Statement 1: State Regulatory Structure and Independence of Functions
The ASC does not impose any particular organizational structure upon the States. It is recognized that each State may have legal, fiscal, regulatory or other valid constraints that determine the structure and organization of its State agency. States, however, should adopt and maintain an organizational structure for appraiser certification, licensing and supervision that avoids conflicts of interest or the appearance of such conflicts. Ideally, States should maintain totally independent State agencies answerable only to the governor or a cabinet level official who has no regulatory responsibility for real estate licensing/certification, promotion, development or financing functions (realty related activities). A State, however, may choose to locate its State agency within an existing regulatory body. Any State with its appraiser regulatory function in a department that regulates realty related activities must ensure that adequate safeguards exist to protect the independence of the appraiser regulatory function.
A State agency may be headed by a board, commission or individual. The organizational structure should provide maximum insulation for the State agency from the influence of any industry or organization whose members have a direct or indirect financial interest in the outcome of the agency’s decisions.
Persons appointing officials to a State agency should not be associated or affiliated with an affected industry, i.e., they should not have a direct or indirect financial interest in realty related activities. A State agency head, appointed by the governor and confirmed by the State legislature, would generally be considered independent.
The ASC believes that, as a matter of sound public policy, State appraiser boards or commissions should adequately represent the broad public interest by providing the public with a meaningful opportunity to participate in the agency’s decision making process. A State agency should not be dominated in any way by any industry or profession and its board or commission should have one or more qualified public members. The ASC believes that domination of the State agency by representatives of affected industries would be inappropriate and inconsistent with Title XI. The ASC, however, recognizes that members of the appraisal industry should be significantly represented on the appraiser board or commission and believes that a board or commission may contain a majority of appraisers and still adequately represent the broad public interest. A State agency, board or commission, however, should reflect the interests of the State’s entire community of appraisers and the general public and not the interests of any professional appraiser organization.
An individual heading a State agency should not be actively engaged in the appraisal business or in any realty related activity during his or her term of office or employment and for a reasonable period thereafter.
The ASC strongly urges that State agency decisions, especially those relating to license or certificate issuance, revocation and disciplinary actions, not be made by State officials who also are responsible for realty related activities. State officials should accept and implement the actions of the appraiser board unless they are inconsistent with the public interest and trust. Additionally, such State agency decisions should be final administrative actions subject only to appropriate judicial review.
Board or commission members and any persons in policy or decision-making positions (collectively, Board Members), including persons who support Board Member activities, must perform their responsibilities consistent with the highest ethical standards of public service as implemented by pertinent State statutes and regulations. In the absence of such statutes and regulations, the ASC expects Board Members to comply with the following general principles:
- Public service is a public trust, requiring Board Members to place loyalty to the Federal and State Constitutions, statutes, regulations, and these ethical principles above private gain;
- Board Members shall not engage in financial transactions using nonpublic information or allow the improper use of such information to further any private interest;
- Board Members shall not solicit or accept any gift or other item of monetary value (other than nominal value) from any person or entity seeking official action from, doing business with, or conducting activities regulated by the State agency, or whose interests may be substantially affected by the performance or nonperformance of the Board Member’s duties;
- Board Members shall put forth an honest effort in the performance of their duties;
- Board Members shall not knowingly make unauthorized commitments or promises of any kind purporting to bind the State agency;
- Board Members shall not use public office for private gain;
- Board Members shall act impartially and not give preferential treatment to any individual or private organization; and
- Board Members shall endeavor to avoid any actions creating the appearance of impropriety or that they may be violating the law or engaging in unethical or wrongful conduct or practices. Whether particular circumstances create such an appearance shall be determined from the perspective of a reasonable person with knowledge of the relevant facts.2 [Paragraph added 10/11/00, effective 1/1/01.]
[Following five paragraphs added 8/11/04, effective 1/1/05.]
Some State agencies contract with private entities (i.e., third parties) to assist them in performing appraiser regulatory activities. Such arrangements can assist in managing costs and providing expertise that might not be available internally. At the same time, potentially reduced financial and operational control over a private entity’s activities might pose certain risks. State agencies using private entities need to establish appropriate internal controls, procedures, and safeguards to assure that the entity performs its duties in an effective and consistent manner in compliance with the State’s responsibilities under Title XI. The types of activities covered by this Statement include, but are not limited to3 :
- Receiving, reviewing, and/or approving applications for initial certification or licensure;
- Receiving, reviewing, and/or approving applications for credential renewals;
- Analyzing the qualifications of appraiser applicants;
- Reviewing and/or approving qualifying and continuing education courses;
- Administering initial appraiser credentialing examinations;
- Receiving, reviewing, and/or approving temporary practice and reciprocity applications;
- Answering inquiries related to the State’s appraiser licensing and certification program;
- Assisting in the investigation/disciplinary process regarding certified or licensed appraisers; and
- Preparing and/or submitting ASC National Registry data submissions and related fee payments.
A State agency should exercise due diligence to identify and select a private entity. As part of this process, the State agency should determine its needs and objectives and convey them to prospective private entities. In selecting a private entity, the State agency should perform sufficient analysis to determine that the entity is competent and experienced in providing the activities that the State plans to outsource. This analysis should include an evaluation of an entity’s ability, both operationally and financially, to meet the State agency’s needs.
Any contract, agreement, or arrangement between a State agency and such a private entity needs to comply with State procurement requirements and be in writing. That document should:
- Clearly describe the duties, rights, and responsibilities of the parties, including specific quality standards and time frames for performing appraiser-regulatory services;
- Address how the parties will handle contingencies that could adversely affect the entity’s performance;
- Ensure that adequate written procedural guidelines exist regarding how each appraiser regulatory activity will be performed;
- Ensure that the private entity provides adequate safeguards for records security, privacy of personal information, and confidentiality of documents;
- Provide that the private entity’s appraiser-related operations, including any records relating to those operations (whether in physical or machine-readable form), at all times shall be available to the State; and
Finally, a State agency retains accountability for any private entity arrangement and for ensuring that its appraiser-related regulatory functions are in compliance with Title XI.
- Require that the records noted above are the property of the State agency and will be surrendered promptly to the State agency upon its request.