Today, language was added to Senate Bill 521 (“S521”) that would change North Carolina’s position on when and by whom a Broker Price Opinion (“BPO”) a Comparative Market Analysis (“CMA”) may be performed. Sponsored by Sen. Daniel Clodfelter of Charlotte, the bill was originally drafted to repeal the Rule in Dumpor’s Case. The BPO/CMA language was added to an existing bill in a procedural move that will allow the language to be considered in this year’s “short session.”
The House Judiciary Subcommittee A took up S521 again today and considered whether to allow a proposed committee substitute (“PCS”) that included language that liberalizes the purposes for which a real estate broker may perform a BPO or CMA. The Subcommittee, Chaired by Rep. John M. Blust, first considered this issue last Wednesday. After comments from appraisers and real estate brokers, the Chair displaced the matter until this week to allow interested parties to work on the bill and address a number of questions and issues.
The Subcommittee heard from Rep. William Brawley, who explained the content and meaning of the PCS. The Chair also recognized interested parties to speak. One appraiser spoke in opposition of the PCS and described how this PCS would “blur the lines” between objective appraisal practice and brokerage activities. One appraisal group, that strongly and articulately opposed the PCS last week, voiced its continued concerns with the bill, but added that the group would not oppose the PCS if certain language were added via an amendment. Rep. Ric Killian offered an amendment that provided that “no appraiser shall be disciplined for completing an appraisal that includes a reduced scope of work or reporting level as long as it is appropriate for the intended use and is performed in accordance with the Uniform Standards of Professional Appraisal Practice.” The amendment also changed the proposed effective date from July 1, 2012 to October 1, 2012.
The Committee approved the PCS with the Killian amendment after some discussion from Rep. Deborah K. Ross on why the bill was moving so fast and with some thought to waiting to the January 2013 session to have it run as a standalone bill rather than being tacked on to a current bill that may not be considered or evaluated by another House or Senate committee.
- Define “broker price opinion” and “comparative market analysis” as “an estimate prepared by a licensed real estate broker that details the probable selling price or leasing price of a particular parcel of property of or interest in property and provides a varying level of detail about the property’s condition, market and neighborhood and information on comparable properties, but does not include an automated valuation model.”
- Clarify that the new language will not apply to any BPO or CMA performed by a broker licensee for no fee or consideration.
- Expand the purposes for which a broker may perform a BPO or CMA to include for an existing or potential seller, buyer, lessor, or lessee of a parcel of or interest in real property, for a third party making decisions or performing due diligence related to certain activates, and for an existing or potential lienholder for any purpose other than mortgage loan origination.
- Establish required content for all BPOs or CMAs that would include, but not be limited to, 11 requirements listed in the bill.
- Give the North Carolina Real Estate Commission the power to promulgate rules not inconsistent with the proposed provisions
- Restrict brokers from performing BPOs and CMAs when an appraisal is required by federal and state law.
- Prohibit a BPO or CMA from including the reporting of a predetermined result.
The next step is for the S521 to be considered on the House floor. If approved, it will be sent to the Senate for concurrence. If passed by the House and Senate and then ratified by the Governor, the bill would become law October 1, 2012. Both the House and Senate calendars may be found here. The bill is expected to go to the House floor tomorrow.
The contents of this blog may only be republished with the permission of the author. To request permission, please contact Mel Black by email or by phone at 800-268-6180 or 919-865-2577.