ARTICLE 20:77
APPRAISAL MANAGEMENT COMPANIES
Chapter
20:77:01 General provisions.
20:77:02 Administration.
20:77:03 Application procedure.
20:77:04 Fee schedule.
20:77:05 Responsibilities and duties.
20:77:06 Records
20:77:07 Complaints, investigations, and discipline.
20:77:08 National registry fee collection and remittance.
CHAPTER 20:77:01
GENERAL PROVISIONS
Section
20:77:01:01 Appraisal management services.
20:77:01:02 Appraisal review.
20:77:01:03 Controlling person.
20:77:01:04 Designated officer.
20:77:01:05 Definitions.
20:77:01:01. Appraisal
management services. "Appraisal management services," is the act
or process to (a) recruit, select, and retain appraisers; (b) contract with
licensed or certified appraisers to perform appraisal assignments; and (c)
manage the process of having an appraisal performed.
Appraisal management services includes
administrative duties such as receiving appraisal orders and appraisal reports;
submitting completed appraisal reports to creditors and underwriters;
collecting fees from creditors and underwriters for services provided; and
reimbursing appraisers for services performed. It also includes the review and
verification of the work of appraisers for compliance with the Uniform
Standards of Professional Appraisal Practice.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4.
Law
Implemented: SDCL 36-21D-1, 36-21D-2, 36-21D-4(2).
20:77:01:02. Appraisal
review. "Appraisal review," is an 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 related to the appraiser's
data collection, analysis, opinions, conclusions, estimate of value, or
compliance with the Uniform Standards of Professional Appraisal Practice. The
term does not include a general examination for grammatical, typographical or
other similar errors, or a general examination for completeness including
regulatory, or client requirements or both as specified in the agreement
process that does not communicate an opinion.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4.
Law
Implemented: SDCL 36-21D-2(4), 36-21D-4(2).
20:77:01:03. Controlling
person. A "controlling person," is one or more of the following:
(1) An officer or director
of an appraisal management company, or an individual that holds 10% or greater
ownership interest in an appraisal management company;
(2) An individual employed,
appointed, or authorized by an appraisal management company that has the
authority to enter into a contractual relationship with clients for performance
of appraisal services and that has the authority to enter into agreements with
independent appraisers for the completion of appraisals; or
(3) An individual who
possesses the power to direct or cause the direction of the management or
policies of an appraisal management company.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4.
Law
Implemented: SDCL 36-21D-4(2).
20:77:01:04. Designated
officer. A "designated officer," is a controlling person
authorized by the governing structure of the appraisal management company to
act on behalf of the company for purposes of application for, and compliance
with, requirements of this article and responsible for the supervision and
control of activities conducted on behalf of the appraisal management company.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4.
Law
Implemented: SDCL 36-21D-4(2).
20:77:01:05. Definitions. Terms used in this article mean:
(1) "AMC National Registry," the registry of state-registered appraisal management companies and federally regulated appraisal management companies maintained by the Appraisal Subcommittee;
(2) "Appraisal Subcommittee," the Appraisal Subcommittee of the Federal Financial Institutions Examination Council;
(3) "Appraiser," a person who has been issued by the department a state-certified general, state-certified residential, state-licensed, or registered trainee appraiser credential to perform appraisals;
(4) "Appraiser panel," a network, list, or roster of licensed or certified appraisers approved by an appraisal management company to perform appraisals as independent contractors for the appraisal management company. Appraisers on an appraisal management company's appraiser panel under this article include the following:
(a) Appraisers accepted by the appraisal management company for consideration for future appraisal assignments in covered transactions and for secondary mortgage market participants in connection with covered transactions; and
(b) Appraisers engaged by the appraisal management company to perform one or more appraisals in covered transactions or for secondary mortgage market participants in connection with covered transactions.
