Second Regular Session Sixty-seventh General Assembly STATE OF COLORADO INTRODUCED LLS NO. 10-0403.01 Bart Miller SENATE BILL 10-077 SENATE SPONSORSHIP Heath, HOUSE SPONSORSHIP Ferrandino, Senate Committees House Committees Business, Labor and Technology A BILL FOR AN ACT Concerning the regulation of appraisal management companies. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) In compliance with federal law, Colorado currently requires the licensing of real estate appraisers. In order to promote enhanced consumer protection, recently adopted federal guidelines now require mortgage lenders to use entities known as appraisal management companies, which hire licensed real estate appraisers, to value property for lending purposes. Appraisal management companies are not currently subject to regulation under Colorado law. Section 1 of the bill authorizes the board of real estate appraisers in the division of real estate in the department of regulatory agencies to regulate appraisal management companies. Necessary terminology is defined and the registration of appraisal management companies is required. The bill sets forth the requirements for registration and exemptions for certain types of activities. Requirements for owners and controlling persons of appraisal management companies are established, including a requirement that certain persons submit information, including fingerprints, for criminal history record checks. The bill sets forth prohibited activities and grounds for disciplinary actions against appraisal management companies and owners and controlling persons. Administrative and criminal penalties for violations are provided for and the board of real estate appraisers is granted the power to administer the provisions of the bill. Sections 2 through 22 of the bill make conforming amendments to existing statutes to make them consistent with the changes made in the bill. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Part 7 of article 61 of title 12, Colorado Revised Statutes, is amended BY THE ADDITION OF THE FOLLOWING NEW SECTIONS to read: PART 7 REAL ESTATE APPRAISERS SUBPART 2 APPRAISAL MANAGEMENT COMPANIES 12-61-750. Short title. This subpart 2 consists of sections 12-61-750 to 12-61-761 and may be cited as subpart 2. This subpart 2 shall be known and may be cited as the "Colorado Appraisal Management Company Act". 12-61-751. Definitions. As used in this subpart 2, unless the context otherwise requires: (1) "Applicable appraisal standards" means: (a) The uniform standards for professional appraisal practice; (b) The standards set forth in sections 12-61-702 to 12-61-718; and (c) Rules promulgated by the board pursuant to sections 12-61-702 to 12-61-718. (2) "Appraisal" or "real estate appraisal" has the same meaning as set forth in section 12-61-702. (3) "Appraisal management company" means a person that, directly or indirectly, performs appraisal management services, regardless of the use of the term appraisal management company, mortgage technology provider, lender processing services, lender services, loan processor, mortgage services, real estate closing services provider, settlement services provider, real estate closing services provider, vendor management company, or any other term. (4) "Appraisal management service" means any service or activity by which a person, directly or indirectly, performs any of the following functions on behalf of a lender, financial institution, client, or any other person: (a) Administer an appraiser panel; (b) Conduct an appraisal review of an appraisal prior to the delivery of the appraisal to the person that ordered the appraisal; (c) Serve as a third-party broker of an appraisal management service between a client and a person who is part of an appraiser panel; (d) As otherwise defined by the board by rule. (5) "Appraisal review" means the act or process of developing and communicating an opinion about the quality of another appraiser's work that was performed as part of an appraisal assignment. An examination of an appraisal for grammatical, typographical, or other similar errors is not an appraisal review. (6) "Appraiser" or "real estate appraiser" has the same meaning as set forth in section 12-61-702. (7) "Appraiser fee schedule" means a list of the various appraisals requested by an appraisal management company from appraisers and the amount that the appraisal management company pays to an appraiser for the performance of the appraisals. (8) "Appraiser panel" means a network of appraisers who, by definition or function, are independent contractors to the appraisal management company and have: (a) Responded to an invitation, request, or solicitation from an appraisal management company, in any form, to perform appraisals for persons that have ordered appraisals through the appraisal management company, or to perform appraisals for the appraisal management company directly, on a periodic basis, as requested and assigned by the appraisal management company; and (b) Been selected, and approved, by an appraisal management company to perform appraisals for any client of the appraisal management company that has ordered an appraisal through the appraisal management company, or to perform appraisals for the appraisal management company directly, on a periodic basis, as assigned by the appraisal management company. (9) "Board" means the board of real estate appraisers created in section 12-61-703. (10) "Client" means a person that enters into an agreement with an appraisal management company requesting or paying for the performance of an appraisal, or both. "Client" includes, without limitation, a lender or borrower, or both. (11) "Contact information" means identification of a person's name, business address, telephone number, and e-mail address. (12) "Controlling person" means: (a) An owner, officer, or director of a corporation, partnership, or other entity seeking to offer appraisal management services in this state; or (b) An individual employed, appointed, or authorized by an appraisal management company that has the authority to: (I) Enter into a contractual relationship with a client for the performance of appraisal management services; (II) Enter into an agreement with an appraiser for the performance of an appraisal; or (III) Direct or cause the direction of the management or policies of an appraisal management company, whether directly or indirectly. (13) "Director" means the director of the division of real estate. (14) "Division" means the division of real estate. (15) "Entity" means a corporation, firm, limited liability company, partnership, sole proprietorship, or other business entity and any subsidiary or unit thereof. (16) "Financial institution" has the same meaning as set forth in section 12-61-702. (17) "Independent appraisal" has the same meaning as set forth in section 12-61-702. (18) "Person" means an individual, an estate, a trust, an entity, or a state or other jurisdiction, as defined in section 7-90-102 (49), C.R.S. 12-61-752. Registration required - exemptions. (1) An appraisal management company shall register with the division. To register under this subpart 2 as an appraisal management company, a person shall, at a minimum: (a) File with the division a registration application in a form prescribed by the board; (b) Pay the fee as prescribed by the board; and (c) Obtain board approval of the application for registration, subject to the finding that the applicant has complied with the requirements for application of this subpart 2. (2) The registration application shall include the following: (a) Contact information for the following: (I) The person seeking registration; (II) If the person is not a corporation that is domiciled in this state, the contact information for the