maximum of 300 points will be credited for any one 12-month period. ]Credit will be given for appraisal experience earned only within five years immediately preceding the licensure or certification application. Applicants who believe the Experience Points Schedules do[es] not adequately reflect their experience may refer to Section 104-17.

105.3.[4.]9 All [unclassified individuals]trainees are prohibited from signing an appraisal report or discussing an appraisal assignment with anyone other than the appraiser responsible for the assignment, state enforcement agencies and such third parties as may be authorized by due process of law, or a duly authorized professional peer review committee.

105.3.[5.]10 A state-licensed or state-certified[classified] appraiser who supervises [an unclassified individual]a trainee shall be responsible for the training and direct supervision of the [unclassified individual]trainee.

105.3.[5]10.1 Direct supervision shall consist of critical observation and direction of all aspects of the appraisal process and accepting full responsibility for the appraisal and the contents of the appraisal report. The supervising appraiser shall be responsible to personally inspect each residential property that is appraised with a trainee until the trainee has performed 100 residential inspections as provided in Subsection 105.3.5 and 20 non-residential inspections as provided in Subsection 105.3.6. The supervising appraiser must actively supervise those inspections and the resulting appraisals.

105.3.[5.2]11 A supervising[classified] appraiser shall require the [unclassified appraiser]trainee to maintain a log in a form satisfactory to the Board which shall contain, at a minimum, the following information for each appraisal.

(a) Type of property;

(b) Address of appraised property;

(c) Description of work performed;

(d) Number of work hours;

(e) Signature and state license/certification number of the supervising appraiser[.]; and

(f) Client name and address.

105.3.[6.]12 The [unclassified individual]trainee shall maintain a separate appraisal log for each supervising appraiser.

105.4. [Term of Revocation or Surrender]Trainee Status after Revocation, Surrender, or Suspension of License or Certification.

105.4.1 Trainee Status after Revocation or Surrender of License or Certification. Unless otherwise ordered by the Board, an[y] appraiser whose appraiser certification[,] or license[, or registration] has been revoked [or suspended ]by the Board, or who has surrendered a certification[,] or license[, or registration] as a result of an investigation by the Division, may not serve as [an unclassified appraiser]a trainee for a period of five years after the date of the revocation or surrender, nor may a licensed or certified appraiser employ or supervise him during that period in the performance of the activities permitted [unclassified persons]trainees.

105.4.2 Trainee Status while License or Certification is Suspended. Unless otherwise ordered by the Board, any appraiser whose appraiser license or certificate has been suspended by the Board as a result of an investigation by the Division may not serve as a trainee during the period of suspension, nor may a licensed or certified appraiser employ or supervise him during that period in the performance of the activities permitted trainees.

KEY: real estate appraisals

[2003]2004

Notice of Continuation January 13, 2004

61-2b-6(1)(l)

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Shelley Wismer at the above address, by phone at 801-530-6761, by FAX at 801-530-6749, or by Internet E-mail at swismer@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.