SB-1016, As Passed House, September 13, 2006

SUBSTITUTE FOR

SENATE BILL NO. 1016

     A bill to amend 1980 PA 299, entitled

"Occupational code,"

by amending sections 2601, 2605, 2607, 2617, 2619, 2627, 2633,

2635, and 2637 (MCL 339.2601, 339.2605, 339.2607, 339.2617,

339.2619, 339.2627, 339.2633, 339.2635, and 339.2637), as amended

by 1999 PA 170, and by adding section 2610; and to repeal acts and

parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 2601. As used in this article:

     (a) "Appraisal" means an opinion, conclusion, or analysis

relating to the value of real property but does not include any of

the following:

     (i) A market analysis performed by a person licensed under

article 25 solely for the purpose of assisting a customer or

potential customer in determining the potential sale, purchase, or

listing price of real property or the rental rate of real property

as long as a fee or any other valuable consideration is not charged

for that analysis.

     (ii) A market analysis of real property for a fee performed by

a broker or associate broker licensed under article 25 which does

not involve a federally related transaction if the market analysis

is put in writing and it states in boldface print "This is a market

analysis, not an appraisal and was prepared by a licensed real

estate broker or associate broker, not a licensed appraiser.".

Failure to do so results in the individual being subject to the

penalties set forth in article 6.

     (iii) An assessment of the value of real property performed on

behalf of a local unit of government authorized to impose property

taxes when performed by an assessor certified under section 10d of

the general property tax act, 1893 PA 206, MCL 211.10d, or an

individual employed in an assessing capacity.

     (b) "AQB criteria" means the criteria established by the

appraiser qualifications board of the appraisal foundation or as

adopted by rule of the director. Until January 1, 2008, AQB

criteria mean the criteria entitled "Real Property Appraiser

Qualification Criteria and Interpretation of the Criteria", adopted

by the appraiser qualifications board on February 16, 1994,

effective January 1, 1998, and as revised and effective January 1,

2003. Beginning January 1, 2008, AQB criteria mean the criteria

entitled "Real Property Appraiser Qualification Criteria and

Interpretation of the Criteria", adopted by the appraiser

qualifications board on February 20, 2004, effective January 1,

2008.

(c)  (b) "Appraiser" means an individual engaged in or

offering to engage in the development and communication of an

appraisal.

(d)  (c) "Certified general real estate appraiser" means an

individual who is licensed under section  2615  2610 to appraise

all types of real property, including nonresidential real property

involving federally related transactions and real estate related

financial transactions.

(e)  (d) "Certified residential real estate appraiser" means

an individual who is licensed under section  2614  2610 to appraise

all types of residential real property involving real estate

related financial transactions and federally related transactions

as authorized by the regulations of a federal financial institution

regulatory agency and resolution trust corporation as well as any

nonresidential, nonfederally related transaction for which the

individual is qualified.

(f)  (e) "Federal financial institution regulatory agency"

means the board of governors of the federal reserve system, the

federal deposit insurance corporation, the office of the

comptroller of the currency, the office of thrift supervision, or

the national credit union administration.

(g)  (f) "Federally related transaction" means any real

estate related financial transaction that a federal financial

institution regulatory agency  or the resolution trust corporation

engages in, contracts for, or regulates and that requires the

services of an appraiser under any of the following:

     (i) 12  C.F.R.  CFR part 323, adopted by the federal deposit

insurance corporation.

     (ii) 12  C.F.R.  CFR parts 208 and 225, adopted by the board of

governors of the federal reserve system.

     (iii) 12  C.F.R.  CFR parts 701, 722, and 741, adopted by the

national credit union administration.

     (iv) 12  C.F.R.  CFR part 34, adopted by the office of the

comptroller of the currency.

     (v) 12  C.F.R.  CFR parts 506, 545, 563, 564, and 571, adopted

by the office of thrift supervision.

     (vi) 12 C.F.R. part 1608, adopted by the resolution trust

corporation.

(h)  (g) "Limited real estate appraiser" means an individual

meeting the AQB criteria for appraiser trainee and licensed under

section  2611  2610 to perform appraisals of real property not

involving real estate related financial transactions or federally

related transactions that require the services of a state licensed

real estate appraiser, certified residential real estate appraiser,

or certified general real estate appraiser.

