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| Montana Administrative Register Notice 24-207-42 | No. 21 11/02/2018 | |
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BEFORE THE BOARD OF REAL ESTATE APPRAISERS DEPARTMENT OF LABOR AND INDUSTRY STATE OF MONTANA
TO: All Concerned Persons
1. On November 26, 2018, at 9:00 a.m., a public hearing will be held in the Large Conference Room, 301 South Park Avenue, 4th Floor, Helena, Montana, to consider the proposed amendment, adoption, and repeal of the above-stated rules.
2. The Department of Labor and Industry (department) will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, contact the Board of Real Estate Appraisers (board) no later than 5:00 p.m., on November 19, 2018, to advise us of the nature of the accommodation that you need. Please contact Sharon Peterson, Board of Real Estate Appraisers, 301 South Park Avenue, P.O. Box 200513, Helena, Montana 59620-0513; telephone (406) 841-2375; Montana Relay 1 (800) 253-4091; TDD (406) 444-2978; facsimile (406) 841-2305; or dlibsdrea@mt.gov (board's e-mail).
3. GENERAL REASONABLE NECESSITY STATEMENT: As required by 37-54-105 and 37-54-303, MCA, the board must adopt rules pertaining to education, experience, and examination that are at least as stringent as those required by Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). FIRREA established the Appraisal Foundation and its Appraisal Qualifications Board (AQB) to establish education and experience criteria of appraisers. These criteria are known as the Real Property Appraiser Qualification Criteria and Interpretations of the Criteria – more commonly referred to as the "AQB criteria." The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council is the organization that, along with the Appraisal Foundation, ensures that real estate appraisers who perform appraisals in federally related real estate transactions are sufficiently trained and tested to assure competency and independent judgment as dictated by uniform professional standards. The ASC is responsible for monitoring individual state licensing and certification of real property appraisers, and acts as an oversight mechanism for the activities of the Appraisal Foundation. Requirements of the ASC are expressed in policy statements which are based on Title XI of FIRREA. The board concluded it is reasonably necessary to amend the rules to incorporate the AQB criteria by reference and repeal rules that unnecessarily repeat these criteria. The AQB criteria are well-organized, clearly worded, and accessible. Incorporation by reference of the AQB criteria will make it clear by contrast if or when the board exceeds the federal requirements and provide assurance that the current version is in effect. The board may adopt future versions by reference as well. Otherwise, the language is capable of inadvertent omission, variable word choice, and inconsistency with federal requirements. It is unduly cumbersome, expensive, and inexpedient to compare board rules line-by-line with federal requirements. Adoption by reference will eliminate such efforts by appraisers in the field, board members, staff, and other users of this information. Where additional specific bases for a proposed action exist, the board will identify those reasons immediately following that rule.
4. The rules proposed to be amended are as follows, stricken matter interlined, new matter underlined:
24.207.401 FEES (1) The following fees shall apply to all licensed and certified real estate appraisers, trainees, and applicants. Fees are not refundable or transferable. Fees are not prorated for portions of the year. (a) original license application by examination $475 (c) through (e) remain the same but are renumbered (b) through (d). (k) through (m) remain the same but are renumbered (j) through (l). (2) The following fees apply to registered appraisal management companies and applicants for registration. Fees are not refundable or transferable. Fees are not prorated for portions of the year. (a) remains the same. (h) remains the same but is renumbered (d). (3) remains the same.
