CHAPTER 36-21D
APPRAISAL MANAGEMENT COMPANIES
36-21D-1 Registration of appraisal management companies required--Injunction for violation.
36-21D-2 Appraisal management company defined.
36-21D-3 Appraisal defined.
36-21D-4 Promulgation of rules regarding companies and services.
36-21D-5 Promulgation of rules regarding fees.
36-21D-6 South Dakota appraisal management companies fund.
36-21D-7 Expenditure from fund only upon appropriation.
36-21D-8 Monetary penalty for violation.
36-21D-9 Assessment of expenses of contested case proceeding.
36-21D-10 Prohibited conduct--Grounds for discipline.
36-21D-11 Permissible conduct.
36-21D-12 Surety bond or irrevocable letter of credit to be filed with application for registration or renewal--Conditions.
36-21D-13 Maintenance of surety bond or irrevocable letter of credit.
36-21D-14 Action against surety bond or irrevocable letter of credit.
36-21D-1. Registration of appraisal management companies required--Injunction for violation.
Any person or entity acting as an appraisal management company or performing appraisal management services in this state, except an appraisal management company that is a subsidiary owned and controlled by a financial institution regulated by a federal financial institution regulatory agency, shall register with the Department of Labor and Regulation. Any person or entity who violates this section may be restrained by permanent injunction in any court of competent jurisdiction, at the suit of the attorney general or any citizen of the state.
Source: SL 2011, ch 184, § 1.
36-21D-2. Appraisal management company defined.
For the purposes of this chapter, the term, appraisal management company, means, in connection with valuing properties and collateralizing mortgage loans or mortgages incorporated into a securitization, any external third party authorized either by a creditor of a consumer credit transaction secured by a consumer's principal dwelling or by an underwriter of or other principal in the secondary mortgage markets, that oversees a network or panel of more than fifteen certified or licensed appraisers in a state or twenty-five or more nationally within a given year to:
(1) Recruit, select, and retain appraisers;
(2) Contract with licensed or certified appraisers to perform appraisal assignments;
(3) Manage the process of having an appraisal performed, including providing administrative duties including:
(a) Receiving appraisal orders and appraisal reports;
(b) Submitting completed appraisal reports to creditors and underwriters;
(c) Collecting fees from creditors and underwriters for services provided; or
(d) Reimbursing appraisers for services performed; or
(4) Review and verify the work of appraisers for compliance with the Uniform Standards of Professional Appraisal Practice.
Source: SL 2011, ch 184, § 2.
36-21D-3. Appraisal defined.
For the purposes of this chapter, an appraisal is the act or process of developing an opinion of value of real estate for another and for compensation.
Source: SL 2011, ch 184, § 3; SL 2013, ch 180, § 3.
36-21D-4. Promulgation of rules regarding companies and services.
The secretary of the Department of Labor and Regulation may promulgate rules pursuant to chapter 1-26 relating to appraisal management companies and appraisal management services in the following areas:
(1) Registration of appraisal management companies;
(2) Definition of terms;
(3) Responsibilities and duties;
(4) Application for and issuance of certificate of registration;
(5) Renewal and late renewal procedures;
(6) Contracting for investigations;
(7) Complaints and grounds for disciplinary actions, including denial, revocation, suspension, censure, and reprimand;
(8) Retention and inspection of records;
(9) Roster;
(10) Review of appraisal related records;
(11) Inspection, examination, and photocopy of records;
(12) National registry fee collection and remittance; and
(13) Filing of surety bonds or irrevocable letters of credit.
Source: SL 2011, ch 184, § 4; SL 2014, ch 184, § 4; SL 2021, ch 168, § 36.
36-21D-5. Promulgation of rules regarding fees.
The secretary of the Department of Labor and Regulation may promulgate rules pursuant to chapter 1-26 to establish fees for registration of appraisal management companies as follows:
(1) Application fees not to exceed one thousand dollars;
(2) Renewal fees not to exceed one thousand dollars; and
(3) An additional late renewal fee not to exceed six hundred dollars.
Source: SL 2011, ch 184, § 5.
36-21D-6. South Dakota appraisal management companies fund.
All moneys received by the Department of Labor and Regulation pursuant to this chapter shall be deposited by the department with the state treasurer. The state treasurer shall credit the moneys to the South Dakota appraisal management companies fund. Expenditure from this fund shall only be paid on warrants drawn by the state auditor and approved by the department.
Source: SL 2011, ch 184, § 6.
36-21D-7. Expenditure from fund only upon appropriation.
Any expenditure of money from the South Dakota appraisal management companies fund shall be made only upon appropriation by the Legislature through either the general appropriations act or a special appropriations bill.
Source: SL 2011, ch 184, § 7.
36-21D-8. Monetary penalty for violation.
The secretary of the Department of Labor and Regulation may impose a monetary penalty not to exceed two thousand dollars on an appraisal management company registered pursuant to this chapter or on an unregistered appraisal management company performing appraisal management services in this state, upon proof of a violation of the rules relating to appraisal management companies as adopted by the department pursuant to chapter 1-26 or a violation of this chapter.
Source: SL 2011, ch 184, § 8.
36-21D-9. Assessment of expenses of contested case proceeding.
