HF 2991

as introduced - 89th Legislature (2015 - 2016) Posted on 03/16/2016 01:25pm

A bill for an act
relating to real estate appraisers; regulating appraiser fees, investigation costs,
and appraisal management companies; amending Minnesota Statutes 2014,
sections 45.027, subdivision 1; 82C.02, subdivisions 4, 5; proposing coding for
new law in Minnesota Statutes, chapter 82C.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 45.027, subdivision 1, is amended to read:

Subdivision 1.

General powers.

In connection with the duties and responsibilities
entrusted to the commissioner, and Laws 1993, chapter 361, section 2, the commissioner
of commerce may:

(1) make public or private investigations within or without this state as the
commissioner considers necessary to determine whether any person has violated or is
about to violate any law, rule, or order related to the duties and responsibilities entrusted
to the commissioner;

(2) require or permit any person to file a statement in writing, under oath or otherwise
as the commissioner determines, as to all the facts and circumstances concerning the
matter being investigated;

(3) hold hearings, upon reasonable notice, in respect to any matter arising out of the
duties and responsibilities entrusted to the commissioner;

(4) conduct investigations and hold hearings for the purpose of compiling
information related to the duties and responsibilities entrusted to the commissioner;

(5) examine the books, accounts, records, and files of every licensee, and of every
person who is engaged in any activity regulated; the commissioner or a designated
representative shall have free access during normal business hours to the offices and
places of business of the person, and to all books, accounts, papers, records, files, safes,
and vaults maintained in the place of business;

(6) publish information which is contained in any order issued by the commissioner;

(7) require any person subject to duties and responsibilities entrusted to the
commissioner, to report all sales or transactions that are regulated. The reports must
be made within ten days after the commissioner has ordered the report. The report is
accessible only to the respondent and other governmental agencies unless otherwise
ordered by a court of competent jurisdiction; and

(8) assess a natural person or entity subject to the jurisdiction of the commissioner
the necessary expenses of the investigation performed by the department when an
investigation is made by order of the commissioner. The cost of the investigation shall
be determined by the commissioner and is based on the salary cost of investigators or
assistants and at an average rate per day or fraction thereof so as to provide for the total
cost of the investigation. All money collected must be deposited into the general fund.
A natural person licensed under chapter 60K deleted text begin or deleted text end new text begin , new text end 82 new text begin , or 82B new text end shall not be charged costs
of an investigation if the investigation results in no finding of a violation. This clause
does not apply to a natural person or entity already subject to the assessment provisions
of sections 60A.03 and 60A.031.

new text begin EFFECTIVE DATE; APPLICATION. new text end

new text begin This section is effective the day following
final enactment and applies to investigations commenced or concluded on or after that date.
new text end

Sec. 2.

Minnesota Statutes 2014, section 82C.02, subdivision 4, is amended to read:

Subd. 4.

Appraisal management company.

"Appraisal management company"
deleted text begin means a corporation, partnership, sole proprietorship, subsidiary, unit, or other business
entity that directly or indirectly performs the following appraisal management services:
deleted text end

deleted text begin (1) administers networks of independent contractors and/or employee appraisers to
perform residential real estate appraisal assignments for clients;
deleted text end

deleted text begin (2) receives requests for residential real estate appraisal services from clients and, for
a fee paid by the client, enters into an agreement with one or more independent appraisers
to perform the real estate appraisal services contained in the request; or
deleted text end

deleted text begin (3) serves as a third-party broker of appraisal management services between clients
and appraisers deleted text end new text begin has the meaning given in Code of Federal Regulations, title 12, section
323.9 new text end .

Sec. 3.

Minnesota Statutes 2014, section 82C.02, subdivision 5, is amended to read:

Subd. 5.

Appraisal management services.

"Appraisal management services"
deleted text begin means the process of directly or indirectly performing any of the following functions on
behalf of a lender, financial institution, client, or any other person to:
deleted text end

deleted text begin (1) administer an appraiser panel;
deleted text end

deleted text begin (2) recruit, qualify, verify licensing or certification, and negotiate fees and service
level expectations with persons who are part of an appraiser panel;
deleted text end

deleted text begin (3) receive an order for an appraisal from one person, and deliver the order for the
appraisal to an appraiser that is part of an appraiser panel for completion;
deleted text end

deleted text begin (4) track and determine the status of orders for appraisals;
deleted text end

deleted text begin (5) conduct quality control of a completed appraisal prior to the delivery of the
appraisal to the person that ordered the appraisal; or
deleted text end

deleted text begin (6) provide a completed appraisal performed by an appraiser to one or more clients
deleted text end new text begin has the meaning given in Code of Federal Regulations, title 12, section 323.9 new text end .

Sec. 4.

new text begin [82C.17] REASONABLE AND CUSTOMARY FEES.
new text end

new text begin Subdivision 1. new text end

new text begin Fees. new text end

new text begin An appraisal management company shall compensate
appraisers with fees that are reasonable and customary for appraisal services performed in
the market area of the property being appraised.
new text end

new text begin Subd. 2. new text end

new text begin Evidence. new text end

new text begin (a) An appraisal management company can evidence that the
fees paid to an appraiser were reasonable and customary through:
new text end

new text begin (1) objective third-party information, including, but not limited to, government
agency fee schedules or academic studies. An academic study used must exclude appraisal
assignments ordered by an appraisal management company. The commissioner may
establish a fee scheduled for use by an appraisal management company; or
new text end

new text begin (2) reviewing each of the following factors and making adjustments to recent fees
paid for appraisal services performed in the market area:
new text end

new text begin (i) the type of property appraised;
new text end

new text begin (ii) the scope of the appraisal work;
new text end

new text begin (iii) the time in which the appraisal service must be performed;
new text end

new text begin (iv) appraiser qualifications;
new text end

new text begin (v) appraiser experience and professional record; and
new text end

new text begin (vi) appraiser work quality.
new text end

new text begin (b) The fees paid for a complex appraisal assignment shall reflect the increased
time, difficulty, and scope of work required.
new text end

new text begin (c) An appraisal management company shall maintain written documentation
describing and substantiating all methods and information used to determine the customary
and reasonable fees required by this section.
new text end

new text begin Subd. 3. new text end

new text begin Reporting. new text end

new text begin (a) An appraisal management company shall separately state to
the client the following:
new text end

new text begin (1) the fees paid to an appraiser for appraisal services; and
new text end

new text begin (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.
new text end

new text begin (b) An appraisal management company shall not prohibit an appraiser who is part
of an appraiser panel from recording the fee that the appraiser was paid by the appraisal
management company for appraisal within the appraisal report that is submitted by the
appraiser to the appraisal management company.
new text end

new text begin (c) An appraisal management company shall not include fees for appraisal
management services performed by the company in the amount the company reports as
charges for the appraisal by the appraiser.
new text end

new text begin Subd. 4. new text end

new text begin Timely payment. new text end

new text begin Except in the case of breach of contract or substandard
appraisal, an appraisal management company shall pay an independent contractor
appraiser for the completion of an appraisal or appraisal review:
new text end

new text begin (1) within 30 days of the appraiser providing the appraisal report to the appraisal
management company; or
new text end

new text begin (2) in accordance with a payment schedule agreed to in writing by the appraiser
and the appraisal management company.
new text end

Sec. 5. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 2 to 4 are effective August 1, 2016, and apply to appraisal assignments
commenced on or after that date.
new text end