company's agent for service of process in this state, along with an irrevocable consent to service of process; (III) Owners and controlling persons, as follows: (A) Any person that owns ten percent or more of the appraisal management company; (B) The controlling persons of the appraisal management company, including the designation of one controlling person as the primary individual responsible for the appraisal management company's compliance with this subpart 2 and to serve as the main contact for communication with the appraisal management company, pursuant to section 12-61-753 (2); (b) Submission of fingerprints and consent for a criminal history record check pursuant to section 12-61-754 for individuals described in section 12-61-753 (2) (b); (c) Submission of an irrevocable consent for service of process on a form prescribed by the board. If the person's registered agent is not registered in this state, not located under its registered agent name at its registered agent address, or cannot with reasonable diligence be served, the entity may be served by registered mail or by certified mail, return receipt requested, addressed to the person at his or her principal address of record with the division. Service is perfected at the earliest of: (I) The date the person receives the process, notice, or demand; (II) The date shown on the return receipt, if signed by or on behalf of the person; or (III) Five days after mailing. (d) A certification that the applicant has a system and process in place that will be implemented to provide verification related to: (I) Adding or maintaining an individual on an appraiser panel; (II) Review of the work of an appraiser; (III) Obtaining and maintaining detailed records; and (IV) Compliance with section 12-61-753; and (e) Any other information required by board rule pursuant to this subpart 2. (3) Registration is not required for the following, regardless of whether the person uses the term "appraisal management company" to describe itself: (a) A person that exclusively employs appraisers on an employer and employee basis for the performance of appraisals and is responsible for ensuring that the appraisals are performed by employees in accordance with applicable appraisal standards; (b) A department or unit within a financial institution that is subject to direct regulation by an agency of the United States government or an agency of this state that receives a request for the performance of an appraisal from one employee of the financial institution, and another employee of the same financial institution assigns the request for the appraisal to an appraiser who is an independent contractor to the institution; except that an appraisal management company that is a wholly owned subsidiary of a financial institution shall not be considered a department or unit within a financial institution; or (c) As otherwise defined by the board by rule. 12-61-753. Owner and controlling person requirements. (1) Each person that owns ten percent or more of an appraisal management company registered in this state, and each controlling person of an appraisal management company registered in this state, shall: (a) Be of good moral character, as determined by the board pursuant to section 12-61-761 (1) (j); (b) Not have had a registration, license, or certificate to engage in an act related to a real estate or mortgage transaction refused, denied, relinquished, canceled, revoked, or surrendered in lieu of a pending revocation in this state or in another state; and (c) Make written disclosure to the board in the initial application and thereafter within ten days after the following: (I) (A) Entry of a conviction or plea of guilty, no contest, or similar agreement to a felony or crime of moral turpitude at the time of initial application and thereafter within ten days after the entry of such conviction or plea; or (B) Resolution of a criminal case by a diversion agreement, abeyance, or other agreement under which a criminal charge is held in suspense for a period of time; and (II) Filing of personal bankruptcy or bankruptcy of a business that transacts appraisal management services; (III) Any state's determination to refuse, deny, relinquish, cancel, revoke, or accept a surrender in lieu of a pending revocation of, any registration, license, or certificate to engage in an act related to a real estate or mortgage transaction; and (IV) Issuance of a cease-and-desist order or a temporary or permanent injunction by any court or government agency for any conduct or practice involving: (A) The business of appraisal management services; or (B) Fraud, deceit, or misrepresentation; and (d) Submit to a criminal history record check, as determined by the board pursuant to section 12-61-754. (2) A person applying for a registration in this state shall: (a) Ensure and certify to the board that each person that owns ten percent or more of the appraisal management company and each controlling person of an appraisal management company is in compliance with the requirements of this section; and (b) Designate one controlling person, who holds a license or certificate to act as an appraiser in at least one state, to act as the main contact for all communication with the division. The designated person shall submit fingerprints pursuant to section 12-61-754. 12-61-754. Criminal history record check required. Prior to submitting an application for registration as an appraisal management company, each applicant shall submit a set of fingerprints to the Colorado bureau of investigation for the controlling person designated as the contact as required in sections 12-61-752 (2) (a) (III) (B) and 12-61-753 (2) (b) for the purpose of conducting a state and national fingerprint-based criminal history record check utilizing records of the Colorado bureau of investigation and the federal bureau of investigation. The applicant shall pay to the Colorado bureau of investigation the fee established for conducting the fingerprint-based criminal history record check. Upon completion of the criminal history record check, the bureau shall forward the results to the board. The board may acquire a name-based criminal history record check for any individual described in section 12-61-753 who has twice submitted to a fingerprint-based criminal history record check and whose fingerprints are unclassifiable. In addition to the fingerprint-based criminal history record check for the controlling person designated as the contact as required in sections 12-61-752 (2) (a) (III) (B) and 12-61-753 (2) (b), the board may, by rule, prescribe additional criminal history check requirements for any individual described in section 12-61-753, as necessary. 12-61-755. Expiration and renewal of registration. (1) A registration granted by the board pursuant to this subpart 2 shall be valid for one year after the date on which it is issued. (2) To renew a registration under this subpart 2, before the day on which the registration expires, an appraisal management company shall: (a) File with the board a renewal registration application on a form prescribed by the board. Such renewal registration application shall include the appraisal management company's appraisal fee schedule and substantially similar information and documentation as that required by section 12-61-752 (2); and (b) Pay a fee as prescribed by the board. (3) A registration expires if it is not renewed on or before its expiration date; except that, for a period of thirty days after the expiration date, the registration may be reinstated upon compliance with this section, including payment of a renewal fee and a late fee determined by the board. 