Commerce, Real Estate

Rule R162-105

Scope of Authority

Notice of Proposed Rule

(Amendment)

DAR File No.: 33225
Filed: 11/30/2009 03:54:46 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The appraisal board has proposed a new rule, Rule R162-110, for trainee registration. Therefore, Rule R162-105 is amended to remove the requirements for trainee registration. The appraisal board has also proposed amending Rule R162-104 so as to require trainees to record their experience in terms of hours rather than in terms of both points and hours. Therefore, Rule R162-105 is amended to track with those changes. (DAR NOTE: The proposed new Rule R162-110 is under DAR No. 33148 in the December 1, 2009, issue of the Bulletin. The proposed amendment to Rule R162-104 is under DAR No. 33224 in this issue, December 15, 2009, of the Bulletin.)

Summary of the rule or change:

Requirements for trainee registration are removed, as they are now incorporated into proposed Rule R162-110. The term "point" is replaced with the term "hour" to track with the proposed amendments to Rule R162-104.

State statutory or constitutional authorization for this rule:

• Subsection 61-2b-6(1)(l)

Anticipated cost or savings to:

the state budget:

These changes do not implement or require a new program or procedure. They will have no impact on the state budget.

local governments:

Local governments are not involved in the qualification and registration of appraiser trainees.

small businesses:

Small businesses are not required to qualify or register appraiser trainees. Small businesses that hire trainees may choose to assist trainees in tracking their experience toward licensure. In that situation, they should benefit from having the process simplified. Small businesses that choose to pay the costs of a trainee's registration and renewal may do so; those costs are outlined in the rule analysis for proposed Rule R162-110.

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

Shifting the trainee registration requirements to a different rule imposes no costs on appraiser trainees. The actual costs of registering were contemplated by H.B. 86 and are outlined in the rule analysis for proposed Rule R162-110. There is no cost associated with relieving trainees from the requirement that they record their experience in terms of points. (DAR NOTE: H.B 86 (2009) is under Chapter 352, Laws of Utah 2009, and was effective 05/12/2009.)

Compliance costs for affected persons:

To comply, affected persons will record trainee experience in terms of hours rather than recording both hours and points. There are no associated compliance costs.

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

No fiscal impact to businesses is anticipated from this rule filing, which makes technical amendments to properly track with other rule filings and statutory changes as described in the rule summary.

Francine A. Giani, Executive Director

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

Commerce
Real Estate
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Jennie Jonsson at the above address, by phone at 801-530-6706, by FAX at 801-526-4387, or by Internet E-mail at jjonsson@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:

01/14/2010

This rule may become effective on:

01/21/2010

Authorized by:

Deanna Sabey, Director

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 Trainees.

105.3.1 For the purposes of these rules, "trainee" means a person who is working under the direct supervision of a State-Certified Appraiser to earn [points]hours 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]110 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]110 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.

105.3.2.1 A trainee may not solicit an assignment or accept an assignment on behalf of anyone other than the trainee's supervisor or the supervisor's appraisal firm. All engagement letters shall be addressed to the supervisor or the supervisor's appraisal firm, not to the trainee. In all appraisal assignments, the supervisor shall delegate only such duties as are appropriate to the trainee and shall directly supervise the trainee in the performance of those duties.

[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 all courses, and must file a notification with the Division as provided in Subsection 105.3.3.1. The education required by this Subsection must have been completed within the 5 years preceding the filing of the notification required by 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 September 10, 2009, points that were earned prior to September 10, 2004, 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 state-certified supervising appraiser. A supervising appraiser may supervise a maximum of three trainees at one time.

105.3.5 Residential Property Inspections. A trainee, including a trainee who was previously a state-registered appraiser, [must]shall be accompanied by a supervising State-Certified 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. All reports in appraisals in which a trainee participated in the inspection of the subject property shall comply with the requirements of Section 106.9.

105.3.6 Non-Residential Property Inspections. A trainee, including a trainee who was previously a state-registered appraiser, [must]shall 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. All reports in appraisals in which a trainee participated in the inspection of the subject property shall comply with the requirements of Section 106.9.

105.3.7 [Points]Hours for Licensure. A trainee may accumulate experience [points]hours for each duty listed below with the respective percentages, not to exceed the maximum number of [points]hours awarded by the Appraisal Experience [Point]Hour Schedule under Section s 104-15.1 , [and] 104-15.2 , and 104.15.3. No more than one-third of the experience [points]hours submitted toward licensure may come from any one of the following categories:

(a) participation in highest and best use analysis - 10% of total [points]hours;

(b) participation in neighborhood description and analysis - 10% of total [points]hours;

(c) as provided in Sections 105.3.5 and 105.3.6, inspecting the interior and exterior, including measurement of the exterior of a property that is the subject of an appraisal and inspection of the exterior of a property that may be used as a comparable in an appraisal. No [points]hours will be granted for inspections that do not include both an interior and exterior inspection of the subject property - 20% of total [points]hours;

(d) participation in land value estimate - 20% of total [points]hours;

(e) participation in sales comparison property selection and analysis - 30% of total [points]hours;

(f) participation in cost analysis - 20% of total [points]hours;

(g) participation in income analysis - 30% of total [points]hours;

(h) participation in the final reconciliation of value - 10% of total [points]hours;

(i) participation in report preparation - 20% of total [points]hours.

105.3.8 Credit will be given for appraisal experience earned only within five years immediately preceding the licensure or certification application.

105.3.9 All 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.

105.3.10 A state-certified appraiser who supervises a trainee shall be responsible for the training and direct supervision of the trainee.

105.3.10.1 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]shall actively supervise those inspections and the resulting appraisals. In addition, the supervising appraiser shall personally inspect all property when the appraisal report scope of work or certification requires appraiser inspection.

105.3.11 A supervising appraiser shall require the 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]file number;

(b) [Address of appraised property]report date;

(c) [Description of work performed]subject address;

(d) [Number of work hoursand points claimed]client name;

(e) [Signature and state certification number of the supervising appraiser; and]type of property;

(f) [Client name.]report form number or type; and

(g) number of work hours.

105.3.12 The trainee shall maintain a separate appraisal log for each supervising appraiser.

105.4. Trainee Status after Revocation, Surrender, Denial, or Suspension of License or Certification.

105.4.1 Trainee Status after Revocation, Surrender, or Denial of License or Certification. Unless otherwise ordered by the Board, an appraiser whose appraiser certification or license has been revoked by the Board, whose application for renewal of a certification or license has been denied by the Board, or who has surrendered a certification or license as a result of an investigation by the Division, may not serve as a trainee for a period of four years after the date of the revocation, denial, or surrender, nor may a licensed or certified appraiser employ or supervise the former appraiser in the performance of the activities permitted trainees for that same period of time.

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. While an appraiser is suspended, a licensed or certified appraiser may not employ or supervise the suspended appraiser in the performance of the activities permitted trainees.

 

KEY: real estate appraisals

Date of Enactment or Last Substantive Amendment: [June 1, 2009]2010

Notice of Continuation: November 10, 2008

Authorizing, and Implemented or Interpreted Law: 61-2b-6(1)(l)