AUTH: 37-1-131, 37-1-134, 37-54-105, MCA IMP: 37-1-131, 37-1-134, 37-1-141, 37-54-105, 37-54-112, 37-54-212, 37-54-302, 37-54-310, MCA
REASON: The board is amending (1)(a) and (h) to differentiate between a license application by examination and a reciprocal license application. This change will further align with amendments in this notice to utilize ASC license terminology. The board is striking (1)(b) and (2)(b) because the division's database now allows licensees to change their addresses online and a fee for an address change is no longer warranted. The board is amending (1)(e) as unnecessary since no appraisers have requested to downgrade their licenses in over six years and staff can find no downgrade fee code in the database. Additionally, if an appraiser's scope of practice and licensure level is downgraded as part of a disciplinary action, any applicable costs or fees would be addressed as part of a final order. The board is amending (1)(f) because it unnecessarily repeats the federal requirement underlying the fee. Additionally, because the fee has remained unchanged since January 1, 2012, it is preferable and more convenient to include the actual fee amount in the rule. Following the department's recommendation, the board is amending (1)(g) to align with standardized department procedures and for consistency in administration of board fees. Per ARM 24.101.403, the fee to reactivate an inactive license is limited to half of the active renewal fee. In addition to distinguishing reciprocal license applications from examination applications, the board is amending (1)(h) to adopt the ASC's use of "reciprocal" for licensing out-of-state persons. The term "credential" refers to an appraiser's license. The board is combining (2)(c) through (e) into (2)(b) after determining there is no difference between the word "change" and "redesignation," and the same background check and license verification applies regardless of whether a "controlling" or "contact" person is designated. The board proposes to charge $250 for the application to change controlling or contact person or persons. This fee will be consistent with changes in the business structure that adds new owners in (2)(e). The board is amending (2)(c) and striking (g) after concluding that the renewal process should be the same regardless of the number of engagements an appraisal management company (AMC) had in the previous renewal year. The board further determined that a single renewal fee of $1000 should apply to all AMCs whether it had more than 200 engagements or 200 or fewer engagements during the previous renewal year. Tracking and auditing the number of engagements for this purpose is administratively burdensome and unnecessary. The board is amending (2)(e) and (f) to remove the reference to ten percent and align with statute. In 2017, House Bill 106 removed this language from 37-54-503, MCA, to ensure that any owner who is a license holder, regardless of their share in the business, is subject to the professional good-standing requirement. The board is amending (2)(g) to introduce and clarify a new federal requirement, and provide the underlying fee. The board determined it is reasonably necessary to strike (2)(l) because the board is standardizing the information requested in audits. The board determined that with this standardization, there is no reason that any audit will be broader in scope to incur or assess additional costs and the unlimited ability to charge additional costs is unacceptably vague in its scope. The board estimates 374 renewing licensees will be affected by the $25 renewal fee reduction, resulting in a $9,350 decrease in revenue; 12 AMCs will be affected by the fee restructure for change of controlling/contact person, resulting in a $1,100 increase in revenue; and 12 AMCs will be affected by the $2,000 reduction in the renewal fee for companies with more than 200 engagements in the previous renewal cycle, resulting in a decrease of $24,000 in revenue. The remaining fee changes will have zero cumulative effect on board revenue. The board estimates the proposed rule changes will affect approximately 398 licensees/AMCs and result in a cumulative decrease in annual revenue of $32,250.
24.207.404 APPRAISAL REVIEW – USPAP EXEMPTION (1)
AUTH: IMP: 37-54-105, MCA
REASON: The board is amending (1) to improve grammar, eliminate vagueness, and clarify that the exemption provided by the scope of practice covers board members and board agents. Review of appraisals related to licensing and disciplinary decisions by the board or its agents are not considered appraisal reviews or appraisals under USPAP. The board is striking (2) as it imposes an unnecessarily high standard on any reasonable cause finding the board may make that does not require expert testimony to decide. The board in conjunction with legal counsel must decide on a case-by-case basis whether such expert testimony is required. Authority citations are being amended to provide the complete sources of the board's rulemaking authority.
24.207.406 DEFINITIONS (1) "AQB" means the Appraiser Qualifications Board of the Appraisal Foundation as provided for under Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). (2) "AQB criteria" means minimum education, experience, and examination requirements to obtain and the continuing education requirements to maintain a license or certification as an appraiser, supervisory appraiser, or trainee appraiser. The AQB publishes these requirements in The Real Property Appraiser Qualification Criteria, which is adopted and incorporated by reference at [NEW RULE I]. (2) remains the same but is renumbered (3). (a) The qualifications component will include a completed appraisal review prepared by an individual designated by the board, unless the applicant is qualified for a license by reciprocity or is applying for a mentor endorsement, temporary practice permit, or trainee license. (3) remains the same but is renumbered (4). (5) "USPAP" means the Uniform Standards of Professional Appraisal Practice, promulgated by the Appraisal Standards Board of the Appraisal Foundation.
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-131, 37-1-304, 37-54-202, 37-54-302, 37-54-403,
REASON: The board determined it is reasonably necessary to add (2) and define "AQB criteria" as that term is used repeatedly throughout the proposed new rules. The board is amending (3)(a) to align with changes proposed in ARM 24.207.518(1) to no longer require review of mentor experience. Because the review is being eliminated, the board is adding it as exempt in this rule. The board is striking "nonroutine reciprocal applicant" in favor of the AQB criteria per the general statement of reasonable necessity and New Rule I(3)(c). The new language in (5) is proposed to identify the publisher so persons unfamiliar with USPAP can more easily locate it. Implementation citations are being amended to accurately reflect all statutes implemented through the rule.
24.207.501 EXAMINATION (1) Upon approval by the department of an original applicant's education and experience requirements, the department will issue a letter of exam eligibility to take the examination pending completion of fingerprint and background checks. (2) Only an original applicant for licensure or certification as an appraiser must take an examination. Reciprocal applicants, temporary permit applicants, and trainees and trainee mentors are not generally subject to an examination. However, for nonroutine reciprocal applicants under ARM 24.207.502 or licensees reactivating an inactive or administratively suspended license, the board may require the applicant to demonstrate competency by taking the licensing examination.