An appraiser is an independent contractor for purposes of this article if considered an independent contractor by the appraisal management company for federal income tax purposes;
(5) "Certificate of Registration," the certificate verifying the registration of any person or entity approved as an appraisal management company by the State of South Dakota;
(6) "Covered transaction," any consumer credit transaction secured by the consumer's principal dwelling;
(7) "Department," the Department of Labor and Regulation;
(8) "Federally regulated appraisal management company," an appraisal management company that is owned and controlled by an insured depository institution, as defined in 12 U.S.C. § 1813 as amended to July 21, 2010 and regulated by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System or the Federal Deposit Insurance Corporation;
(9) "Federally related transaction regulations," regulations established by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, or the National Credit Union Administration, pursuant to sections 1112, 1113, and 1114 of FIREA Title XI, 12 U.S.C. §§ 3341-3343 as amended to July 21, 2010;
(10) "Financial institutions," institutions regulated by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Office of Thrift Supervision, and National Credit Union Administration;
(11) "FIRREA," the Financial Institution Reform Recovery and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183 (1989), 12 U.S.C. § 3310, et seq. as amended to July 21, 2010;
(12) "Real estate," as defined in SDCL 36-21A-11;
(13) "Secondary mortgage market participant," a guarantor or insurer of mortgage-backed securities, or an underwriter or issuer of mortgage-backed securities. Secondary mortgage market participant only includes an individual investor in a mortgage-backed security if that investor also serves in the capacity of a guarantor, insurer, underwriter, or issuer for the mortgage-backed security;
(14) "Secretary," the secretary of the department;
(15) "Substantive cause," a reason for imposing discipline against an appraiser described in § 20:77:07:03 or a substantially similar provision in the jurisdiction that imposed the discipline;
(16) "Uniform Standards," Uniform Standards of Professional Appraisal Practice as incorporated in § 20:14:06:01.
Source: 38 SDR 40, effective September 20, 2011; 45 SDR 45, effective October 8, 2018; 49 SDR 25, effective September 18, 2022; 49 SDR 48, effective November 22, 2022; 49 SDR 48, effective October 1, 2023.
General Authority: SDCL 36-21D-4(2).
Law Implemented: SDCL 36-21D-1, 36-21D-4(2).
CHAPTER 20:77:02
ADMINISTRATION
Section
20:77:02:01 Roster of appraisal management companies.
20:77:02:02 Notice of change of address.
20:77:02:03 Notice of change of designated officer.
20:77:02:04 Notice of change of controlling person.
20:77:02:01. Roster
of appraisal management companies. The secretary shall maintain a roster of
appraisal management companies registered under the provisions of this article.
The secretary shall transmit the roster to the Appraisal Subcommittee as required
by FIRREA.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(9).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(9).
20:77:02:02. Notice
of change of address. Each appraisal management company registered under
the provisions of this article shall, within five days, give written notice of
any change of physical and mailing address, change of company name, telephone
number, website, facsimile, or email address to the secretary.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(9).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(9).
20:77:02:03. Notice
of change of designated officer. Each appraisal management company
registered under the provisions of this article shall, within five days, give
written notice of change of designated officer of the appraisal management
company to the secretary.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(9).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(9).
20:77:02:04. Notice
of change of controlling person. Each appraisal management company
registered under the provisions of this article shall, within five days, give
written notice of change of controlling person of the appraisal management
company to the secretary.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(9).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(9).
CHAPTER 20:77:03
APPLICATION PROCEDURE
Section
20:77:03:01 Application for registration.
20:77:03:02 Uniform consent to service of process.
20:77:03:03 Term of registration.
20:77:03:04 Registration renewal.
20:77:03:05 Late renewal.
20:77:03:06 Change of ownership -- new application.
20:77:03:01. Application for registration. An appraisal management company desiring to provide appraisal management services in South Dakota shall apply in writing for a certificate of registration on a form approved by the secretary. An application is valid for 90 days. The secretary may extend the time for an application upon the written request of the applicant or to allow the applicant reasonable time to comply with the department's request for information or records. The registration fee prescribed in § 20:77:04:01 must accompany the application form. The application form must contain the following:
(1) Legal name and any trade or business name of the appraisal management company;
(2) Business contact information;
(3) Name and contact information of the designated officer and all other controlling persons;
(4) Name and contact information for any owner who has had an appraiser license or certificate refused, denied, cancelled, surrendered in lieu of revocation, or revoked in any state for substantive cause;
(5) Name and contact information for any person who owns more than ten percent of the appraisal management company;
(6) A signed irrevocable Uniform Consent to Service of Process;
(7) Name and contact information of each individual authorized by the appraisal management company to contract with clients or independent appraisers for performance of appraisals; and
(8) A sworn declaration signed by the applicant.
Contact information includes, but is not limited to: mailing and physical address, telephone and facsimile number, email, and website address.