12-61-756. Fees, penalties, and fines. All fees, penalties, and fines collected pursuant to this subpart 2 shall be transmitted to the state treasurer, who shall credit the same to the division of real estate cash fund created in section 12-61-111.5. 12-61-757. Prohibited activities - grounds for disciplinary actions - procedures. (1) The board, upon its own motion or upon the complaint in writing of any person, may investigate the activities of any registrant. The board has the power to impose an administrative fine, not to exceed two thousand five hundred dollars, for each separate offense; issue a letter of admonition; impose public censure; place a registrant on probation under its close supervision on such terms and for such time as it deems appropriate; refuse to issue, renew, reinstate, or revoke a registration; or suspend the registration of any person or registrant if the board determines that any employee, director, officer, owner, controlling person, or other agent of an appraisal management company has performed, is performing, or is attempting to perform any of the following acts: (a) Fails to disclose to a client, prior to collecting a fee: (I) The total compensation that the appraisal management company pays to the appraiser who performs the appraisal; (II) The services actually performed by the appraisal management company; or (III) Other information as required by board rule; (b) Employs or enters into any independent contractor arrangement for the performance of work for which an appraisal license or certificate is required pursuant to this part 7 with any person who has had a license or certificate to act as an appraiser in this state or in any other state refused, denied, relinquished, canceled, revoked, or surrendered in lieu of a pending revocation; (c) Enters into any contract, agreement, or other business relationship, whether in oral, written, or other form, for the performance of work for which an appraisal license or certificate is required pursuant to this part 7 with any entity that employs, has entered into an independent contract arrangement, or enters into any contract, agreement, or other business relationship, whether in oral, written, or other form, with any person who has ever had a license or certificate to act as an appraiser in this state or in any other state refused, denied, relinquished, canceled, revoked, or surrendered in lieu of a pending revocation; (d) Fails to verify that the appraiser with whom an assignment is placed is qualified under this part 7 to perform such appraisal and has no practice prohibitions currently in effect; (e) Fails to ensure that the work of all appraisers who are performing appraisals for the appraisal management company is in compliance with applicable appraisal standards; (f) Fails to conduct an annual audit, consisting of a random selection of at least ten percent of all of the appraisals received within the previous year by the appraisal management company, to ensure that the appraisals are being performed in accordance with applicable appraisal standards; (g) Fails to maintain possession, for future use or inspection by the division, for a period of at least five years or at least two years after final disposition of any judicial proceeding in which any representative of the appraisal management company provided testimony related to the assignment, whichever period expires last, of the documents or records prescribed by the rules of the board or to produce such documents or records upon reasonable request by the board or by the division; (h) Structures an appraisal assignment, employment, or a contract with an appraiser for the purpose of evading the provisions of this subpart 2 relating to appraisal management company regulation, as determined at the sole discretion of the board; (i) Alters, modifies, or changes a completed appraisal report submitted by an appraiser; (j) Removes an appraiser from an appraiser panel or otherwise refuses to assign requests for real estate appraisal services to an appraiser that has been on the panel for more than thirty days without: (I) Written notification to the appraiser of: (A) The reasons why the appraiser is being removed from the appraiser panel of the appraisal management company; and (B) The nature of the alleged conduct or violation if the appraiser is being removed from the appraiser panel for illegal conduct or a violation of the board rules or the applicable appraisal standards; and (II) Providing an opportunity for the appraiser to respond to such written notification; (k) Fails to make payment to an appraiser for the completion of an appraisal or valuation assignment within sixty days after the date on which the appraiser transmits or otherwise provides the completed appraisal to the appraisal management company or its assignee, except in cases of verifiable or documented breach of contract or substandard performance of services; (l) Has been convicted of a felony or has had accepted by a court a plea of guilty or nolo contendere to a felony. A certified copy of the judgment of a court of competent jurisdiction of such conviction or plea shall be conclusive evidence of such conviction or plea. In considering the disciplinary action, the board shall be governed by section 24-5-101, C.R.S. (m) Has violated, or attempted to violate, directly or indirectly, or assisted in or abetted the violation of, or conspired to violate any provision or term of this subpart 2, rules promulgated pursuant to this subpart 2, or any order of the board established pursuant to this subpart 2; (n) Has been subject to an adverse or disciplinary action in another state, territory, or country relating to a license, certificate, registration, or other authorization to practice as an appraisal management company, a real estate appraiser, a real estate broker or salesperson, a subdivision developer, a mortgage loan originator, an attorney, an insurance producer, a securities broker-dealer, a securities advisor, an investment advisor, or an investment advisor representative. A disciplinary action in any other state, territory, or country for disciplinary reasons shall be deemed to be prima facie evidence of grounds for disciplinary action or denial of licensure or certification by the board. (o) Has committed an act or omission in the business of appraisal management that constitutes dishonesty, fraud, or misrepresentation; (p) Has committed unprofessional conduct as determined by the board; (q) Engages in conduct that constitutes dishonest dealing; (r) Procures, or attempts to procure, an appraisal management company registration or renews or reinstates, or attempts to renew or reinstate, an appraisal management company registration by fraud, misrepresentation, or deceit or by making a material misstatement of fact in an application for such registration; (s) Engages in the business of an appraisal management company under an assumed or fictitious name not properly registered in this state; (t) Improperly influences or attempts to improperly influence the development, reporting, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner that would constitute undue influence, including but not limited to: (I) Withholding or threatening to withhold timely payment for an appraisal; (II) Withholding or threatening to withhold future business for an appraiser, or demoting or terminating or threatening to demote or terminate an appraiser; (III) Expressly or impliedly promising future business, promotions, or increased compensation for an appraiser; (IV) Conditioning the request for an appraisal or the payment of an appraisal fee or salary or bonus on the opinion, conclusion, or valuation to be reached or on a preliminary estimate or opinion requested from an appraiser; (V) Requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report, or provide estimated values or comparable