Texas

Reviewer Requirements

  • Reviewers must be certified to at least the same level as the original appraiser

 

  • TX Occupations Code Title 7 Chapter 1104.153:

Sec. 1104.153. APPRAISAL REVIEW. A person who performs an appraisal review for an

appraisal management company must be licensed or certified under Chapter 1103 with at

least the same certification for the property type as the appraiser who completed the report being

reviewed.

  • Definition of Review

 

  • TX Occupations Code Title 7 Chapter 1104.003-(b)-(4):

(4) “Appraisal review” means 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 does 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.

 

Scope of Law

  • Regulations do not apply to commercial real estate and some residential real estate

 

  • TALCB Chapter 159.4-(a)-(1)-(A):

(a) This chapter does not apply to appraisal management services provided:

(1) for the appraisal of:

(A) commercial property; or

(B) residential properties of more than four units; or

Reviewing Provisions

  • Must conduct quality reviews periodically to assure compliance with USPAP

 

  • TX Occupations Code Title 7 Chapter 1104.155:

Sec. 1104.155. PROFESSIONAL STANDARDS.

An appraisal management company registered under this chapter shall on a periodic basis perform an appraisal review of the work of appraisers performing appraisal services for the company to ensure that the services comply with:

(1) the edition of the Uniform Standards of

Professional Appraisal Practice in effect at the

time of the appraisal; or

(2) other standards prescribed by board rule.

  • Review samples must include one of the first five appraisal from each appraiser and a total of 5% of all appraisals per year

 

  • TALCB Chapter 159.155-(a-f)

§159.155 Periodic Review of Appraisals. [adopted March 5, 2012]

(a) A registrant shall review the work of appraisers performing appraisal services by performing a review in accordance with Standard 3 of the Uniform Standards of Professional Appraisal Practice (USPAP) of:

(1) one of the first five appraisals performed for the registrant by each appraiser, prior to making a sixth assignment; and

(2) a total of five percent, randomly selected, of the appraisals performed for the AMC for each twelve-month period following the date of the AMC’s registration.

(b) Appraisals performed pursuant to subsection (a)(1) of this section shall be counted toward the calculation of five percent for the purposes of subsection (a)(2) of this section.

(c) A review pursuant to subsection (a)(1) of this section is not required if the first five appraisals by an appraiser were completed before the AMC was required by Chapter 1104 of the Texas Occupations Code, to be registered with the Board.

(d) In addition to satisfying the requirements of §1104.153 of the Act, the review appraiser must have access to appropriate data sources for the appraisal being reviewed.

(e) A certified residential appraiser may perform a review of a residential real estate appraisal completed by a certified general appraiser if the review appraiser is otherwise permitted by the Texas Appraiser Licensing and Certification Act to perform the assignment.

(f) An appraiser conducting a review under §1104.155 of the Act and this rule must ensure compliance with the USPAP and with §1104.154 of the Act.

  • Very specific criteria for conduct of reviews

 

  • TALCB Chpater 159.155-(g):

(g) In order to satisfy the requirements of §1104.155 of the Act, this rule and USPAP, a registrant performing a review must adhere to the following minimum scope of work:

(1) research and consult the appropriate data sources for the appraisal being reviewed to, at a minimum, validate the significant characteristics of the comparables and the essential elements of the transactions including:

(A) the multiple listing service(s) or commercial databases and other recognized methods, techniques and data sources for the geographic area in which the appraisal under review was performed, if the appraisal under review included a sales comparison approach;

(B) published cost data sources and other recognized methods, techniques and data sources for the geographic area in which the appraisal under review was performed, if the appraisal under review included a cost approach;

(C) the comparable rental data, income and expense data, and other recognized methods, techniques and data sources for the geographic area in which the appraisal under review was performed, if the appraisal under review included an income approach; and

(D) the sales or listing history of the property which is the subject of the appraisal under review, if that property was sold within the three years prior to the effective date of the appraisal under review or listed for sale as of the effective date of the appraisal under review, the scope of review must include research and consultation of that;

(2) state the reviewer’s opinions and conclusions about the work under review for each of the approaches to value utilized in the appraisal under review, including the reason for any disagreements;