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-131, 37-54-105, 37-54-202, 37-54-302, MCA
REASON: The board is amending this rule by striking the requirements that are set forth in the AQB criteria and need not be repeated. The board is adding new provisions to address questions from staff and applicants by clearly setting forth the standardized department procedures utilized to process examination applications.
24.207.502 APPLICATION REQUIREMENTS (1) Applicants for licensure, a mentor endorsement, or a temporary practice permit must submit a complete application form provided by the department, electronically or by paper, including appropriate fees and all required documentation. (2) An applicant for licensure by examination must additionally submit: (a) a set of fingerprints to the Montana Department of Justice; (b) qualifying education certificates or transcripts; and (c) an experience log on a form provided by the department. (3) Department staff will identify and direct an applicant by examination to submit three appraisal reports from the experience log for review. If the review indicates that the work is not compliant with USPAP, or staff have otherwise determined the applicant's background check indicates board review, staff will refer the application to the board as nonroutine. The board may request additional information or clarification of information provided in the application as it deems reasonably necessary. (4) (a) submit a set of fingerprints to the Montana Department of Justice; (b) have an active license in good standing, as shown on the ASC national appraiser registry, from a state that has: (i) licensing requirements that meet or exceed those in Montana; and (ii) a rating above a "poor" for compliance with Title XI of FIRREA as determined by the ASC; and (c) be listed as AQB-compliant with continuing education on the ASC national appraiser registry. (5) If the criteria in (4)(b) and (c) are not met or there is a criminal history revealed by the fingerprint background check, the reciprocal application will require review by the board as nonroutine for issuance of the license in the board's discretion. (b) be AQB-compliant. (7) Trainee appraisers from other states are not eligible for temporary practice permits. (8) Staff may request additional information or clarification of information provided in the application. If the applicant fails to complete the application or comply with the request, the application will expire within one year. After expiration, an applicant will be required to submit an entirely new application to begin the process again. (9) A fingerprint report is valid for six months from date of receipt of the report from the Federal Bureau of Investigation. If an application is still pending after this six-month period, the board may require the applicant to resubmit fingerprints.
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-131, 37-54-105, 37-54-202, MCA
REASON: The board is striking (2) as unnecessary because these distinctions are present in the licensure qualifications and on the department application forms. The board is striking (3) because it refers to rules being repealed in this notice. New (3) qualifies the term "representative sample" (formerly in (3)(e)) and explains when the board must review an application or work product associated with an application. The language is further intended to replace the language in stricken (7) that unnecessarily defines that type of experience that will be required for the level of licensure sought. The experience qualifications are defined in the AQB and incorporated by reference; therefore it is redundant to repeat them in rule. The board is striking (3)(g) as the board no longer treats all examination applications as nonroutine. Only applications determined by staff to be nonroutine will require board review. To license individuals who have met all the criteria for licensure, the board decided it is necessary to utilize staff to process routine license applications and reserve only those decisions requiring board expertise and discretion as nonroutine. The board is striking (3)(h) in favor of a department policy that recognizes only the deadline for providing public notice items on a meeting agenda as the deadline to get appraisals before the board. The benefit of a shorter three-day deadline will not unnecessarily infringe upon a person's ability to work or have their rights adjudicated and outweighs the burden of additional paper or information distributed at board meetings. The board is amending (4) to clarify a misstatement of law regarding "approval of appraisers by the ASC" as well as to clarify the grounds on which the reciprocal license will be issued, and incorporating the term "nonroutine" into this category of license applications. Two misconceptions refer to a reciprocity applicant holding a license in a jurisdiction where the appraisers are approved by the ASC as eligible to perform appraisals for federally related transactions, or if the jurisdiction complies with ASC standards. That language is incorrect. The ASC does not approve appraisers for eligibility to do federally related transactions. Neither does the ASC have "standards" in the strict sense of the term. Instead, the ASC uses Title XI of FIRREA, policy statements, and regulations. The board is adding new (5) to make clear that the board may review nonroutine applications and therefore take more time to process. Further, new (5) provides the board with discretion to issue a license despite the state's rating with the ASC. The board is amending (6) to clarify that staff will utilize the ASC national registry to verify the licensing status of temporary practice permit applicants. The board is adding new (7) to clarify that trainees are not eligible for temporary practice permits because the board concluded that the burden involved in requiring a mentor would be too great. Further, only licensed or certified appraisers from another state have the autonomy that would allow a temporary practice permit to practice in this state as contemplated by the AQB. Under AQB qualifications, a temporary permit must be issued in a very short five-day window to allow a practitioner to come to the state to perform an appraisal assignment. The board is removing (7)(a) and restating it more succinctly in new (3). Additionally, to the extent the rule suggests that all reciprocal applicants are nonroutine applications, the board rejects that idea and clarifies in new (5) when an application is considered nonroutine. The board is removing (7)(b) and addressing this requirement in new (8), as well as extending the timeline from 60 days to one year, with the caveat that fingerprint background checks older than six months will need to be resubmitted, as provided in new (9). The board is striking (8) as the process is adequately addressed in (1). The board is striking (9) because the limitation on issuing licenses to reciprocal applicants conflicts with AQB guidance and has perhaps been impermissibly expanded from the limitation against mentor (supervisor) appraisers from having had disciplinary action within the last five years. With respect to license holders from other professions who present a history of disciplinary action, the board must address each application on a case-by-case basis and make a decision on the individual facts. A board decision based solely on this section without accompanying facts, which may differ from case to case, would not be defensible. Other changes are made to avoid passive voice, redundancy, and wordiness and make the rule easier to read and comprehend.