sales at any time prior to the appraiser's completion of an appraisal; (VI) Providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower; except that a copy of the sales contract for purchase transactions may be provided; (VII) Providing to an appraiser, or any entity or person related to the appraiser, stock or other financial or nonfinancial benefits; (VIII) Allowing the removal of an appraiser from an appraiser panel without prior written notice to such appraiser pursuant to subparagraph (I) of paragraph (j) of this subsection (1); (IX) Obtaining, using, or paying for a second or subsequent appraisal or ordering an automated valuation model in connection with a mortgage financing transaction unless there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such basis is clearly and appropriately noted in the loan file, or unless such appraisal or automated valuation model is done pursuant to a bona fide pre- or post-funding appraisal review or quality control process; (X) Compensating an appraiser in a manner that the person should reasonably have known would result in the appraiser not conducting an appraisal in a manner consistent with applicable appraisal standards; (XI) Accepting a contingent fee for performing an appraisal management service if the fee is contingent on: (A) The appraisal report having a predetermined analysis, opinion, or conclusion; (B) The analysis, opinion, conclusion, or valuation reached in an appraisal report; (C) The consequences resulting from the appraisal assignment; or (D) Any other act or practice that impairs or attempts to impair an appraiser's independence, objectivity, or impartiality; or (XII) Imposing work assignment conditions that would preclude the average appraiser from completing the assignment in a competent manner. (2) When a complaint or an investigation discloses an instance of misconduct by a registrant that, in the opinion of the board, does not warrant formal action by the board but should not be dismissed as being without merit, the board may send a letter of admonition by certified mail to the registrant who is the subject of the complaint or investigation. The letter shall advise the registrant of the right to make a written request, within twenty days after receipt of the letter of admonition, to the board to begin formal disciplinary proceedings as provided in this section to adjudicate the conduct or acts on which the letter was based. (3) A proceeding for discipline of a registrant may be commenced when the board has reasonable grounds to believe that a registrant has committed any act or failed to act pursuant to the grounds established in subsection (1) of this section. (4) Disciplinary proceedings shall be conducted in the manner prescribed by the "State Administrative Procedure Act", article 4 of title 24, C.R.S. (5) Complaints of record in the office of the board and the results of division investigations shall be closed to public inspection during the investigatory period and until dismissed or until notice of hearing and charges are served on a registrant, except as provided by court order. Complaints of record that are dismissed by the board and the results of investigation of such complaints shall be closed to public inspection except as provided by court order. The board's records are subject to sections 24-72-203 and 24-72-204, C.R.S., regarding public records and confidentiality. (6) Any person participating in good faith in the making of a complaint or report or participating in any investigative or administrative proceeding before the board pursuant to this article is immune from any liability, civil or criminal, that otherwise might result by reason of such action. (7) Any board member having an immediate personal, private, or financial interest in any matter pending before the board shall disclose the fact to the board and shall not vote upon such matter. (8) Any registrant having knowledge that any person has violated any provision of this subpart 2 shall report such knowledge to the board. 12-61-758. Judicial review of final board actions and orders. Final actions and orders of the board under this subpart 2 that are appropriate for judicial review shall be judicially reviewed in the court of appeals in accordance with section 24-4-106 (11), C.R.S. 12-61-759. Injunctive proceedings. (1) The board may, in the name of the people of the state of Colorado, through the attorney general of the state of Colorado, apply for an injunction in any court of competent jurisdiction to perpetually enjoin any person from committing any act prohibited by this subpart 2. (2) Injunctive proceedings shall be in addition to, and not in lieu of, all penalties and other remedies provided in this subpart 2. (3) When seeking an injunction under this section, the board shall not be required to allege or prove either that an adequate remedy at law does not exist or that substantial or irreparable damage would result from a continued violation. 12-61-760. Unlawful acts. Any person violating this subpart 2 by providing appraisal management services, acting as an appraisal management company in this state without having registered as an appraisal management company in accordance with this subpart 2, or by acting as an appraisal management company after the appraisal management company's registration has been revoked, suspended, or has expired commits a misdemeanor and, upon conviction thereof, if a natural person, shall be punished by a fine of not more than five hundred dollars, or by imprisonment in the county jail for not more than six months, or by both such fine and imprisonment and, if an entity, shall be punished by a fine of not more than five thousand dollars. A second violation, if by a natural person, shall be punishable by a fine of not more than one thousand dollars, or by imprisonment in the county jail for not more than six months, or by both such fine and imprisonment and, if an entity, shall be punished by a fine of not more than five thousand dollars. 12-61-761. Powers, duties, and immunity of the board - rules. (1) The board operates pursuant to section 12-61-703. In addition to all other powers and duties imposed upon it by law, the board has the following powers and duties: (a) To promulgate and amend, as necessary, rules pursuant to article 4 of title 24, C.R.S., for the implementation, enforcement, and administration of this subpart 2; (b) To charge application, examination, registration, and renewal fees established pursuant to section 12-61-704 (1) from all applicants for registration, examination, and renewal under this subpart 2. No fees received from applicants seeking registration, examination, or renewal shall be refunded. (c) (I) To keep all records of proceedings and activities of the board conducted under authority of this subpart 2, which records shall be open to public inspection at such time and in such manner as may be prescribed by rules of the board. (II) The board is not required to maintain or preserve registration history records of any person registered under this subpart 2 for any period longer than seven years. (d) Through the department of regulatory agencies and subject to appropriations made to the department of regulatory agencies, to employ administrative law judges on a full-time or part-time basis to conduct any hearings required by this subpart 2. Such administrative law judges shall be appointed pursuant to part 10 of article 30 of title 24, C.R.S. (e) To issue, deny, or refuse to renew a registration pursuant to this subpart 2; (f) To take disciplinary action in conformity with this subpart 2; (g) To delegate to the director the administration and enforcement of this subpart 2 and the authority to act on behalf of the board on such occasions and in such