vs.
Case No. 20-4792PL
STACY L. FRETINA,
Respondent.
On January 5, 2021, Yolonda Y. Green, a duly-designated Administrative Law Judge of the Division of Administrative Hearings (“DOAH”), conducted a hearing pursuant to section 120.57(1), Florida Statutes (2020), by Zoom conference.
For Petitioner: Delhon Braaten, Assistant General Counsel James Fortunas, Esquire
Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399
Whether Respondent violated Florida law related to real estate appraisal professionals as alleged in the administrative complaint; and if so, what penalty is appropriate.
On March 6, 2020, Petitioner, Department of Business and Professional Regulation (“Petitioner” or “Department”), filed a three-count Administrative Complaint against Respondent, alleging: 1) a violation of section 475.624(4), Florida Statutes, by failing to comply with Florida Administrative Code Rule 61J1-9.001, by failing to comply with the Uniform Standards of Professional Appraisal Practice (“USPAP”) rules; 2) a violation of section 455.227(1)(m), Florida Statutes; and 3) a violation of section 475.624(15). Respondent timely requested a formal hearing to dispute the allegations in the Administrative Complaint.
On October 27, 2020, the Department referred this matter to DOAH for assignment of an Administrative Law Judge and this matter was assigned to the undersigned. The undersigned scheduled this matter for final hearing on January 5 and 6, 2021.
Prior to the final hearing, the parties filed a Joint Pre-Hearing Stipulation, in which they stipulated to certain facts. To the extent relevant, the parties' stipulated facts have been incorporated in the findings below.
During preliminary matters, the undersigned heard argument from both parties regarding Petitioner’s Motion for Judicial Notice. After hearing argument from both parties, the undersigned denied the motion.
On January 5, 2021, the undersigned commenced the final hearing.
Petitioner presented the testimony of two witnesses: Teresa White (mortgage underwriting expert) and Joel Salley (general real estate appraiser expert).
18 through 23 into evidence. Respondent testified on her own behalf and presented no other witnesses. Respondent’s exhibits 1 through 3 were admitted into evidence.
The one-volume Transcript was filed with DOAH on February 4, 2021.
The parties timely filed Proposed Recommended Orders ("PRO"), which have been considered in preparation of this Recommended Order.
Except where otherwise indicated, all references to the Florida Statutes in this Recommended Order are to the 2019 edition. See McCloskey v. Dep’t of Fin. Servs., 115 So. 3d 441, 444 (Fla. 5th DCA 2013)(holding that statutes and rules in effect at the time of the allegations apply, unless otherwise specified).
Petitioner is the state agency charged with regulating the practice of real estate appraisal pursuant to section 20.165 and chapters 455 and 475, Florida Statutes.
At all times material to this matter, Respondent was licensed as a state certified general real estate appraiser in the state of Florida, having been issued license number RD 6606. Respondent is also certified as an appraiser in Texas. Respondent has no prior discipline.
At all times material to this matter, Respondent’s address of record was 11 Racetrack Road Northeast, Suite F4, Fort Walton Beach, Florida 32547.
Respondent has a 15-year history of practicing in the area of appraising property and preparing appraisal reports. She has appraised approximately
15 properties in Santa Rosa County, and has significant knowledge of the geographical area to perform appraisals in Santa Rosa County.
Respondent has taken college courses to develop her education of appraisal practice, and she has taken courses on proper supervision of an appraisal trainee.
In this case, Respondent was retained by Value Links, an appraisal management company to appraise a residential real estate property located at 6839 Gordon Evans Road, Navarre, Florida 32566 in Santa Rosa County (“Subject Property”). Value Links was serving as the agent for George Mason Mortgage, LLC (“Intended User” or “Lender”).
The engagement letter required that the final appraisal report include original photos of all comparable sales. Multiple Listing Services (“MLS”) photos were acceptable if original photos were not available, so long as the report includes a comment disclosing that MLS photos were used.
