This article is part of an ongoing series covering violations of real estate law. Here, the DRE revoked the California real estate license of a broker who engaged in conduct that resulted in the revocation of an appraisal license issued by another state agency.

This article was updated on November 23, 2021.

In June 2021, the California Department of Real Estate (DRE) decided after a formal hearing to revoke the license of Angela Kim Carleton, a broker since 2008 operating out of Beverly Hills, California. The effective date of the revocation was August 2021.

Carleton was a certified residential real estate appraiser since 2010. Under an administrative hearing conducted by the Office of Administrative Hearings (OAH), the California Bureau of Real Estate Appraisers (BREA) revoked Carleton’s real estate appraiser license on April 23, 2019.

The reason for the revocation of Carleton’s real estate appraiser license was that she failed to:

  • conform to the Uniform Standards of Professional Appraisal Practice (USPAP) in her creation of an appraisal report on a residential property;
  • cooperate with the BREA’s investigation; and
  • provide the BREA with copies of her appraisal reports and work file for the property.

In addition to the revocation of her appraiser license, the BREA ordered Carleton to pay $24,662 in investigation and enforcement costs. She was also issued a $10,000 fine.

The conduct that led to Carleton’s revocation of her real estate appraiser license warrants license discipline against a real estate license. The hearing that led to Carleton’s revocation of her appraiser license was conducted under the Administrative Procedure Act (APA), resulting in an express finding of a violation of law.

Critical for real estate practitioners, a California real estate licensee may face disciplinary action including suspension or revocation of their real estate license when another state or federal agency revokes a license for acts that, when done by a real estate licensee, are grounds for revocation of a California real estate license. [Calif. Business and Professions Code §10177(f)]

In sum, the BREA’s prior discipline against Carleton’s appraiser license provides cause for the DRE to likewise revoke her real estate license, preventing her from earning income as a real estate licensee.

Carleton faced investigation and prosecution costs totaling $671 for the DRE’s investigation.

Uniform standards for appraisers

A real estate appraiser is a third-party individual indirectly hired by a lender to determine a property’s value. When mortgage financing is involved, the property serves as collateral to provide security for the repayment of the mortgage in the event of a borrower default.

The Uniform Standards of Professional Appraisal Practice (USPAP) was adopted by Congress in 1989 to create an accepted and recognized standard for the appraisal practice in the U.S. The purpose of the USPAP is to promote and maintain a high level of public trust in the appraisal profession by establishing requirements for appraisers.

Compliance to the USPAP standards is required for state-licensed and state-certified appraisers involved in real estate transactions.

A real estate appraiser’s failure to conform to and observe any provision of USPAP warrants suspension or revocation of their license. [10 Calif. Code of Regulations §3721(a)(6)]

In practice, an appraiser prepares an appraisal report containing their opinion or estimate of a property’s value on a specific date. [See RPI Form 200]

The appraisal report contains data collected and analyzed by the appraiser which substantiates the appraiser’s opinion of the property’s value.

Related Video: An Opinion of Value

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Factors used in the appraisal process to determine a property’s value include:

  • demand – the number of buyers for the property;
  • utility – the property’s possible uses;
  • scarcity – the availability of similar properties; and
  • transferability – the seller’s ability to transfer good title to a buyer clear of all encumbrances itemized in a title insurance policy.

Collectively, these factors are known as the elements of value.

Further, various forces influence value, including:

  • physical considerations – the property’s proximity to commercial amenities, access to transportation, the availability of freeways, beaches, lakes and hills;
  • economic considerations – rents in the area, vacancies and the percentage of homeownership, as well as employment opportunities lost or gained;
  • government considerations – property taxes, zoning, building codes and local services such as police and fire protection; and
  • social considerations – crime rates, school ratings, shopping and recreational opportunities.

Many different types of values may be assigned to a property. In real estate appraisal, the most common type of value used is market value, also called fair market value (FMV).

The FMV of a property is the highest price on the date of valuation a willing seller and buyer will agree to, both having full knowledge of the property’s various uses. [Calif. Code of Civil Procedures §1263.320]

Related article:

Case in point: Does the price paid at a trustee’s foreclosure sale establish a property’s fair market value (FMV)?

When an appraiser is on the receiving end of an official complaint, they will need to cooperate with the BREA’s Enforcement Unit. Allowing access to all documents and notes will help this process along.

Not conforming to the USPAP was the catalyst which lead to the revocation of Carleton’s appraisal license, but her refusal to comply with the BREA’s investigation and provide copies of her reports factored into the degree of discipline she received.

The DRE considered Carleton’s actions egregious enough that it would deny a license to a license applicant who has a parallel disciplinary history from another licensing entity.

Disregarding the standards which govern a licensee’s practice and refusing to comply with investigations raises a red flag for the DRE – a state regulator which requires all licensees to be honest and truthful to best protect the buying and selling public. [See RPI e-book Real Estate Principles Chapter 1]

Related article:

Securing your practice against appraiser complaints

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