24.207.504 APPROVAL OF QUALIFYING AND CONTINUING EDUCATION
AUTH: 37-1-131, 37-1-319, 37-54-105, MCA IMP: 37-1-131, 37-1-306, 37-54-105, 37-54-202, MCA
REASON: The board is amending the rule title to clearly reflect the substance of the rule and avoid confusion.
24.207.508 AD VALOREM (2) The applicant shall provide (3) Applicants for the following license or certification categories shall hold, at a minimum, the following certification(s) issued by the Montana Department of Revenue, or equivalent from another state, as verified on supervisor's affidavit, or by separate documentation issued to applicant: (a) (b)
AUTH: 37-1-131, 37-54-105, MCA
REASON: The board determined that ad valorem tax appraisals require current valuation, and therefore do not allow experience gained in using highest and best use valuation. Further, ad valorem experience does not provide a candidate experience writing individual property appraisal reports. For these reasons, the board determined it is reasonably necessary to require a portion of a candidate's experience to be performed under the supervision of a licensed or certified appraiser. The amendments will allow a greater portion of an ad valorem appraiser's experience to be counted toward licensure because the current rule expresses the experience in total hours which varies in percentage, depending on the type of licensure or certification sought. The board is amending (2)(a) to eliminate the limitation on the experience taking place within the last five years to be consistent with the AQB which has no maximum period to gain the experience. Rather, the AQB focuses on minimum time periods. The board is further amending this rule to eliminate redundancy and improve clarity.
24.207.509 QUALIFYING EXPERIENCE (7) and (8) remain the same but are renumbered (1) and (2).
AUTH: 37-1-131, 37-54-105, 37-54-303, MCA IMP: 37-1-131, 37-54-105, 37-54-202, 37-54-303, MCA
REASON: The board is amending this rule by deleting (1) through (6) because applicants are required to submit experience hours in the format required on the experience log provided by the board.
24.207.515 INACTIVE LICENSE/CERTIFICATION (1) A licensed or certified appraiser can place their license or certification in an inactive status by notifying the board in writing. (4) remains the same but is renumbered (3).
AUTH: 37-1-131, 37-1-319, 37-54-105, MCA IMP: 37-1-131, 37-1-319, 37-54-105, 37-54-310, MCA
REASON: The board is proposing substantive changes to this rule in (1)(a) and (c). Following amendment, no fee will be charged for the simple act of requesting inactive status. Inactive licensees will pay an inactive license fee at renewal time, as directed in (3). Further, the board will no longer require licensees to submit proof of continuing education during inactive status. The board will only require proof of continuing education and payment of a reactivation fee upon request to convert to active status as specified in the proposed amendments to ARM 24.207.516. The board is striking (2) as the duty to keep the department informed of address changes is set forth in statute and is being relocated to New Rule II. Other changes improve clarity and organization.
24.207.516 INACTIVE TO ACTIVE LICENSE (1) For a licensed or certified real estate appraiser to become active, the appraiser must: (a) file an updated application form with the board office and pay the required reactivation fee in accordance with ARM 24.207.401; and (b) complete all required continuing education hours that would have been required if the licensee was in an active status, including the most recent edition of a 7-hour National USPAP Update Course (or AQB-approved equivalent).
AUTH: 37-1-131, 37-1-319, 37-54-105, MCA IMP: 37-1-131, 37-1-319, 37-54-105, 37-54-310, MCA
REASON: The board determined it is reasonably necessary to relocate the continuing education provisions for inactive status from ARM 24.207.515 to this rule. The board will no longer require licensees to submit proof of continuing education during inactive status, but only upon request to convert to active status.
