Behind Curtain at State Boards

Like most real estate appraisal boards, Florida’s Board publishes an annual summary of the cases it finalizes against its appraisers. Florida’s Real Estate Appraisal Board (FREAB) does not intend these summaries to be lengthy analyses of “what went wrong” or something law students might study for insight. They are merely summaries of the charges the state brings against appraisers, why they bring them and the outcomes, as the state’s sunshine law requires.

The website is public record, listing names, dates, certification numbers and so forth, as is common in most states (find link below). We have included summaries here with appraiser names redacted. What is important is not the respondents’ names but the charges laid against them, as well as the charges that are not. This issue is important to all appraisers no matter where they live.

Guilty until Proven Innocent
It is interesting to note that to violate a state’s appraiser certification law is not a crime, per se. It is not illegal, either, which means it is not “breaking the law.” It is unlawful, however, which means to do something in a manner the law does not authorize. Since violation of a state’s appraiser certification law is not a crime, the protection of our Federal Constitution- “innocent until proven guilty,” does not apply. When the state sends a letter it informs you that you are guilty of a violation of USPAP and/or state law. There are no hearings, no trial, no judge, no jury. You are guilty. You can defend yourself and the state may even drop some of the charges. However, you are guilty of something for no other reason than the state says you are.

Failure to Exercise Reasonable Diligence
In the state of Florida, an omnibus charge leveled no matter what an appraiser does or fails to do, is that he or she “failed to exercise reasonable diligence” in performing that appraisal. Most states have a similar omnibus charge. It is also interesting to note the state of Florida does not, in its appraisal statute (FS 475, part 2) nor in its administrative code (FAC 61J1), define, explain, or elaborate on what the exercise of reasonable diligence means, how the state applies it, when the state may choose to apply it or what constitutes such a failure. Despite this lack of elaboration, the state of Florida chooses to level this charge frequently. Inspection of the 2010 Disciplinary Activity Report shows that of the 144 disciplinary actions listed, 96 (67 percent) specifically contain this charge. It is equally interesting to note that any of an appraiser’s omissions or commissions can result in this tacked on charge.

Consider Case #2008060859 [1] (names redacted). Here, the state charges the appraiser with violation of the Departure Rule, as well as with “failure to exercise reasonable diligence,” whereby one charge becomes two. In Case #2009017685, the respondent’s workfile failed to contain “[the] documentation to support the adjustments and conclusions in the Sales Comparison and Cost Approach sections of the report,” which is by definition also a “failure to exercise reasonable diligence.” Again, one violation becomes two by an action no more complex that the stroke of a pen. In Case #2008047867, “failure to exercise reasonable diligence” includes a misstatement of the subject’s zoning (as if merely misstating the zoning was not enough, in and of itself, to justify a charge).

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