On April 27, 2019, the Appraisal Management Company Registration & Regulation Act (S. 9080) became effective, 120 days after having been signed into law by NY Governor Andrew Cuomo. While the registration of appraisal management companies in various states is not a new phenomenon, some of the requirements in the New York legislation caught the attention of many industry professionals. With that in mind, AMCs looking to continue offering services in New York should be aware of their requirements under the law.
One consideration that must be made for AMCs ordering appraisals in the State of New York is that the AMC is now required by law to engage an appraiser, licensed or certified in New York, to perform assignments. While this requirement might seem obvious, New York is still a voluntary licensure state with appraiser licenses only required for assignments as part of a Federally Related Transaction. The New York AMC act does not have any such limitation, though it is focused on consumer credit transactions, meaning that New York practicing AMCs must engage licensed or certified appraisers regardless of the assignment type being performed. A failure to do so will result in a violation of the Act.
Other significant requirements for New York practicing AMCs involve appraiser compensation. Specifically, the timeliness of payment and the disclosure of fees are now required under the Act. While many states have taken a position on the permissible time allotted to make payment to an appraiser after an assignment, the New York legislation specifically requires that the fee is due within 30 days from the date that the appraiser transmits the “completed appraisal” to the AMC or other designated recipient. Exactly how “completed appraisal” will be interpreted is likely an open question, where some regulators will take a position that the initial transmission by the appraiser sets that date, and others will allow for the date to be set by the final report after the AMC quality control and review.
The New York legislation also requires that the AMC state both the fees of that AMC and of the individual appraiser separately to the lender, borrower, and any other responsible for paying for services. The Act further requires that a copy of the Appraiser’s invoice be included with a copy of the report. This requirement is somewhat different from other states that have sought fee transparency. For example, the Illinois appraisal license law has long required appraisers to include the identity of the appraisal management company ordering an assignment and a statement of the fee charged by the appraiser in the body of the appraisal report. However, the actual inclusion of an invoice with the appraisal report will be another requirement that AMCs practicing in New York. Again, a failure to do so would constitute a violation of the Act.
As with any applicable legislation in states where an industry professional is expecting to practice, it is advisable to review the complete Act and or Rules prior to starting operations, or as soon as practicable if operations are already in process. While many larger AMCs already have a compliance program due to the various other state laws impacting their practice, persons engaged in managing various parts of the AMC operations should be familiar with the requirements of the New York law to determine how these requirements will impact their regular practices. Where questions or concerns exist, AMCs should contact legal counsel to assist with interpreting this law and appropriate compliance planning.