The Costly Dangers of Unlicensed Commercial Appraisal Work

In CAM Library, Condo Association, Florida Hurricane Insurance, Florida Statute 718.111, Home Owner Association (HOA), Insurance Appraisal, USPAP by Patricia Staebler

When reviewing insurance appraisal reports for condo associations my colleagues and I often find reports authored and signed by companies or individuals who are not licensed appraisers in the State of Florida. When appraising buildings for condo associations an appraiser must be a State-Certified General Appraiser; residential appraisers are not allowed to appraise residential buildings over four units or a commercial building. Fulfilling the requirements to become a commercial appraiser (see bullet points below) takes between three and four years.

State-Certified General Appraisers Requirements:

  • 4-year bachelors degree or higher, or a total of 30 semester hours consisting of: English Composition; Micro Economics, Macro Economics; Finance; Algebra; Geometry or higher mathematics; Statistics; Computer Science; and either Business Law or Real Estate Law.
  • 300 classroom hours of board-approved courses (with passing exams) including fifteen hours of the Uniform Standards of Professional Appraisal Practice (USPAP).
  • Provide evidence of 3,000 hours of real property appraisal experience obtained over a minimum of a 30-month period. 1,500 hours of the claimed experience must be in commercial appraisal work. Upon request, the applicant must provide the appraisal board, for its examination, copies of appraisal reports to support the claim for experience.
  • Pass the General National Exam and the Florida Supplemental Exam.
  • State-Certified General (Commercial) Appraiser may appraise both, residential and commercial properties.

So we spend a good amount of time in the field and in the classroom, study as much as we can to pass the grueling state exam to find that others take the easy road. We have seen “appraisal reports” from home inspectors, insurance adjusters, contractors, engineers and others.

Some of these providers argue that they are providing a cost estimate and not an appraisal. Unfortunately this argument is copied by the Florida Department of Business and Professional Regulation (DBPR) and trying to turn these unlicensed providers in, appears to be futile in most cases.

I discussed this wrong decision by the DBPR with many of my peers and we all have the same opinion that unlicensed providers should not perform a commercial appraisal.

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When examining Florida law, we find the following:

Florida Statute 718.111.11 (a) states the following:

“Adequate property insurance, regardless of any requirement in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, must be based on the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal. The replacement cost must be determined at least once every 36 months.”

This passage in the Florida Statutes makes the insurance appraisal a requirement by law, which in turn will require every appraiser to comply with the Uniform Standard of Professional Appraisal Practice (USPAP), see the following excerpt from USPAP:

“An appraiser must comply with USPAP, when either the service or the appraiser is required by law, regulation, or agreement with the client or intended user.”

USPAP further states, that if one acts as an appraiser, one has to comply with USPAP.

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Therefore, an individual or company signing reports with “senior appraiser”, “regional appraiser”, “insurance appraiser” and alike is violating law and USPAP.

A commercial appraisal report, regardless if for market or insurable value, must be signed by a State-Certified General Appraiser with full name, license number and rank. Fantasy titles as listed above are not sufficient to sign an appraisal report. Furthermore, State-Registered Trainees cannot sign an appraisal report without the accompanying signature of their supervisor who must be a State-Certified General Appraiser.

So why is unlicensed work potentially dangerous? An insurance appraisal will establish the replacement value of your commercial or multifamily building, which in turn will be the basis for your insurance policy. If the value is not right, your policy will not be right and you might risk being under- or over insured. Especially CAMs and board members want to do their due diligence when selecting an appraiser to avoid liability issues with the community they are serving.

The next time you are comparing bids for your next appraisal report, make sure all bidders are licensed commercial appraisers with the title as stated above. You can check an individual’s license following by going to DBPR License Search.

One more thought: After all these years of education and continuing education a true appraiser will proudly display his/her title as required by law. Because we love what we do!!

As always call or email with questions; thank you for reading my blog.

Patricia Staebler, SRA
State-Certified General Appraiser RZ2980
(yes, that’s the way it should be done)

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