The Issue Whether the Respondent committed the violations stated in the Amended Administrative Complaint filed September 30, 2009, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Florida Real Estate Appraisal Board ("Board") is the entity responsible for licensing, regulating, and imposing discipline upon real estate appraisers operating in Florida. See §§ 475.613(2) and .624, Fla. Stat. (2007). The Department is the state agency responsible for investigating complaints and, upon a finding of probable cause by the Board, issuing administrative complaints and prosecuting disciplinary actions involving real estate appraisers in Florida. See § 455.225(1)(a), (4), and (6), Fla. Stat. At all times pertinent to these proceedings, Mr. Facendo was a state-certified real estate appraiser, having been issued license number RD-2598, and his business office was located in Plantation, Florida. In August 2007, Mr. Facendo's office received a request from University Capital Funding, a mortgage broker, for an appraisal on property known as 901 Southwest Worchester Lane, Port St. Lucie, Florida 34953 ("Worchester Lane property"). After receiving the request, Mr. Facendo consulted the Multiple Listing Service with respect to the Worchester Lane property and the neighborhood. Mr. Facendo then went to the Worchester Lane property, measured the property, inspected the interior and exterior of the property, and looked at the homes that were comparable to the Worchester Lane property. Mr. Facendo returned to his office and analyzed the data he had collected during the site visit. He used print sources and online services available in his office to verify the flood zones, neighborhood composition, land sales, and other information necessary to complete the appraisal. Mr. Facendo prepared the Appraisal Report for the Worchester Lane property and provided it to University Capital Funding. Mr. Facendo also compiled a workfile containing documentation he used to develop the Appraisal Report. The Appraisal Report contained three errors:2 Mr. Facendo included the incorrect zoning classification for the Worchester Lane property, identifying it as RM-143, residential multi-family, rather than the correct RS-2, residential; he identified the wrong location for the Worchester Lane property on the map included with the Appraisal Report,3 and he failed to include the lot number in the legal description of the property. Mr. Facendo stated in the Appraisal Report that the property was not in a FEMA (Federal Emergency Management Association) special flood hazard area, and he referenced FEMA Map # 12111C0290F, dated August 19, 1991. He did not include a copy of the map in the workfile he compiled when preparing the Appraisal Report. Mr. Facendo included in the Appraisal Report information regarding neighborhood characteristics, one-unit housing trends, one-unit housing, and present land use percentage. He indicated that the neighborhood was over 75 percent built-up and stable; that one-unit housing trends showed that the supply and demand for housing in the neighborhood were in balance, with marketing conditions partially stable to declining, and time exposure typically between three-to-six months; that the one-unit housing prices ranged from a low of $188,000.00 for new housing to a high of $450,000.00 for housing six years old, with a median of $305,000.00 for housing three years old; and that the present land use consisted of 80 percent one-unit housing and 20 percent commercial. Mr. Facendo did not include in his workfile documentation to support this information. Mr. Facendo concluded that the value of the Worchester Lane property was $305,000.00 when calculated under the Sales Comparison Approach method. In the Appraisal Report, Mr. Facendo identified 88 comparable properties currently for sale in the neighborhood, ranging in price from $175,000.00 to $360,000.00, and 72 comparable sales in the neighborhood within the previous 12 months, ranging in price from $188,000.00 to $450,000.00. Mr. Facendo did not include in his workfile documentation to support the number of properties currently for sale or the number of properties sold within the past 12 months. Mr. Facendo concluded that the value of the Worchester Lane property was $296,990.00 when calculated under the Cost Approach to Value method. Mr. Facendo placed a value of $60,000.00 on the property's home site. He calculated the square footage replacement cost new using the cost estimator in his online copy of the Marshall & Swift Residential Cost Handbook and noted in the Appraisal Report that this was the source of his cost data. Mr. Facendo also noted as a comment on the cost approach that he used the Marshall & Swift Residential Cost Handbook "& local builders [estimates]" as the sources of the cost figures he used to estimate the value of the Worchester Lane property using the cost approach. Finally, Mr. Facendo also consulted the South Florida 2007 Blue Book Construction and the 2007 National Building Cost Manual for cost data, but he did not mention these sources in the Appraisal Report. Mr. Facendo did not include in the workfile he compiled for the Appraisal Report documentation to support his opinion of site value, copies of the Marshall & Swift online calculations of the replacement cost new, copies of the local and national builder's data he used in his calculations, or copies of the Marshall & Swift data to support the square footage prices he used to calculate the value of the Worchester Lane property. Mr. Facendo signed the Appraisal Report on August 22, 2007, and noted on the Appraisal Report that it was effective August 22, 2007. In October 2007, JP Morgan Chase Bank, N.A.,4 ordered a review of Mr. Facendo's August 22, 2007, Appraisal Report of the Worchester Lane property. The review appraiser, John Nickerson, prepared a One-Unit Residential Appraisal Field Review Report ("Review Appraisal"), which he signed and dated October 8, 2007. In the review report, Mr. Nickerson opined that there were a number of errors in Mr. Facendo's Appraisal Report, including the zoning classification, the legal description, and the location of the property. Mr. Nickerson also criticized the comparable properties used by Mr. Facendo in the Sales Comparison section of the Appraisal Report and the site value assigned by Mr. Facendo in the Cost Approach section of the Appraisal Report. At some point, Mr. Facendo was advised by Chase Home Lending of the results of Mr. Nickerson's Review Appraisal, and he was provided with a copy of the report.5 In a letter to Chase Home Lending dated August 25, 2008, Mr. Facendo responded to the concerns raised by Mr. Nickerson in the Review Appraisal about Mr. Facendo's Appraisal Report. Mr. Facendo explained the basis for his choice of comparable properties and for the value he placed on the building site, and he discussed his reasons for believing that the conclusions regarding comparable properties and site valuation reached by Mr. Nickerson were flawed. As directed by an employee of Chase Home Lending, Mr. Facendo modified his August 22, 2007, Appraisal Report to include the correct zoning classification of RS-2, residential. Mr. Facendo was expressly directed by the employee of Chase Home Lending not to change anything on the face of the original Appraisal Report except for the zoning classification. Mr. Facendo followed this direction, and he did not revisit the Worchester Lane property or change any other information in the original Appraisal Report. The corrected Appraisal Report was, therefore, not a new appraisal report based on new information gathered in August 2008 regarding the Worchester Lane property. The corrected Appraisal Report was not effective in August 2008, and did not supersede the original Appraisal Report of August 22, 2007, except for the zoning classification correction.6 Mr. Facendo submitted the corrected Appraisal Report on the Worchester Lane property to Chase Home Lending on or about August 25, 2008, but he did not alter the original signature date or effective date of August 22, 2007. Mr. Facendo did not, however, include a copy of the original Appraisal Report in the workfile that he transmitted to the Department during the course of its investigation; the workfile contained a copy of only the corrected Appraisal Report. In signing the Appraisal Report, Mr. Facendo certified and agreed that he had complied with the USPAP that were effective when the report was prepared in August 2007. The Ethics Rule of the USPAP (2006) provides in pertinent part as follows: Record Keeping An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment. The workfile must include: the name of the client and the identity, by name or type, or any other intended users; true copies of any written reports, documented on any type of media; summaries of any oral reports or testimony, or a transcript of testimony, including the appraiser's signed and dated certification; and all other data, information, and documentation necessary to support the appraiser's opinions and conclusions and to show compliance with this Rule and all other applicable Standards, or references to the location(s) of such other documentation. USPAP (2006) Standards Rule 1-1(c) provides: In developing a real property appraisal, an appraiser must: * * * (c) not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results. USPAP (2006) Standards Rule 1-4(a) and (b) provides: In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results. When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. When a cost approach is necessary for credible assignment results, an appraiser must: develop an opinion of site value by an appropriate appraisal method or technique; analyze such comparable cost data as are available to estimate the cost new of the improvements (if any); and analyze such comparable data as are available to estimate the difference between the cost new and the present worth of the improvements (accrued depreciation). USPAP (2006) Standards Rule 2-1(a) provides: Each written or oral real property appraisal report must: clearly and accurately set forth the appraisal in a manner that will not be misleading[.] USPAP (2006) Standards Rule 2-2(b)(viii) provides: Each written real property appraisal report must be prepared under one of the following three options and prominently state which option is used: Self-Contained Appraisal Report. Summary Appraisal Report, or Restricted Use Appraisal Report.[footnote omitted.] * * * The content of a Summary Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: * * * (viii) summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Appraisal Board enter a final order dismissing all counts of the Amended Administrative Complaint dated September 30, 2009. DONE AND ENTERED this 4th day of March, 2010, in Tallahassee, Leon County, Florida. PATRICIA M. HART Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 2010.