Source: 38 SDR 40, effective September 20, 2011; 45 SDR 45, effective October 8, 2018; 46 SDR 29, effective September 9, 2019; 49 SDR 25, effective September 18, 2022.
General Authority: SDCL 36-21D-4(1)(4).
Law Implemented: SDCL 36-21D-1, 36-21D-4(1)(4).
20:77:03:02. Uniform
consent to service of process. An appraisal management company applying for
registration under this article shall complete an irrevocable Uniform Consent
to Service of Process on a form approved by the secretary.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(1)(4).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(1)(4).
20:77:03:03. Term
of registration. The secretary shall issue a certificate of registration to
an applicant who qualifies in accordance with this article. Any registration
issued under this article expires on December 31 of each year, unless otherwise
revoked or suspended during said term.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(1)(4).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(1)(4).
20:77:03:04. Registration
renewal. To renew any current valid certificate of registration the holder
of the registration must file an application on a form approved by the
secretary and pay the renewal fee prescribed in § 20:77:04:02 to the
secretary by November 15 of each year.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(1)(4)(5).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(1)(4)(5).
20:77:03:05. Late
renewal. If renewal of a certificate of registration is not accomplished
within the period prescribed in § 20:77:03:04, the applicant may renew the
certificate at any time prior to three months after its date of expiration by
satisfying all of the requirements for renewal, including paying the renewal
fee prescribed in § 20:77:04:02, and paying the applicable late renewal
fee prescribed in § 20:77:04:03.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(1)(4)(5).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(1)(4)(5).
20:77:03:06. Change of ownership -- new application. If a registered appraisal management company has a change of ownership that results in a new owner that holds 10% or greater interest or a change in ownership that increases an existing individual's total ownership to 10% or greater interest, it shall apply in writing for a certificate of registration as a new appraisal management company under this article and shall complete an irrevocable Uniform Consent to Service of Process on a form approved by the secretary.
Source: 45 SDR 45, effective October 8, 2018.
General Authority: SDCL 36-21D-4(1)(4).
Law Implemented: SDCL 36-21D-1, 36-21D-4(1)(4).
CHAPTER 20:77:04
FEE SCHEDULE
Section
20:77:04:01 Registration fees.
20:77:04:02 Renewal fees.
20:77:04:03 Late renewal fees.
20:77:04:04 Refund of fees.
20:77:04:01. Registration
fees. The registration fee is $1,000.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-5.
Law
Implemented: SDCL 36-21D-5(1).
20:77:04:02. Renewal
fees. The renewal fee is $750.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-5.
Law
Implemented: SDCL 36-21D-5(2).
20:77:04:03. Late
renewal fees. The late renewal fee is $50 for each month or fraction of a
month that has passed since the first day of January, not to exceed $150.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-5.
Law
Implemented: SDCL 36-21D-5(3).
20:77:05:01. Responsibilities and duties. An appraisal management company registered under the provisions of this article shall:
(1) Have a system in place to verify that utilized appraisers are licensed or certified and in good standing by this state;
(2) Require each utilized appraiser who performs appraisals in this state to certify in writing the area of geographic competency and the specific appraisal assignments competent to appraise;
(3) Have a system in place to select for review a representative sample of each utilized appraiser's reports who perform appraisal services for the appraisal management company to validate with a uniform standards, Standard 3 and 4, appraisal review the appraisal services are conducted in compliance with the uniform standards;
(4) Have a system in place to verify that any employee of, or independent contractor to, the appraisal management company that is utilized to perform a uniform standards, Standard 3 and 4, appraisal review, of the work of utilized appraisers who perform an appraisal assignment for a property located in South Dakota, be licensed or certified and in good standing by this state and conducts the appraisal review in compliance with the uniform standards;
(5) File a referral with the department if there is evidence that a utilized appraiser is in violation of the laws, rules, or uniform standards regarding appraisers, including but not limited to grounds for disciplinary action as prescribed in § 20:14:11:03;
(6) Authorize a designated officer, who will be responsible for accepting the responsibilities for compliance with SDCL chapter 36-21D and the provisions of this article, and notify the department, within five days, of any change in its designated officer;
(7) Maintain with the department the name and address of a registered agent for service of process; and notify the department, within five days, of any change to the information on file;
(8) Disclose to its client the actual fees paid to an appraiser for appraisal services, separate from any other fees or charges for appraisal management services, and make the information available to the department upon request;
(9) Disclose its certificate of registration number within its engagement document with each utilized appraiser;
(10) Pay the appraisal fee to a utilized appraiser within 45 days of the date the utilized appraiser first transmits the appraisal report to the appraisal management company, except in cases of verifiable breach of contract or substandard performance of services by the utilized appraiser; and
(11) Establish and comply with processes and controls reasonably designed to ensure that the appraisal management company conducts its appraisal management services in accordance with the requirements of subsections 129E(a) through (i) of the Truth in Lending Act (TILA), 15 U.S.C. §§ 1639e(a) through (i), and regulations thereunder.
