January 31, 2006, Introduced by Senators GEORGE and CASSIS and referred to the Committee on Economic Development, Small Business and Regulatory Reform.
A bill to amend 1980 PA 299, entitled
"Occupational code,"
by amending sections 2601, 2605, 2611, 2613, 2614, 2615, 2617,
2619, 2621, 2627, 2629, 2633, 2635, and 2637 (MCL 339.2601,
339.2605, 339.2611, 339.2613, 339.2614, 339.2615, 339.2617,
339.2619, 339.2621, 339.2627, 339.2629, 339.2633, 339.2635, and
339.2637), sections 2601, 2605, 2611, 2613, 2615, 2617, 2619, 2621,
2627, 2629, 2633, 2635, and 2637 as amended and section 2614 as
added by 1999 PA 170.
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 04 criteria" means the criteria established by the
appraiser qualifications board of the appraisal foundation 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) "AQB 94 criteria" means the criteria established by the
appraiser qualifications board of the appraisal foundation 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.
(d) (b)
"Appraiser" means an individual engaged in
or
offering to engage in the development and communication of an
appraisal.
(e) (c)
"Certified general real estate appraiser"
means an
individual who is licensed under section 2615 to appraise all types
of real property, including nonresidential real property involving
federally related transactions and real estate related financial
transactions.
(f) (d)
"Certified residential real estate
appraiser" means
an individual who is licensed under section 2614 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.
(g) (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.
(h) (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.
(i) (g)
"Limited real estate appraiser" means an
individual
licensed under section 2611 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.
(j) (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.
(k) (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.
(l) (k)
"Residential real property" means real
property used
as a residence containing a dwelling that has not more than 4
living units.
(m) (l) "State licensed real estate appraiser"
means an
individual who is licensed under section 2613 to appraise real
property, including, but not limited to, residential and
nonresidential real property involving federally related
transactions and real estate related financial transactions.
(n) (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) Beginning January 1, 2008, the department shall utilize
the AQB 04 criteria regarding education, experience, and other
related standards for licensure under this article. The AQB 04
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 04 criteria or by adoption of
subsequent amendments to that standard adopted by the appraiser
qualification board of the appraisal foundation.
Sec.
2611. (1) The Until January 1, 2008, the department
shall license as a limited real estate appraiser an individual who
is at least 18 years of age, is of good moral character, and
provides proof of having completed not less than 75 classroom hours
of courses related to developing and communicating appraisals of
real property, at least 15 of which relate to the uniform standards
of professional appraisal practice. Beginning January 1, 2008, the
department shall license as a limited real estate appraiser an
individual who is at least 18 years of age, is of good moral
character, and provides proof of having completed not less than the
number and type of courses required for an appraisal trainee as
specified by the AQB 04 criteria.
(2)
Beginning the effective date of the amendatory act that
added
this subsection, the department shall not accept an
application
for a real estate valuation specialist. The department
shall
convert licenses for real estate valuation specialists to
limited
real estate appraiser licenses upon the next license
renewal
cycle.
Sec. 2613. The department shall license as a state licensed
real estate appraiser an individual who demonstrates, to the
satisfaction of the department, that he or she meets all of the
following conditions:
(a)
Has Beginning January 1, 2008, has completed not less
than the minimum education requirements contained in the AQB 04
criteria. Until January 1, 2008, has completed not less than 90
classroom hours of courses emphasizing the appraisal of residential
real property and meeting the standards of section 2617. The
courses shall cover all of the following:
(i) Influences on real estate value.
(ii) Legal considerations in appraisal.
(iii) Types of value.
(iv) Economic principles of appraisals.
(v) Real estate markets and analysis.
(vi) Valuation process.
(vii) Property description.
(viii) Highest and best use analysis.
(ix) Appraisal statistical concepts.
(x) Sales comparison approach.
(xi) Site value.
(xii) Cost approach.
(xiii) Income approach.
(xiv) Valuation of partial interests.
(xv) The uniform standards of professional appraisal practice
and ethics.
(b)
Possesses Beginning
January 1, 2008, possesses not less
than the minimum experience requirements contained in the AQB 04
criteria. Until January 1, 2008, possesses at least 2,000 hours of
experience meeting the standards of section 2621, at least 1,500
hours of which are in appraising residential real property.
Acceptable experience includes, but is not limited to, the
following in compliance with any applicable federal standards:
(i) Fee and staff appraisal.
(ii) Ad valorem tax appraisal.
(iii) Technical review appraisal.
(iv) Appraisal analysis.
(v) Real estate consulting.
(vi) Highest and best use analysis.
(vii) Feasibility analysis or study.
(viii) Condemnation appraisal.
(ix) Market analysis.
(c) Has passed an examination as described in section 2619.
(d) Is of good moral character.
(e) Is at least 18 years of age.
Sec. 2614. The department shall license as a certified
residential real estate appraiser an individual who demonstrates,
to the satisfaction of the department, that he or she meets all of
the following conditions:
(a)
Possesses Beginning
January 1, 2008, possesses not less
than the minimum experience requirements contained in the AQB 04
criteria. Until January 1, 2008, possesses at least 2,500 hours of
experience meeting the standards of section 2621 in appraising real
property, at least 2,000 hours of which shall be in appraising
residential real property, completed over 24 or more months.