(3) identify if the appraisal under review omitted an approach to value, a particular piece of information, or an analysis of either that was necessary for credible assignment results, identify what was omitted and explain why it was necessary for credible assignment results;

(4) identify the client, any intended users and the effective date of the appraisal review;

(5) state that the appraisal review’s intended use and purpose is to satisfy the requirements of §1104.155 of the Act and this rule, including ensuring that the appraisal under review complies with the edition of USPAP in effect at the time of the appraisal;

(6) state that the scope of work for the appraisal review is commensurate with the requirements of §1104.155 of the Act, this rule and USPAP in effect at the time of the appraisal review and that the scope of work ensures the development of credible assignment results and that no assignment conditions impose limitations which make the results of the review not credible;

(7) identify the appraisal under review, including:

(A) any ownership interest of the appraiser or reviewer in the property that is the subject of the appraisal under review;

(B) the report date and effective date of the appraisal under review;

(C) the effective date of the opinions or conclusions in the appraisal under review;

(D) the physical, legal, and economic characteristics of the property, properties, property type(s), or market area in the appraisal under review; and

(E) the name of all appraisers who signed or provided significant professional assistance in the appraisal under review;

(8) state clearly and conspicuously, all extraordinary assumptions and hypothetical conditions and state that their use might have affected the review; and

(9) contain a certification which complies with USPAP Standards Rule 3-6.

Appraiser Requirements

Appraiser Competency

  • Must verify competency of appraisers prior to making assignments

 

  • TX Occupations Code Title 7 Chapter 1104.154:

Sec. 1104.154. COMPETENCY OF APPRAISERS.

Before making an assignment to an appraiser, an appraisal management company must 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.

 

  • Must not require appraiser to conduct an appraisal for an assignment for which he/she does not feel competent

 

  • TX Occupations Code Title 7 Chapter 1104.203-(a)-(18)-(A):

Sec. 1104.203. PROHIBITED PRACTICES.

(a) An appraisal management company or an employee, director, officer, or agent of an appraisal management company may not:

(18) require an appraiser to:

(A) prepare an appraisal report if the appraiser, in the appraiser’s own professional judgment, believes the appraiser does not have the necessary expertise for the specific geographic area and the appraiser has notified the company of this belief;

 

  • Appraiser must certify that they are competent prior to accepting assignment

 

  • TACLB Chapter 159.154:

 

§159.154 Competency of Appraisers. [adopted March 5, 2012]

(a) In addition to verifying an appraiser’s licensure or certification as required by §1104.152 of the Act, an AMC must, at the time of or before making an assignment to an appraiser, obtain a written certification from the appraiser that the appraiser:

(1) is competent in the property type of the assignment;

(2) is competent in the geographical area of the assignment;

(3) has access to appropriate data sources for the assignment;

(4) will immediately notify the AMC if the appraiser later determines that he or she is not qualified under subsection (a)(1), (a)(2), or (a)(3) to complete the assignment; and

(5) is aware that misrepresentation of competency is subject to the mandatory reporting requirement in §1104.160 of the Act.

(b) An AMC that has reviewed an appraiser’s work shall consider the findings of the review in verifying competency for the purpose of assigning future work.

(c) For the purposes of verifying that an appraiser has not had a license or certification as an appraiser denied in another jurisdiction, an AMC may rely on information provided by the appraiser.

 

Record Keeping

  • Record keeping requirements for five years
  • TX Occupations Code Title 7 Chapter 1104.156-(a,c):

Sec. 1104.156. BUSINESS RECORDS.

(a)An appraisal management company registered under this chapter or that has applied for

registration under this chapter shall retain for at least five years all business records relating to

each service request that the company receives and the appraiser who performs the appraisal for

the company.

(c) A written record of all substantive communications between an appraisal management company registered under this chapter and an appraiser relating to inclusion on an appraisal panel or to an appraisal assignment must be maintained as provided under Subsection (a).

 

  • TACLB CHAPTER 159.156-(a):

(a) For the purposes of the requirement in §1104.156(c) of the Act regarding retention of written records of substantive communications between an AMC and an appraiser, a communication is substantive if it relates to the appraiser’s qualifications or to the scope of work of an assignment.

