1999 Legislation
Print Friendly

SENATE BILL NO. 1059 – Real estate appraisals, unlawful


View Daily Data Tracking History

View Bill Text

View Statement of Purpose / Fiscal Impact

Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Daily Data Tracking History

S1059.......................................by COMMERCE AND HUMAN RESOURCES
REAL ESTATE APPRAISALS - Amends existing law to provide for the unlawful
practice of real estate appraisal; to add definitions; to add exceptions to
the application of the chapter for a broker's price opinion, a property
owner's personal opinion of value, a lender's opinion of collateral value
or an attorney's or accountant's rendering of professional advice; and to
provide for the suspension or revocation of a real estate broker's or
salesman's license upon entry of a judgment for fraud in any real estate
related transaction.

01/27    Senate intro - 1st rdg - to printing
01/28    Rpt prt - to Com/HuRes
02/10    Rpt out - rec d/p - to 2nd rdg
02/11    2nd rdg - to 3rd rdg
02/15    3rd rdg - PASSED - 25-1-9
      AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
      Crow, Darrington, Davis, Deide, Dunklin, Frasure, Geddes, Keough,
      Lee, McLaughlin, Richardson, Risch, Sandy, Schroeder, Sorensen,
      Stegner, Thorne, Twiggs, Wheeler
      Absent and excused--Danielson, Hawkins, Ingram, Ipsen, King, Noh,
      Parry, Riggs, Stennett
    Floor Sponsor - Andreason
    Title apvd - to House
02/16    House intro - 1st rdg - to Comm/Hu Res
02/26    Rpt out - rec d/p - to 2nd rdg
03/01    2nd rdg - to 3rd rdg
03/02    3rd rdg - PASSED - 63-0-7
      AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Bruneel,
      Campbell, Chase, Clark, Crow, Cuddy, Deal, Denney, Ellsworth,
      Field(13), Field(20), Gagner, Geddes, Gould, Hadley, Hammond,
      Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Jones, Judd,
      Kempton, Kendell, Kunz, Lake, Limbaugh, Linford, McKague, Meyer,
      Montgomery, Mortensen, Moyle, Pischner, Pomeroy, Reynolds, Ridinger,
      Ringo, Robison, Sali, Schaefer, Sellman, Smith, Smylie, Stevenson,
      Stoicheff, Stone, Taylor, Tilman, Tippets, Trail, Watson, Wheeler,
      Williams, Wood, Zimmermann
      NAYS -- None
      Absent and excused -- Boe, Callister, Kellogg, Loertscher, Mader,
      Marley, Mr Speaker
    Floor Sponsor - Hadley
    Title apvd - to Senate
03/03    To enrol
03/04    Rpt enrol - Pres signed - Sp signed
03/05    To Governor
03/11    Governor signed
         Session Law Chapter 54
         Effective: 07/01/99

Bill Text


 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fifth Legislature                 First Regular Session - 1999

                                      IN THE SENATE

                                   SENATE BILL NO. 1059


 1                                        AN ACT

12    Be It Enacted by the Legislature of the State of Idaho:

13        SECTION  1.  That  Section 54-4103, Idaho Code, be, and the same is hereby
14    amended to read as follows:

16    FUL  PRACTICE  OF  APPRAISAL  .    From  and  after July 1, 1992, i
17     I t shall be unlawful for any person in this state to assume
18    or use the title "state licensed" or "state certified real  estate  appraiser"
19    or  any  title, designation or abbreviation likely to create the impression of
20    licensure or  certification  by  the  state  of  Idaho  for  any  real  estate
21    appraisal,  unless the person has first been licensed or certified by the real
22    estate appraiser board under the provisions of this  chapter.  The  board  may
23    adopt  for the exclusive use of persons licensed or certified under the provi-
24    sions of this chapter, a seal, symbol or other mark identifying the user as  a
25    state licensed or certified real estate appraiser.
26         From and after July 1, 1992, i  I t shall be unlaw-
27    ful for any  real estate appraiser   person to appraise, prac-
28    tice  appraisal,  assume to act as, or hold themselves out to the public as an
29    appraiser, or carry on the calling of an appraiser within the state, or 
30    to perform an appraisal of real estate located in this state unless the person
31    has first been licensed or certified by the board under the provisions of this
32    chapter.

