Appraisal Board Complaints: You Can’t Fight City Hall…Or Can You?

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Appraisal Board Complaints: You Can’t Fight City Hall…Or Can You?
By Bob Keith, MNAA, IFA

You’re rushing to meet the next deadline when you stop by the mailbox before grabbing a quick bite to eat for lunch. There is the usual junk mail, a few bills, a birthday card from aunt Martha and a certified letter from…your state licensing board. Uh oh, they don’t normally send birthday cards, you think, especially not by certified mail. As panic sets in, your mind races to every possible scenario and sure enough, a complaint has been filed against you. Your first thought may be: “Now what?! I can’t fight City Hall!” But yes you can.

For 13 years, I was the guy sending those certified letters to appraisers. During that time I interacted with hundreds of appraisers who found themselves in the unenviable position of being on the receiving end. I am no longer a state appraiser regulator and I would like to offer a few suggestions in case you are ever notified by your state board that a complaint has been filed against you. The three most important things for you to know are (in order of importance):
1. Don’t panic.
2. Don’t procrastinate, and
3. Don’t wait to begin seeking resources to assist you.

Spike in Complaints
The rate of complaints against appraisers nationwide is much higher than you might think- some estimate it to be close to 50 percent. A well-written response to allegations is your first and best opportunity to have a complaint dismissed, but this can be time-consuming. Therefore, you need to take immediate action to increase your chances of a positive result. Just as non-appraisers often have misconceptions and misunderstandings about the appraisal process, likewise, most appraisers lack experience and understanding of the legal process that they are thrust into when facing a complaint.

Having a complaint filed against you can be embarrassing, but don’t let that interfere with effectively defending yourself. You must immediately start identifying resources that can assist you through this unfamiliar process. Let’s face it, appraisers are not necessarily “experts” in USPAP. Must they be? Well, no! All appraisers know that the Uniform Standards of Professional Appraisal Practice (USPAP) are the minimum requirements governing an appraiser’s ethical conduct and (appraisal) performance obligations. While portions of USPAP are clear and easy to understand, some would argue that the application of USPAP in disciplinary matters is neither uniform nor standard.

What many appraisers don’t realize is that not all state board appraiser investigators are trained appraisers and are not all are experts in USPAP. For example, a current job posting in a northwest state for an open “Appraiser Investigator 3” position states… “This position supports the Department of Licensing, Business and Professions Division Real Estate, Real Estate Appraisers, Appraisal Management Company, Timeshare Licensing, Home Inspector Licensing, Camping Resort Programs.” This means those who are investigating YOU for USPAP compliance could also be investigating alleged violators of time share, AMC, home inspection and camping resort requirements. In my tenure as president of the Association of Appraiser Regulatory Officials, I heard tales of investigators who worked on cases involving a bad embalming on Monday, a bad haircut on Tuesday and a bad appraisal on Wednesday!

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Worse than that, most appraiser licensing boards, who are charged with the responsibility of identifying USPAP violations, do not have a qualified USPAP expert serving on their board or on their staff. There are roughly 81,000 licensed and certified appraisers in the United States and only 500 +/- are AQB (Appraiser Qualifications Board) Certified USPAP Instructors. In other words, only slightly more than one-half of one percent of all credentialed appraisers are qualified as experts in the minimum Uniform Standards of Professional Appraisal Practice. As a result, those making decisions about your professional license and career may be no more of an expert in USPAP than you are.

As appraisers know, USPAP addresses an appraiser’s minimum ethical and (appraisal) performance standards. When you face a complaint, are your interests protected from the standpoint of whether you complied with the minimum standards? Or are you being judged by someone not qualified in USPAP and are they making compliance judgments based upon their own personal standards of “best practices,” regardless of the USPAP minimum standards of practice? This makes it that much more important to consult with your own USPAP expert.