The Issue The issue presented is whether Petitioner achieved a passing grade on the May 20, 1991, certified residential appraiser examination.
Findings Of Fact Petitioner took the May 20, 1991, certified residential appraiser examination. He was subsequently advised that he had correctly answered 74 out of the 100 questions and had therefore achieved a score of 74. A score of 75 is the passing score on that examination. In the development of the state certified residential appraiser examination, a job analysis was performed by Educational Testing Service of Princeton, New Jersey, a national psychometric company. From that job analysis, a list of tasks routinely performed by appraisers was developed. From that list of tasks, the uniform examination content outline was developed specifying the areas to be covered by the examination. From that uniform content outline, Educational Testing Service then developed a bank of questions to be utilized in the examinations for licensure or certification. Each item in the bank was validated by Educational Testing Service. Once Respondent received that bank of validated test items, it sent all of the items to the Appraiser Qualifications Board of the Appraisal Foundation, an entity involved in establishing uniform standards on a national level for real estate appraisers. Respondent's examination bank was also validated by the Appraiser Qualifications Board. In addition, Respondent has its own validation committee which meets prior to the administration of an examination to review the items on that examination to again verify that the test items are valid, are not ambiguous, and are correct and proper for a residential appraiser certification examination. The five questions challenged by Petitioner are part of the bank that was approved by the Appraiser Qualifications Board. Those five questions have been used on past examinations and have previously been determined to be valid. The five questions challenged by Petitioner ranged from moderately difficult to extremely easy. Subsequent to the filing of Petitioner's examination challenge, Respondent reviewed the questions challenged and performed a statistical item analysis. All of the questions had a positive point biserial correlation. The number of candidates correctly answering each of those questions was approximately the same as the number of candidates correctly answering those questions on previous examinations. For example, 94% of the candidates correctly answered question numbered 4. On previous examinations, 93% to 95% of the candidates had correctly answered that same item. Sixty-seven per cent of the candidates taking the May 20, 1991, certified residential appraiser examination achieved a passing grade. Their examination was a typical examination in that the usual percentage of candidates achieved a passing score. Question numbered 4 required the examinee to identify the item which was not a fixture. The correct answer was "D," which answer specified that the personalty was "unattached." Petitioner chose answer "C," which answer specified that the personalty was attached to the structure. Petitioner's answer was not correct. Question numbered 73 required the examinee to name the cost method defined in the question. The correct answer was "B." Petitioner chose answer "A," which was not a correct answer. Question numbered 32 tested the examinee's understanding of valuing property containing superadequacies and was written in the negative. The correct answer was "C." Petitioner's choice of "D" was not correct since that was one of the approaches that can be used. Question numbered 76 tested the examinee's understanding of the difference between reproduction costs and replacement costs. The correct answer was "B." Petitioner chose answer "D." Petitioner's answer was wrong. Although the testimony at the final hearing indicated that answer "A" may also have been a correct answer to this question, Petitioner did not choose answer "A." Question numbered 93 tested the examinee's knowledge of proper appraisal practices. Answer "A" was the correct answer. Petitioner chose answer "C," which was not correct. Although Petitioner questioned the propriety of this question as part of the residential appraiser examination, the expert testimony indicates that the question was appropriate. Further, the question has been validated as being appropriate by the Appraiser Qualifications Board applying national standards. The parties have stipulated that Petitioner meets all of the requirements for licensure as a certified residential appraiser except for achieving a passing grade on the certification examination.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered dismissing the Petitioner's examination question challenges and finding that Petitioner failed to achieve a passing grade on the May 20, 1991, certified residential appraiser examination. DONE and ENTERED this 16th day of March, 1992, at Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SC 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1992. Copies furnished: Mr. Stephen Metro 1841 Northwest 22nd Street Pompano Beach, Florida 33069 Fred H. Wilsen, Chief Staff Attorney DPR - Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Darlene F. Keller, Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
The Issue The issues are as follows: (a) whether Respondent violated a standard for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice (USPAP) in violation of Section 475.624(14), Florida Statutes (1995); (b) whether Respondent failed to exercise reasonable diligence in developing an appraisal in violation of Section 475.624(15), Florida Statutes (1995); and (c) whether Respondent is guilty of culpable negligence or breach of trust in a business transaction in violation of Section 475.624(2), Florida Statutes (1995).
Findings Of Fact Petitioner is the agency charged with the duty of licensing and regulating real estate appraisers in the State of Florida. Respondent is and was at all times material hereto a state-certified general real estate appraiser, having been issued License RZ0001233 in accordance with Chapter 475, Part II of the Florida Statutes. Respondent has been appraising real property in the State of Florida since 1985 and has conducted over 5,000 appraisals. During that period of time, Respondent has not been charged with any disciplinary action or proceeding as an appraiser other than with respect to this particular case. Respondent is the sole shareholder of McCall Realty and Investment, Inc. (McCall Realty). Eighty percent of McCall Realty’s business is appraisals, while 20 percent is attributable to real estate sales, rentals and property management. Respondent is the sole appraiser in his office, but does have two trainees. Imposition of a fine or suspension of Respondent’s license would cause a great degree of financial hardship in that the Respondent and McCall Realty would have to file bankruptcy. On or about March 10, 1996, Respondent developed and communicated an appraisal report (Report) for property identified on the cover page as 5600 Bubba Lane, Milton, Florida 32570 (Subject Property) to Ward Brewer. In his Report, Respondent estimated the market value of the subject property as of February 20, 1996, as $1,095,000.00. The Report contained three separate appraisal form reports as follows: (a) an appraisal of parcel 1, an alleged 160-acre vacant land site valued at $800,000 (Appraisal 1); (b) an appraisal of parcel 2, an alleged 7-acre site with a 1,508 square-foot residence valued at $95,000 (Appraisal 2); and an appraisal of parcel 3, an alleged 25-acre vacant land site valued at $200,000 (Appraisal 3) (the Park Property). Each of the form reports indicated that Respondent was appraising a fee simple interest. On November 28, 1995, Ward Brewer called Respondent’s secretary and indicated that he needed Respondent to do an appraisal. Mr. Brewer indicated that the Subject Property was between 159 and 200 acres and owned by J. W. Hawkins. According to Mr. Brewer, there also was an alleged 25-acre park that was owned by J. W. Hawkins but leased to the State of Florida. Shortly after receiving this message from his secretary, Respondent returned Ward Brewer’s call and confirmed that Mr. Brewer wanted Respondent to appraise the property owned by J. W. Hawkins totaling between 159 to 200 acres, as well as an adjacent park owned by J. W. Hawkins and leased to the State of Florida. Also in that conversation, Mr. Brewer indicated he needed this property to be worth $1 million. In making his investigation for the appraisal, Respondent determined that the Park Property was actually owned by the State of Florida. Respondent then called Mr. Brewer and informed him that Mr. Hawkins did not own the Park Property. Mr. Brewer indicated that the owner, Mr. Hawkins, had donated the Park Property to the State, but that Mr. Hawkins was going to get it back through a reversionary interest because he was having problems with the State of Florida. Mr. Brewer then instructed Respondent to appraise the Park Property as if Mr. Hawkins owned the property in fee simple. Respondent also contacted the property owner, Mr. Hawkins, to determine Mr. Hawkins’ understanding of the reversionary interest. Mr. Hawkins confirmed that he was expecting to get the property back from the State through the reversionary interest. Respondent also inquired of the owner, Mr. Hawkins, as to the size of the property, and Mr. Hawkins indicated that it was somewhere between 150 and 200 acres. Respondent walked the Subject Property on two separate