33        SECTION 2.  That Section 54-4104, Idaho Code, be, and the same  is  hereby
34    amended to read as follows:

35        54-4104.  DEFINITIONS. As used in this chapter:
36        (1)  "Appraisal"  or "real estate appraisal" means an analysis, opinion or
37    conclusion relating to the value, nature, quality,  or  utility  of  specified
38    interests in, or aspects of, identified real estate.
39        (2)  "Appraisal  assignment" means an engagement for which an appraiser is
40    employed or retained to act, or would be perceived by  third  parties  or  the
41    public  as  acting,  as  a  disinterested third party in rendering an unbiased


 1    opinion or conclusion relating to the value, nature,  quality  or  utility  of
 2    specified interests in, or aspects of, identified real estate.
 3        (3)  "Appraisal foundation" or "foundation" means the appraisal foundation
 4    established  on  November  20, 1987, as a not-for-profit corporation under the
 5    laws of Illinois.
 6        (4)  "Board" means the real estate appraiser board.
 7        (5)   "Broker's price opinion" means a written price opinion  of  the
 8    estimated price for identified real property that is prepared by a real estate
 9    broker  or  associate  broker licensed under chapter 20, title 54, Idaho Code,
10    pursuant to the requirements and content provisions  for  the  broker's  price
11    opinions contained in this chapter.
12        (6)  "Federally  related transaction" means any real estate related finan-
13    cial transaction that a federally regulated institution, regulatory agency, or
14    the resolution trust corporation engages in, funds, contracts  for,  or  regu-
15    lates. 
16        ( 5  7 )  "License" or "certificate" means that doc-
17    ument  issued  by  the  real estate appraiser board certifying that the person
18    named thereon has satisfied the requirements for licensure or certification as
19    a state licensed or certified real estate appraiser and bearing a  license  or
20    certificate number assigned by the board.
21        ( 6  8 )  "Noncomplex appraisal" is one in which the
22    subject  property  has  an  active market of essentially identical properties,
23    there is adequate market data available, adjustments do not exceed the typical
24    range found in the market for essentially identical  properties,  and  in  the
25    instance  of  residential property, the contract sales price would fall within
26    the market norm for homes or lots within the same area.
27        ( 7  9 )  "Real  estate  appraiser"  or  "appraiser"
28    means  a  person who for a fee or other valuable consideration or the expecta-
29    tion thereof, develops and communicates real estate  appraisals  or  otherwise
30    gives an opinion of the value of real estate or any interest therein.
31          (10) "Real estate related financial transaction" means any transac-
32    tion involving:
33        (a)  The sale, lease, purchase, investment in or exchange  of  real  prop-
34        erty, including interest in property or the financing thereof;
35        (b)  The  financing  or  refinancing  of real property, or any interest in
36        real property;
37        (c)  The use of real property or an interest in real property as  security
38        for a loan or investment, including a mortgage backed security. 
39        ( 8  11 ) "Real property" or "real estate" means and
40    includes  leaseholds  as well as any other interest or estate in land, whether
41    corporeal, incorporeal, freehold or nonfreehold and whether situated  in  this
42    state or elsewhere.
43        (  9    12  ) "State  certified  general real estate
44    appraiser" means a person who is certified to appraise all types of real prop-
45    erty.
46        (1 0  3 ) "State certified residential  real  estate
47    appraiser"  means  a  person who holds a current, valid certificate as a state
48    certified residential appraiser issued under the provisions  of  this  chapter
49    whose  practice  is limited to appraisal of residential properties of four (4)
50    or less units without regard to transaction value or complexity.
51        (1 1  4 ) "State licensed  residential  real  estate
52    appraiser"  means  a person who is licensed to appraise residential real prop-
53    erty consisting of one (1) to four (4) noncomplex residential units  having  a
54    transaction  value  less than one million dollars ($1,000,000) and complex one
55    (1) to four (4) residential units having a transaction  value  less  than  two


 1    hundred fifty thousand dollars ($250,000).