     (h) "Real estate valuation specialist" means an individual

licensed under section 2611 to perform appraisals of real property

not involving federally related transactions or real estate related

financial transactions that require the services of a state

licensed real estate appraiser, certified residential real estate

appraiser, or certified general real estate appraiser.

     (i) "Real estate related financial transaction" means any of

the following:

     (i) A sale, lease, purchase, investment in, or exchange of real

property or the financing of real property.

     (ii) A refinancing of real property.

     (iii) The use of real property as security for a loan or

investment, including mortgage-backed securities.

     (j) "Real property" means an identified tract or parcel of

land, including improvements on that land, as well as any

interests, benefits, or rights inherent in the land.

     (k) "Residential real property" means real property used as a

residence containing a dwelling that has not more than 4 living

units.

     (l) "State licensed real estate appraiser" means an individual

who is licensed under section  2613  2610 to appraise real

property, including, but not limited to, residential and

nonresidential real property involving federally related

transactions and real estate related financial transactions.

     (m) "Uniform standards of professional appraisal practice"

means those standards relating to real property adopted by the

appraisal foundation on March 31, 1999, or as adopted by rule of

the director.

     Sec. 2605. (1) At a minimum and subject to subsection (2),

licensees under this article shall utilize the uniform standards of

professional appraisal practice.

     (2) The director may supplement or adopt by reference any

amendments to the uniform standards of professional appraisal

practice through the promulgation of rules if the director

determines that the amendments or supplemental standards serve as a

basis for the competent development and communication of an

appraisal and are not in conflict with federal requirements.

     (3) The director through promulgation of a rule may supplement

or adopt by reference any changes promulgated by a federal

financial institution regulatory agency relative to standards for a

federally related transaction.

     (4) The department shall utilize the AQB criteria regarding

education, examination, and experience for licensure under this

article. The AQB criteria are adopted by reference. The department

may, by promulgation of a rule by the director, supplement or amend

the standards by adoption of a stricter standard that is otherwise

in compliance with the minimum AQB criteria in effect or by

adoption of subsequent amendments to that standard adopted by the

appraiser qualification board of the appraisal foundation.

     Sec. 2607. (1) A person shall not act as or offer to act as an

appraiser unless licensed under this article or exempt from

licensure under this article.

     (2) An individual shall not represent himself or herself to be

a state licensed real estate appraiser, a certified general real

estate appraiser, a certified residential real estate appraiser, or

a limited real estate appraiser  , or a real estate valuation

specialist unless that individual is licensed under this article

in the appropriate capacity.

     (3) The terms "state licensed real estate appraiser",

"certified general real estate appraiser", "certified residential

real estate appraiser", or "limited real estate appraiser"  , or

"real estate valuation specialist" or any similar term tending to

connote licensure under this article shall refer only to an

individual licensed under this article and shall not refer to or be

used in connection with the name or signature of a person that is

not an individual licensed under this article.

     (4) An individual licensed as a certified general real estate

appraiser may perform the appraisal of real property of any type or

value, including appraisals required for federally related

transactions and real estate related financial transactions.

     (5) An individual licensed as a certified residential real

estate appraiser may perform the appraisal of residential real

property and any other residential or nonresidential appraisal

required for a federally related transaction for which a certified

residential real estate appraiser is authorized under sections 1113

and 1114 of title XI of the financial institutions reform,

recovery, and enforcement act of 1989, Public Law 101-73, 12

U.S.C.  USC 3342 and 3343, real estate related financial

transactions, and any nonfederally related transaction for which

the licensee is qualified.

     (6) An individual licensed as a state licensed real estate

appraiser may independently perform the appraisal of residential

real property and any other residential or nonresidential appraisal

required for a federally related transaction for which a state

licensed real estate appraiser is authorized under title XI of the

financial institutions reform, recovery, and enforcement act of

1989, Public Law 101-73, 12  U.S.C.  USC 3342 and 3343, real estate

related financial transactions, and any nonfederally related

transaction for which the licensee is qualified.

