A valuation-based contingent fee prohibition for appraisers

Amended by SB 223:

Business and Professions Code §11323

An appraiser is now prohibited from accepting employment to prepare an appraisal of value if his compensation for the appraisal is dependent on or coupled to the amount of his opinion of value in financing or developing real estate.

Unlawful influence of licensees on real estate appraisers

Added by SB 223:

Business and Professions Code §1090.5

A person with an interest in a real estate transaction involving an appraisal may not improperly influence in any way the result, review, reporting or development of a real estate appraisal connected with a mortgage loan. This prohibition does not include asking the appraiser to:

  • consider additional appropriate property information;
  • provide further detail or explanation of the appraiser’s value conclusion; or
  • correct errors in the appraisal report.

Any state licensee—such as any individual holding a license issued by the Department of Real Estate—who violates this law while acting within the scope of his agency is in violation of state licensing laws.

Editor’s note — The broker advising an appraiser on a request to prepare an appraisal report of the amount of value needed in the appraisal report to close the transaction, be it a loan or sale, appears to be in the crosshairs of this legislation.