 2        SECTION  3.  That  Section 54-4105, Idaho Code, be, and the same is hereby
 3    amended to read as follows:

 4        54-4105.  EXCEPTIONS. (1)  The provisions  of  this  chapter  do  not
 5    apply to any person who does not hold himself out as, or offer to perform ser-
 6    vices as, a real estate appraiser.
 7        (2)    The  provisions  of this chapter do not restrict the right to
 8    use the term "appraiser," provided that such term is not used in a manner that
 9    creates the impression of certification by the state of Idaho to perform  real
10    estate  appraisals  other  than ad valorem tax appraisals. However, nothing in
11    this chapter shall entitle a state licensed or  state  certified  real  estate
12    appraiser  to  appraise  real estate for ad valorem tax purposes unless he has
13    first been certified by the Idaho state tax  commission  pursuant  to  section
14    63-105A(17), Idaho Code.
15        (  3   2 )  The provisions of this chapter shall not
16    apply to a licensed real estate broker, associate broker or  salesperson  who,
17    in  the  ordinary course of his business gives an opinion of the price of real
18    estate for the purpose of a prospective listing or sale,  provided  that  such
19    person  does not represent himself as being a state licensed or certified real
20    estate appraiser.
21         (3)  The provisions of this chapter shall not prohibit a real estate
22    broker or associate broker licensed under chapter 20, title  54,  Idaho  Code,
23    whose  license is active and in good standing, from rendering a broker's price
24    opinion, for which the broker may charge a fee, provided  the  broker's  price
25    opinion complies with the following requirements:
26        (a)  The  broker's  price opinion shall be in writing and contain the fol-
27        lowing:
28             (i)    A statement of the intended purpose of the price opinion;
29             (ii)   A brief description  of  the  subject  property  and  property
30             interest to be priced;
31             (iii)  The  basis  of  reasoning  used to reach the conclusion of the
32             price, including the applicable  market  data  and/or  capitalization
33             computation;
34             (iv)   Any assumptions or limiting conditions;
35             (v)    A  disclosure  of any existing or contemplated interest of the
36             broker(s) issuing the opinion;
37             (vi)   The name and signature of  the  broker(s)  issuing  the  price
38             opinion and the date of its issuance;
39             (vii)  A  disclaimer  that,  unless  the broker is licensed under the
40             Idaho real estate appraisers act, chapter 41, title 54,  Idaho  Code,
41             the  report  is not intended to meet the uniform standards of profes-
42             sional appraisal practice.
43             (viii) A disclaimer that the broker's price opinion is  not  intended
44             to  be  an appraisal of the market value of the property, and that if
45             an appraisal is desired, the services  of  a  licensed  or  certified
46             appraiser should be obtained.
47        The broker's price opinion permitted under this chapter may not be used as
48        an  appraisal, or in lieu of an appraisal, in a federally related transac-
49        tion. 
50        (4)  Any person who is not licensed or certified under the  provisions  of
51    this chapter may assist a state licensed or certified real estate appraiser in
52    the  performance  of an appraisal, provided that he is actively and personally
53    supervised by the state licensed or certified appraiser and  provided  further


 1    that  any  appraisal  report  rendered  in  connection  with  the appraisal is
 2    reviewed and signed by the state licensed or certified real estate appraiser.
 3        (5)  The provisions of this chapter requiring mandatory licensure or  cer-
 4    tification  shall not apply to employees or agents of the Idaho transportation
 5    department when appraising transportation department property with a fair mar-
 6    ket value of ten thousand dollars ($10,000) or less.
 7         (6)  This chapter shall not prohibit a property owner from  express-
 8    ing  his personal opinion of the value of his own property, nor shall the pro-
 9    visions of this chapter prohibit a lender, or employee of a  lending  institu-
10    tion,  from forming and expressing an opinion of collateral value in the ordi-
11    nary course of business including, but not limited  to,  mortgaging  property,
12    underwriting a loan, or foreclosing a loan, so long as such opinion of collat-
13    eral value is not represented as being an appraisal of the market value of the
14    property, or prepared under the provisions of this chapter.
15        (7)  This  chapter  shall not prohibit an attorney or accountant from ren-
16    dering professional advice within the ordinary course of  his  profession,  so
17    long  as such advice is not represented to be an appraisal of the market value
18    of the property. 

19        SECTION 4.  That Section 54-2040, Idaho Code, be, and the same  is  hereby
20    amended to read as follows:

22    commission may upon its own motion, and shall upon verified complaint in writ-
23    ing of any person claiming to have been injured or defrauded, investigate  the
24    action of any person engaged in the business or acting in the capacity of real
25    estate  broker  or  real  estate salesman within this state and shall have the
26    power to temporarily suspend or permanently revoke licenses issued  under  the
27    provisions  of  this  act and/or to impose a civil penalty in an amount not to
28    exceed five thousand dollars ($5,000) and to assess costs and attorney 's
29     fees against the person for the cost of any investigation and/or admin-
30    istrative or other proceedings upon the licensee at any time where the  holder
31    thereof  in  performing  or attempting to perform any of the acts mentioned in
32    section 54-2022, Idaho Code, regardless of whether the acts were for  his  own
33    account  or  in  his capacity as a broker or salesman, is guilty of (a) making
34    any fraudulent misrepresentations; or, (b) a continued or flagrant  course  of
35    misrepresentation or making of false promises whether through agents or sales-
36    men;  or,  (c)  failure  to account for or remit any property or moneys coming
37    into his possession which belong to another; or, (d) failure to keep  adequate
38    records  of all property transactions in which he acts in the capacity of real
39    estate broker or real estate salesman; or, (e) failing or refusing upon demand
40    to disclose any information within his knowledge, or to produce any documents,
41    books, or records in his possession for inspection by the  commission  or  its
42    authorized representatives when acting within the jurisdiction or by authority
43    of  law;  or, (f) employment of fraud, deception, misrepresentation, misstate-
44    ment or any unlawful means in applying for or securing a  license  to  act  as
45    real estate broker or salesman in the state of Idaho; or, (g) acting as a real
46    estate  broker  or  salesman  under an assumed name; or, (h)  violation of any
47    provision of sections 54-2021 through 54-2053, Idaho Code, or any of the rules
48    made or promulgated by the real estate commission, or final order of the  com-
49    mission;  or, (i) any other conduct whether of the same or a different charac-
50    ter than hereinabove specified which  constitutes  dishonest  or  dishonorable
51    dealings; or, (j) the use by a licensee of any provision allowing the licensee
52    an  option to purchase in any agreement authorizing or employing such licensee
53    to sell, buy, list or exchange real estate  for  compensation  or  commission,