The final appraisal report was required to be submitted to the Intended User.
First Appraisal Report
At the outset of receiving the appraisal assignment, Respondent assigned the appraisal to herself and had her appraiser trainee, Stephanie Lanette Hansen, assist her with the assignment. Ms. Hansen, a state registered trainee appraiser, has been issued license number RI24220.
It is customary that an appraiser trainee under the supervision of a certified residential appraiser is permitted to perform all aspects of an appraisal assignment including inspecting and measuring the Subject Property with or without their supervisor present.
Respondent’s appraiser trainee, Ms. Hansen, who did not testify at the hearing, has been training with Respondent since 2014.
Ms. Hansen performed a physical inspection including taking pictures of the interior and exterior of the Subject Property. Respondent did not
physically visit the property, but rather she visually examined the photographs Ms. Hansen took during her inspection.
A material issue of dispute in this matter is whether Respondent’s
review of the photographs taken by her trainee could be considered an
inspection of the property. Petitioner’s expert testified that the term “visual”
inspection is known within the real estate appraisal industry to mean “personal” inspection. Petitioner also pointed to the language of USPAP Standards Rule 2-3 for guidance regarding the meaning requirement of a personal inspection.
USPAP Rule 2-3 provides a standard certification that the appraiser shall indicate whether he or she made a personal inspection of the property that is the subject of the report. The language of the rule does not require a personal inspection. Moreover, the certification cites to an advisory opinion regarding Inspection of Subject Property. See USPAP Advisory Opinion 2 (AO-2). The advisory opinion regarding minimum level of inspection provides as follows: “An appraiser may use any combination of property inspection, plans and specifications, asset records, photographs, property sketches, recorded media, etc., to gather information about the relevant characteristics of the subject property….”
On or about September 5, 2019, with an effective date of August 23, 2019, Respondent prepared and transmitted the first appraisal report for the
Subject Property, with the assistance of her trainee. Respondent assessed the market value of the property at $388,000.
In the appraisal report, Respondent indicated in the additional certification comments section that: “State Registered Trainee Appraiser Florida License Number RI 24220, Stephanie Lanette Hanson has contributed significant assistance in this report. The extent of the assistance includes: inspecting, gathering, analyzing, and verifying data of the [Subject Property] and comparable properties, data entry, market adjustments, reporting and reconciliation of market value.”
In the first appraisal report, Respondent did not identify the presence of any fireplace.
Respondent used MLS photos for the comparable properties. However, she did not disclose in the report that the photos were not original.
Respondent’s appraisal report included a standard Fannie Mae certification form. The certification form listed a provision regarding performance of a complete “visual” inspection of the interior and exterior of the Subject Property.
Respondent testified that she performed a visual inspection of the property by examining the photographs, which, according to her experience, is permitted in the appraisal industry.
Respondent signed the first appraisal report as the primary appraiser, instead of as the supervising appraiser. Respondent’s signature on the report was her attestation that she certified the representations in the report.
Respondent also maintained a work file for her appraisal of the Subject Property. Respondent’s work file contained all documentation required to comply with USPAP rules, including the name of the Intended User, copies of all written reports, all data, and documentation necessary to support her opinion and conclusions.
After transmission of the first appraisal report, the Intended User contacted Respondent and advised her that the buyer, sellers, and listing agent wanted reconsideration of the value of the property. Respondent agreed to amend her report.
Second Appraisal Report
Respondent revised her first appraisal report as requested and addressed the concerns in the second report, including a comparable sales assessment for a comparable property, the absence of a fireplace, and the value assessment of the property.
In her second appraisal report, Respondent addressed the requested revisions. First, she noted that the comparable sale assessment as a Q3 construction rating and supported her reason for assessing the Subject Property as a Q4 rating because it was located in a superior neighborhood with amenities. Respondent also addressed the omission of the fireplace. She testified that she inadvertently missed the permanent fireplace. She further explained that the second alleged fireplace was electric and, thus, considered personal property. As a result, she did not give the electric fireplace consideration in the assessment. She provided this same support for her decision in the second appraisal report.