24.207.517 Trainee Requirements (1) A trainee shall apply to the board as required in ARM 24.207.502(1). (2) A trainee who has completed 500 hours of training may exercise a one-time option to submit to the board for review an appraisal of the type of property for which the trainee seeks licensure to determine if the appraisal complies with USPAP. (3) Applying the same criteria for reciprocal applicants in ARM 24.201.502, the board will accept hours earned in another jurisdiction as a licensed trainee in an AQB-compliant training program.
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-131, 37-54-105,
REASON: The board is striking (1) through (7) from this rule because they mirror the requirements in the AQB criteria. See the REASON for New Rule I. The board is adding (2) to afford license candidates an opportunity sooner than their final experience submission to have their work assessed for USPAP compliance. The requirement is not mandatory. The board is reversing its position by amending (3) to accept a trainee's hours received in another state when the state is AQB-compliant. The board determined this is reasonably necessary to increase mobility and competition and to ensure a qualified pool of candidates for licensure as appraisers in this state. Implementation citations are being amended to accurately reflect all statutes implemented through the rule.
24.207.518 Mentor requirements (1) A licensed or certified appraiser who intends to supervise a trainee shall first obtain a license endorsement by applying to the board as required in ARM 24.207.502.
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-131, 37-54-105,
REASON: The board is striking (1)(b) to no longer require review of mentor experience as the requirement exceeds that required by the AQB. There is a lack of evidence between the requirement and the quality of the work submitted by trainee candidates for licensure, as reviewed at the time of application. Rather, the board is proposing to offer trainee applicants an opportunity to have their work reviewed, as provided in ARM 24.207.517. Further, without the requirement to submit work to the board for review, more licensed or certified appraisers may become mentors. The board is striking (1)(g), (h), and (4) in response to several comments from trainees that the requirement for 50 inspections by a mentor is somewhat arbitrary. The board is unable to determine what number would appropriately determine a trainee's competency to perform inspections on their own and believes each supervision situation is unique. Therefore, it is reasonably necessary to allow each mentor to determine when a trainee is competent to inspect a property with limited supervision. The board is striking (1)(a), (c) through (f), (i) and (j), and (5) as these are covered by the AQB criteria. The board is relocating the notification provisions of (2) to a single location at New Rule II. Section (3) is unnecessary given this information is reported by the national registry. Nevertheless, the board concluded it is a good idea to require independent reporting by individuals, as is required by all boards, and this requirement is being moved to New Rule II. Implementation citations are being amended to accurately reflect all statutes implemented through the rule.
24.207.1501 REGISTRATION AND RENEWAL OF APPRAISAL MANAGEMENT COMPANIES (1) An applicant for registration as an appraisal management company in Montana must: (a) submit a complete application on forms prescribed by the department (b) through (h) remain the same. (i) provide specific information requested by the board regarding the business practices, any civil, criminal, or administrative actions, ethical practice of the appraisal management company's individual owners of (2) remains the same.
AUTH: 37-1-131, 37-54-105, MCA
REASON: The board is amending (1)(a) as the department provides standardized forms for all boards as part of its administrative services. The board is removing from (1)(i) a reference to an AMC applicant's provision of certain information relating to more than 10 percent of the appraisal management company's owners because HB 106 in the 2017 legislature removed this percentage requirement. The board has an obligation to investigate or at least to inquire about and consider the business practices and ethical practice of an appraisal management company applicant's individual owners regardless of how much of the company the individual owns. The board is relocating (3) through (6) to New Rule III with changes described in that REASON. The board is eliminating fees based on number of engagements from (7). See REASON for ARM 24.207.401. The board is striking (8) as it unnecessarily repeats the provisions of ARM 24.207.1504(2). The board concluded that it is sufficient to require the maintenance of a list of appraisal panel members and their appointment or deletion dates, as required by ARM 24.207.1507(1)(d). It is reasonably necessary to strike (9) as the board does not cancel an AMC license when notified they are no longer providing services in the state. Any non-renewed licenses will lapse, expire, and terminate according to 37-1-141, MCA.
24.207.2101 CONTINUING EDUCATION – COMPLIANCE AND AUDITING (2) Failure to respond to the audit or to comply with continuing education requirements may result in the administrative suspension of the license and reporting to the appraiser national registry until the licensee cures the continuing education deficiency. Repeated failures by a licensee to respond to or comply with a continuing education audit may result in the filing of a complaint and referral for disciplinary action. (3) If more than 10 percent of appraisers audited fail to meet continuing education requirements, the board shall conduct the next annual audit using a higher percentage of audited appraisers as set by board motion.