 

  • TACLB Chapter 159.103-(d):

 

(d) Registrants shall retain documents establishing ownership for a period of five years from the date the application was filed.

 

  • TACLB Chapter 159.156-(c):

 

(c) A business entity registered as an AMC must maintain documentation showing that it has complied with the requirements contained in its governing documents for changing officers or managers. The business entity must promptly provide to TALCB upon request all business formation, ownership and representative authorization records and changes thereto required to be kept by the business entity by law.

 

  • Must retain records regarding compensation policy

 

  • TACLB Chapter 159.157-(b):

 

(b) A registrant shall reassess its compensation policy at least annually and shall retain, for a period of five years, records of all compensation information that formed the basis for the policy.

 

Licensing Disclosure

  • Must disclose registration number on relevant documents

 

  • TX Occupations Code Title 7 Chapter 1104.159:

Sec. 1104.159. DISCLOSURE OF REGISTRATION NUMBER.

An appraisal management company registered under this chapter shall disclose the company’s registration number on all documents used to procure appraisals in this state.

 

  • TACLB Chapter 159.159:

 

§159.159 Expiration Disclosure of Registration Number. [adopted November 3, 2011] For the purposes of the Act, “documents used to procure appraisals” include all written documents and electronic communications, including e-mail, used for that purpose, but does not include general advertisements.

 

Communications With Appraisers

Communication With Board

  • Mandatory reporting clause

 

  • TX Occupations Code Title 7 Chapter 1104.160:

Sec. 1104.160. MANDATORY REPORTING.

An appraisal management company that has a reasonable basis to believe an appraiser is failing

to comply with the Uniform Standards of Professional Appraisal Practice in a manner that

materially affects a value conclusion, violating applicable laws, or otherwise engaging in

unethical or unprofessional conduct shall refer the matter to the board in the manner provided by

Section 1104.204.

  • TX Occupations Code Title 7 Chapter 1104.204:

Sec. 1104.204. COMPLAINT.

(a) Any person, including a member of the board, may file with the board a written complaint on a form prescribed by the board.

(b) The board, on its own motion, may file a complaint against an appraisal management company registered under this chapter.

 

Billing/ Payment

  • Must make payment to appraisers within 60 days of transmission of completed report

 

  • TX Occupations Code Title 7 Chapter 1104.157-(a)-(1):

Sec. 1104.157. COMPENSATION OF APPRAISERS.

(a) An appraisal management company shall:

(1) except in cases of breach of contract or substandard performance of services, pay an appraiser for the completion of an appraisal or valuation assignment not later than the 60th day after the date the appraiser provides the completed appraisal or valuation assignment to the company or its assignee; and

 

  • Rates paid to appraisers must be “reasonable and customary”

 

  • TX Occupations Code Title 7 Chapter 1104.157-(a)-(2):

 

Sec. 1104.157. COMPENSATION OF APPRAISERS.

(a) An appraisal management company shall:

(2) compensate appraisers at a rate that is reasonable and customary for appraisals being performed in the market area of the property being appraised consistent with the presumptions under federal law.

  • TALCB Chapter 159.157-(a):

 

(a) A registrant shall compensate the appraisers on the panel based on a compensation policy, established by the registrant, that provides for customary and reasonable fees by taking into consideration the requirements of and any presumptions available under federal law.

 

  • Fees paid to appraiser and AMC fees must be stated separately to clients

 

  • TX Occupations Code Title 7 Chapter 1104.158-(a):

 

Sec. 1104.158. STATEMENT OF FEES.

(a) In reporting to a client, an appraisal management company shall separately state the fees:

(1) paid to an appraiser for the completion of an appraisal; and

(2) charged by the company for appraisal management services.

 

Employee Training

Removal of Appraisers from Panel

  • Specific guidelines for removal of appraiser from panel

 

  • TX Occupations Code Title 7 Chapter 1104.161-(a):

Sec. 1104.161. REMOVAL OF APPRAISER

FROM APPRAISAL PANEL.