Based on her identification of the permanent fireplace, Respondent corrected the assessment of the property to reflect a $2,000 increase in value.
Respondent’s $2,000 increased adjustment for the fireplace was also supported in Respondent’s work file that she maintained for this appraisal assignment. In determining the value of the Subject Property’s fireplace,
Respondent considered the cost stated in Marshall Swift Cost Handbook that she maintains in her office, the local builders in the area, consultation with her father who is a general contractor, and her peers in the area where the Subject Property is located.
Respondent testified that she did not intend to mislead anyone when she transmitted the report. She inadvertently failed to include the fireplace in the first report, but corrected her mistake when she revised the report.
On or about September 16, 2019, with an effective date of August 23, 2019, Respondent submitted the amended appraisal report for the Subject Property. In that report, Respondent assessed the value of the property at
$390,000. As she did with the first report, she signed the second report as the primary appraiser.
Petitioner’s Expert
Petitioner’s expert, Joel Salley, a State Certified Residential Appraiser, reviewed Respondent’s report to determine compliance with USPAP rules. Mr. Salley was critical of Respondent’s performance in appraising the property and her reports. He was critical of Respondent’s omission of the fireplace from her first report. He credibly testified that the omission of the fireplace impacted the assessed value of the property.
Mr. Salley also credibly testified that Respondent’s work file included a description compliant with a Q3 quality rating for comparable property No. 4. He further testified that the alleged lack of inspection resulted in omission of other things, which will not be addressed as a violation in this matter, as they were not alleged in the Administrative Complaint.1
Respondent’s Testimony
Respondent asserted that she did not intend to mislead the Intended User by using MLS photographs of the comparable sale, the Intended User
never complained about Respondent’s use of MLS photographs, and the use of MLS photographs had no overall effect on the credibility of the appraisal report.
Respondent testified that she signed both appraisal reports as the primary appraiser to demonstrate that she was accepting full responsibility for the appraisal reports. She also indicated in both of her reports that her appraiser trainee provided significant assistance with the appraisal. She asserted that when more than one appraiser is involved in an assignment, USPAP allows for only one appraiser to sign the certification as long as it is disclosed that another appraiser provided significant assistance and the
1 The allegations of fact set forth in the Administrative Complaint are the grounds upon which this proceeding is predicated. Trevisani v. Dep’t of Health, 908 So. 2d 1108, 1109 (Fla. 1st DCA 2005); see also Cottrill v. Dep’t of Ins., 685 So. 2d 1371, 1372 (Fla. 1st DCA 1996). Thus, the scope of this proceeding is restricted to those matters as framed by Petitioner.
M.H. v. Dep’t of Child. & Fam. Servs., 977 So. 2d 755, 763 (Fla. 2d DCA 2008).
nature of the assistance. The undersigned does not find Respondent’s explanation for signing the appraisal reports as the appraiser instead of the supervisory appraisal persuasive. The undersigned finds that the competent substantial evidence demonstrates that she signed both appraisal reports as the appraiser when she actually served as the supervising appraiser.
Although the Intended User was aware of the errors made regarding the appraisal assignment, it did not file the complaint against Respondent and Value Link continues to retain Respondent to perform appraisals.
Ultimate Findings of Fact
The undersigned finds that there is no clear and convincing evidence that Respondent did not inspect the property as the term is used under the USPAP rules, which governs appraisers.
Respondent included a description and support in her work file to support the Q3 quality construction rating for comparable property No. 4.
Respondent failed to identify a fireplace in the Subject Property in the first appraisal report, but corrected her error in the second report.
The competent substantial evidence demonstrated that Respondent was reasonably diligent in her preparation of the appraisal reports to meet the needs of the Intended User. While there may have been errors in the initial report, the competent substantial evidence demonstrates that Respondent exercised reasonable diligence in preparing the appraisal reports to meet the needs of the Intended User.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to sections 120.569 and 120.57(1).