occasions. During his physical inspection of the Subject Property, Respondent walked all over the property except for the island portion. He only viewed the island from the shoreline. He then used an aerial photograph to confirm his understanding of the island. Respondent asked Mr. Brewer if he had a survey of the Subject Property. Mr. Brewer indicated that he did not have a survey. Respondent was not aware that Mr. Brewer was in the process of obtaining a survey. In fact, Appraisal 2 in the Report states that no survey was available. Additionally, the Report contains a disclaimer, which states as follows: This appraiser is not qualified to, nor does the appraisal warrant, the following: * * * 6. The actual location of its designated flood hazard or designated area without a current survey. . . . * * * It is recommended that these items and areas be checked by professionals who specialize in these various fields. It is also recommended that any and all reports prepared by others be made available to this appraiser for consideration in the appraisal process. This appraiser reserves a right of review and/or revision subject to any outside reports submitted on the property appraised. Respondent then began the process of compiling comparable sales. After receiving the Report from the Respondent, Mr. Brewer and others obtained title to a portion of the Subject Property. The purchase price for this phase of the purchase was $300,000. Mr. Brewer and his counsel had the Report and a survey before closing on the Subject Property. Neither Mr. Brewer nor his counsel provided the Respondent with a copy of the survey. Thereafter, Mr. Brewer and the other owners decided to finance the purchase of the remaining portion of the Subject Property. The bank requested Mr. R. Shawn Brantley, to prepare an appraisal of a portion of the Subject Property. Mr. Brantley valued a portion of the Subject Property as of May 2, 1997, at $380,000. Thereafter, Mr. Brantley prepared two additional appraisals of the balance of the Subject Property for $69,000 and $70,000, respectively. Accordingly, Mr. Brantley’s appraised value of the Subject Property a little more than a year after the Report was $519,000. Mr. Brewer and others completed the purchase of the remaining property by paying an additional $270,000, for a total of $570,000. Thereafter, Mr. Brewer and others filed a civil lawsuit against Respondent and McCall Realty. In a settlement of the lawsuit, Mr. Brewer and the other owners received a $300,000 settlement. According to Mr. Brewer, one-half of the settlement amount paid attorneys' fees and costs. The other half of the settlement amount was to offset their losses. Because of the disparity in the appraised values, Mr. Brantley’s client, SunTrust Bank, insisted on knowing why there was a difference in the values. Mr. Brantley subsequently prepared a Review Appraisal Report. Respondent asserts that he had developed one prior appraisal involving wetlands or property with similar characteristics. Respondent did not produce this prior appraisal as requested by Petitioner's investigator. As a result of this entire experience, the Respondent has limited his appraisal practice to single-family residential. Respondent identified the Subject Property in the Report by tax identification numbers, metes and bounds descriptions, aerial photographs and a depiction of the property on a zoning map. Tax identification numbers are found in the Report on the tax roll assessment information sheet. With regard to parcel 2, the assessor’s parcel number is identified as 35-2N-28-0000-00500-0000 on the form report itself. On parcels 1 and 3, the property is identified on the first page of each form appraisal by metes and bounds in Section 35, Township North, Range 28 West and by reference to the “attached aerial photograph.” On the aerial photograph, the Respondent wrote in 1, 2 and 3 corresponding to the separate parcel numbers that he was appraising. Additionally, the Report includes a zoning map that identifies the Subject Property with 1, 5, or 5.3, corresponding to the respective tax identification numbers for the three parcels being appraised. The tax roll assessment information sheet in the Report provides a tax identification number of 35-2N-28-0000- 00100-0000 for parcel 1. One can then go to the zoning map, which identifies parcel 1 by a no. 1 on the zoning map. Parcel is also identified in the Report as containing assessor’s parcel no. 35-2N-28-0000-00500-0000. Here again, this property can be seen on the zoning map and is depicted with a number 5. Finally, parcel 3, the Park Property, is identified as being zoned P-2 and then further identified as the property on the zoning map where the zoning is indicated as P-2. Respondent's effort to identify and describe the Subject Property is inadequate in at least two important respects. First, the Report described the property as 192 acres when it is in fact much smaller, approximately 99 acres. Correct acreage is a fundamental way to describe and identify a property. Second, the Report fails to reveal the existence of wetlands, which were readily apparent. The Report states that the alleged 160-acre tract is bordered by the Blackwater River to the East but fails to specify the following: (a) the property contains seven ponds; (b) a bayou intersects the property; and (c) over half of the property is an island surrounded by at least 50 feet of water. When reading the Report, the only way to discern these characteristics is by reference to the Report's attachments. At the very least, Respondent should have made some attempt to describe the portion of the property that is dry upland and the portion that is covered with water. Respondent did not physically walk the entire length of the island. Instead, he viewed the island across the river and then used an aerial photograph to become familiar with the island. The use of aerial photographs in some instances may be a valuable resource where an appraiser finds it impossible to penetrate every square yard of the property. In this case Respondent did not make an effort to gain access to the island or to navigate around it by boat. Mr. Brewer specifically requested that Respondent appraise the Park Property as if J. W. Hawkins owned it in fee simple. Respondent and Mr. Hawkins discussed the donation of the Park Property and the alleged reversionary interest under which Mr. Hawkins expected to get the property back. Respondent's report failed to disclose the basis of his appraisal of the Park Property. The Report did not mention that the State of Florida had any kind of interest in the land. The report did not refer to a lease or a warranty deed with a reversionary interest. In complying with Mr. Brewer's request regarding the estimated market value of the Park Property, Respondent should have made these disclosures. Respondent failed to provide an adequate analysis and overvalued the Subject Property in part because he failed to consider the impact that wetlands would have on the value of the Subject Property. Respondent did not have to be an environmental or ecological expert to know that property covered by so much water would contain wetlands. Respondent’s Report contains a statement of limitations regarding adverse conditions "such as, needed repairs, depreciation, the presence of hazardous wastes, toxic substances, etc." This statement does not refer to wetlands. The multi-purpose appraisal addendum for federally regulated transactions contained in the Report, provides as follows: ENVIRONMENTAL DISCLAIMER The value estimated is based on the assumption that the property is not negatively affected by the existence of hazardous substances or detrimental environmental conditions unless otherwise stated in this report. The appraiser is not an expert in the identification of hazardous substances or detrimental environmental conditions. The appraiser’s routine inspection and inquiries about the subject property did not develop any information that indicated any apparent significant hazardous substances or detrimental environmental conditions which would affect the property negatively unless otherwise stated in this report. It is possible that tests and inspections made by a qualified hazardous substance and environmental expert would reveal the existence of hazardous substances or detrimental environmental conditions on or around the property that would negatively affect its value. Considering the general description of the Subject Property, Respondent was remiss in not directly addressing the existence of wetlands in his Report and in not expressly stating his expertise (or lack thereof) in appraising wetland property in his statement of limitations and/or disclaimers. The Petitioner did not present the testimony of an ecological or environmental expert to establish the existence of wetlands on the Subject Property. Instead, Petitioner relied on the testimony of Mr. Brantley, who is an expert in the appraisal of wetland property. In his own appraisal performed on a portion of the Subject Property, Mr. Brantley expressly stated with respect to jurisdictional wetlands that: This appraisal is based upon the special assumption that the appraiser’s estimates regarding this matter, as set forth herein, are correct. The reader is expressly notified that the appraiser does not hold himself out to be an environmental or ecological consultant, nor a surveyor, and the reader is encouraged to employ such experts for further confirmation of the conclusions and estimates rendered herein, if they should so desire or should consider it