     (7) An individual licensed as  a real estate valuation

specialist or a limited real estate appraiser may perform

independently only those appraisals related to transactions not

requiring, under federal law or regulations, the services of a

state licensed real estate appraiser, certified residential real

estate appraiser, or certified general real estate appraiser. The

appraisal must contain the supervisory signature of the state

licensed real estate appraiser, certified residential real estate

appraiser, or certified general real estate appraiser and must also

contain the signature of the  real estate valuation specialist or

limited real estate appraiser only where the appraisal is performed

by the  real estate valuation specialist or limited real estate

appraiser under the provisions of this subsection.

     Sec. 2610. The department shall license as a limited real

estate appraiser, a state licensed real estate appraiser, a

certified residential real estate appraiser, or a certified general

real estate appraiser an individual who is at least 18 years of

age, is of good moral character, and provides proof of having

completed the minimum education, examination, and experience

requirements contained in the AQB criteria for the appropriate

license category.

     Sec. 2617. (1) The director may promulgate rules regulating

the offering of educational courses required under this article,

including the type and conditions of instruction, the qualification

of instructors, the methods of grading, the means of monitoring and

reporting attendance, and the representations made by course

sponsors.

     (2) All educational courses required under this article shall

be courses offered by 1 of the following:

     (a) An institution of higher education authorized to grant

degrees, being a college, university, or community or junior

college.

     (b) A private school licensed by the department of education

under 1943 PA 148, MCL 395.101 to 395.103, or authorized to operate

in any other state or jurisdiction.

     (c) A state or federal agency or commission.

     (d) A nonprofit association related to real property or real

property appraisal.

     (3) Prelicensure courses, being those courses offered as a

qualification for licensure, shall meet the following minimum

requirements:

     (a) Be not less than 15 classroom hours in length, a classroom

hour being at least 50 minutes.

     (b) Include an examination at the end of the course requiring

an individual taking the course to demonstrate mastery of the

course content.

     (c) Be completed at any time prior to sitting for the

examination described in section 2619.

     (4) An applicant who received credit for completion of a

prelicensure course by successfully passing a challenge examination

may be given credit for such courses passed prior to July 1, 1990,

upon review by the department of the course content and examination

given.

     (5) Continuing education courses required to be completed

under this article shall meet the following minimum requirements:

     (a) Be not less than 2 classroom hours in length, a classroom

hour being at least 50 minutes.

     (b) Be completed at any time following the expiration of the

licensee's previous license and the time the licensee applies for

renewal.

     (c) Be designed to maintain and improve the licensee's skill,

knowledge, and competency in the appraisal of real estate.

     (6) Courses taken in satisfying the qualifying education

requirements should not be repetitive in nature and should

represent a progression in which the appraiser's knowledge is

increased, as determined by the department and board.

     (3) Educational courses required for licensure under this

article shall comply with AQB criteria.

     Sec. 2619. (1) Except as otherwise provided in section 2623,

an individual seeking licensure under this article as a state

licensed real estate appraiser, certified general real estate

appraiser, or certified residential real estate appraiser shall

first successfully pass the appraiser qualification board endorsed

uniform real property appraiser examination or its equivalent as

appropriate to the level of licensure sought and that is acceptable

to the board and the department.

     (2) The board and department may adopt an examination prepared

or approved by a professional entity or organization including, but

not limited to, the appraisal qualification board if the department

and the board determine that the examination serves as a basis for

determining whether an individual has the knowledge and skills to

perform with competence.

     (3) Examination scores are considered valid for  3  2 years

from the date of the examination.

     Sec. 2627.  (1) As a condition for the renewal of licensure

as a limited real estate appraiser, a certified general real estate

appraiser, a certified residential real estate appraiser, or a

state licensed real estate appraiser, a licensee shall complete  14

classroom hours of continuing education meeting the standards of

section 2617 for each year since the expiration of his or her

previous license  the minimum continuing education requirements

described in AQB criteria.

     (2) Effective the third year of licensure as a real estate

valuation specialist or as a limited real estate appraiser, an

individual licensed as a real estate valuation specialist or as a

limited real estate appraiser shall complete not less than 14

classroom hours of continuing education for each year since the

expiration of his or her previous license. This continuing

education shall meet the standards of section 2617.

     (3) Courses for which continuing education credit may be

obtained may include, but not be limited to, the following:

     (a) Ad valorem taxation.