AUTH: 37-1-131, 37-1-319, 37-54-105, 37-54-303, MCA IMP: 37-1-131, 37-1-306, 37-1-319, 37-1-321, 37-54-105, 37-54-303, 37-54-310, MCA
REASON: The board is striking (1) because continuing education (CE) provisions are adequately addressed in ARM 24.207.504. The board is striking (2) through (6) and (9) as these provisions are addressed by the AQB criteria and need not be repeated. The board is amending (1) to allow flexibility in conducting random CE audits. This amendment will allow the board to respond to staffing and budget issues, and audit failure, as suggested by ASC policy statements, by adjusting the licensees audited, while remaining consistent with the statutory maximum of 50 percent in 37-1-306, MCA. The board is adding (2) and (3) to clarify any ambiguity regarding whether the board "may" audit and to align with and further facilitate the department's standardized renewal, administrative suspension, and audit procedures. Because of the seriousness of the consequences, the amendment advises licensees of the potential results of failing to respond to or comply with a CE audit. The board is amending (4) because the USPAP record-keeping rule addresses work-related opinion and conclusion documentation and has nothing to do with maintaining CE certificates. Implementation citations are being amended to accurately reflect all statutes implemented through the rule.
24.207.2301 UNPROFESSIONAL CONDUCT FOR APPRAISERS (1) In addition to (a) (b) failing to provide information or documents requested by the board or its designee in relation to an audit, investigation, or complaint; (c) failing to comply with (d) failing to provide adequate supervision of a trainee by a mentor.
AUTH: 37-1-131, 37-1-136, 37-1-319, 37-54-105, MCA IMP: 37-1-131, 37-1-137, 37-1-141, 37-1-306, 37-1-307, 37-1-312, 37-1-316, 37-1-319, 37-54-105, MCA
REASON: The board determined it is reasonably necessary to cite to the unprofessional conduct statute than to vaguely refer to "other statutes and rules." The board is amending (1)(a) to clearly specify that the board views failure to comply with any law or rule governing the conduct of an appraiser as unprofessional conduct. Additionally, the board concluded the prohibition on failure to comply with any request could be found as overreaching the board's authority. This requirement is covered sufficiently by (1)(b), which accurately and specifically reflects the scenarios in which the board has authority to compel information. Subsection (1)(d) is being relocated here from ARM 24.207.518. The board is eliminating (2) as it conflicts with due process procedures which require some degree of notice of a deficiency and an opportunity to cure before the department may report to the ASC national registry. The requirement to report is set forth in the ASC policy statements and applies both to appraisers and appraisal management companies.
24.207.2305 UNPROFESSIONAL CONDUCT FOR APPRAISAL MANAGEMENT COMPANIES (1) In addition to (a) (b) through (d) remain the same.
AUTH: 37-1-131, 37-1-136, 37-1-319, 37-54-105, MCA IMP: 37-1-131, 37-1-137, 37-1-307, 37-1-312, 37-1-316, 37-1-319, 37-54-105, 37-54-512, 37-54-514, MCA
REASON: See REASON for ARM 24.207.2301 regarding changes in (1) and (1)(a).
5. The proposed new rules are as follows:
NEW RULE I INCORPORATION BY REFERENCE OF THE REAL PROPERTY APPRAISER QUALIFICATION CRITERIA (1) Except as stated in (3) and ARM 24.207.508 regarding ad valorem appraisal experience, the board adopts and incorporates by reference the Real Property Appraiser Qualification Criteria effective May 1, 2018, in its entirety, inclusive of the criteria, interpretations, guide notes, and Q&A, and Policy Statements, effective March 2018, published by the Appraiser Qualifications Board of the Appraisal Foundation. The Real Property Appraiser Qualification Criteria are commonly referred to as the "AQB criteria." A copy of the criteria and policy statements are available from the Appraisal Foundation at www.appraisalfoundation.org, or 1155 15th Street NW, Suite 1111, Washington, DC 20005. (2) The AQB criteria covers the qualifying experience, education, examination, and background check requirements necessary to become a trainee, trainee supervisor, licensed appraiser, or certified appraiser; and the standards, scopes of practice, and continuing education requirements for each category of licensure. (3) The board amends the following AQB Criteria: (a) "Criteria Specific to Continuing Education," Part II F, paragraph 11 is amended with the addition of the following: "The board has a two-year continuing education cycle." (b) "Criteria Specific to Continuing Education," Part III F, paragraph 13, delete the first sentence and replace with the following: "If after audit, a credential holder is determined to be deficient in continuing education, the state will offer a 60-day opportunity to cure and complete all required education hours for that continuing education cycle. If the credential holder fails to cure the continuing education deficiency, the state will place the credential holder in an "administrative suspension" status and report the credential holder to the national registry as AQB-noncompliant until the audited deficiency and any accrued deficiency is cured. A demonstrated pattern of deficiencies may result in referral to the board for traditional disciplinary action." (c) "Background Checks," Part VI, paragraph C, is amended with the addition of the following: "As provided by Title 37, chapter 1, part 2, MCA, the board may not base a denial of a license solely on a previous criminal conviction unless it finds, after investigation, the applicant has not been sufficiently rehabilitated as to warrant the public trust."
