PROPOSED RULEMAKING
STATE BOARD OF CERTIFIED REAL ESTATE APPRAISERS
[49 PA. CODE CH. 36]
Qualifications for Certification
[29 Pa.B. 5727] The State Board of Certified Real Estate Appraisers (Board), proposes to amend §§ 36.11 and 36.12 (relating to residential real estate appraiser; and general real estate appraiser) to read as set forth in Annex A.
Background and Statutory Authority
The Real Estate Appraisers Certification Act (REACA) (63 P. S. §§ 457.1--457.19) enacted in June 1990, established the certification classes of residential appraiser and general appraiser to perform appraisals in Federally related transactions under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), Public Law 101-73, 103 Stat. 183. Federally related appraisals are those performed for Federally-regulated financial institutions where the transaction amounts exceed certain levels; since September 3, 1996, residential and general appraisers have been authorized under section 18 of the REACA (63 P. S. § 457.18), to perform appraisals in non-Federally related transactions as well.
Section 6(d) and (e) of the REACA (63 P. S. § 457.6(d) and (e)), provides that an applicant for certification as a general appraiser or residential appraiser shall, as a prerequisite to taking the certification examination, complete the minimum education and experience requirements established under the FIRREA. The Appraisal Qualifications Board (AQB) of The Appraisal Foundation is charged with establishing education and experience qualifications for appraisers under the FIRREA. Section 6(f) of the REACA, directs the Board to prescribe and define the educational topics and types of experience that will satisfy education and experience requirements under the FIRREA. Section 5(2) of the REACA (63 P. S. § 457.5(2)), authorizes the Board to adopt regulations necessary to carry out the provisions of the REACA.
Sections 36.11 and 36.12 set forth, for residential certification and general certification, minimum hours of education and experience; mandatory course topics (including 15 hours of coverage on the Uniform Standards of Professional Appraisal Practice (USPAP)); acceptable types of appraisal experience; and special rules relating to education matters (for example, credit for teaching, correspondence courses, challenge examinations). The content and language of §§ 36.11 and 36.12 are derived, almost verbatim, from the AQB's qualifications criteria and interpretations. In February 1994, the AQB increased, effective January 1, 1998, the minimum hours of education for general certification from 165 hours to 180 hours; the minimum hours of experience for general certification from 2,000 hours to 3,000 (during at least a 30-month period); and the minimum hours of experience for residential certification from 2,000 hours to 2,500 hours (during at least a 24-month period). By operation of law under section 6(d) and (e) of the REACA, these new requirements automatically took effect in this Commonwealth on January 1, 1998, and have been applied by the Board to persons applying for residential or general certification on or after that date. Sections 36.11 and 36.12, which were last revised in December 1994, do not reflect the AQB's current education and experience requirements.
In April 1999, as the result of an effort to achieve consistency in appraisal standards education throughout the United States, the Appraisal Foundation completed development of a 15-hour National USPAP Course, which has been approved by the AQB and recommended to state appraiser regulatory bodies for adoption as the required course for mandatory training in the USPAP.
Description of Proposed Amendments
§ 36.11.
The proposed amendments would revise paragraph (1) to delete references to the 105-hour education requirement for residential certification in effect prior to January 1994, and to renumber subsequent subparagraphs and clauses to reflect the deletion. The proposed amendments to paragraph (1) also would adopt the National USPAP Course as part of the current 120-hour education requirement. The proposed amendments would revise paragraph (2), which lists the 16 mandatory course topics for residential certification, to include the subtopics for each as developed by the AQB. The proposed amendments would revise paragraph (3) to reflect the current experience requirement of 2,500 hours obtained over a period of at least 24 months. The proposed amendments to paragraph (3) also would make editorial changes to reflect current AQB terminology and give an updated example of how an applicant may accumulate the necessary hours over a 5-year period. The proposed amendments would revise paragraph (4), which states in part that a residential appraiser is authorized to perform residential appraisals in Federally related transactions without regard to value, to reflect the fact that residential appraisers are now authorized to perform residential appraisals in non-Federally related transactions as well.
§ 36.12.
The proposed amendments would revise paragraph (1) to reflect the current 180-hour education requirement for general certification and to adopt the National USPAP Course as part of the 180-hour requirement. The proposed amendments would revise paragraph (2), which lists the 16 mandatory course topics for general certification, to include the AQB's recommended subtopics. The proposed amendments would revise paragraph (3) to reflect the current experience requirement of 3,000 hours obtained over a period of at least 30 months. The proposed amendments to paragraph (3) also would make editorial changes and give an updated example of how the required hours may be accumulated over a 5-year period. The proposed amendments to paragraph (4) would clarify that a general appraiser is authorized to perform appraisals in non-Federally related transactions as well as Federally- related transactions without regard to value.