practical to do so. Mr. Brantley went on to qualify his own appraisal further with the following language: Certain portions of the subject property consist of jurisdictional wetlands, which are subject to the rights exercised by the various environmental agencies and governments. This appraisal is subject to the special assumption that that appraiser’s estimates of the amount of area subject to environmental scrutiny is accurate. The appraiser has based these estimates upon observation of topography and wetlands species upon the property, as well as review of various soil and aerial maps. While, the appraiser is of the opinion that these estimates are reasonably accurate, he can assume no responsibility for variations that may be identified by an environmental audit and survey of lines established by an ecological expert. The reader is encouraged to consult experts in these fields for professional verification of the appraiser’s assumptions. During the hearing, Mr. Brantley admitted that he does not warrant his conclusions and assumptions regarding jurisdictional wetlands as a qualified ecologist or environmentalist. He acknowledged that the Subject Property possibly was only seasonally wet and could appear dry for as much as six months out of the year. However, Mr. Brantley's persuasive testimony leaves no doubt that Respondent should have recognized the existence of wetlands in his report and calculated their impact on the value of the Subject Property. In all three appraisals, Respondent used the sales comparison approach to determine the value of each of the three parcels. In making the comparisons, Respondent asked his administrative assistant to calculate the acreage of the Subject Property using the scale on the aerial photograph. Respondent failed to adequately calculate the area of certain comparable sales used in the Report. For example, Respondent used the wrong acreage for each of the comparable sales used in Appraisal 1, the alleged 160-acre parcel, and one comparable sale used in Appraisal 3, the Park Property. Comparable 1 for the alleged 160-acre parcel should have been closer to 51 acres instead of the 40 acres reported by the Respondent. With regard to comparable no. 2 on the alleged 160-acre parcel the acreage is closer to 38.5 acres instead of the 15 acres reported by Respondent. As for the acreage on comparable no. 3 on the alleged 160-acre parcel, the actual acreage was 551 acres and not the 303 acres reported by the Respondent. As for the acreage for comparable number 1 on parcel 3 (Park Property), the acreage was 20.4 acres rather than the 6 acres reported by the Respondent. Respondent should not have relied on the owner's assertion that the comparable property contained 6 acres when Respondent knew the tax identification card indicated 12.91 acres. Apparently, Respondent did not attempt to confirm either of these numbers by checking the deed, which indicated 20.4 acres. Respondent relied on inaccurate acreage for each comparable referenced above. The discrepancies increased the cost of comparable price per acre. The final result was a highly inflated value for the Subject Property. Respondent appraised the value of the Subject Property as $1,095,000.00 as of February 20, 1996. Petitioner’s expert, Mr. Brantley, in his own appraisal of the Subject Property, a little over a year later, valued the property at $519,000. Respondent's and Mr. Brantley's opinions of value are different. In response to questioning from the Court as to whether the removal of a levee on the Subject Property between the time the Respondent appraised the Subject Property and the time that Mr. Brantley appraised the Subject Property affected the value of the property, Mr. Brantley acknowledged that it would have decreased the value. Mr. Brantley indicated that the effect would be the approximate cost that it would take to bridge that particular area where the levee was removed. Petitioner never provided any evidence as to the exact amount or approximate cost that it would take to bridge that particular area. Accordingly, there is no evidence from which the Court can determine that there is a drastic difference in the reported value opinions. Even so, the foregoing facts are sufficient to determine that Respondent's report was misleading and inaccurate.
Recommendation Based upon the forgoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Petitioner enter a final order suspending Respondent's license for one year and imposing an administrative fine in the amount of $3,000. DONE AND ENTERED this 17th day of March, 2004, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of March, 2004. COPIES FURNISHED: S. L. Smith, Esquire Department of Business and Professional Regulation 400 West Robinson Street, Suite 802N Orlando, Florida 32801 Robert E. Thielman, Jr., Esquire Baker & Hostetler, LLP Post Office Box 112 Orlando, Florida 32801-0112 Jason Steele, Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Suite 802, North Orlando, Florida 32801 Nancy Campiglia, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint in the manner specified therein and, if so, what penalty should be imposed.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Respondent is now, and has been since March 25, 2004, a Florida-certified residential real estate appraiser, holding license number RD 4405. She has not been the subject of any prior disciplinary action. From 1998 until becoming certified as a residential real estate appraiser, Respondent was a Florida-registered trainee appraiser. At all times material to the instant case, the Subject Property was a single-family residential property, owned by Pablo Perez, housing the residents of an assisted living facility (ALF) operated by South Florida Home Services, Inc., pursuant to a license issued by the Agency for Health Care Administration (AHCA). At all times material the instant case, the Subject Property was zoned by the City of Miami for residential use. The ALF that operated on the premises of the Subject Property was inspected by Miami-Dade County Health Department Code Inspector Manuel Alzugaray on April 6, 2007. This was the only Miami-Dade County Health Department inspection of the premises conducted in April 2007. The "results" of Mr. Alzugaray's April 6, 2007, inspection were "unsatisfactory." The written "inspection report" that Mr. Alzugaray completed following the inspection contained the following "comments and instructions": Repair wall in the 2nd stall of the restroom across from Rm. #5. Repair all holes throughout the facility & floor tiles also. Maintain restrooms & facilities clean. Provide screen for kitchen restroom. Evidence of rodents in the kitchen. Evidence of termites in restroom across from Rm. 5. Mr. Alzugaray noted, during his inspection, that the doors of the residents' bedrooms had removable numbers displayed on them and that the "restroom across from Rm. #5" had two toilets separated by a "divider." Mr. Alzugaray returned to the Subject Property to conduct a follow-up inspection on May 17, 2007. The "results" of Mr. Alzugaray's May 17, 2007, inspection were "unsatisfactory." The written "inspection report" that Mr. Alzugaray completed following this May 17, 2007, inspection contained the following "comments and instructions": Evidence of rodent droppings in the kitchen. Provide screen for window in the kitchen bathroom. Remove mold & mildew from shower in the kitchen restroom. Repair restroom in the 2nd floor (toilet doesn't flush). During both the April 6, 2007, and May 17, 2007, inspections, there were, by Mr. Alzugaray's count, 14 ALF residents present on the premises. (The facility had a licensed capacity of 14 residents.) Mr. Alzugaray conducted two additional inspections of the ALF in 2007, one on September 12, 2007, and the other on November 2, 2007, with the former yielding "unsatisfactory" "results" (due to "drawers in [the] kitchen [not being] clean" and there being "evidence of roach droppings in the kitchen area") and the latter yielding "satisfactory" "results." In April 2007, Respondent was working as a residential real estate appraiser for Atlantic Appraisal Consultants Corporation, when she received an assignment to conduct a residential appraisal of the Subject Property for Affordable Finance Group (Affordable). Affordable was in the business of making residential mortgage loans, and only residential mortgage loans. It did not make commercial mortgage loans. Affordable had received an application from Adolfina Ortega for a residential mortgage loan to purchase the Subject Property from its owner, Mr. Perez. The purpose of the appraisal was to determine whether the market value of this single-family residential property justified Affordable's making the loan. Affordable had telephoned Respondent's secretary on April 10, 2007, to order the appraisal. Respondent's secretary inputted the information she had received from Affordable "in the [office] computer" and generated a printed appraisal order (Order), which she gave to Respondent. The Order indicated that Affordable was requesting an "SFA" (a shorthand reference to a "single family appraisal") of the Subject Property in connection with a mortgage loan sought by Ms. Ortega. This was an appraisal Respondent was competent and qualified to perform by herself as a Florida-certified residential real estate appraiser. The same day the appraisal was requested (April 10, 2007), Respondent telephoned Affordable and discussed the appraisal assignment with an Affordable representative. During this telephone conversation, Respondent was told that the Subject