BILL ANALYSIS Ó SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Jerry Hill, Chair 2015 - 2016 Regular Bill No: AB 1381 Hearing Date: June 13, 2016 ----------------------------------------------------------------- |Author: |Weber | |----------+------------------------------------------------------| |Version: |June 1, 2016 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Mark Mendoza | |: | | ----------------------------------------------------------------- Subject: Real estate appraisers SUMMARY: Requires the Bureau of Real Estate Appraisers to provide information on the Internet regarding the continuing education courses taken by a licensee. Existing law: 1) Establishes the Real Estate Appraisers' Licensing and Certification Law (Act), administered by the Bureau of Real Estate Appraisers (BREA) within the Department of Consumer Affairs (DCA), which regulates the licensing of real estate appraisers. (Business and Professions Code (BPC) § 11300 et seq.) 2) Requires the BREA to provide on the Internet information regarding, among other things, the status of every license and registration issued by the BREA. (BPC § 11317.2(a)) 3) Requires the Director of the DCA to adopt regulations for licensure which shall meet, at a minimum, the requirements and standards established by the Appraisal Foundation and the federal financial institutions regulatory agencies acting pursuant to Section 1112 of the Financial Institutions Reform Recovery and Enforcement Act of 1989, Public Law 101-73 (FIRREA). (BPC § 11340(c)) AB 1381 (Weber) Page 2 of ? 4) Requires the director to adopt regulations governing the process and procedures for renewal of a license, which shall include, but not be limited to, continuing education requirements, which shall be reported on the basis of four-year continuing education cycles. (BPC § 11360) This bill: 1) Requires the Bureau of Real Estate Appraisers to provide, on the Internet, information regarding the continuing education courses taken by a licensee. 2) Removes obsolete references to the Office of Real Estate Appraisers and inserts the word "Bureau". FISCAL EFFECT: Unknown for the current version of this bill. The bill is keyed "fiscal" by Legislative Counsel but was changed substantially since being heard by the Assembly Committee on Appropriations in January. COMMENTS: 1. Purpose. The Author is the sponsor of the bill. According to the Author, "In San Diego, the Broadway Heights Community Council raised concerns about recent appraisals in their neighborhood. Many residents questioned whether this appraiser was knowledgeable in renewable energy sources when appraising residential homes. When searching online for additional information about real estate appraisers, very little information is publically available. To attain a license in real estate appraising, every applicant is required to meet certain educational requirements for the type of license he or she is seeking. Once an applicant becomes licensed, at least 56 hours of continuing education is required during each four-year continuing education cycle. The continuing education requirement includes mandatory courses. For the remainder of the hours required, an appraiser is free to choose from a wide range of courses. This allows an appraiser to develop a specialization for a certain type of appraising, such as renewable energy." Broadway Heights Community Council and the Author ultimately AB 1381 (Weber) Page 3 of ? underscore, "AB 1381 would provide the public with additional information on the continuing education courses taken when an appraiser seeks to renew his or her license. By listing an appraiser's continuing education courses, the public will have a better understanding of who appraises their property. In addition, businesses would be better able to evaluate candidates and select appraisers with certain specializations." 2. Background on the BREA. In 1989, Title XI of the federal Financial Institutions Reform, Recovery and Enforcement Act was adopted by congress mandating states to license and certify real estate appraisers who appraise property for federally related transactions. The federal law was enacted as a result of the savings and loan crisis. In response to the federal mandate, the California Legislature enacted the Real Estate Appraisers Licensing and Certification Law in 1990 ( AB 527, Chapter 491, Statutes of 1990). The OREA was established within the Business, Transportation and Housing Agency, and charged with developing and implementing a real estate appraiser licensing and certification program compliant with the federal mandate. In 2012, Governor Brown submitted a reorganization plan to the Legislature. As a result, on July 1, 2013, OREA became the BREA within DCA. BREA, which is entirely funded by licensing fees, is a single program comprised of two core components, licensing and enforcement. The Licensing Division implements the minimum requirements for licensure, according to criteria established by the federal government and California law, to ensure that only qualified persons are licensed to conduct appraisals in