Fiscal Impact and Paperwork Requirements
The proposed amendments would have no fiscal impact on the Commonwealth or its political subdivisions. While the proposed amendments reflect increased education and experience requirements for applicants for residential or general certification, the proposed amendments would have no fiscal impact on those applicants because the increased requirements have already taken effect by operation of law.
The proposed amendments would not create new paperwork requirements for the Commonwealth, its political subdivisions or the private sector. Prior to January 1, 1998, the Board amended its application forms and instructions to reflect the increased education and experience requirements.
Compliance with Executive Order 1996-1
In accordance with Executive Order 1996-1 (relating to regulatory review and promulgation), the Board solicited preproposal comments from the major trade associations representing the real estate appraising industry in this Commonwealth.
Regulatory Review
As required by section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on October 21, 1999, the Board submitted copies of the proposed amendments to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the Senate Consumer Protection and Professional Licensure Committee and the House Professional Licensure Committee (Committees). The Board also provided IRRC and the Committees with copies of a regulatory analysis form prepared in compliance with Executive Order 1996-1. Copies of the form are available to the public upon request.
If IRRC has objections to any portion of the proposed amendments, it will notify the Board within 10 days following the close of the Committees' review period, specifying the regulatory review criteria that have not been met. The Regulatory Review Act sets forth procedures that permit IRRC, the General Assembly and the Governor to review objections prior to final adoption of the amendments.
Public Comment
The Board invites interested persons to submit written comments, suggestions or objections regarding the proposed amendments to Steven Wennberg, Counsel, State Board of Certified Real Estate Appraisers, P. O. Box 2649, Harrisburg, PA 17105-2649, within 30 days following publication of this notice of proposed rulemaking in the Pennsylvania Bulletin
DAVID J. KING,
ChairpersonFiscal Note: 16A-7010. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 49. PROFESSIONAL AND VOCATIONAL STANDARDS
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL AND OCCUPATIONAL AFFAIRS
CHAPTER 36. STATE BOARD OF CERTIFIED REAL ESTATE APPRAISERS
Subchapter A. GENERAL PROVISIONS
QUALIFICATIONS FOR CERTIFICATION § 36.11. Residential real estate appraiser.
An applicant for certification as a residential real estate appraiser shall be of good moral character, meet the following education and experience requirements and pass an examination for certification as a residential real estate appraiser. Neither a real estate salesperson's license nor a real estate broker's license issued under the Real Estate Licensing and Registration Act (63 P. S. §§ 455.101--455.902) is a prerequisite to certification as a real estate appraiser.
(1) Education.
[(i) Prior to January 1, 1994: An applicant shall submit evidence to the Board of having completed 105 classroom hours of courses in subjects related to real estate appraisal, 15 hours of which shall include coverage of the Uniform Standards of Professional Appraisal Practice, together with coverage of the topics listed in paragraph (2). There is no time limit regarding when qualifying education credit may have been obtained.
(ii) On or after January 1, 1994:] An applicant shall submit evidence to the Board of having completed 120 classroom hours of courses in subjects related to real estate appraisal, [15 hours of which shall include coverage of the] including the 15-hour National Uniform Standards of Professional Appraisal Practice Course, together with coverage of the topics listed in paragraph (2). There is no time limit regarding when qualifying education credit [may have been] shall be obtained.
[(A)] (i) * * *
[(B)] (ii) * * *
[(C)] (iii) * * *
[(D)] (iv) Correspondence courses. Correspondence courses may be acceptable to meet the classroom hour requirement if each course is approved by the Board and meets the following conditions:
[(I)] (A) * * *
[(II)] (B) * * *
[(III)] (C) The content and length of the course meets the requirements of [clause (A)] subparagraph (i) and paragraph (2).
[(E)] (v) Video and remote television courses. Video and remote television courses may be acceptable to meet the classroom hour requirement if each offering is approved by the Board and meets the following conditions:
[(I)] (A) * * *
[(II)] (B) * * *
[(III)] (C) The content and length of the course meets the requirements of [clause (A)] subparagraph (i) and paragraph (2).
[(F)] (vi) * * *
(2) Mandatory course topics. Applicants shall demonstrate that their education included coverage of the topics listed in this paragraph with particular emphasis on the appraisal of one-to-four unit residential properties:
(i) Influences in real estate value.
(A) Physical and environmental.
(B) Economic.
(C) Governmental and legal.
(D) Social.
(ii) Legal considerations in appraisal.
(A) Real estate verses real property.
(B) Real property verses personal property.
(C) Limitations on real estate ownership.