 1    except  when  such  licensee,  prior  to or coincident with entering into such
 2    agreement, discloses in writing to his principal the  purpose  for  which  the
 3    property  will  be  purchased,  that  the licensee is licensed, and such other
 4    information as the commission may require by rule; or, (k) gross negligence or
 5    reckless conduct in a regulated real estate transaction.  Conduct  is  grossly
 6    negligent  or reckless when, taken as a whole, the conduct substantially fails
 7    to meet the generally accepted standard of care in the practice of real estate
 8    in Idaho.
 9        B.  The commission may also temporarily suspend or  permanently  revoke  a
10    license  where the holder thereof (a) is convicted of any felony in a state or
11    federal court, or is convicted of a misdemeanor involving moral turpitude. The
12    record of conviction, or a certified copy thereof, certified by the  clerk  of
13    the  court,  or the judge in whose court the judgment  was had, shall be prima
14    facie evidence of conviction in such cases; (b) is declared insane by a  court
15    of  competent  jurisdiction; provided, however, that when a license shall have
16    been revoked or suspended for this cause, such license may be  reactivated  by
17    the  commission  upon  a  declaration of sanity being made; (c) has a judgment
18    entered against him in a civil action upon grounds  of  fraud,  misrepresenta-
19    tion,  or  deceit  with  reference  to  any    real estate related 
20    transaction .   for which a license is required. 
21        C.  The commission may also temporarily suspend or  permanently  revoke  a
22    license  of a broker or salesman where the license of such licensee, issued by
23    another jurisdiction, is suspended or revoked  for  acts  or  omissions  which
24    would  be  grounds  for  suspension  or revocation under chapter 20, title 54,
25    Idaho Code. A certified copy of the findings of fact, conclusions of law, mem-
26    orandum opinion and/or final order from the appropriate administrative  agency
27    or court shall be prima facie evidence of the suspension or revocation and the
28    facts stated therein.
29        D.  If  the  commission  temporarily  suspends  or  permanently  revokes a
30    license, and/or imposes a civil penalty, the commission may withhold execution
31    of said suspension, revocation and/or civil penalty on such terms and for such
32    time as it may prescribe.
33        E.  In the event of the revocation or suspension of the  broker's  license
34    issued to the designated broker of a partnership, limited liability company or
35    corporation, the license issued to such partnership, limited liability company
36    or  corporation  shall be revoked or suspended by the commission. However, the
37    commission may withhold execution of the  revocation  or  suspension  on  such
38    terms and for such time as it may prescribe.
39        F.  All  civil  penalties collected by the commission under the provisions
40    of this chapter shall be deposited in the state treasury to the credit of  the
41    special  real  estate  account  established pursuant to section 54-2037, Idaho
42    Code.
43        G.  The commission may accept, on such conditions as it may prescribe,  or
44    reject any offer to voluntarily terminate the license of a person whose activ-
45    ity is under investigation or against whom a formal complaint has been filed.

Statement of Purpose / Fiscal Impact


              RS 08618C1


The purpose of the legislation is to clarify the practice of appraisal and define real estate
broker's price opinions. The legislation defines a real estate related financial transaction as
it relates to the appraisal act.

The legislation also clarifies exemptions to the law that allow property owners, lending
institutions, attorneys and accountants to express opinions and provide advice.

The legislation also provides a procedure for the Idaho Real Estate Commission to
implement diciplinary action against a real estate licensee when they are found to be at
fault in a civil action regarding fraud, misrepresentation or deceit.

                           FISCAL NOTE

There is no fiscal impact to the state of local government budgets.

CONTACT: Ed Morse, Idaho Real Estate Appraisers Board 667-5583
                  Mark Dunham, Idaho Association of Realtors 342-3585
                  Alex LaBeau, Idaho Association of Realtors 342-3585
                                      STATEMENT OF PURPOSE/ FISCAL NOTE   S1059