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Regular Session, 2012
HOUSE BILL NO. 823
BY REPRESENTATIVE GREENE
REAL ESTATE/APPRAISERS: Provides with respect to licensure requirements for
appraisal management companies
AN ACT1
To amend and reenact R.S. 37:3415.3(B)(10) and (11), 3415.13, and 3415.21 and to enact2
R.S. 37:3415.2(11), (12), and (13), 3415.3(C) and (D), and 3415.15, relative to real3
estate appraisals; to define certain terms; to require an appraiser's license to perform4
appraisal reviews; to provide that administrative reviews of an appraisal do not5
require an appraiser's license; to require a surety bond; to provide for the competency6
of appraisers; to provide for customary and reasonable fees for appraisers; to provide7
for disclosure of fees paid to appraisers by appraisal management companies; to8
provide for the disclosure of administration fees charged by appraisal management9
companies; to require that administrative rules receive affirmative approval from the10
Louisiana Legislature; to repeal an outdated grandfathering clause; to provide for11
applicability; to provide for an effective date; and to provide for related matters.12
Be it enacted by the Legislature of Louisiana:13
Section 1. R.S. 37:3415.3(B)(10) and (11), 3415.13, and 3415.21 are hereby14
amended and reenacted and R.S. 37:3415.2(11), (12), and (13), 3415.3(C) and (D), and15
3415.15 are hereby enacted to read as follows: 16
§3415.2. Definitions17
As used in this Chapter, the following words have the meaning ascribed to18
them in this Section unless the context clearly indicates otherwise:19
* * *20 HLS 12RS-1271 ENGROSSED
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(11) "Administrative review", "compliance review", "quality check", or1
"QC" means a process that checks an appraisal report for compliance with the2
Uniform Standards of Professional Appraisal Practice or other stipulated3
requirements.4
(12) "Appraisal review" means the act or process of developing and5
communicating an opinion about the quality of another appraiser's work that was6
performed as part of an appraisal assignment. The term shall not include an7
examination of an appraisal for grammatical, typographical, mathematical, or other8
similar administrative errors that do not involve the appraiser's professional9
judgment, including compliance with the elements of the client's statement of work.10
(13) "Fee appraiser" means a person who is not an employee of the mortgage11
loan originator or appraisal management company engaging the appraiser and is one12
of the following:13
(a) A state-licensed or certified appraiser who receives a fee for performing14
an appraisal and certifies that the appraisal has been prepared in accordance with the15
Uniform Standards of Professional Appraisal Practice.16
(b) A company not subject to the requirements of §1124 of the Financial17
Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. 3331 et18
seq., that utilizes the services of state-licensed or certified appraisers and receives a19
fee for performing appraisals in accordance with the Uniform Standards of20
Professional Appraisal Practice.21
§3415.3. License required; bond required22
* * *23
B. The license required by Subsection A of this Section shall, at a minimum,24
include the following information:25
* * *26
(10) Proof that the entity has obtained and maintains a surety bond that meets27
the requirements of Subsection D of this Section.28 HLS 12RS-1271 ENGROSSED
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(11) An irrevocable Uniform Consent to Service of Process, pursuant to this1
Chapter.2
(11) Any other information required by the board.3
C.(1) A person who performs an appraisal review for an appraisal4
management company shall be licensed or certified in Louisiana.5
(2) An administrative review may be performed by any individual, including6
a certified appraiser.7
D.(1) Every applicant for a license or the renewal of a license shall obtain8
and maintain a surety bond in the amount of twenty thousand dollars. The surety9
bond shall:10
(a) Be in the form prescribed by the board pursuant to regulations duly11
promulgated by it.12
(b) Accrue to the state for the benefit of a claimant against the registrant to13
secure the faithful performance of the licensee obligations under this Chapter.14
(2) The aggregate liability of the surety shall not exceed the principal sum15
of the bond.16
(3) A party having a claim against the licensee may bring suit directly on the17
surety bond, or the board may bring suit on behalf of the party having a claim against18
the licensee.19
(4) Consumer claims shall be given priority in recovering from the bond.20
(5) A deposit of cash or security may be accepted in lieu of the surety bond.21
(6) If a claim reduces the face amount of the bond, the bond shall be22
annually restored upon renewal of the licensee's registration.23
* * *24
§3415.13. Adherence to standards; competency25
A. Each appraisal management company seeking to be licensed in this state26
shall certify to the board on an annual basis that it has a system in place to review on27
a periodic basis the work of all appraisers that are performing real estate appraisal28
services for the appraisal management company to ensure that the real estate29 HLS 12RS-1271 ENGROSSED
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appraisal services are being conducted in accordance with Uniform Standards of1
Professional Appraisal Practice.2
B. Before or at the time of making an assignment to an appraiser, an3
appraisal management company shall verify that the appraiser receiving the4
assignment satisfies each provision of the competency rule of the Uniform Standards5
of Professional Appraisal Practice for the appraisal being assigned.6
* * *7
§3415.15. Fees; customary and reasonable; disclosure8
A. An appraisal management company shall compensate appraisers at a rate9
that is customary and reasonable for appraisals being performed in the market area10
of the property being appraised, consistent with the presumptions of compliance11