Acceptable experience includes, but is not limited to, the
following in compliance with any applicable federal standards:
(i) Fee and staff appraisal.
(ii) Ad valorem tax appraisal.
(iii) Technical review appraisal.
(iv) Appraisal analysis.
(v) Real estate consulting.
(vi) Highest and best use analysis.
(vii) Feasibility analysis or study.
(viii) Condemnation appraisal.
(ix) Market analysis.
(b)
Has Beginning January 1, 2008, has completed not less
than the minimum education requirements contained in the AQB 04
criteria. Until January 1, 2008, has completed not less than 120
classroom hours of courses meeting the standards of section 2617
and emphasizing all types and values of residential real property
appraisals. An applicant may apply the classroom hours used to
obtain a prior real estate appraiser license toward the requirement
of the 90 classroom hours used to obtain licensure as a certified
residential real estate appraiser. The remaining classroom hours
shall relate to the appraisal of residential real property or
address both residential and commercial real property. The courses
shall cover all of the following topics:
(i) Influences on real estate value.
(ii) Legal considerations in appraisal.
(iii) Types of value.
(iv) Economic principles of appraisal.
(v) Real estate markets and analysis.
(vi) Valuation process.
(vii) Property description.
(viii) Highest and best use analysis.
(ix) Appraisal math and statistics.
(x) Sales comparison approach.
(xi) Site value.
(xii) Cost approach.
(xiii) Income approach.
(xiv) Valuation of partial interests.
(xv) The uniform standards of professional appraisal practice
and ethics.
(xvi) Narrative report writing.
(c) Has passed an examination as required in section 2619.
(d) Is of good moral character.
(e) Is at least 18 years of age.
Sec. 2615. The department shall license as a certified general
real estate appraiser an individual who demonstrates, to the
satisfaction of the department, that he or she meets all of the
following conditions:
(a)
Possesses Beginning
January 1, 2008, possesses not less
than the minimum experience requirements contained in the AQB 04
criteria. Until January 1, 2008, possesses at least 3,000 hours of
experience, at least 1,500 hours of which shall be in appraising
nonresidential real property completed over at least 30 or more
months preceding application for licensure. Acceptable experience
includes, but is not limited to, the following in compliance with
any applicable federal standards:
(i) Fee and staff appraisal.
(ii) Ad valorem tax appraisal.
(iii) Technical review appraisal.
(iv) Appraisal analysis.
(v) Real estate consulting.
(vi) Highest and best use analysis.
(vii) Feasibility analysis or study.
(viii) Condemnation appraisal.
(b)
Has Beginning January 1, 2008, has completed not less
than the minimum education requirements contained in the AQB 04
criteria. Until January 1, 2008, has completed 180 classroom hours
of courses meeting the standards of section 2617 and emphasizing
all types and values of real property appraisals. An applicant may
apply the 90 classroom hours used to obtain a prior real estate
appraiser license toward the requirement of 180 classroom hours,
but shall be able to demonstrate that the remaining 90 classroom
hours relate to the appraisal of nonresidential real property. The
courses shall cover all of the following topics:
(i) Influences on real estate value.
(ii) Legal considerations in appraisal.
(iii) Types of value.
(iv) Economic principles of appraisal.
(v) Real estate markets and analysis.
(vi) Valuation process.
(vii) Property description.
(viii) Highest and best use analysis.
(ix) Appraisal math and statistics.
(x) Sales comparison approach.
(xi) Site value.
(xii) Cost approach.
(xiii) Income approach.
(xiv) Valuation of partial interests.
(xv) The uniform standards of professional appraisal practice
and ethics.
(xvi) Narrative report writing.
(c) Has passed an examination as required in section 2619.
(d) Is of good moral character.
(e) Is at least 18 years of age.
Sec.
2617. (1) The Subject to
subsection (3), 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) Until January 1, 2008, educational courses required for
licensure under this article shall comply with AQB 94 criteria.
Beginning January 1, 2008, educational courses required for
licensure under this article shall comply with AQB 04 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. 2621. Experience required of applicants for licensure
under this article shall meet the following requirements:
(a)
Consist of at least the required number of hours of
appraisal
experience obtained over not less than the required
number
of months.
(b)
Be experience obtained while properly licensed or exempt
from
licensure under the standards applicable at the time the
experience
was obtained.
(c)
Be capable of being documented in writing by the applicant
or
licensee upon the request of the department in the form of
reports,
file memoranda, or affidavits of a supervisor.
(a) Until January 1, 2008, the minimum experience requirements
described in the AQB 94 criteria.
(b) Beginning January 1, 2008, the minimum experience
requirements described in the AQB 04 criteria.
Sec.
2627. (1) As a condition for the renewal of licensure
as 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 04
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.
2629. (1) Notwithstanding section 411(4), relicensure
of an individual whose license as a certified general real estate
appraiser, a certified residential real estate appraiser, or a
state licensed real estate appraiser under this article has lapsed
for 3 or more continuous years shall require that the applicant
complete the licensing examination for the type of license sought.
(2)
The continuing education requirements of section 2627 do
not
apply to an individual renewing his or her license in the year
in
which the original license is issued.
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 04 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.