circumstances as the board directs, including to act as a hearing officer in lieu of appointing an administrative law judge; (h) In compliance with article 4 of title 24, C.R.S., to make investigations, subpoena persons and documents, which subpoenas may be enforced by a court of competent jurisdiction if not obeyed, hold hearings, and take evidence in all matters relating to the exercise of the board's power under this subpart 2; (i) To determine whether an applicant for registration possesses the necessary qualifications for registration as required by this subpart 2. The board may consider qualities such as the applicant's truthfulness and honesty and whether the applicant has been convicted of a crime involving moral turpitude. If the board determines that an applicant does not possess the qualifications required by this subpart 2 or that the applicant has violated this subpart 2, rules of the board, or an order of the board, the board may deny the applicant a registration or deny the renewal or reinstatement of a registration pursuant to this subpart 2 and, in such instance, the board shall provide the applicant with a statement in writing setting forth the basis of the board's determination that the applicant does not possess the qualifications or professional competence required by this subpart 2. The applicant may request a hearing on such determination as provided in section 24-4-104 (9), C.R.S. (j) To recover reasonable costs of investigation, enforcement, prosecution of the case, and costs incurred for collection efforts of such costs as follows: Except as otherwise provided by law, any order issued in resolution of a disciplinary proceeding may direct a person who acts in a capacity that requires a license, certification, or registration under this part 7 who is found to have committed a violation or violations of this subpart 2 to pay a sum not to exceed the reasonable costs of investigation, enforcement, prosecution of the case, and costs incurred for collection efforts of such costs. Nothing in this section precludes the division from including the recovery of the costs of investigation and enforcement of a case in any default decision or stipulated settlement, nor does this section affect the ability of the board to impose any other fees, penalties, fines, or other amounts referenced in this subpart 2. SECTION 2. 12-61-701, Colorado Revised Statutes, is amended to read: 12-61-701. Legislative declaration. The general assembly finds, determines, and declares that this part 7 is sections 12-61-702 to 12-61-718 are enacted pursuant to the requirements of the federal "Real Estate Appraisal Reform Amendments", Title XI of the federal "Financial Institutions Reform, Recovery, and Enforcement Act of 1989". The general assembly further finds, determines, and declares that this part 7 is sections 12-61-702 to 12-61-718 are intended to implement the minimum requirements of federal law in the least burdensome manner to real estate appraisers. SECTION 3. The introductory portion to 12-61-702 and 12-61-702 (1), Colorado Revised Statutes, are amended to read: 12-61-702. Definitions. As used in this part 7 subpart 1, unless the context otherwise requires: (1) "Appraisal", "appraisal report", or "real estate appraisal" means a written analysis, opinion, or conclusion relating to the nature, quality, value, or utility of specified interests in, or aspects of, identified real estate. Such terms include a valuation, which is an opinion of the value of real estate, and an analysis, which is a general study of real estate not specifically performed only to determine value; except that such terms include any valuation completed by any appraiser employee of a county assessor as defined in section 39-1-102 (2), C.R.S. Such The terms do not include an analysis, valuation, opinion, conclusion, notation, or compilation of data by an officer, director, or regular salaried employee of a financial institution or its affiliate, made for internal use only by the said financial institution or affiliate, concerning an interest in real estate that is owned or held as collateral by the said financial institution or affiliate which that is not represented or deemed to be an appraisal except to the said financial institution, the agencies regulating the said financial institution, and any secondary markets that purchase real estate secured loans. Any such appraisal prepared by an officer, director, or regular salaried employee of said the financial institution who is not registered, licensed, or certified under this part 7 subpart 1 shall contain a written notice that the preparer is not registered, licensed, or certified as an appraiser under this part 7 subpart 1. SECTION 4. 12-61-704 (1) (a), (1) (b), (1) (c), (1) (d), (1) (e), (1) (f), (1) (g), (1) (h), and (1) (i), Colorado Revised Statutes, are amended to read: 12-61-704. Powers and duties of the board. (1) In addition to all other powers and duties imposed upon it by law, the board has the following powers and duties: (a) To promulgate and amend, as necessary, rules and regulations pursuant to article 4 of title 24, C.R.S., for the implementation and administration of this part 7 subpart 1 and as required to comply with the federal "Real Estate Appraisal Reform Amendments", Title XI of the federal "Financial Institutions Reform, Recovery, and Enforcement Act of 1989", and with any requirements imposed by amendments to such federal law. The board shall not establish any requirements that are more stringent than the requirements of any applicable federal law. (b) To charge application, examination, and registration, license, and certificate renewal fees established pursuant to section 12-61-111.5 from all applicants for registration, licensure, certification, examination, and renewal under this part 7 subpart 1. No fees received from applicants seeking registration, licensure, certification, examination, or renewal shall be refunded. (c) (I) To keep all records of proceedings and activities of the board conducted under authority of this part 7 subpart 1, which records shall be open to public inspection at such time and in such manner as may be prescribed by rules and regulations formulated by the board. (II) The board shall not be required to maintain or preserve licensing history records of any a person licensed or certified under the provisions of this part 7 subpart 1 for any period of time longer than seven years. (d) Through the department of regulatory agencies and subject to appropriations made to the department of regulatory agencies, to employ administrative law judges on a full-time or part-time basis to conduct any hearings required by this part 7 subpart 1. Such administrative law judges shall be appointed pursuant to part 10 of article 30 of title 24, C.R.S. (e) To issue, deny, or refuse to renew a registration, license, or certificate pursuant to this part 7 subpart 1; (f) To take disciplinary actions in conformity with this part 7 subpart 1; (g) To delegate to the director the administration and enforcement of this part 7 subpart 1 and the authority to act on behalf of the board on such occasions and in such circumstances as the board directs; (h) (I) To develop, purchase, or contract for any examination required for the administration of this part 7 subpart 1, to offer each such examination at least twice a year or, if demand warrants, at more frequent intervals, and to establish a passing score for each examination that reflects a minimum level of competency. (II) If study materials are developed by a testing company or other entity, the board shall make such the materials available to persons desiring to take examinations pursuant to this part 7 subpart 1. The board may charge fees for such the materials to defray any costs associated with making such the materials available. (i) In compliance with the provisions of article 4 of title 24, C.R.S., to make investigations, subpoena persons and documents, which subpoenas may be enforced by a court of competent jurisdiction if not obeyed, hold hearings, and take evidence in all matters relating to the exercise of the board's power under this part 7 subpart 1; SECTION 5. 