(D) Legal rights and interests.
(E) Forms of property ownership.
(F) Legal descriptions.
(G) Transfer of title.
(iii) Type of values.
(A) Market value or value in exchange.
(B) Price.
(C) Cost.
(D) Investment value.
(E) Value in use.
(F) Assessed value.
(G) Insurable value.
(iv) Economic principles.
(A) Anticipation.
(B) Balance.
(C) Change.
(D) Competition.
(E) Conformity.
(F) Contribution.
(G) Increasing and decreasing returns.
(H) Opportunity cost.
(I) Substitution.
(J) Supply and demand.
(K) Surplus productivity.
(v) Real estate markets and analysis.
(A) Characteristics of real estate markets.
(B) Absorption analysis.
(C) Role of money and capital markets.
(D) Real estate financing.
(vi) Valuation process.
(A) Definition of the problem.
(B) Collection and analysis of data.
(C) Analysis of highest and best use.
(D) Application and limitations of each approach to value.
(E) Reconciliation and final value estimate.
(F) The appraisal report.
(vii) Property description.
(A) Site description.
(B) Improvement description.
(C) Basic construction and design.
(viii) Highest and best use analysis.
(A) Four tests.
(B) Vacant site or as if vacant.
(C) As improved.
(D) Interim use.
(ix) Appraisal [statistical concepts] math and statistics.
(A) Compound interest concepts.
(B) Statistical concepts used in appraisal.
(x) Sales comparison approach.
(A) Research and selection of comparables.
(B) Elements of comparison.
(C) Adjustment process.
(D) Application of sales comparison approach
(xi) Site value.
(A) Sales comparison.
(B) Land residual.
(C) Allocation.
(D) Extraction.
(E) Plottage and assemblage.
(xii) Cost approach.
(A) Steps in cost approach.
(B) Application of the cost approach.
* * * * * (xiv) Valuation of partial interests.
(A) Life estates.
(B) Undivided interest in commonly held property
(C) Easements.
(D) Timeshares.
(E) Cooperatives.
(F) Leased fee estate.
(G) Leasehold estate.
* * * * * (3) Experience. In addition to meeting the education requirements, an applicant shall submit evidence to the Board of having completed [2 years] 2,500 hours of acceptable appraisal experience obtained during no fewer than 24 months. [Effective December 26, 1995, 50%] Fifty percent of the experience obtained by an applicant shall be in the actual preparation of real estate appraisal reports which include a physical inspection of the interior and exterior of the subject property. [One year is defined in terms of hours within a calendar year. One thousand hours constitutes 1 year of appraisal experience. A minimum of 2 calendar years is required. Although there is no minimum or maximum number of creditable experience hours which must be earned during a calendar year, an applicant shall be able to demonstrate having obtained 2,000 hours of appraisal experience within not less than 2 calendar years.] Hours may be treated as cumulative to achieve the necessary [2,000] 2,500 hours of appraisal experience. Cumulative is defined to mean that experience may be acquired over any time period in excess of [2 years] 24 months. There is no minimum number of hours which must be acquired in any [1 year] 12 months. The following will serve as an example:
Year 1 [200] 400 Hours Year 2 800 Hours Year 3 [100] 200 Hours Year 4 [400] 500 Hours Year 5 [500] 600 Hours ______ ______ Total
[2,000] 2,500 Hours * * * * * (4) State certified residential real estate appraiser. An applicant who has passed an examination and who is certified under this section will be deemed to have met the minimum criteria for the certified residential real property appraiser classification adopted by the Appraiser Qualifications Board of the Appraisal Foundation, and shall be qualified to perform residential real property appraisals in [connection with] Federally-related and non-Federally related transactions without regard to value.
§ 36.12. General real estate appraiser.
An applicant for certification as a general real estate appraiser shall be of good moral character, meet the following education and experience requirements and pass an examination for certification as a general real estate appraiser. Neither a real estate salesperson's license nor a real estate broker's license issued under the Real Estate Licensing and Registration Act (63 P. S. §§ 455.101--455.902) is a prerequisite to certification as a real estate appraiser.
(1) Education. An applicant shall submit evidence to the Board of having completed [165] 180 classroom hours of courses in subjects related to real estate appraisal, [15 hours of which shall include coverage of the] including the 15-hour National Uniform Standards of Professional Appraisal Practice [, including] Course, together with coverage of the topics [listed] in paragraph (2). There is no time limit regarding when qualifying education credit [shall have been] must be obtained.
* * * * * (2) Mandatory course topics. Applicants shall demonstrate that their education included coverage of the topics listed in this paragraph with particular emphasis on the appraisal of nonresidential properties. Residential is defined as one to four residential units.
