SB-1016, As Passed Senate, June 8, 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.