12-61-705, Colorado Revised Statutes, is amended to read: 12-61-705. Fees, penalties, and fines collected under subpart 1. All fees, penalties, and fines collected pursuant to this part 7 subpart 1, not including fees retained by contractors pursuant to contracts entered into in accordance with section 12-61-103, 12-61-706, or 24-34-101, C.R.S., shall be transmitted to the state treasurer, who shall credit the same to the division of real estate cash fund created in section 12-61-111.5. SECTION 6. 12-61-706 (1) (a), (2), (3), and (5) (b), Colorado Revised Statutes, are amended to read: 12-61-706. Qualifications for registration, licensing, and certification of appraisers - continuing education. (1) (a) The board shall, by rule, prescribe requirements for the initial registration, licensing, or certification of persons under this part 7 subpart 1 to meet the requirements of the federal "Real Estate Appraisal Reform Amendments", Title XI of the federal "Financial Institutions Reform, Recovery, and Enforcement Act of 1989" and shall develop, purchase, or contract for examinations to be passed by applicants. The board shall not establish any requirements for initial registration, licensing, or certification that are more stringent than the requirements of any applicable federal law; except that all applicants shall pass an examination offered by the board. If there is no applicable federal law, the board shall consider and may use as guidelines the most recent available criteria published by the appraiser qualifications board of the appraisal foundation or its successor organization. (2) The board shall, by rule, prescribe continuing education requirements for persons registered, licensed, or certified under this part 7 subpart 1 as needed to meet the requirements of the federal "Real Estate Appraisal Reform Amendments", Title XI of the federal "Financial Institutions Reform, Recovery, and Enforcement Act of 1989". The board shall not establish any continuing education requirements that are more stringent than the requirements of any applicable law; except that all persons registered, licensed, or certified under this part 7 subpart 1 shall be subject to continuing education requirements. If there is no applicable federal law, the board shall consider and may use as guidelines the most recent available criteria published by the appraiser qualifications board of the appraisal foundation or its successor organization. The board shall not grant continuing education credits for attendance at the board's meetings. (3) Any provision of this section to the contrary notwithstanding, the criteria established by the board for the registration, licensing, or certification of appraisers pursuant to this part 7 subpart 1 shall not include membership or lack of membership in any appraisal organization. (5) (b) Appraiser employees of county assessors who are employed to appraise real property shall be are subject to all provisions of this part 7 subpart 1; except that appraiser employees of county assessors who are employed to appraise real property shall are not be subject to disciplinary actions by the board on the ground that they have performed appraisals beyond their level of competency when appraising real estate in fulfillment of their official duties. County assessors, if registered, licensed, or certified as provided in subsections (1) and (2) of this section, shall are not be subject to disciplinary actions by the board on the ground that they have performed appraisals beyond their level of competency when appraising real estate in fulfillment of their official duties. SECTION 7. 12-61-707 (3) (c), Colorado Revised Statutes, is amended to read: 12-61-707. Expiration of licenses - renewal - penalties. (3) (c) The holder of an inactive license shall not hold himself or herself out as having an active license pursuant to this part 7 subpart 1. SECTION 8. 12-61-708 (1) (a), Colorado Revised Statutes, is amended to read: 12-61-708. Licensure or certification by endorsement - temporary practice. (1) The board may issue a license or certification to an appraiser by endorsement to engage in the occupation of real estate appraisal to any applicant who has a license, registration, or certification in good standing as a real estate appraiser under the laws of another jurisdiction if: (a) The applicant presents proof satisfactory to the board that, at the time of application for a Colorado registration, license, or certificate by endorsement, the applicant possesses credentials and qualifications which that are substantially equivalent to the requirements of this part 7 subpart 1; or SECTION 9. 12-61-709, Colorado Revised Statutes, is amended to read: 12-61-709. Denial of registration, license, or certificate - renewal. (1) The board is empowered to determine whether an applicant for registration, licensure, or certification possesses the necessary qualifications for registration, licensure, or certification required by this part 7 subpart 1. The board may consider such qualities as the applicant's truthfulness and honesty and whether the applicant has been convicted of a crime involving moral turpitude. (2) If the board determines that an applicant does not possess the applicable qualifications required by this part 7 subpart 1, or such applicant has violated any provision of this part 7 subpart 1 or the rules and regulations promulgated by the board or any board order, the board may deny the applicant a registration, license, or certificate or deny the renewal or reinstatement of a registration, license, or certificate pursuant to section 12-61-707; and, in such instance, the board shall provide such the applicant with a statement in writing setting forth the basis of the board's determination that the applicant does not possess the qualifications or professional competence required by this part 7. Such subpart 1. The applicant may request a hearing on such determination as provided in section 24-4-104 (9), C.R.S. SECTION 10. The introductory portion to 12-61-710 (1), 12-61-710 (1) (b), (1) (e), (1) (i), and (5) (a) (II), the introductory portion to 12-61-710 (6), and 12-61-710 (6) (b) and (10), Colorado Revised Statutes, are amended to read: 12-61-710. Prohibited activities - grounds for disciplinary actions - procedures. (1) A real estate appraiser is in violation of this part 7 subpart 1 if the appraiser: (b) Has violated, or attempted to violate, directly or indirectly, or assisted in or abetted the violation of, or conspired to violate any provision or term of this part 7 subpart 1 or rule or regulation promulgated pursuant to this part 7 subpart 1 or any order of the board established pursuant to this part 7 subpart 1; (e) Has used fraud or misrepresentation in obtaining a license or certificate under this part 7 subpart 1; (i) Has been subject to an adverse or disciplinary action in another state, territory, or country relating to a license, certificate, registration, or other authorization to practice as an appraiser. A disciplinary action relating to a registration, license, or certificate as an appraiser registered, licensed, or certified under this part 7 subpart 1 or any related occupation in any other state, territory, or country for disciplinary reasons shall be deemed to be prima facie evidence of grounds for disciplinary action or denial of licensure or