Source: 38 SDR 40, effective September 20, 2011; 45 SDR 45, effective October 8, 2018.
General Authority: SDCL 36-21D-4(3).
Law Implemented: SDCL 36-21D-1, 36-21D-2(2)(4), 36-21D-4(3).
CHAPTER 20:77:06
RECORDS
Section
20:77:06:01 Retention of records.
20:77:06:02 Inspection and copying.
20:77:06:01. Retention
of records. An appraisal management company registered under the provisions
of this article shall retain the following records:
(1) A detailed record of
each service request that it receives for appraisals of real property located
in South Dakota, which shall include, but is not limited to, the following:
(a) Letter of
engagement with the utilized appraiser;
(b) Appraisal report
received from the utilized appraiser, including the original report, any
revised reports, and any addenda or other material furnished subsequent to the
delivery of the original report;
(c) Any and all
assignment related correspondence sent to and received from the utilized
appraiser;
(d) Letter of
engagement with the utilized reviewing appraiser for the purpose of reviewing
the requested appraisal;
(e) Review of the
requested appraisal, including the original review report, any and all
correspondence sent to and received from the utilized reviewing appraiser, and
each subsequent revised review report;
(f) Requests received
from the client, all documentation supplied to that client, and any and all
correspondence sent to and received from the client; and
(g) Fees paid to
utilized appraisers and the fees received from the client;
(2) The appraiser fee
schedules, with beginning and ending effective dates, which is developed,
maintained, and is currently being used.
Records must be retained for a minimum
of five years. However, if, within the five-year period, an appraisal or report
is involved in an investigation, litigation, or state or federal review, the
five-year period for the retention of the records begins on the date of the
final disposition of that investigation, litigation, or state or federal
review. Records may be retained as a photocopy or electronic copy type of
media.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(8).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(3)(8).
20:77:06:02. Inspection
and copying. An appraisal management company registered under the
provisions of this article shall make all records required to be maintained or
records deemed to be pertinent to an investigation of a complaint under this
article available for inspection and copying upon request of the department.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4.
Law
Implemented: SDCL 36-21D-1, 36-21D-4(3)(8)(10)(11).
CHAPTER 20:77:07
COMPLAINTS, INVESTIGATIONS, AND DISCIPLINE
Section
20:77:07:01 Complaints and investigations.
20:77:07:02 Disciplinary actions.
20:77:07:03 Grounds for disciplinary action.
20:77:07:04 Reporting of discipline.
20:77:07:01 Complaints
and investigations. The department shall upon written and signed complaint
or referral, or may, upon the secretary's own motion, initiate an investigation
of any registration holder or applicant for registration.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(6)(7)(10)(11).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(6)(7)(10)(11).
20:77:07:02 Disciplinary
actions. The secretary may, in compliance with SDCL chapter 1-26, either fine, deny, suspend, censure, reprimand, or revoke a registration required by SDCL chapter 36-21D on any of the grounds for disciplinary action provided in this article. In addition, the secretary may enter into consent agreements to contractually resolve disciplinary actions.
Source:
38 SDR 40, effective September 20, 2011.
General
Authority: SDCL 36-21D-4(7).
Law
Implemented: SDCL 36-21D-1, 36-21D-4(7), 36-21D-8, 36-21D-9.