(a) Other than during the first 30 days after the date an appraiser is first added to the appraisal panel of an appraisal management company, a company may not remove an appraiser from its panel, or otherwise refuse to assign requests for appraisal services to an appraiser without:

(1) notifying the appraiser in writing of the reasons for removal from the company’s panel;

(2) if the appraiser is being removed from the panel for illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice, or a violation of this chapter, notifying

the appraiser of the nature of the alleged conduct or violation; and

(3) providing an opportunity for the appraiser to respond in writing to the notification

  • TALCB Chapter 159.161-(c):

(c) Either the appraiser or the AMC may terminate an appraiser’s membership on a panel by:

(1) submitting a termination notice electronically, if available, through the Texas Appraiser Licensing and Certification Board’s online license management system, including payment of any required fee; or

(2) submitting a notice on a form approved by the Board for this purpose and the appropriate fee(s).

Misc

  • Controlling person must be certified appraiser OR completed sufficient educational courses
    • TX Occupations Code Title 7 Chapter 1104.104-(b):

(b) The controlling person designated under

Subsection (a):

(1) must:

(A) be certified as an appraiser in at least one state at all times during the designation; or

(B) have completed:

(i) the 15-hour national Uniform Standards of Professional Appraisal Practice

course; and (ii) the seven-hour national Uniform Standards of Professional Appraisal Practice

update course not more than two years before the renewal of the appraisal management company’s registration;

 

  • Registration is valid for two years

 

  • TX Occupations Code Title 7 Chapter 1104.107:

 

Sec. 1104.107. EXPIRATION OF REGISTRATION.

Unless renewed, a registration issued under this chapter expires on the second anniversary of the date the registration is issued.

 

  • Must create dispute resolution process

 

  • TX Occupations Code Title 7 Chapter 1104.162:

Sec. 1104.162. DISPUTE RESOLUTION.

An appraisal management company shall make a dispute resolution process available to review a

written request by an appraiser who:

(1) is dismissed from the company’s appraisal panel for a reason stated in Section 1104.161(a)(2)

(2) is not paid as required by Section 1104.157; or

(3) alleges a violation by the company of one or more prohibitions in Section 1104.203.

 

  • TALCB Chapter 159.162:

 

(a) A registrant’s dispute resolution process for appraisers shall provide for:

(1) a written response to the request for review;

(2) a written statement of the outcome of the dispute resolution process; and

(3) copies of all relevant documentation to the appraiser upon written request.

(b) The dispute resolution process shall provide for either: (1) review by an external third party; or

(2) internal review by a person whose position within the company is above the level of the person responsible for the decision or action under review.

 

  • Must accept a report prepared by multiple appraisers

 

  • TX Occupations Code Title 7 Chapter 1104.203-(a)-(17):

 

Sec. 1104.203. PROHIBITED PRACTICES.

(a) An appraisal management company or an employee, director, officer, or agent of an appraisal management company may not:

(17) refuse to accept an appraisal report prepared by more than one appraiser if an appraiser provides substantial assistance to another appraiser in the preparation of the report, unless the appraisal assignment names an individual appraiser or the statement of work requires an unassisted report; or

 

  • Deadlines to complete appraisal reports must be reasonable

 

  • TX Occupations Code Title 7 Chapter 1104.203-(a)-(18)-(B):

 

Sec. 1104.203. PROHIBITED PRACTICES.

(a) An appraisal management company or an employee, director, officer, or agent of an appraisal management company may not:

(18) require an appraiser to:

(B) prepare an appraisal report under a schedule that the appraiser, in the appraiser’s own professional judgment, believes does not afford the appraiser the ability to meet all the relevant legal and professional obligations if the appraiser has notified the company of this belief;

 

  • Must notify board about addition of appraisers to panel

 

  • TALCB Chapter 159.161-(a),(b):

 

(a) An appraisal management company may not make an assignment to an appraiser who is not a member of the AMC’s panel at the time of the assignment unless the appraiser is employed by the AMC on an employer-employee basis.

(b) To add an appraiser to a panel, the AMC shall:

(1) initiate the appropriate two-party transaction, if available, through the Texas Appraiser Licensing and Certification Board’s online license management system, including payment of any required fee(s); or

(2) submit a notice on a form approved by the Board for this purpose, including the signatures of the appraiser and the AMC’s primary contact, and the appropriate fee(s).