certification by the board. This paragraph (i) shall apply applies only to violations based upon acts or omissions in such other state, territory, or country that are also violations of this part 7 subpart 1. (5) As authorized in subsection (2) of this section, disciplinary actions by the board may consist of the following: (a) Revocation of a registration, license, or certificate. (II) Any A person whose registration, license, or certificate to practice is revoked is rendered ineligible to apply for any registration, license, or certificate issued under this part 7 subpart 1 until more than two years have elapsed from the date of surrender of the registration, license, or certificate. Any reapplication after such two-year period shall be treated as a new application. (6) In addition to any other discipline imposed pursuant to this section, any person who violates the provisions of this part 7 subpart 1 or the rules and regulations of the board promulgated pursuant to this article may be penalized by the board upon a finding of a violation pursuant to article 4 of title 24, C.R.S., as follows: (b) In any subsequent administrative proceeding against any a person for transactions occurring after a final agency action determining that a violation of this part 7 subpart 1 has occurred, a fine of not less than one thousand dollars but not more than two thousand dollars. (10) Any registrant, licensee, or certified person having direct knowledge that any person has violated any of the provisions of this part 7 subpart 1 shall report such knowledge to the board. SECTION 11. 12-61-712 (1) (a) and (3), Colorado Revised Statutes, are amended to read: 12-61-712. Unlawful acts. (1) It is unlawful for any person to: (a) Violate any provision of section 12-61-710 (1) (c), (1) (e), or (1) (f), or to perform a real estate appraisal in conjunction with a debt instrument that is federally guaranteed or in the federal secondary market or regulated pursuant to title 12, U.S.C., without first having obtained a registration, license, or certificate from the board pursuant to this part 7 subpart 1; (3) A person who represents property owners as an advocate in tax or valuation protests and appeals pursuant to title 39, C.R.S., shall be exempt from the licensing requirements of this part 7 subpart 1. SECTION 12. 12-61-713 (1) and (2), Colorado Revised Statutes, are amended to read: 12-61-713. Injunctive proceedings. (1) The board may, in the name of the people of the state of Colorado, through the attorney general of the state of Colorado, apply for an injunction in any a court of competent jurisdiction to perpetually enjoin any a person from committing any an act prohibited by the provisions of this part 7 subpart 1. (2) Such Injunctive proceedings shall be in addition to and not in lieu of all penalties and other remedies provided in this part 7 subpart 1. SECTION 13. 12-61-714, Colorado Revised Statutes, is amended to read: 12-61-714. Special provision for appraiser employees of county assessors. (1) Except as provided in subsection (2) of this section, unless a federal waiver is applied for and granted pursuant to section 12-61-704 (1) (j), on and after July 1, 1997, any person acting as a real estate appraiser in this state in conjunction with a debt instrument that is federally guaranteed or in the federal secondary market or regulated pursuant to title 12, U.S.C., shall be registered, licensed, or certified as provided in this part 7 subpart 1, and, on and after said date, no person shall practice in conjunction with a debt instrument that is federally guaranteed or in the federal secondary market or regulated pursuant to title 12, U.S.C., without such a registration, license, or certificate or hold himself or herself out to the public as a registered, licensed, or certified real estate appraiser unless registered, licensed, or certified pursuant to this part 7 subpart 1. (2) Any appraiser employee of any a county assessor who is employed to appraise real property shall be registered, licensed, or certified as provided in this part 7 subpart 1 and shall have two years from after the date of taking office or the beginning of employment to comply with the provisions of this part 7 subpart 1. SECTION 14. 12-61-715, Colorado Revised Statutes, is amended to read: 12-61-715. Duties of board under federal law. (1) The board shall: (a) Transmit to the appraisal subcommittee of the federal financial institutions examinations council, no less than annually, a roster listing individuals who have received a certificate or license as provided in this part 7 subpart 1; (b) Collect from individuals who have received a certificate or license as provided in this part 7 subpart 1 an annual registry fee of not more than twenty-five dollars, unless the appraisal subcommittee of the federal financial institutions examinations council adjusts the fee up to a maximum of fifty dollars, and transmit such fee to the federal financial institutions examinations council on an annual basis; and (c) Conduct its business and promulgate rules and regulations in a manner not inconsistent with Title XI of the federal "Financial Institutions Reform, Recovery, and Enforcement Act of 1989", as amended. SECTION 15. The introductory portion to 12-61-716 (1), Colorado Revised Statutes, is amended to read: 12-61-716. Business entities. (1) A corporation, partnership, bank, savings and loan association, savings bank, credit union, or other business entity may provide appraisal services if such the appraisal is prepared by individuals registered, certified, or licensed in accordance with this part 7 subpart 1. An individual who is not a registered, certified, or licensed appraiser may assist in the preparation of an appraisal if: SECTION 16. 12-61-717, Colorado Revised Statutes, is amended to read: 12-61-717. Provisions found not to comply with federal law null and void - severability. If any provision of this part 7 subpart 1 is found by a court of competent jurisdiction or by the appropriate federal agency not to comply with any provision of the federal "Financial Institutions Reform, Recovery, and Enforcement Act of 1989", such provision shall be null and void, but the remaining provisions of this part 7 subpart 1 shall be valid unless such the remaining provisions alone are incomplete and are incapable of being executed in accordance with the legislative intent of this part 7 subpart 1. SECTION 17. 12-61-718 (1) (b), Colorado Revised Statutes, is amended to read: 12-61-718. Scope of article - regulated financial institutions - de minimis exemption. (1) (b) Such appraisal shall not be represented or deemed to be an appraisal except to the said financial institution, the agencies regulating the said financial institution, and any secondary markets that purchase real estate secured loans. Such The appraisal shall contain a written notice that the preparer is not registered, licensed, or certified as an appraiser under this part 7 subpart 1. Nothing in this subsection (1) shall be construed to exempt a person registered, licensed, or certified as an appraiser under this part 7 subpart 1 from regulation as provided in this part 7 subpart 1. SECTION 18. 