Property was owner-occupied and that its sale was "pending contract." She was also given the name of the owner/seller, Mr. Perez, and his telephone number. Nothing was said to Respondent to suggest that she was expected to perform anything other than the "SFA" indicated on the Order. No mention was made of any business that was part of the sale. Later in the day on April 10, 2007, Respondent telephoned Mr. Perez and made arrangements to visit the Subject Property on the morning of April 12, 2007, as part of the appraisal process. Before her visit, to find out more information about the Subject Property and to obtain possible "comparable sales" properties, Respondent performed internet-based research using generally accepted data sources (MLS, FARES, and RealQuest) that Florida-certified residential real estate appraisers typically employ for such purposes. According to the data her research uncovered, the Subject Property was a one-story, single-family residence, with three bedrooms and two bathrooms, that was owned by Mr. Perez and had R-4 zoning. There was nothing in any of the data sources that she used to indicate that an ALF or any other business was operating on the premises of the Subject Property. Respondent visited the Subject Property the morning of April 12, 2007, as scheduled. When she arrived (somewhere between 10:00 and 10:30 a.m.), she was greeted by a "gentleman."4 Respondent and this "gentleman" were the only persons present at the Subject Property during the entire time Respondent was there. After measuring the exterior of the structure, Respondent asked for and was granted permission to go inside to do a "very basic" "walk[] through," the purpose of which was to note the number and location of the rooms and the general condition of the residence. Respondent's "walk[] through" took approximately ten minutes, which was an adequate amount of time for her to accomplish what she needed to. As part of the "walk[] through," she "peek[ed] in" the bathrooms. The last thing that Respondent did during her visit was to take photographs outside the residence.5 Respondent witnessed nothing during her visit to suggest that the Subject Property was anything other than a single-family residential property. She had no reason to believe, based on the observations she made,6 that the property was being used as an ALF or to conduct any other business activity. She did discover, however, as a result of the observations she made during her visit, that the on-line information she had obtained about the Subject Property was inaccurate to the extent that it indicated that the Subject Property was a one-story structure with three bedrooms, not a two-story structure with five bedrooms. Appropriately, in completing her appraisal, she relied, not on this erroneous information, but on what she had actually observed during her visit. On her way back from the Subject Property, Respondent drove to, and parked on the street outside of, each of the three possible "comparable sales" properties she had selected before setting out that morning (all of which were located within 1.28 miles of the Subject Property). She looked at and took exterior photographs of each property, but did not go inside any of them. On the Order, which she had taken with her, she wrote notes recording her observations about each property. Thereafter, Respondent sought to verify the information she had gleaned from her internet-based research about these three "comparable sales" properties (as she was professionally required to do, if she wanted to use them for her appraisal). She did so, appropriately, by contacting individuals who had been involved in these "comparable sales" transactions (realtors, in the case of two of the transactions, and the purchasers, in the case of the other). Where there was a conflict between what her research had revealed and what she was told by these individuals, she, again appropriately, relied on the latter in completing her appraisal. Using a pre-printed Fannie Mae form, Respondent completed a Summary Appraisal Report (Report), dated April 30, 2007, containing her opinion that the market value of the Subject Property as of April 25, 2007 (the date Respondent started preparing the Report) was $590,000.00 (which was price Ms. Ortega had agreed to pay Mr. Perez for the Subject Property). Respondent arrived at her opinion by conducting a sales comparison analysis. (She conducted neither a cost analysis nor an income analysis.) As she indicated in the Report, Respondent, appropriately, appraised the Subject Property as a single-family residential property, as she had been asked to do by Affordable. The first page of Respondent's Report contained five sections: "Subject," "Contract," "Neighborhood," "Site," and "Improvements." The "Subject" section of the Report read, in pertinent part, as follows: Property Address: 140 NW 9 AVENUE City: MIAMI State: FL Zip Code: 33128 County: MIAMI DADE Borrower: ORTEGA Owner of Public Record: PEREZ Neighborhood Name: RIVERVIEW * * * Occupant: X Owner _ Tenant _ Vacant * * * Property Rights Appraised: X Fee Simple _ Leasehold _ Other (Describe) * * * Assignment Type: X Purchase Transaction _ Refinance Transaction _ Other (describe) Lender/Client: AFFORDABLE FINANCIAL GROUP . . . . . Report data source(s) used, offering price(s), and date(s): PUBLIC RECORDS, MLS TAX ROLLS, REALQUEST The "Contract" section of the Report read, in pertinent part, as follows: I _ did X did not analyze the contract for sale for the subject purchase transaction. Explain the results of the analysis of the contract for sale or why the analysis was not performed. SALE PRICE IS $590,000 AND 4/2007 CONTRACT DATE PER SALES CONTRACT. Contract Price: $590,000 Date of Contract: 4/2007 Is the property seller the owner of public record: X Yes _ No Data Sources: PUBLIC RECORDS Is there any financial assistance (loan charges, sale concessions, gift or down payment assistance, etc.) to be paid by any party on behalf of the borrower? X Yes _ No If Yes, report the total dollar amount and describe the items to be paid: 20,000 SELLER TO PAY $20,000 TOWARDS BUYER[']S CLOSING COST[s]. Respondent did not "analyze the contract for sale for the subject purchase transaction" because she was not in possession of a written contract at the time she prepared her Report. She had merely been told (by the Affordable representative) of the purported existence of such a contract and of its salient terms. It was not unreasonable, however, for her to have relied on these oral representations and included in the Report the information with she had been provided, as she did. Following the development and communication of the Report, Respondent received a copy of a written contract, dated May 11, 2007, signed by Mr. Perez, as the seller of the Subject Property, and Ms. Ortega, as the buyer. Respondent maintained this written contract in her work file.7 The contract was a "standard purchase and sale contract for the sale of a residential home." Consistent with the information contained in the "Contract" section of the Report, the "contract price" was $590,000.00, and provision was made in the contract for a $20,000.00 "seller contribution toward closing costs." The contract made clear that what was being purchased and sold was the Subject Property, "together with all improvements and attached items," as well as "all appliances in working condition[]," and nothing else (including any business enterprise that might have been operating on the premises or any items associated therewith).8 In the "Neighborhood" section of the Report, Respondent identified the boundaries of what she considered, in her judgment, to be the "neighborhood" in which the Subject Property was located. She identified these boundaries as follows: "US-1 TO THE SOUTH, I-95 TO THE EAST, SR 836 TO THE NORTH, AND SW 17TH AVENUE TO THE WEST." She then provided the following "Neighborhood Description" and "Market Conditions": Neighborhood Description: Subject is located in a typical neighborhood. Typical neighborhood amenities such as schools, shopping, parks, houses of worship and transportation are within a reasonable distance of the subject but do not intrude on residential areas. No unfavorable factors affect marketability. Subject is convenient to employment centers and is stable at present time. The predominate price for the area does not appear to [sic]. Market Conditions (including support for the above conclusions): Property values are stable along with supply and demand. Competitive listings are selling within 3-6 months. Typical sales are at 93-95% of listing price. Sellers need not negotiate financing related concessions as most sales are conventional or FHA/VA financed. Identifying the precise boundaries of a property's "neighborhood" is largely a subjective exercise.9 While Petitioner's expert, Mr. Spool, may have drawn different, narrower "neighborhood" boundaries had he been the one doing the appraisal (as he testified he would have at hearing), it cannot be clearly said that the boundaries identified by Respondent in her Report were "incorrect," as alleged in numbered paragraph 13A. of the Administrative Complaint's "Essential Allegations of Material Fact." Where the boundaries of the Subject Property's "neighborhood" lie is a matter of judgment about which reasonable people may disagree. The "Site" section of the Report read, in part, as follows: * * * View: RESIDENTIAL Specific Zoning Classification: R-4 (AS PER TAX ROLL). Zoning Description: MULTI-FAMILY HIGH- DENSITY RESIDENTIAL. Zoning Compliance: X Legal _ Legal Nonconforming (Grandfathered Use) _ No Zoning _ Illegal (describe) Is the highest and best use of subject property as improved (or as proposed per plans and specifications) the present use? X Yes _ No If no, describe. * * * In the "Improvements" section of the Report, Respondent indicated, among other things, that the Subject Property was a one-unit structure built in 1920, with an "effective age" of 30 years. Next to "# of stories," Respondent inadvertently entered, "One," but next to "Design (Style)," she put, "2 Story" (which, as the "Subject Front" photograph appended to the Report plainly showed, was, of these two conflicting entries, the correct one). Other information provided in this section included the following: Finished area above grade contains: 8 Rooms, 5 Bedrooms, 2 Bath(s) 1,971 Square Feet of Gross Living Area Above Grade. Additional features (special energy efficient items, etc.) THE SUBJECT HAS A COVERED ENTRY, TILE/WOOD FLOORS, CENTRAL AND UNIT A/C, CHAIN LINK FENCE, OPEN PARKING, ALUM. PATIO, AND GRAVEL DRIVEWAY. Describe the condition of the property (including needed repairs, deterioration, renovation, remodeling, etc.). NORMAL PHYSICAL DEPRECIATION FOR AGE. THE SUBJECT APPEARS TO BE IN OVERALL AVERAGE CONDITION. Are there any physical deficiencies or adverse conditions that affect livability, soundness, or structural integrity of the property? _ Yes X No If Yes, describe Does the property generally conform to the neighborhood (functional utility, style, condition, use, construction, etc.)? X Yes _ No If No, describe The second page of Respondent's Report contained two sections: "Sales Comparison Approach" and "Reconciliation." In the "Sales Comparison Approach" section of the Report, Respondent identified the three "comparable sales" properties ("comparables") that she initially examined to estimate (using a sales comparison analysis) the market value of the Subject Property, and she provided information about these "comparables," as well as the Subject Property. The following were the three "comparables" Respondent selected for her sales comparison analysis: Comparable Sale 1, located at 2805 Southwest 4th Avenue in Miami (1.28 miles from the Subject Property); Comparable Sale 2, located at 460 Southwest 18th Terrace in Miami (.92 miles from the Subject Property); and Comparable Sale 3, located at 1285 Southwest 16th Street in Miami (1.18 miles from the Subject Property). It is alleged in numbered paragraph 13D. of the Administrative Complaint's "Essential Allegations of Material Fact" that Respondent erred in using these "comparables" because none of them were "located in the Subject Property's defined market area."10 It is not at all clear from a review of the evidentiary record, however, what constituted the "Subject Property's defined market area," as that phrase is used in the Administrative Complaint,"11 and it therefore cannot be said, without hesitation, that any of these "comparables" were located outside of this "market area." The Report accurately reflected that the "comparables," as well as the Subject Property, were "Residential" properties. Contrary to the assertion made in numbered paragraph 13E. of the Administrative Complaint's "Essential Allegations of Material Fact," "Respondent's use of single family Comparable Sales was [not] inappropriate," given that the Subject Property was a single-family residential property (that, according to the information Respondent had obtained from the client, Affordable, was being sold to an individual seeking a mortgage loan from Affordable to finance the purchase transaction), and Affordable had requested, and Respondent was performing, appropriately, an "SFA" to determine the value of this single-family residential property. That an ALF (which was not part of the purchase transaction) was operating on the premises of this single-family residential property did not render "Respondent's use of single family Comparable Sales . . . inappropriate." Comparative information relating to the three "comparables" chosen by Respondent and the Subject Property was set forth in a grid (Sales Comparison Grid) in the "Sales Comparison Approach" section of the Report. On the "Design (Style)" line of the Sales Comparison Grid, Respondent indicated that the Subject Property was a "2 Story" structure. On the "Above Grade Room Count" line of the Sales Comparison Grid, Respondent entered the following with respect to the Subject Property and the three "comparables": Subject Property: 8 (Total); 5 (bdrms.); (Baths). Comparable Sale 1: 6 (Total); 3 (bdrms.); (Baths). Comparable Sale 2: 6 (Total); 3 (bdrms.); 1 (Bath). Comparable Sale 3: 7 (Total); 4 (bdrms.); 3 (Baths). The following "Adjusted Sale Price[s]" for the three "comparables" were set forth on the last line of the Sales Comparison Grid: Comparable Sale 1: $595,800.00; Comparable Sale 2: $571,400.00; and Comparable Sale 3: $628,700.00. At the end of the "Sales Comparison Approach" section (beneath the grid) was the following "Summary of Sales Comparison Approach" and "Indicated Value by Sales Comparison Approach": Summary of Sales Comparison Approach: SEE ATTACHED ADDENDUM. THE SUBJECT PROPERTY IS SIMILAR TO ALL THREE COMPARABLE CLOSED SALES WHICH WERE CAREFULLY SELECTED AFTER AN EXTENSIVE SEARCH IN AND OUT OF THE SUBJECT NEIGHBORHOOD. THIS SEARCH CONSISTED OF ANALYZING NUMEROUS CLOSED SALES AND NARROWING THIS LIST DOWN TO THE THREE MOST SIMILAR. AFTER CLOSE EVALUATION OF THE THREE COMPARABLE SALES UTILIZED, ADJUSTMENTS TO ALL COMPARABLES[S] WERE MADE ACCORDINGLY. Indicated Value by Sales Comparison Approach: $590,000. In the first part of the "Reconciliation" section of the Report, Respondent reiterated that $590,000.00 was the "Indicated Value by [the] Sales Comparison Approach," and she added that she used this approach in valuing the Subject Property because it "best reflect[ed] [the] action of buyers and sellers in the market place." The second and final part of the "Reconciliation" section of the Report read, in part, as follows: This appraisal is made x "as is," . . . . . Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser's certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $590,000, as of APRIL 25, 2007, which is the date of inspection and the effective date of this appraisal. The "date of inspection" was actually April 12, 2007, not April 25, 2007. On the third page of the Report, Respondent indicated that the "income approach [was] not applied [to determine the Subject Property's value] due to lack of rental data." The fourth page of the Report contained pre-printed boilerplate, including the following: This report form is designed to report an appraisal of a one-unit property . . . . The appraisal report is subject to the following scope of work, intended use, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary, based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser's continuing education or membership in an appraisal organization, are permitted. SCOPE OF WORK: The scope of work for this appraisal is defined by the complexity of this appraisal assignment and the reporting requirements of this appraisal report form, including the following definition of market value, statement of assumptions and limiting conditions, and certifications. The appraiser must, at a minimum: perform a complete visual inspection of the interior and exterior areas of the subject property, (2) inspect the neighborhood, (3) inspect each of the comparable sales from at least the street, research, verify, and analyze data from reliable public and/or privates sources, and report his or her analysis, opinions, and conclusions in this appraisal report. INTENDED USE: The intended use of this appraisal report is for the lender/client to evaluate the property that is the subject of this appraisal for a mortgage finance transaction. INTENDED USER: The intended user of this appraisal report is the lender/client. DEFINITION OF MARKET VALUE: The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. * * * STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS: The appraiser's certification in this report is subject to the following assumptions and limiting conditions: The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title to it, except for information that he or she became aware of during the research involved in performing this appraisal. The appraiser assumes that the title is good and marketable and will not render any opinions about the title. The appraiser has provided a sketch in this appraisal report to show the approximate dimensions of the improvements. The sketch is included only to assist the reader in visualizing the property and understanding the appraiser's determination of its size. * * * The fifth and sixth pages of the Report contained additional pre-printed boilerplate in the form of an "Appraiser's Certification," wherein "the Appraiser [Respondent] certifie[d] and agree[d] that": I have, at a minimum, developed and reported this appraisal in accordance with the scope of work requirements stated in this appraisal report. I performed a complete visual inspection of the interior and exterior areas of the subject property. I reported the condition of the improvements in factual, specific terms. I identified and reported the physical deficiencies that could affect the livability, soundness or structural integrity of the property. I performed this appraisal in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice that were adopted and promulgated by the Appraisal Standards Board of The Appraisal Foundation and that were in place at the time