The Department has authority to investigate and file administrative complaints charging violations of the laws governing real estate appraisers.
§ 475.624, Fla. Stat.
Petitioner seeks to take disciplinary action against the appraiser license of Respondent. A proceeding to impose discipline against a professional license is penal in nature, and Petitioner bears the burden to prove the allegations in the Administrative Complaint by clear and convincing evidence. Dep't of Banking & Fin. v. Osborne Stern & Co., 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
Clear and convincing evidence “requires more proof than a ‘preponderance of the evidence’ but less than ‘beyond and to the exclusion of a reasonable doubt.’” In re Graziano, 696 So. 2d 744, 753 (Fla. 1997). As stated by the Supreme Court of Florida, the clear and convincing evidence level of proof:
Clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.
In re Davey, 645 So. 2d 398, 404 (Fla. 1994) (quoting Slomowitz v. Walker, 429 So.
2d 797, 800 (Fla. 4th DCA 1983)); see also In re Henson, 913 So. 2d 579, 590
(Fla. 2005). “Although this standard of proof may be met where the evidence is in conflict, it seems to preclude evidence that is ambiguous.” Westinghouse Electric Corp. v. Shuler Bros., 590 So. 2d 986, 989 (Fla. 1st DCA 1991).
Disciplinary statutes must be construed in terms of their literal meaning and words used by the Legislature may not be expanded to broaden the application of such statutes. Thus, the provisions of law upon which this disciplinary action has been brought must be strictly construed, with any ambiguity construed in favor of the party against whom the penalty would be imposed. Munich v. Dep’t of Bus. & Prof’l Reg., 592 So. 2d 1136, 1143 (Fla. 1st
DCA 1992); see also Griffis v. Fish & Wildlife Conserv. Comm'n, 57 So. 3d 929, 931 (Fla. 1st DCA 2011); Beckett v. Dep’t of Fin. Servs., 982 So. 2d 94,
100 (Fla. 1st DCA 2008); Whitaker v. Dep’t of Ins., 680 So. 2d 528, 531 (Fla. 1st DCA 1996); Dyer v. Dep’t of Ins. & Treas., 585 So. 2d 1009, 1013 (Fla. 1st DCA 1991).
Alleged Violations
At the time the allegations in this matter arose, section 475.624 provided in relevant part:
Discipline of appraisers.—The board may deny an application for registration or certification of an appraiser; may investigate the actions of any appraiser registered, licensed, or certified under this part; may reprimand or impose an administrative fine not to exceed $5,000 for each count or separate offense against any such appraiser; and may revoke or suspend, for a period not to exceed 10 years, the registration, license, or certification of any such appraiser, or place any such appraiser on probation, if the board finds that the registered trainee, licensee, or certificateholder:
* * *
(4) Has violated any provision of this part or any lawful order or rule issued under this part or chapter 455.
* * *
(15) Has failed or refused to exercise reasonable diligence in developing an appraisal or preparing an appraisal report.
At the time the allegations in this matter arose, section 455.227 provided in pertinent part:
The following acts shall constitute grounds for which the disciplinary actions specified in subsection (2) may be taken:
* * *
(m) Making deceptive, untrue, or fraudulent representations in or related to the practice of a profession or employing a trick or scheme in or related to the practice of a profession.
At the time the allegations in this matter arose, rule 61J1-9.001 provided: “All registered, licensed, or certified appraisers shall comply with the 2018-2019 Uniform Standards of Professional Appraisal Practice (USPAP), effective January 1, 2018, which is incorporated by reference.”
The alleged violations of USPAP provisions at issue here are listed below based on their listing in the Administrative Complaint as follows:
USPAP Record Keeping Rule provides in pertinent part: [t]he workfile must include: all other data, information, and documentation necessary to support the appraiser’s opinions and conclusions and to show compliance with USPAP, or references to the location(s) of such…data, information, and documentation. An appraiser who willfully or knowingly fails to comply with the obligations of the Record Keeping Rule is in violation of the Ethics Rule.
