The Texas Appraiser Licensing and Certification Board (TALCB) adopts an amendment to §153.20, concerning Guidelines for Revocation, Suspension, Denial of Licensure or Certification; Probationary Licensure. The amendment is adopted with changes to the proposed text as published in the September 7, 2012, issue of the Texas Register (37 TexReg 7034). In §153.20(a)(25) the Board added the phrase "after conducting reasonable due diligence, knowingly" to the beginning of the paragraph. This clarification language, inserting a safe harbor standard, was added after the proposed amendment was published to address concerns raised by commenters.

The amendment was proposed at TALCB's August 17, 2012, meeting to make it clear that the board considers acceptance by an appraiser of an assignment from an appraisal management company (AMC) that is not registered with the board to be an activity that can subject the appraiser to sanctions.

The reasoned justification for the amendment to §153.20 is greater consumer protection and transparency by clarifying that there could be sanctions against an appraiser who accepts an assignment from an unlicensed AMC that the appraiser reasonably knows or should have known is required to be registered to make appraisal assignments in Texas. This obligation impliedly exists currently and sanctions could be taken currently against an appraiser who knowingly accepts an assignment from an unlicensed or non-exempt AMC under §153.20(a)(21). This amendment is adopted to make it very clear to appraisers and AMCs that an appraiser who willingly assists an unlicensed AMC in circumventing the regulatory structure for consumer protection established by the Texas Legislature and TALCB will be subject to sanctions.

The revision to §153.20(a)(25) as adopted does not change the nature or scope so much that it could be deemed a different rule. The rule as adopted does not affect individuals other than those contemplated by the rule as proposed. The rule as adopted does not impose more onerous requirements than the proposed rule.

Four comments were received by TALCB on the proposed amendment. Three commenters spoke at the meeting. One felt that the amendment could create an additional burden on appraisers to keep records of verification of AMC status in the work file and also that the section refers to suspension or revocation of a license, which she felt was too harsh. She acknowledged it is a tough issue but didn't want the burden to be on the appraiser. The second questioned how to determine which clients were an AMC, so he would know who to ask for verification and was directed to the definition of an AMC in the rules. A commenter from an appraisal industry association member commented that he thought the process of verifying whether an AMC is registered is a fairly simple process and a good business practice if for no other reason that it increases the likelihood of getting paid. Another commenter submitted written comments against the amendment stating that it places the responsibility for monitoring and policing AMCs on the appraisers and it will be hard for appraisers to keep up with which AMCs are registered or exempt. However, the commenter goes on to say that it is reasonable to ask an appraiser to verify that an AMC is registered in the state when accepting an assignment and should notify TALCB when they discover unlicensed AMC activity.

TALCB does not agree that this amendment shifts the enforcement burden from TALCB to appraisers or that it will be hard for appraisers to keep up with which AMCs are registered in Texas. The burden for enforcement action against AMCs is and will continue to rest with TALCB. TALCB will also have the burden to prove that the appraiser did not use reasonable due diligence before accepting the assignment if any action is brought under this amendment. TALCB does whole-heartedly agree that it is reasonable to ask an appraiser to verify that an AMC is registered in this state or exempt before accepting an assignment. In fact, that is the purpose of the amendment, to clarify that such reasonable due diligence by the appraiser should take place prior to accepting an assignment. TALCB maintains an up-to-date list of all registered AMCs on its website. If an appraiser receives an assignment from an AMC, it takes very little time to go to the website and check the list. If the AMC is on the list, the appraiser needs to be on that AMC's panel prior to accepting the assignment. The appraiser will know if the appraiser is on the panel because the appraiser will have received an invitation to join the panel via email and can accept by a click of the mouse. If the AMC is not on the list of registered AMCs, the appraiser should ask for written confirmation from the AMC that they are not required by law to be registered before accepting the assignment. If the appraiser receives such a letter or email, the appraiser will not be sanctioned under this amendment because reasonable due diligence was performed.

It should also be noted that the amendment does not require the appraiser to turn in a complaint on an AMC that is not licensed or exempt from licensure as one commenter suggested would be reasonable, although such reporting of unlicensed activity would be appreciated and helpful to TALCB. This amendment addresses only actions that are in the control of the appraiser--performing reasonable due diligence before accepting an assignment from an AMC and not accepting an assignment from an AMC that they know is unlicensed and not exempt.

The amendment is adopted under Texas Occupations Code, §1103.151, which authorizes the TALCB to adopt rules necessary for certifying or licensing an appraiser.

The statute affected by the amendment is Texas Occupations Code, Chapter 1103. No other statute, code or article is affected by the amendment.