this appraisal report was prepared. I developed my opinion of the market value of the real property that is the subject of this report based on the sales comparison approach to value. I have adequate comparable market data to develop a reliable sales comparison approach for this appraisal assignment. I further certify that I considered the cost and income approaches to value but did not develop them, unless otherwise indicated in this report. I researched, verified, analyzed, and reported on any current agreement for sale for the subject property, any offering for sale of the subject property in the twelve months prior to the effective date of this appraisal, and the prior sales of the subject property for a minimum of three years prior to the effective date of this appraisal, unless otherwise indicated in this report. I researched, verified, analyzed, and reported on the prior sales of the comparable sales for a minimum of one year prior to the date of sale of the comparable sale, unless otherwise indicated in the report. I selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property. I have not used comparable sales that were the result of combining a land sale with the contract purchase price of a home that has been built or will be built on the land. I have reported adjustments to the comparable sales that reflect the market's reaction to the differences between the subject property and the comparable sales. I verified, from a disinterested source, all information in this report that was provided by parties who have a financial interest in the sale or financing of the subject property. I have knowledge and experience in appraising this type of property in this market area. I am aware of, and have access to, the necessary and appropriate public and private data sources, such as multiple listing services, tax assessment records, public land records and other such data sources for the area in which the property is located. I obtained the information, estimates, and opinions furnished by other parties and expressed in this appraisal report from reliable sources that I believe to be true and correct. I have taken into consideration factors that have an impact on value with respect to the subject neighborhood, subject property, and the proximity of the subject property to adverse influences in the development of my opinion of market value. I have noted in this appraisal report any adverse conditions (such as, but not limited to, needed repairs, deterioration, the presence of hazardous wastes, toxic substances, adverse environmental conditions, etc.) observed during the inspection of the subject property or that I became aware of during research involved in performing this appraisal. I have considered these adverse conditions in my analysis of the property value, and have reported on the effect of the conditions on the value and marketability of the subject property. I have not knowingly withheld any significant information from this appraisal and, to the best of my knowledge, all statements and information in this appraisal report are true and correct. I stated in this appraisal report my own personal, unbiased, and professional analysis, opinions, and conclusions, which are subject only to the assumptions and limiting conditions in this appraisal report. I have no present or prospective interest in the property that is the subject of this report, and I have no present or prospective personal interest or bias with respect to the participants in the transaction. I did not base, either partially or completely, my analysis and/or opinion of market value in this appraisal report on the race, color, religion, sex, age, marital status, handicap, familial status, or national origin of either the prospective owners or occupants of the subject property or of the present owner or occupants of the properties in the vicinity of the subject property or on any other basis prohibited by law. My employment and/or compensation for performing this appraisal or any future or anticipated appraisals was not conditioned on any agreement or understanding, written or otherwise, that I would report (or present analysis supporting) a predetermined specific value, a predetermined minimum value, a range or direction in value, a value that favors the cause of any party, or the attainment of a specific result or occurrence of a specific subsequent event (such as approval of a pending mortgage loan application). I personally prepared all conclusions and opinions about the real estate that were set forth in this appraisal report. If I relied on significant real property appraisal assistance from any individual or individuals in the performance of this appraisal or the preparation of this appraisal report, I have named such individual(s) and disclosed the specific tasks performed in this appraisal report.[12] I certify that any individual so named is qualified to perform the tasks. I have not authorized anyone to make a change to any item in this appraisal report; therefore any change made to this appraisal is unauthorized and I will take no responsibility for it. I identified the lender/client in this appraisal report who is the individual, organization, or agent for the organization that ordered and will receive this appraisal report. The lender/client may disclose or distribute this appraisal to the borrower; another lender at the request of the borrower; the mortgagee or its successors and assigns; mortgage insurers; government sponsored enterprises; other secondary market participants; data collection or reporting services; professional appraisal organizations; any department, agency, or instrumentality of the United States; and any state, the District of Columbia, or other jurisdictions; without having to obtain the appraiser's or supervisory appraiser's (if applicable) consent. Such consent must be obtained before this appraisal report may be disclosed or distributed to any other party, including, but not limited to, the public through advertising, public relations, news, sales, or other media. I am aware that any disclosure or distribution of this appraisal report by me or the lender/client may be subject to certain laws and regulations. Further, I am also subject to the provisions of the Uniform Standards of Professional Appraisal Practice that pertain to disclosure or distribution by me. The borrower, another lender at the request of the borrower, the mortgagee or its successors and assigns, mortgage insurers, government sponsored enterprises, and other secondary market participants may rely on this appraisal report as part of any mortgage finance transaction that involves any one or more of these parties. If this appraisal was transmitted as an "electronic record" containing my "electronic signature," as those terms are defined in applicable federal and/or state laws (excluding audio and video recordings), or a facsimile transmission of this appraisal report containing a copy or representation of my signature, the appraisal report shall be as effective, enforceable and valid as if a paper version of this appraisal report were delivered containing my original hand written signature. Any intentional or negligent misrepresentation contained in this appraisal report may result in civil liability and/or criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Section 1001, et seq., or similar state laws. Directly beneath the foregoing boilerplate was Respondent's signature. Appended to the Report was a "Supplemental Addendum," which read, in pertinent part, as follows: ALL SALES WERE CLOSED SALES AND CONSIDERED STRONG MARKET VALUE INDICATORS FOR THE SUBJECT PROPERTY. THEY ARE RELATIVELY SIMILAR TO THE SUBJECT IN TERMS OF LOCATION, QUALITY OF CONSTRUCTION, RELATIVE SIZE, ROOM COUNT AND MARKET APPEAL. THEY ARE LOCATED IN THE SUBJECT'S IMMEDIATE AREA AND ALL SHARE THE SAME IF NOT SIMILAR NEIGHBORHOOD AMENITIES. ADJUSTMENTS WERE REQUIRED FOR SITE CONDITION, BATH, GLA, CARPORT AND POOL. AFTER EXTENSIVE RESEARCH, THE THREE SALES USED WERE DEEMED GOOD INDICATORS OF MARKET VALUE. EQUAL EMPHASIS WAS PLACED ON ALL THREE SALES. * * * SCOPE OF APPRAISAL The appraisal is based on the information gathered by the appraiser from public records, other identified sources, inspection of the subject property and neighborhood, and selection of comparable sales within the market area. The original source of the comparables is shown in the Data Source section of the market grid along with the source of confirmation, if available. The original source is presented first. The sources and data are considered reliable. When conflicting information was provided, the source deemed most reliable has been used. Data believed to be unbelievable was not included in this report nor was used as a basis for the value conclusion. * * * HIGHEST AND BEST USE The Highest and Best Use of a site is that reasonable and probable use that supports the highest present value, as defined, as of the effective date of the appraisal. For improvements to represent[] the highest and best use of a site, they must be legally permitted, be financially feasible, be physically possible and provide[] more profit than any other use of the site would generate. SITE The improvements on the property are legal and conform to current zoning regulations. In the event of a loss by fire [] all improvements could be rebuilt without obtaining a zoning variance. The opinion of zoning compliance requirements expressed in this appraisal is based on the appraiser's inspections of the subject property and comparison to the appropriate zoning ordinance. This opinion