under federal law.12
B. An appraisal management company shall separately state to the client all13
of the following:14
(1) The fees paid to an appraiser for appraisal services.15
(2) The fees charged by the appraisal management company for services16
associated with the management of the appraisal process, including procurement of17
the appraiser's services.18
C.(1) An appraisal management company shall not prohibit any appraiser19
who is part of an appraiser panel from recording the fee that the appraiser was paid20
by the appraisal management company for the performance of the appraisal within21
the appraisal report that is submitted by the appraiser to the appraisal management22
company.23
(2) An appraisal management company shall not include any fees for24
appraisal management services performed by the company in the amount the25
company reports as charges for the actual completion of an appraisal by the26
appraiser.27
* * *28 HLS 12RS-1271 ENGROSSED
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§3415.21. Rulemaking authority; effective date1
A. The board shall have the power to may adopt any rules and regulations2
in accordance with the Administrative Procedure Act necessary for the enforcement3
of this Chapter.4
B. Notwithstanding any law to the contrary, these rules shall require the5
affirmative approval by the House of Representatives Committee on Commerce and6
the Senate Committee on Commerce, Consumer Protection and International Affairs.7
If the board submits its proposed rules for affirmative approval and the legislature8
is not in session, the proposed rules shall be deemed affirmatively approved if sixty9
days have elapsed from the date the proposed rules are received by the oversight10
committees and no hearing is held by either committee.11
C. Any appraisal management company doing business in this state at the12
time of passage of this Act, may continue to perform such services without a license13
until the earlier of either such time that the rules and regulations pertaining to this14
Chapter have been approved in accordance with Subsections A and B of this Section15
or January 1, 2011.16
Section 2. The provisions of R.S. 37:3415.3(B)(10) and (C) shall apply to any new17
or renewed license after December 31, 2011, and only upon promulgation of rules by the18
board concerning the provisions of R.S. 37:3415.3(B)(10) and (C).19
Section 3. This Act shall become effective upon signature by the governor or, if not20
signed by the governor, upon expiration of the time for bills to become law without signature21
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If22
vetoed by the governor and subsequently approved by the legislature, this Act shall become23
effective on the day following such approval.24 HLS 12RS-1271 ENGROSSED
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Greene HB No. 823
Abstract: Requires a surety bond as a condition of licensure as an appraisal management
company; provides for appraisal reviews by licensed appraisers; establishes
guidelines for fees to be paid to appraisers; and requires an appraisal management
company to confirm the competency level of an appraiser prior to assignment.
Proposed law defines "administrative review", "compliance review", "quality check", or
"QC" as a process that checks an appraisal report for compliance with the Uniform Standards
of Professional Appraisal Practice or other stipulated requirements.
Proposed law defines "appraisal review" as the act or process of developing and
communicating an opinion about the quality of another appraiser's work that was performed
as part of an appraisal assignment. The term shall not include an examination of an appraisal
for grammatical, typographical, mathematical, or other similar administrative errors that do
not involve the appraiser's professional judgment, including compliance with the elements
of the client's statement of work.
Proposed law defines "fee appraiser" as a person who is not an employee of the mortgage
loan originator or appraisal management company engaging the appraiser and is one of the
following:
(1)A state-licensed or certified appraiser who receives a fee for performing an appraisal
and certifies that the appraisal has been prepared in accordance with the Uniform
Standards of Professional Appraisal Practice.
(2)A company not subject to the requirements of §1124 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 that utilizes the services of state-
licensed or certified appraisers and receives a fee for performing appraisals in
accordance with the Uniform Standards of Professional Appraisal Practice.
Proposed law requires a person who performs an appraisal review for an appraisal
management company to be licensed or certified in La.
Proposed law provides that an administrative review may be performed by any individual,
including a certified appraiser.
Present law prohibits an entity from directly or indirectly engaging or attempting to engage
in business as an appraisal management company, directly or indirectly engaging or
attempting to perform appraisal management services, or advertising or holding itself out as
engaging in or conducting business as an appraisal management company without first
obtaining a license issued by the La. Real Estate Appraisers Board.
Present law requires the license to, at a minimum, include the following information:
(1)The name of the entity seeking a license.
(2)The business address of the entity seeking a license.
(3)The phone contact information of the entity seeking a license. HLS 12RS-1271 ENGROSSED
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(4)If the entity is not a corporation that is domiciled in this state, the name and contact
information for the company's agent for service of process in this state.
(5)The name, address, and contact information of any individual, corporation,
partnership, or other business entity that has any ownership interest in the appraisal
management company.
(6)The name, address, and contact information for a controlling person.