20:77:07:03. Grounds for disciplinary action. The following acts and omissions are grounds for disciplinary action:
(1) Prohibiting an appraiser from reporting the fee paid to the appraiser in the body of the appraisal report;
(2) Using an appraisal report submitted by an independent appraiser, or any data or information contained therein, for any purpose other than its intended use without the appraiser's or the intended end user's written consent, except as necessary to comply with regulatory mandates or legal requirements;
(3) Failing to meet the requirements for registration established pursuant to this article;
(4) Procuring or attempting to procure registration under this article by knowingly making a false statement, submitting false information, or making a material misrepresentation in an application filed with the department or procuring or attempting to procure a registration through fraud or misrepresentation;
(5) Paying money or other valuable consideration other than the fees provided for by this article to any employee of the department to procure a registration;
(6) Any act which constitutes dishonesty, fraud, or misrepresentation;
(7) Any owner who owns more than ten percent of the appraisal management company, a designated officer or a controlling person having pled guilty or nolo contendere to or being found guilty of a felony; pled guilty or nolo contendere to or being convicted of a misdemeanor involving mortgage lending or real estate appraising; or having committed an offense involving breach of trust, moral turpitude, fraudulent or dishonest dealings;
(8) Any owner, who is, in whole or in part, directly or indirectly, a designated officer, or a controlling person, who has had an appraiser license or certificate refused, denied, cancelled, surrendered in lieu of revocation, or revoked in any state for substantive cause;
(9) Having disciplinary action of the designated officer or a controlling person by any agency of the State of South Dakota or another state or jurisdiction;
(10) Being permanently or temporarily prohibited by a court of competent jurisdiction from engaging in or continuing to conduct any practice involving appraisal management services or operating an appraisal management company;
(11) Violating any provision of this article or SDCL chapter 36-21D;
(12) Being disciplined with suspension, denial, censure, reprimand, or revocation of a registration by another state or jurisdiction;
(13) Submitting fraudulent documents to another state or jurisdiction to become registered;
(14) Being disciplined by any agency of the federal government, State of South Dakota, or another state or jurisdiction;
(15) Failing to comply with a final order of the secretary;
(16) Voluntary surrender of a registration in lieu of other disciplinary action by another state or jurisdiction;
(17) Altering, modifying, or otherwise changing a completed requested appraisal report without written consent from the utilized appraiser who prepared the appraisal report;
(18) Failing to establish and comply with processes and controls reasonably designed to ensure that the appraisal management company conducts its appraisal management services in accordance with the requirements of subsections 129E(a) through (i) of the Truth in Lending Act (TILA), 15 U.S.C. §§ 1639e(a) through (i) as amended to May 24, 2018, and 12 C.F.R. Part 226 (October 28, 2010);
(19) Having an investigation or disciplinary action of an appraisal management company, the designated officer or a controlling person by the department or another state pending in this state or another state;
(20) Failing to comply with a final order of the secretary;
(21) Having any owner, designated officer or controlling person fail to demonstrate good moral character; or
(22) Failing to register as an appraisal management company as required to perform appraisal management services.
Source: 38 SDR 40, effective September 20, 2011; 45 SDR 45, effective October 8, 2018; 49 SDR 25, effective September 18, 2022.
General Authority: SDCL 36-21D-4(7)
Law Implemented: SDCL 36-21D-1, 36-21D-4(7), 36-21D-10.
20:77:07:04. Reporting of discipline. Disciplinary action taken under this chapter must be reported by the secretary to the Appraisal Subcommittee's AMC National Registry within five days after final disposition.
Source: 49 SDR 25, effective September 18, 2022.
General Authority: SDCL 36-21D-4(7).
Law Implemented: SDCL 36-21D-1, 36-21D-4(7).
CHAPTER 20:77:08
NATIONAL REGISTRY FEE COLLECTION AND REMITTANCE
Section
20:77:08:01 Collection of national registry fee.
20:77:08:02 Remittance of national registry fee.
20:77:08:01. Collection of national registry fee. The department shall collect from each registered and federally regulated appraisal management company the appraisal management company national registry fee as prescribed by the Appraisal Subcommittee pursuant to § 1109 of Title XI of FIRREA.
Source: 45 SDR 45, effective October 8, 2018.
General Authority: SDCL 36-21D-4(12).
Law Implemented: SDCL 36-21D-4(12).
20:77:08:02. Remittance of national registry fee. The department shall remit the fees collected from registered and federally regulated appraisal management companies to the Appraisal Subcommittee pursuant to § 1109 of Title XI of FIRREA.
Source: 45 SDR 45, effective October 8, 2018.
General Authority: SDCL 36-21D-4(12).
Law Implemented: SDCL 36-21D-4(12).