     (b) Arbitrations.

     (c) Business courses related to real estate appraisal.

     (d) Construction or development cost estimating.

     (e) Ethics and standards of professional practice.

     (f) Land use planning, zoning, and taxation.

     (g) Real estate management, leasing, brokerage, and time-

sharing.

     (h) Property development.

     (i) Real estate appraisal (valuations and evaluations).

     (j) Real estate financing and investment.

     (k) Real estate law.

     (l) Real estate litigation.

     (m) Real estate appraisal related computer applications.

     (n) Real estate securities and syndication.

     (o) Real estate exchange.

     (4) An individual who has authored a textbook, prepared and

taught a prelicensure or continuing education course, or has

undertaken some other activity which he or she believes may meet

the continuing education requirements of this section may request

continuing education credit for that activity from the department.

An individual who has completed continuing education required for

the renewal of an appraiser license in another state or

jurisdiction may submit proof of the acceptance of that continuing

education by that state as evidence of meeting the continuing

education requirements in this state.

     (5) A course covering the uniform standards of professional

appraisal practice must be completed as part of the continuing

education requirement every third licensing period.

     Sec. 2633. A licensee shall do all of the following:

     (a) Include, in any appraisal or report provided to a client,

the following statement: "Appraisers are required to be licensed

and are regulated by the Michigan Department of  Consumer and

Industry Services  Labor and Economic Growth, P.O. Box 30018,

Lansing, Michigan 48909.".

     (b) Maintain an actual place of business whose address shall

be used as the licensee address and in all advertising.

     (c) Maintain a system of books and records open to the

department upon request during normal business hours. The books and

records shall be maintained in accordance with the uniform

standards of professional appraisal practice, the requirements of

this article, and any requirements imposed by rules promulgated

under this article. The books and records shall show all appraisals

undertaken by name of client and the address or description of the

property appraised. In addition, applicants for licensure as a

state licensed real estate appraiser, a certified residential real

estate appraiser, or a certified general real estate appraiser must

also provide an appraisal log  which  that includes, at a minimum,

the  following for each appraisal:  documentation or data required

to be kept under the AQB criteria.

     (i) Type of property.

     (ii) Date of report.

     (iii) Address of appraised property.

     (iv) Description of work performed.

     (v) Number of work hours.

     (d) Advertise only the services authorized to be rendered

according to the type of license issued and only in the name and

address under which the individual is licensed. The licensee shall

indicate on every appraisal report the license number and level of

licensure.

     Sec. 2635. A licensee who does 1 or more of the following

shall be subject to the penalties set forth in article 6:

     (a) Violates any of the standards for the development and

communication of real property appraisals as provided in this

article or a rule promulgated pursuant to this article.

     (b) Fails or refuses without good cause to exercise reasonable

diligence in developing or communicating an appraisal.

     (c) Demonstrates incompetence in developing or communicating

an appraisal.

     (d) Fails to make available to the department upon request or

fails to maintain books and records required  to be kept under

this article.

     (e) Performs, attempts to perform, or offers to perform

appraisal services for which the individual is not licensed under

this article.

     (f) Aids or abets another to commit a violation of this act or

the rules promulgated under this act.

     (g) Uses the license of another individual or knowingly allows

another individual to use his or her license.

     (h) If  a real estate valuation specialist or a limited real

estate appraiser fails to disclose to the client, before making an

appraisal, that the licensee's appraisal cannot be used in a

federally related transaction.

     Sec. 2637. Not less than monthly, the department shall compile

a list of certified general real estate appraiser, certified

residential real estate appraiser, and state licensed real estate

appraiser licensees under this article, provide it to the appraisal

subcommittee of the federal financial institutions examination

council as required by section 1109 of the financial institutions

reform, recovery, and enforcement act of 1989, Public Law 101-73,

12  U.S.C.  USC 3338, and remit the appropriate fee for each year

the individual is licensed under section 38 of the state license

fee act, 1979 PA 152, MCL 338.2238.

     Enacting section 1. Sections 2611, 2613, 2614, 2615, and 2621

of the occupational code, 1980 PA 299, MCL 339.2611, 339.2613,

339.2614, 339.2615, and 339.2621, are repealed.