(7)Certification that the entity has a system and process in place to verify that a person
being added to the appraiser panel of the appraisal management company holds an
appraisal license in good standing.
(8)Certification that the entity has a system in place to review the work on a periodic
basis of all independent appraisers that are performing real estate appraisal services
for the appraisal management company to ensure that the real estate appraisal
services are being conducted in accordance with Uniform Standards of Professional
Appraisal Practice.
(9)Certification that the entity maintains a detailed record for five years of each real
estate appraisal service request that it receives and an itemized list of all fees
contracted with each appraiser who performs real estate appraisal services for the
appraisal management company.
(10)An irrevocable Uniform Consent to Service of Process.
(11) Any other information required by the board.
Proposed law retains present law but repeals the board's authority to request other
information and adds a requirement of proof that the entity has obtained and maintains a
surety bond that meets the requirements of proposed law.
Proposed law requires every applicant for a license or the renewal of a license to obtain and
maintain a surety bond in the amount of $20,000.
Proposed law requires the surety bond to:
(1)Be in the form prescribed by the board pursuant to regulations duly promulgated by
it.
(2)Accrue to the state for the benefit of a claimant against the registrant to secure the
faithful performance of the licensee obligations under proposed law.
Proposed law provides that the aggregate liability of the surety shall not exceed the principal
sum of the bond.
Proposed law authorizes a party having a claim against the licensee to bring suit directly on
the surety bond, or the board to bring suit on behalf of the party having a claim against the
licensee.
Proposed law provides that consumer claims shall be given priority in recovering from the
bond.
Proposed law provides that a deposit of cash or security may be accepted in lieu of the surety
bond.
Proposed law requires that, if a claim reduces the face amount of the bond, the bond shall
be annually restored upon renewal of the licensee's registration. HLS 12RS-1271 ENGROSSED
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are additions.
Proposed law requires an appraisal management company, before or at the time of making
an assignment to an appraiser, to verify that the appraiser receiving the assignment satisfies
each provision of the competency rule of the Uniform Standards of Professional Appraisal
Practice for the appraisal being assigned.
Proposed law requires an appraisal management company to compensate appraisers at a rate
that is customary and reasonable for appraisals being performed in the market area of the
property being appraised, consistent with the presumptions of compliance under federal law.
Proposed law requires an appraisal management company to separately state to the client
all of the following:
(1)The fees paid to an appraiser for appraisal services.
(2)The fees charged by the appraisal management company for services associated with
the management of the appraisal process, including procurement of the appraiser's
services.
Proposed law prohibits an appraisal management company from prohibiting any appraiser
who is part of an appraiser panel from recording the fee that the appraiser was paid by the
appraisal management company for the performance of the appraisal within the appraisal
report that is submitted by the appraiser to the appraisal management company.
Proposed law prohibits an appraisal management company from including any fees for
appraisal management services performed by the company in the amount the company
reports as charges for the actual completion of an appraisal by the appraiser.
Present law authorizes the board to adopt any rules and regulations necessary for the
enforcement of present law.
Proposed law retains present law but makes technical changes.
Present law requires the rules to obtain the affirmative approval of the House Committee on
Commerce and the Senate Committee on Commerce, Consumer Protection, and International
Affairs.
Proposed law retains present law and further provides that if the board submits its proposed
rules for affirmative approval and the legislature is not in session, the proposed rules shall
be deemed affirmatively approved if 60 days have elapsed from the date the proposed rules
are received by the oversight committees and no hearing is held by either committee.
Present law provides that any appraisal management company doing business in this state
at the time of passage of present law, may continue to perform such services without a
license until the earlier of either such time that the rules and regulations pertaining to present
law have been approved in accordance with present law or Jan. 1, 2011.
Proposed law repeals present law.
Proposed law provides that the surety bond requirement shall apply to any new or renewed
license after Dec. 31, 2011, and only upon promulgation of rules by the board concerning
proposed law.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 37:3415.3(B)(10) and (11), 3415.13, and 3415.21; Adds R.S. 37:3415.2(11),
(12), and (13), 3415.3(C) and (D), and 3415.15) HLS 12RS-1271 ENGROSSED
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Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Commerce to the original
bill.
1. Made technical corrections.
2. Added the definitions of "administrative review", "appraisal review", and "fee
appraiser".
3. Required a person who performs an appraisal review for an appraisal
management company to be licensed or certified in La.
4. Authorized an administrative review to be performed by any individual,
including a certified appraiser.
5. Required an appraisal management company, before or at the time of making an
assignment to an appraiser, to verify that the appraiser receiving the assignment
satisfies each provision of the competency rule of the Uniform Standards of
Professional Appraisal Practice for the appraisal being assigned.
6. Provided for the compensation of appraisers and the disclosure of the fees.
7. Provided that proposed administrative rules shall be deemed affirmatively
approved if 60 days have elapsed from the date the proposed rules are received
by the oversight committees and no hearing is held by either committee.
8. Repealed an outdated grandfathering clause.