SENATE BILL REPORT

EHB 1917

BYRepresentatives O'Brien, May, Gallagher, Wineberry, Nelson, Locke, Sayan, Patrick, Baugher, Ferguson and McLean

Establishing a certified real estate appraiser law.

House Committe on Commerce & Labor

Rereferred House Committee on Appropriations

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):March 28, 1989; March 30, 1989; March 31, 1989

Majority Report:  Do pass as amended and be referred to Committee on Ways & Means.

      Signed by Senators von Reichbauer, Chairman; Johnson, Vice Chairman; Fleming, McMullen, Moore, Sellar, Smitherman, West.

Senate Staff:Benson Porter (786-7470)

                  March 31, 1989

Senate Committee on Ways & Means

Senate Hearing Date(s):April 3, 1989

Majority Report:  Do pass as amended.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Bailey, Bauer, Bluechel, Cantu, Hayner, Johnson, Lee, Moore, Newhouse, Smith, Talmadge, Wojahn.

Senate Staff:Lynn French (786-7715)

                  April 4, 1989

AS REPORTED BY COMMITTEE ON WAYS & MEANS, APRIL 3, 1989

BACKGROUND:

Current state law requires real estate appraisers who perform appraisals for taxation purposes and for sales of certain public property to meet specified standards.  Otherwise, the state does not specifically regulate persons who conduct real estate appraisals.

In October 1988, the Department of Licensing released a report concerning proposed state regulation of real estate appraisers.  The department recommended that no certification or licensing be required at that time.  However, the department further recommended that if federal law were to require state certification of appraisers, the Legislature should provide only the minimal level of certification to meet the federal standards.

In November, 1988, the federal Office of Management and Budget issued a directive to federal agencies to require state certified appraisals for certain transactions by July 1, 1991.  For Washington appraisers to perform such appraisals, a state certification program would have to be adopted.

SUMMARY:

The Certified Real Estate Appraiser Act is established creating a certification program of real estate appraisers in Washington.  The Department of Licensing is directed to administer the act.

Two classes of appraiser certification are created under the act.  The first is a certified residential real estate appraiser who may render certified appraisals of residential real property of one to four units. The second is a certified general real estate appraiser who may render certified appraisals of all types of real property.

To obtain state certification, an appraiser must meet experience, education, and examination requirements.  The requirements must not be less than minimum criteria established by the Appraisal Foundation (a private, nonprofit corporation), unless the director of the department finds that the criteria are not appropriate.  To be eligible to take the certification examination, an applicant must have two years experience in real property appraisal within five years of the application.  An applicant seeking certification as a residential real estate appraiser also must have a baccalaureate degree from an accredited college or university or at least 60 hours of classroom study in real estate appraisal and 15 hours of classroom study in the standards of professional practice. Moreover, the education requirement for applicants for general real estate appraiser certification is similar except that the applicant must have 150 hours of classroom study in real estate appraisal.  The exam is to include questions testing the applicant's knowledge of certain specified materials.

The terms "certified appraisal" and "state certified real estate appraiser" are granted title protection so that no person may use these terms unless he or she is certified by the state.  A person who is not certified is not precluded from performing real estate appraisals for compensation.

A five member real estate appraiser certification board is created to provide technical assistance to the director.  One member shall be a public member and the remaining four members shall be real estate appraisers meeting specified guidelines.  The board shall make recommendations to the director regarding the experience, education, and examination requirements, and may conduct administrative hearings in connection with disciplinary hearings, as requested by the director.

Continuing education requirements are imposed.  Appraisers must complete at least 40 classroom hours of instruction within a two year period preceding renewal or participate in other acceptable activities.

The director may impose sanctions, including revocation of certification and imposition of a fine, for negligence or incompetence in making an appraisal, other specified acts, or for violations of the chapter.  Certified appraisers must comply with standards of professional practice.  The certificate number must be placed on appraisal documents.

A reciprocity provision allows an applicant who is currently certified and in good standing under the laws of another state to obtain a certificate without passing the examination.

Appropriation:    $450,000 from the general fund to the Department of Licensing to be repaid from fees imposed by June 30, 1993.

Revenue:    yes

Fiscal Note:      available

Effective Date:Sections 1, 4, 9 through 27, and 29 take effect July 1, 1990.  Sections 2, 3, 5 through 8, 28, 30, and 31 contain an emergency clause and take effect July 1, 1989.

SUMMARY OF PROPOSED FINANCIAL INSTITUTIONS & INSURANCE AMENDMENT:

The membership of the real estate appraiser certification board is increased to seven members.  The composition is modified to include two public members and five appraisers.  Real estate appraisers on the board shall represent a cross section of the real estate appraisal organizations.

An applicant must meet certain real estate education requirements and may not substitute a baccalaureate degree in lieu of these requirements.

The continuing education requirement of at least 30 hours of instruction every two years is imposed.

SUMMARY OF PROPOSED WAYS & MEANS AMENDMENT:

A reciprocity agreement is required between Washington State and the home state of nonresidents seeking certification in Washington.  The education and experience standards are removed and the Real Estate Appraisal Board is required to establish the standards by rule.  The bill is contingent upon funding in the budget.

Senate Committee - Testified: FINANCIAL INSTITUTIONS & INSURANCE:  Representative Fred May, sponsor; Richard McKown, AIREA (pro); Pam Barrett (pro); Charles Anderson, AIREA (pro); Michael Lamb, SREA-AIREA (pro); Bruce H. Worthington, ASA-SREA (pro); James D. Tesso, NAIFA (pro); Jay H. Widby, NAREA (pro); Thomas F. Saunders, American Savings Bank (pro); Fred O. Bell, Guildmark Appraisal Services (pro); George Caporale, NAIFA (con)

Senate Committee - Testified: WAYS & MEANS: Jim Miner (con); Pam Barrett, American Institute of Real Estate Appraisers (pro); Chuck Anderson, National Chairman, American Institute of Real Estate Appraisers (pro); Dick McCown, Chapter President, American Institute of Real Estate Appraisers (pro); Mike Lamb, Society of Real Estate Appraisers (pro)