federally related real estate transactions. Applicants must meet minimum education and experience requirements and successfully complete a nationally approved examination. The Licensing Division also registers Appraisal Management Companies (AMC) in compliance with California law. The Enforcement Division investigates the background of applicants, licensees, and AMC registrants to ensure they meet the standards for licensure. The Enforcement Division AB 1381 (Weber) Page 4 of ? also investigates complaints of violations of California law and national appraisal standards filed against licensed appraisers and registered AMCs. BREA is responsible for the accreditation of educational courses and providers for real estate appraisers. BREA has reviewed and approved over 1,800 pre-licensing and continuing education courses. In addition to the real estate appraisal related 3 courses offered by California's community colleges and universities, over 70 proprietary schools provide appraisal education. 3. Continuing Education for Licensees. The term of a California real estate appraiser's license is two years. All licensed appraisers must meet minimum continuing education requirements before renewing their license. A total of 56 hours of continuing education is required during the four-year continuing education cycle including the following mandatory courses for all license categories. 7-hour National Uniform Standards of Professional Appraisal Practice (USPAP) course-required every two years. 4-hour Bureau approved course entitled "Federal and State Laws and Regulations"- required every four years. This 4-hour course is an addition since the last sunset review. (California Code of Regulations, Title 10, § 3543) In practical terms, this requires a renewal of the 7-hour USPAP course every two years on its own, and a full continuing education (56 hours) renewal every four years. Generally the requirement is a full CE 56 hour renewal every other two year cycle, with a reduced 7 hour CE renewal cycle in between. Continuing education courses or seminars must cover appraisal related topics including subjects such as land use planning, appraisal computer applications, cost estimating, and green building appraisals. 1. BREA Continuing Education Course Approval. Continuing AB 1381 (Weber) Page 5 of ? education courses, both classroom and online, must meet the requirements of the Appraisal Qualifications Board (AQB). The AQB is within the Appraisal Foundation, a non-profit organization that works to advance professionalism for appraisers through the promulgation of standards, appraiser qualifications, and guidance regarding appraisal methods and techniques. The AQB establishes the minimum education and experience requirements as well as the examination requirements for appraisers. The requirements for BREA approval of continuing education courses are: Courses must be a minimum of two classroom hours long (classroom hour means 50 minutes within a one-hour period actually spent in presenting the course content). Participants must have been present for at least 90% of the course hours to obtain credit for the course. Continuing education courses that BREA has already approved allow for faster processing of renewal applications. Courses offered by providers that are private vocational schools or professional organizations are assigned a BREA course approval number. In addition, some college and university courses may be acceptable if the courses cover one of the topics listed below. The AQB allows, and BREA may grant, continuing education credit for courses that cover topics including but not limited to: a) Ad Valorem Taxation b) Arbitration-Dispute Resolution c) Practice of Real Estate Appraisal d) Development Cost Estimating e) Ethics and Standards of Practice f) Land use Planning-Zoning g) Property Management-Leasing-Timesharing h) Property Development-Partial Interests i) Real estate law-Easements-Legal Interests j) Real Estate Litigation-Damages-Condemnation aa) Real Estate Financing and Investment bb) Real Estate Appraisal Computer Applications AB 1381 (Weber) Page 6 of ? cc) Real Estate Securities and Syndication dd) Real Property Appraisals-Personal Property-Business Valuation ee) Seller Concession Impact on Value ff) Energy Efficient-Green Building Appraisal 1. Policy Issue : Do continuing education courses demonstrate expertise in a specific area of appraising? The Author's office underscores that, "By listing an appraiser's continuing education courses, the public will have a better understanding of who appraises their property. In addition, businesses would be better able to evaluate candidates and select appraisers with certain specializations." Representing a continuing education course as equitable with a "specialty" may be questionable. The Author may wish to clarify to the committee how posting these courses outweigh the fiscal costs of this program (posting courses for 11,278 licensees) and the aforementioned issue. SUPPORT AND OPPOSITION: Support: Broadway Heights Community Council Opposition: None on file as of June 7, 2016. -- END --