(i) Influences on real estate value.
(A) Physical and environmental.
(B) Economic.
(C) Governmental and legal.
(D) Social.
(ii) Legal considerations in appraisal.
(A) Real estate verses real property.
(B) Real property verses personal property.
(C) Limitations on real estate ownership.
(D) Legal rights and interests.
(E) Forms of property ownership.
(G) Legal descriptions.
(H) Transfer of title.
(iii) Type of values.
(A) Market value or value in exchange.
(B) Price.
(C) Cost.
(D) Investment value.
(E) Value in use.
(F) Assessed value.
(G) Insurable value.
(H) Going concern value.
(iv) Economic principles.
(A) Anticipation.
(B) Balance.
(C) Change.
(D) Competition.
(E) Conformity.
(F) Contribution.
(G) Increasing and decreasing returns.
(H) Opportunity cost.
(I) Substitution.
(J) Supply and demand.
(K) Surplus productivity.
(v) Real estate markets and analysis.
(A) Characteristics of real estate markets.
(B) Absorption analysis.
(C) Role of money and capital markets.
(D) Real estate financing.
(vi) Valuation process.
(A) Definition of the problem.
(B) Collection and analysis of data.
(C) Analysis of highest and best use.
(D) Application and limitations of each approach to value.
(E) Reconciliation and final value estimate.
(F) The appraisal report.
(vii) Property description.
(A) Site development.
(B) Improvement description.
(C) Basic construction and design.
(viii) Highest and best use analysis.
(A) Four tests.
(B) Vacant site or as if vacant.
(C) As improved.
(D) Interim use.
(ix) Appraisal [statistical concepts] math and statistics.
(A) Compound interest concepts.
(B) Statistical concepts used in appraisal.
(x) Sales comparison approach.
(A) Research and selection of comparables.
(B) Elements of comparison.
(C) Adjustment process.
(D) Application of sales comparison approach.
(xi) Site value.
(A) Sales comparison.
(B) Land residual.
(C) Allocation.
(D) Extraction.
(E) Ground rent capitalization.
(F) Subdivision analysis.
(G) Plottage and assemblage.
(xii) Cost approach.
(A) Steps in cost approach.
(B) Application of the cost approach.
(xiii) Income approach.
(A) [Gross net multiplier analysis] Estimation of income and expenses.
(B) [Estimation of income and expenses] Operating statement ratios.
(C) [Operating expense ratios] Direct capitalization.
(D) [Direct capitalization] Cash flow estimates (before tax only).
(E) Measures of cash flow.
(F) Discounted cash flow analysis (DCF).
(xiv) Valuation of partial interests.
(A) Interests created by a lease.
(B) Lease provisions.
(C) Valuation considerations.
(D) Other partial interests.
* * * * * (3) Experience. In addition to meeting the education requirements, an applicant shall submit evidence to the Board of having completed [2 years] 3,000 hours of acceptable appraisal experience, including 1,500 hours in nonresidential work, obtained during no fewer than 30 months. [Effective December 26, 1995, 50%] Fifty percent of the experience obtained by an applicant shall be in the actual preparation of real estate appraisal reports which include a physical inspection of the interior and exterior of the subject property. [One year is defined in terms of hours within a calendar year. One thousand hours constitutes 1 year of appraisal experience. A minimum of 2 calendar years is required. An applicant, for 2 years experience credit, shall have accumulated a total of 2,000 hours of appraisal experience of which at least 50% (1,000 hours) is in nonresidential appraisal work. Although there is no minimum or maximum number of creditable experience hours which must be earned during any calendar year, an applicant shall be able to demonstrate having obtained 2,000 hours of appraisal experience within not less than 2 calendar years.] Hours may be treated as cumulative [in order] to achieve the necessary [2,000] 3,000 hours of appraisal experience. Cumulative is defined to mean that experience may be acquired over any time period in excess of [2 years] 30 months. There is no minimum number of hours which must be acquired in any 1 year. The following will serve as an example:
Year 1 [200] 1,000 Hours * * * * * Year 4 [400] 1,000 Hours Year 5 [500] 100 Hours ______ ______ Total [2,000] 3,000 Hours * * * * * (4) State certified general real estate appraiser. An applicant who has passed an examination and who is certified under this section will be deemed to have met the minimum criteria for the Certified General Real Property Appraiser Classification adopted by the Appraiser Qualifications Board of the Appraisal Foundation, and shall be qualified to perform residential and nonresidential real property appraisals in [connection with] Federally related and non-Federally-related transactions without regard to value.
[Pa.B. Doc. No. 99-1873. Filed for public inspection November 5, 1999, 9:00 a.m.]
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