AUTH: 37-1-131, 37-43-105, MCA IMP: 37-1-131, 37-1-203, 37-1-321, 37-54-105, MCA
REASON: See GENERAL REASONABLE NECESSITY STATEMENT for (1) and (2). The board is adopting (3)(a) and (b) to recognize Montana statutes that are more stringent than the federal requirements, or that embody constitutionally based rights of Montana citizens.
NEW RULE II APPRAISER REPORTING OBLIGATIONS TO THE BOARD (1) All licensees shall report in writing to the board, within ten days of the occurrence of: (a) change in the licensee's physical, postal, or e-mail address, or phone numbers; (b) constructive notice to the licensee of a final order of disciplinary action, an order of summary suspension, or legal action related to the practice of real estate appraisal against the licensee; and (c) personal knowledge of the licensee of the unprofessional conduct of another licensee. (2) To ensure that a mentor adheres to the limitation on the number of trainees the mentor supervises at a time, all mentors shall report in writing to the board, within ten days of the ending or beginning of a training relationship. (3) "In writing" includes by postal mail or e-mail, or if available, by updating the licensee's online account with the division (e.g., address changes and supervisory relationships). (4) Failure to report under this rule shall be cause for disciplinary action up to and including suspension or revocation of the license.
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-105, 37-1-131, 37-1-309, 37-54-105, MCA
REASON: Currently, the department enforces 37-1-105, MCA, by questions posed on the licensure application and renewal forms. While the department will continue to question applicants about past legal or disciplinary action, in lieu of asking the question at renewal time, the department will instead remind the licensee of the obligation to report and ask the licensee to certify compliance with this rule. The rule will enable the department to learn about the action closer to its occurrence when the events are recent rather than waiting until annual renewal time. Although appraisers and AMCs renew annually, some license types in the division renew every two years. The new reporting obligation will allow faster processing of renewals and spread workload throughout the year rather than focusing it at renewal time. The board is also relocating reporting requirements from other rules to this single new rule.
NEW RULE III APPRAISAL MANAGEMENT COMPANY REPORTING OBLIGATIONS TO THE BOARD (1) The designated contact person for a registered AMC shall report in writing to the board, and submit any necessary application forms within ten days of occurrence, the following information pertaining to the AMC: (a) change in controlling person, with application; (b) change in contact person, with application; (c) change in owners, with application; (d) change in physical, postal, or e-mail address, or phone numbers; (e) institution of legal or disciplinary action against the AMC, the controlling person, or contact person that is related to the conduct of the AMC; (f) pending, current, or completed license disciplinary action or investigation against the company, controlling person, contact person, or other licensed individuals affiliated with the company to the board within ten days of the proposed action or notice of such action or investigation; or (g) the personal knowledge of agents of the AMC of unprofessional conduct of an appraiser or other AMC. (2) "In writing" includes by postal mail or e-mail, or if available, by updating the licensee's online account with the division (e.g., address changes and relationships). (3) Failure to report or make application under this rule shall be cause for disciplinary action up to and including suspension or revocation of the registration.
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-105, 37-1-131, 37-1-309, 37-54-105, MCA
REASON: The board is relocating ARM 24.207.1501(3) through (6) to this new rule to avoid redundancy and wordiness and increase readability and comprehension. For all types of information, the reporting period is shortened from 30 to 10 days in the interest of ensuring consistency in reporting obligations and to convey the urgency of updating the department regarding the information. The board notes that "days" mean calendar days unless otherwise stated as business days. The board is also providing guidance regarding various methods to communicate to the board to encourage licensee use of online services.
6. The rules proposed to be repealed are as follows:
24.207.403 REGULATORY REVIEWS
AUTH: 37-54-105, MCA
REASON: The board is repealing this rule because it unnecessarily repeats statute. Section 37-54-105, MCA, expresses the board's authority to require licensees to submit reports, information, and documents to the board, as does the authority of the department to investigate under 37-1-101, MCA. Without an articulated peer review program, which the board does not have, nor is interested in expanding its regulation to include, 37-54-105, MCA, should only be construed to require submission of documents connected to an application or complaint investigation. In practice, board members and board staff have no recollection of a random "regulatory review" of an appraiser's work ever taking place without relation to the investigation of a complaint or an application for licensure. Further, the references to unprofessional conduct in 37-1-316, MCA, unnecessarily repeat ARM 24.207.2301, which adequately sets forth unprofessional conduct.