The secretary of the Department of Labor and Regulation may assess to a registered appraisal management company, an applicant for registration as an appraisal management company, or an unregistered appraisal management company performing appraisal management services in this state, all or part of the actual expenses of a contested case proceeding resulting in the discipline or censure of the registrant, suspension or revocation of the registrant's certificate of registration, the denial of a certificate of registration to the applicant, or the discipline or censure of an unregistered appraisal management company performing appraisal management services in this state.
Source: SL 2011, ch 184, § 9.
36-21D-10. Prohibited conduct--Grounds for discipline.
No employee, director, officer, agent, independent contractor or other third party acting on behalf of an appraisal management company may:
(1) Improperly influence or attempt to improperly influence the development, reporting, result, or review of a real estate appraisal;
(2) Intimidate, coerce, extort, bribe, blackmail, withhold payment for appraisal services, or threaten to exclude the real estate appraiser from future work in order to improperly obtain a desired result;
(3) Condition payment of an appraisal fee upon the opinion, conclusion, or valuation to be reached;
(4) Request a real estate appraiser to report a predetermined opinion, conclusion, or valuation or the desired valuation of any person or entity;
(5) Engage in any other act or practice that impairs or attempts to impair a real estate appraiser's independence, objectivity, and impartiality;
(6) Require a real estate appraiser to provide the appraisal management company with the appraiser's digital signature or seal;
(7) Alter, amend, or change an appraisal report submitted by a real estate appraiser;
(8) Remove an appraiser from a real estate appraiser panel without prior written notice to the appraiser, with the prior written notice including evidence of the following:
(a) The appraiser's illegal conduct;
(b) A violation of the appraisal standards adopted by the Department of Labor and Regulation pursuant to this chapter; or
(c) Improper or unprofessional conduct; or
(9) Require an appraiser to sign any indemnification agreement that would require the appraiser to defend and hold harmless the appraisal management company or any of its agents or employees for any liability, damage, losses, or claims arising out of the services performed by the appraisal management company or its agents, employees, or independent contractors and not the services performed by the appraiser.
A violation of this section may constitute grounds for discipline against an appraisal management company who is registered pursuant to the laws of the State of South Dakota.
Source: SL 2011, ch 184, § 10.
36-21D-11. Permissible conduct.
No appraisal management company violates § 36-21D-10 solely by asking a real estate appraiser to:
(1) Consider additional, appropriate property information;
(2) Provide further detail, substantiation, or explanation for the appraiser's value conclusion; or
(3) Correct errors in the appraisal report.
An appraisal management company may retain a real estate appraiser from panels or lists on a rotating basis; supply an appraiser with information the appraiser is required to analyze under the appraisal standards adopted by the department, such as agreements of sale, options, and listings of the property to be valued; and withhold payment of an appraisal fee based on a bona fide dispute regarding the appraiser's compliance with the appraisal standards adopted by the Department of Labor and Regulation pursuant to this chapter.
Source: SL 2011, ch 184, § 11.
36-21D-12. Surety bond or irrevocable letter of credit to be filed with application for registration or renewal--Conditions.
An applicant for issuance or renewal of an appraisal management company registration shall file with the Department of Labor and Regulation a surety bond with one or more corporate sureties authorized to do business in this state or an irrevocable letter of credit issued by an insured institution authorized to do business in South Dakota in the amount of twenty-five thousand dollars. The surety bond or irrevocable letter of credit shall be conditioned upon the following:
(1) That the appraisal management company pay all amounts owed to a person who performs a real estate appraisal service for the company and pay all amounts adjudged against the company by reason of a negligent or improper real estate appraisal, a negligent or improper appraisal management service, or a breach of contract in performing a real estate appraisal or appraisal management service; and
(2) That the surety company or insured institution provides written notice to the department, by registered or certified mail, at least thirty days before the surety company or insured institution cancels or revokes a surety bond or irrevocable letter of credit or if the surety company or insured institution pays for a loss under the surety bond or irrevocable letter of credit.
Source: SL 2014, ch 184, § 1.
36-21D-13. Maintenance of surety bond or irrevocable letter of credit.
An appraisal management company shall continuously maintain the surety bond or irrevocable letter of credit required by § 36-21D-12 on file with the Department of Labor and Regulation in the amount of twenty-five thousand dollars for the exclusive purpose of payment of the obligations listed in subdivision 36-21D-12(1). Upon termination, cancellation, or reduction of the surety bond or irrevocable letter of credit to less than twenty-five thousand dollars, the registered appraisal management company shall file a replacement surety bond or irrevocable letter of credit within the time period established by the department by rule or surrender the company's registration to the department and cease operating as an appraisal management company.
Source: SL 2014, ch 184, § 2.
36-21D-14. Action against surety bond or irrevocable letter of credit.
Any person damaged by an appraisal management company's failure to pay an obligation listed in subdivision 36-21D-12(1) has a right of action against the surety bond or irrevocable letter of credit. Any action against a surety bond or irrevocable letter of credit must be filed in a court of competent jurisdiction within one year after the appraisal management company fails to pay the amount owing or the amount adjudged against the appraisal management company.
Source: SL 2014, ch 184, § 3.