Appraisers often feel intimidated when dealing with their state appraiser board during the complaint investigation and/or settlement process. It stands to reason because the process is intimidating, especially because the appraisal board appears to be holding all of the cards. Compared to a lone appraiser, they have a seemingly disproportionate amount of financial and personnel resources and ultimately, they have the power to decide what is (and what is not) a violation of USPAP. They also have the advantage of being able to hold the most serious violations over an appraiser’s head as leverage in order to encourage a “plea deal” in settlement negotiations (See Beware of Consent Decrees). Failure to accept a settlement offer can result in an administrative (disciplinary) hearing that can cost an appraiser many thousands of dollars for a legal defense.

There are resources available to help you “fight city hall” when faced with a complaint. First, you should immediately notify your E&O insurance carrier to allow them opportunity to protect your interests, which is precisely why you carry that insurance. Failure to provide them with timely notification of your complaint could negate benefits otherwise available to you under your policy.

Second, visit your state board’s website and read all of the statutes and administrative rules/regulations that pertain to investigation of complaints and the enforcement and sanction process. It is imperative that you understand the legal process in which you’ve been injected. Also, most state boards have policies and standard operating procedures that supplement their statutes and rules/regulations. You should obtain all of this information and study it as soon you are notified of a possible complaint.

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Find out whether any provisions exist to obtain an extension of time to satisfy any of the requirements placed on you for submitting a written response to the complaint or to produce copies of records demanded by the board in the complaint notice.

Third, you should carefully read the appraisal report that is the focus of the complaint and its corresponding workfile and then carefully read everything in the USPAP book from the Ethics Rule through Standard 2; include Standard 3 if the complaint against you involves an appraisal review assignment. This USPAP refresher will assist you in writing your written response to the complaint.

Finally, and perhaps most importantly, you should consult with another appraiser to review the allegations contained in the complaint filed against you and your appraisal report. Use the information from your consultant-reviewer to assist you in writing your response to the complaint. The state licensing board will conduct an investigation that will likely result in an investigative report; you should do no less. In light of comments made earlier in this article, I strongly recommend that your consultant-reviewer be an AQB Certified USPAP Instructor.

Having a complaint filed against you is a frightening experience but it does not automatically mean that you’re going to be disciplined by your state licensing board. Don’t panic, but don’t delay either. You can fight city hall but you must be willing to utilize resources that are readily available.

About the Author
Bob Keith, MNAA, IFA is an AQB Certified USPAP Instructor, Certified General Appraiser, experienced appraiser educator, former Executive Director of the Oregon Appraiser Certification and Licensure Board, past President of the Association of Appraiser Regulatory Officials, past chair of The Appraisal Foundation Advisory Council, and has served as a subject matter expert for two national appraiser exam providers. Mr. Keith currently serves on the Board of the National Association of Appraisers. OREP insureds/Affiliates and Working RE Subscribers enjoy a free half-hour consultation with Bob Keith, MAA, IFA and a discount on his consulting services should they be needed. For more information, see page XX or email to confirm your discount.

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Comments (3)

  1. I was one of those who thought fighting the state board was impossible. I must admit I am also among the ones who panic. But I can see the wealth of having worked with the board itself, and the suggestions that come out here are incredibly helpful. Firstly, the panic button needs to be kept away. That is what has always been my undoing. I had been warned about it, but I never paid any heed. I have never procrastinated or been late, but I have pressed the panic button plenty of times. This will help, now that it comes from somebody who has been on the other side.

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  2. In my state, the vast majority of complaints filed with the state board are determined to be unfounded. And they are almost always about a low value. While most of these cases are dismissed, this is a long (6-8 months) and expensive process and can keep an appraiser off potential client fee appraiser panels. My question is, what recourse does an appraiser have when falsely accused and reputation often permanently damaged? That’s what I thought. Is there a lawyer in the house?

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  3. You just made your 1st point, most boards if any NEVER have a USPAP expert but Appraisers are suppose to defend their work with ppl who don’t know squat about the process! The Investigators are MOST LIKELY NOT APPRAISERS also but your suppose to defend your work. Most Board Members are not Appraisers also but your suppose to defend your work! This is the only profession where ppl can RUIN your livelihood & not know anything about your job. Dr’s are not judged by Dentist nor are Attorneys judged by construction workers but nobody seems to have a problem with this except Appraisers that have been screwed by the Boards!

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