24.207.503 EXPERIENCE - NUMBER OF HOURS REQUIRED
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-131, 37-54-105, 37-54-202, 37-54-303, MCA
REASON: The board is repealing ARM 24.207.503, 24.207.505, 24.207.506, 24.207.507, and 24.207.510 because the provisions are set forth in the AQB criteria. See GENERAL REASONABLE NECESSITY STATEMENT.
24.207.505 QUALIFYING EDUCATION REQUIREMENTS FOR LICENSED REAL ESTATE APPRAISERS
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-131, 37-54-105, 37-54-202, MCA
24.207.506 QUALIFYING EDUCATION REQUIREMENTS FOR RESIDENTIAL CERTIFICATION
AUTH: 37-1-131, 37-54-105, 37-54-303, MCA IMP: 37-1-131, 37-54-105, 37-54-303, MCA
24.207.507 QUALIFYING EDUCATION REQUIREMENTS FOR GENERAL CERTIFICATION
AUTH: 37-1-131, 37-54-105, 37-54-303, MCA IMP: 37-1-131, 37-54-105, 37-54-303, MCA
24.207.510 SCOPE OF PRACTICE
AUTH: 37-1-131, 37-54-105, MCA IMP: 37-1-131, 37-54-105, 37-54-201, MCA
24.207.2102 CONTINUING EDUCATION NONCOMPLIANCE
AUTH: 37-1-136, 37-1-319, 37-54-105, MCA
REASON: It is reasonably necessary to repeal this rule because it no longer states the correct process for addressing CE noncompliance since the enactment of 37-1-321, MCA, and the board's ratification of the department's standardized administrative suspension process which provides for opportunity to cure CE deficiencies. This process has specifically been acknowledged as more stringent than Title XI of FIRREA and is concurred in by the appraisal subcommittee. The process and deviation from the AQB criteria are called out in New Rule I(3)(b).
7. Concerned persons may present their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to the Board of Real Estate Appraisers, 301 South Park Avenue, P.O. Box 200513, Helena, Montana 59620-0513, by facsimile to (406) 841-2305, or e-mail to dlibsdrea@mt.gov, and must be received no later than 5:00 p.m., November 30, 2018.
8. An electronic copy of this notice of public hearing is available at realestateappraiser.mt.gov (department and board's web site). Although the department strives to keep its web sites accessible at all times, concerned persons should be aware that web sites may be unavailable during some periods, due to system maintenance or technical problems, and that technical difficulties in accessing a web site do not excuse late submission of comments.
9. The board maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this board. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding all board administrative rulemaking proceedings or other administrative proceedings. The request must indicate whether e-mail or standard mail is preferred. Such written request may be sent or delivered to the Board of Real Estate Appraisers, 301 South Park Avenue, P.O. Box 200513, Helena, Montana 59620-0513; faxed to the office at (406) 841-2305; e-mailed to dlibsdrea@mt.gov; or made by completing a request form at any rules hearing held by the agency.
10. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor was contacted on August 16, 2017, by telephone.
11. Regarding the requirements of 2-4-111, MCA, the board has determined that the amendment of ARM 24.207.404, 24.207.406, 24.207.501, 24.207.502, 24.207.504, 24.207.508, 24.207.509, 24.207.515, 24.207.516, 24.207.517, 24.207.518, 24.207.1501, 24.207.2101, 24.207.2301, and 24.207.2305 will not significantly and directly impact small businesses. Regarding the requirements of 2-4-111, MCA, the board has determined that the adoption of New Rules I through III will not significantly and directly impact small businesses. Regarding the requirements of 2-4-111, MCA, the board has determined that the repeal of ARM 24.207.403, 24.207.503, 24.207.505, 24.207.506, 24.207.507, 24.207.510, and 24.207.2102 will not significantly and directly impact small businesses. Regarding the requirements of 2-4-111, MCA, the board has determined that the amendment of ARM 24.207.401 will significantly and directly impact small businesses. The group of small businesses affected are appraisal management companies (AMCs) registered in Montana who reported more than 200 engagements during the previous renewal cycle. The significant and direct effect on the AMCs in question is a $2,000 decrease in their annual renewal fee. The board has determined that the proposed rule amendment would be a positive change to the AMCs affected. Therefore, it is not necessary to minimize or eliminate any potential adverse effects of the proposed rule. Documentation of the board's above-stated determinations is available upon request to the Board of Real Estate Appraisers, 301 South Park Avenue, P.O. Box 200513, Helena, Montana 59620-0513; telephone (406) 841-2375; facsimile (406) 841-2305; or to dlibsdrea@mt.gov.
12. Sharon Peterson, Executive Officer, has been designated to preside over and conduct this hearing.
Certified to the Secretary of State October 23, 2018.
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