28-3-106 (1) (s) (I), Colorado Revised Statutes, is amended to read: 28-3-106. Powers and duties of adjutant general. (1) The adjutant general has the following powers and duties: (s) (I) If, in the judgment of the adjutant general, any real estate which that has been acquired for military purposes is unsuitable for military purposes, the adjutant general, by and with the approval of the governor, in writing, has authority to sell, trade, or otherwise dispose of such real estate, but, except as otherwise provided by subparagraph (II) of this paragraph (s), such the real estate shall not be disposed of for less than its appraised value. The appraised value of such the real estate shall be determined by an appraiser who is registered, licensed, or certificated pursuant to subpart 1 of part 7 of article 61 of title 12, C.R.S., and who is selected by the adjutant general from a list of three qualified individuals submitted to the adjutant general by the department. Appraisers shall be selected for the list, and their fees shall be negotiated in accordance with the standards established by part 14 of article 30 of title 24, C.R.S. The adjutant general, by and with the advice and approval of the governor, is authorized to lease any property belonging to the department when it is not needed for the immediate use of the department. All conveyances which that are required for the purpose of this section shall be executed by the governor under the seal of the state, and the proceeds of all sales, trades, or other disposition shall be placed in an account to be invested by the state treasurer as provided in section 24-36-113, C.R.S. Any interest earned on the investment or deposit of such the proceeds shall remain in such the account and shall not be credited to the general fund or any other fund of the state. Said The proceeds and any interest thereon shall be disbursed by authority of the adjutant general, subject to appropriation by the general assembly, only for the construction, repair, improvement, acquisition, or costs of acquisition or sale of armories throughout the state. Costs of acquisition or sale shall include but need not be limited to appraisals, site surveys, environmental surveys, title work, property inspections, closing costs, legal fees, real estate fees, site preparation, or utility studies. Prior to disposing of any real property pursuant to the provisions of this paragraph (s), the adjutant general shall submit a report to the capital development committee which that describes such the real property, the maintenance costs related to such the real property, the current value of such the real property, any conditions or limitations which that may restrict the use of such the real property, and the terms of the proposed disposition of such the real property. The capital development committee shall review any such report which that is submitted to the capital development committee and shall provide recommendations to the adjutant general concerning the proposed real property disposition within thirty days after the date of receipt of such the report. The adjutant general shall not complete any such real property disposition without considering any recommendations of the capital development committee which that are provided within such the thirty-day period. SECTION 19. 39-2-123 (2), Colorado Revised Statutes, is amended to read: 39-2-123. Board of assessment appeals created - members - compensation. (2) Effective July 1, 1991, the existing board of assessment appeals is abolished, and the terms of members of the board then serving are terminated. Effective July 1, 1991, except as otherwise provided in section 39-2-125 (1) (c) (I), the new board shall be comprised of three members, who shall be appointed by the governor with the consent of the senate. Members of the board shall be experienced in property valuation and taxation and shall be public employees, as defined in section 24-10-103 (4) (a), C.R.S., who are not subject to the state personnel system laws. One of such the members shall be or shall have been, within the five years immediately preceding the date of initial appointment, actively engaged in agriculture. On and after June 1, 1993, members shall be registered, licensed, or certificated pursuant to the provisions of subpart 1 of part 7 of article 61 of title 12, C.R.S., and, if any member fails to become so registered, licensed, or certificated by said date, the office of such the member shall be deemed to be vacated and shall be filled in the same manner as other vacancies. Initial appointments to the board shall be as follows: One member shall be appointed for a term of two years, and two members shall be appointed for terms of four years. Thereafter, appointments to the board shall be for terms of four years each. Service on the board shall be at the pleasure of the governor, who may appoint a replacement to serve for the unexpired term of any member. Such replacement shall be appointed with the consent of the senate. Any other vacancies on the board shall be filled by appointment by the governor with the consent of the senate for the unexpired term. SECTION 20. 39-8-106 (1.5), Colorado Revised Statutes, is amended to read: 39-8-106. Petitions for appeal. (1.5) In addition to any other requirements set forth in subsection (1) of this section, any petition for appeal relating to real property shall contain the actual value of such real property, stated in terms of a specific dollar amount, which is being offered as the correct valuation. Nothing in this subsection (1.5) shall be construed to exempt paid representatives of taxpayers from the requirements of subpart 1 of part 7 of article 61 of title 12, C.R.S., if applicable. SECTION 21. The introductory portion to 39-8-108.5 (1) (b), Colorado Revised Statutes, is amended to read: 39-8-108.5. Arbitration of property valuations - arbitrators - qualifications - procedures. (1) (b) Except as otherwise provided in paragraph (c) of this subsection (1), persons on such the list shall be, in addition to any other qualifications deemed necessary by the board, experienced in the area of property taxation, on and after June 1, 1993, be registered, licensed, or certificated pursuant to subpart 1 of part 7 of article 61 of title 12, C.R.S., and be any one of the following: SECTION 22. 39-22-522 (3.3), Colorado Revised Statutes, is amended to read: 39-22-522. Credit against tax - conservation easements. (3.3) The appraisal for a conservation easement in gross for which a credit is claimed shall be a qualified appraisal from a qualified appraiser, as those terms are defined in section 170 (f) (11) of the internal revenue code. The appraisal shall be in conformance with the uniform standards for professional appraisal practice promulgated by the appraisal standards board of the appraisal foundation and any other provision of law. The appraiser shall hold a valid license as a certified general appraiser in accordance with the provisions of subpart 1 of part 7 of article 61 of title 12, C.R.S. The appraiser shall also meet any education and experience requirements established by the board of real estate appraisers in accordance with section 12-61-719 (7), C.R.S. If there is a final determination, other than by settlement of the taxpayer, that an appraisal submitted in connection with a claim for a credit pursuant to this section is a substantial or gross valuation misstatement as such misstatements are defined in section 1219 of the federal "Pension Protection Act of 2006", Pub.L. 109-280, the department shall submit a complaint regarding the misstatement to the board of real estate appraisers for disciplinary action in accordance with the provisions of subpart 1 of part 7 of article 61 of title 12, C.R.S. SECTION 23. Act subject to petition - effective date - applicability. (1) This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 11, 2010, if adjournment sine die is on May 12, 2010); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part shall not take effect unless approved by the people at the general election to be held in November 2010 and shall take effect on the date of the official declaration of the vote thereon by the governor. (2) The provisions of this act shall apply to acts occurring and offenses committed on or after the applicable effective date of this act.