USPAP Ethics Rule provides in pertinent part: [a]n appraiser must not advocate the cause or interest of any party or issue; must not communicate assignment results with the intent to mislead or defraud; must not use or communicate a report or assignment results known by the appraiser to be misleading or fraudulent; must not willfully or knowingly violate the requirements of the Record Keeping Rule; and must not perform an assignment in a grossly negligent manner.
USPAP Scope of Work Rule provides in pertinent part: [f]or each appraisal …, an appraiser must identify the problem to be solved; determine and perform the scope of work necessary to develop a credible assignment results; disclose the scope of work in the report. Appraisers have broad
flexibility and significant responsibility in determining the appropriate scope of work for an appraisal…. Credible assignment results require support by relevant evidence and logic. The credibility of the results is always measured in the context of the intended user.
USPAP Standard Rule 1-2(e)(i) provides: [i]n developing a real property appraisal, an appraiser must: Identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal including: its location and physical, legal, and economic attributes.
USPAP Standard Rule 1-4(a) provides: [w]hen a sales comparison approach is necessary for a credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion.
USPAP Standard Rule 2-1(a) provides: [e]ach written or written appraisal report must: clearly and accurately set forth the appraisal in a manner that will not be misleading.
The three-count Administrative Complaint alleged Respondent violated the following: 1) a violation of section 475.624(4), by failing to comply with rule 61J1-9.001, by failing to comply with the USPAP rules; 2) a violation of section 455.227(1)(m); and 3) a violation of section 475.624(15).
As to Count One, Petitioner alleged Respondent violated section 475.624(4), by failing to comply with rule 61J1-9.001, by failing to comply with the USPAP rules.
Regarding the USPAP Record Keeping Rule, Petitioner conceded in it’s PRO that there was no evidence to prove by clear and convincing evidence that Respondent violated USPAP Rule 1-4(a) or the USPAP Record Keeping Rule. In addition, the record establishes sufficient evidence that Respondent complied with this rule.
Regarding the USPAP Ethics Rule, one of the issues raised was related to the photos used for the comparative properties. The engagement agreement indicated that Respondent, as the appraiser, was permitted to use MLS photos with an included comment. However, Respondent did not include a comment regarding the use of MLS photos for the comparable properties. Petitioner must prove that Respondent’s failure to make the disclosure of the origin of the photos was considered intentionally and knowingly communicating a report that was misleading. The evidence clearly establishes that Respondent examined photographs of the comparable properties. However, upon examination of the report in the comments about the Subject Property, including the comparative properties, Respondent did not provide a comment that they were not original photos. It is noted that Respondent provided an explanation related to her trainee’s inspection of the property, but again did not provide information regarding the origin of the comparable property photos. By signing the certification, Respondent attested to the truth of its contents. The only reasonable inference that may be drawn here is that she knowingly intended to submit the report which was misleading as to the origin of the comparative property photos. See Walker v. Dep’t pf Bus. & Prof’l Reg., 705 So. 2d 652, 654 (Fla. 5th DCA 1998) (circumstantial evidence is sufficient to prove an intentional act). Thus, Petititioner proved that Respondent violated the USPAP Ethics Rule.
Regarding the USPAP Scope of Work Rule, the evidence offered at hearing established that Respondent inadvertently omitted the fireplace from her initial appraisal report. She then corrected the error when it was called to her attention. Thus, there is insufficient clear and convincing evidence that Respondent violated the Scope of Work Rule.
Regarding USPAP Standard Rule 1-2(e)(i), as stated herein, Respondent did not include the fireplace in the initial appraisal report, which was relevant to the value of the Subject Property. While Respondent explained that it was an unintended oversight, Respondent’s failure to
include the fireplace led to her initial assessment of $2,000 less than the value of the property. Respondent corrected her error and adjusted the value.
However, the evidence demonstrates that she initially failed to include a
characteristic of the property that was relevant to the property’s value. Thus, Petitioner proved by clear and convincing evidence that Respondent failed to comply with USPAP Rule 1-2(e)(i).
Regarding USPAP Standard Rule 1-4(a), Petitioner conceded in its PRO that there was insufficient evidence to prove by clear and convincing evidence that Respondent violated USPAP Rule 1-4(a). In addition, the record establishes sufficient evidence that Respondent complied with this rule.
Regarding USPAP Standard Rule 2-1(a), at issue is whether Respondent truthfully certified the type of inspection she performed of the property. As discussed above, there was insufficient clear and convincing evidence she violated rule 2-1(a) by performing a visual inspection of the property utilizing photographs, which is permitted under the rule.
Based on the foregoing, Petitioner proved Respondent violated section 475.624(4) by failing to comply with rule 61J1-9.001, and by failing to comply with USPAP Rule 1-2(e)(i) and USPAP Ethics Rule.
As to Count Two, Respondent inadvertently omitted the fireplace from the initial report. An honest mistake would not constitute deceptive or fraudulent representations, as Petitioner would need to prove intentional conduct. The listing of incorrect information in the first report was, however, untrue. Thus, Petitioner proved by clear and convincing evidence that Respondent violated section 455.227(1)(m).
As to Count Three, for the reasons discussed in the Findings of Fact above, the evidence does not support a violation for failure to exercise reasonable diligence in developing an appraisal or preparing an appraisal report. While there may have been errors in the initial report, the competent substantial evidence demonstrates that Respondent exercised reasonable
diligence in preparing the appraisal reports to meet the needs of the Intended User. Thus, Petitioner did not prove a violation of section 475.624(15).
Penalty
Respondent is subject to disciplinary action by the Real Estate Appraisal Board pursuant to section 475.624.
Section 455.2273(5), Florida Statutes, states that “[t]he administrative law judge, in recommending penalties in any recommended order, must follow the penalty guidelines established by the board or department and must state in writing the mitigating or aggravating circumstances upon
which the recommended penalty is based.”
Under rule 61J1-8.002(3), the following guidelines shall be used in disciplinary cases, absent aggravating or mitigating circumstances and subject to other provisions of that chapter:
(g) Section 475.624(4), for a first violation, probation or revocation and an administrative fine up to $5,000.
(r) Section 475.624(15), for a first violation, one year probation to revocation and an administrative fine of $1,000.
Rule 61J1-8.002(4)(b) provides the following:
(b) Aggravating or mitigating circumstances may include, but are not limited to, the following:
The degree of harm to the consumer or public.
The number of counts in the administrative complaint.
The disciplinary history of the licensee.
The status of the licensee at the time the offense was committed.
The degree of financial hardship incurred by a licensee as a result of the imposition of a fine or suspension of the license.
The clear, convincing evidence of multiple mitigating circumstances, with no aggravating circumstances, clearly calls for departing from the high end of the penalty guidelines that would apply in a normal case without mitigating circumstances.
Under these circumstances, the undersigned has considered the violations found in two of the three counts, the financial hardship that would result from imposition of a fine or suspension of license, the fact that Respondent corrected her mistakes, thus, reducing any harm to the client, and that Respondent has no prior disciplinary history.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered as follows:
$1,500 within the probationary period.
DONE AND ENTERED this 8th day of March, 2021, in Tallahassee, Leon County, Florida.
Mackenzie K. Medich, Esquire Department of Business and Professional Regulation
YOLONDA Y. GREEN
Division of Administrative Hearings this 8th day of March, 2021.
Daniel Villazon, Esquire Daniel Villazon, P.A. Suite 535
Julie I. Brown, Secretary Department of Business and Professional Regulation 2601 Blair Stone Road
David Axelman, General Counsel Office of the General Counsel Department of Business
and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399-2202
All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