does not represent a certification which can only be obtained from the proper jurisdictional authority. * * * ROOM LISTS The number of rooms, bedrooms, baths and lavatories is typical of houses in this neighborhood. Foyers, laundry rooms and all rooms below grade are excluded from the total room count. * * * CONDITION OF COMPONENTS Any opinion expressed in this appraisal pertaining to the condition of the appraised property's, or comparable property's components, is based on observation[s] made at the time of inspection. They rely on visual indicators as well as reasonable expectations as to adequacy and dictated by neighborhood standards relative to marketability. These observations do not constitute certification of condition, including roof or termite problems, which may exist. If certification is required, a properly licensed or qualified individual should be consulted. * * * DIRECT SALES COMPARISON APPROACH Direct Sales Comparison Approach is based on the comparison of the subject with sales of similar type properties. Adjustments are made to these sales for differences with the subject. [T]his is generally considered the best indicator of value. * * * CONDITIONS OF APPRAISAL PERSONAL PROPERTY/INTANGIBLE/NON-REALTY ITEMS Items of personal property and other non- realty items have not been included in the appraisal o[f] the subject property. The indicated Market Value for the subject property does not include items o[f] personal property or other non-realty property. * * * Via the "Supplemental Addendum," Respondent advised the reader of the Report that, where she had "conflicting information," she included in the Report only the data that was, in her view, "most reliable." While she did not, anywhere in the Report, specify or describe how this included data differed from the less reliable data she excluded, she was under no professional obligation to do so (contrary to the allegation made in numbered paragraph 13C. of the Administrative Complaint's "Essential Allegations of Material Fact"). Appended to the Report, in addition to the "Subject Front" photograph referenced above, were five other photographs: two additional photographs Respondent took when she was at the Subject Property on April 12, 2007 (a "Subject Rear" photograph and a "Subject Street" photograph); and an exterior photograph of each of the three "comparables." Also appended to the Report was a sketch of the Subject Property, showing it to be a two-story, five-bedroom, two-bath structure. Approximately two months after Respondent had developed and communicated the Report, Affordable asked her to examine two "additional comparables to support [the determination of] value" she had made. Respondent complied with this request. The two "additional comparables" she selected were Comparable Sale 4, located at 330 Southwest 29th Road in Miami (1.02 miles from the Subject Property), and Comparable Sale 5, located at 441 Southwest 29th Road in Miami (1.29 miles from the Subject Property). According to Respondent's calculations, Comparable Sale 4 had an "Adjusted Sale Price" of $603,800.00, and Comparable Sale 5 had an "Adjusted Sale Price" of $599,200.00. She further determined, and on or about June 25, 2007, reported to Affordable, that her analysis of these two additional comparables "support[ed] [her prior determination of] market value."13
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Board issue a Final Order finding the record evidence insufficient to support a finding of Respondent's guilt of any of the counts of the Administrative Complaint and, based upon such finding, dismissing the Administrative Complaint in its entirety. DONE AND ENTERED this 28th day of January, 2010, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 2010.
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint dated March 3, 2004, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Division is the state agency responsible for investigating complaints filed against registered, licensed, or certified real estate appraisers and for prosecuting disciplinary actions against such persons. § 455.225, Fla. Stat. (2005). The Florida Real Estate Appraisal Board ("Board") is the state agency charged with regulating, licensing, and disciplining real estate appraisers registered, licensed, or certified in Florida. § 475.613(2), Fla. Stat. (2005). At the times material to this proceeding, Mr. Rutan was a certified residential real estate appraiser in Florida, having been issued a license numbered RD 2791. Mr. Rutan had been a certified residential real estate appraiser in Florida for approximately 10 years. At the time of the events giving rise to this action, Mr. Rutan was employed by Excel Appraisal. Mr. Rutan interviewed and hired Frank Delgado, Juan Carlos Suarez, and Ricardo Tundador to work at Excel Appraisal as state-registered assistant real estate appraisers. At all times material to this proceeding, Mr. Rutan was Mr. Suarez’s supervisor and was responsible for Mr. Suarez’s appraisals. On or about June 16, 1999, Mr. Suarez prepared an appraisal for property located at 9690 Northwest 35th Street, Coral Springs, Florida, in which he valued the property at $325,000. The property is a multi-family, four-plex property. Mr. Rutan signed Mr. Suarez's appraisal as the supervisory appraiser and certified on the appraisal that he had inspected the property by placing an “X” in the "Inspect Property" box. The appraisal form signed by Mr. Rutan contains a "Supervisory Appraiser's Certification" that provides: If a supervisory appraiser signed the appraisal report, her or she certifies and agrees that: I directly supervise the appraiser who prepared the appraisal report, have reviewed the appraisal report, agree with the statements and conclusions of the appraiser, agree to be bound by the appraiser's certifications numbered 4 through 7 above, and am taking full responsibility for the appraisal and the appraisal report. It is the custom in the industry that a supervisory appraiser who certifies that he or she has inspected the property in question must inspect the property inside as well as outside before he or she can sign the appraisal. Mr. Rutan inspected the property the day after he signed the appraisal and only inspected the property from the outside. The appraisal report on the property at issue herein listed a prior sale of the property from Rodney Way to Doyle Aaron for $325,000 on April 28, 1999. The appraisal failed to list the sale of the property on the same day from Julius Ohren to Rodney Way for $230,000. Mr. Rutan did not investigate the relevant sales history of the property and was unaware, therefore, that the property had been “flipped” and was considerably overvalued in the appraisal report.2 Mr. Rutan admitted that he did not investigate prior sales and that the property was substantially overvalued. Mr. Suarez listed in the appraisal report three "comparable sales," that is, sales of properties similar in type and location to the property being appraised, to support the valuation of $350,000. The first comparable property used in the appraisal was property located at 4102 Riverside Drive, Coral Springs, which was listed in the appraisal report as being previously sold for $315,000. Earlier on the day that the Riverside Drive property was sold for $315,000, however, it had been sold for $185,000. Mr. Rutan failed to research and review the sales of the comparable properties that were included in Mr. Suarez's appraisal report, and the "comparable sale" of property on Riverside Drive was not properly used to value the property that was the subject of the appraisal report at issue herein. Mr. Suarez failed to make the proper adjustments in value on the Riverside Drive property based on the features of that property that were superior to the features of the subject property. The Riverside Drive property was located on a canal and should have had a negative adjustment with respect to the subject property, which was not on a canal. Mr. Suarez included a positive adjustment in the comparable sales data for the Riverside Drive property. Mr. Rutan failed to review the comparable property adjustments submitted by Juan Carlos Suarez for the appraisal of the subject property. Mr. Suarez overstated the rental income of the subject property in his appraisal report. Mr. Rutan failed to research and review the rental figures Mr. Suarez submitted. When Mr. Rutan was notified by Brokers Funding, a company that purchased the loans on the subject property, that there were problems with the appraisal done by Mr. Suarez, Mr. Rutan checked additional comparable sales and interviewed the tenants in the building. He also hired another appraiser to conduct an appraisal of the subject property. Based on his investigation and Mr. Salimino’s appraisal, Mr. Rutan discovered the problems in Mr. Suarez's appraisal and report of the subject property. Mr. Salimino’s appraisal for the subject property was $290,000, but Mr. Rutan estimated that his appraisal would have been approximately $250,000. Mr. Rutan fired Mr. Suarez, as well as Frank Delgado, and Ricardo Tundador, all three of whom were subsequently indicted on federal charges relating to real-estate-appraisal scams. In a Final Order entered on April 22, 2002, Mr. Rutan was found guilty by the Board of violating Sections 475.624(14) and 475.624(15), Florida Statutes, and was ordered to pay an administrative fine of $1,000. Mr. Rutan trusted Mr. Suarez to do an honest and competent appraisal and was rushed by Mr. Suarez to approve the appraisal on the subject property. The evidence presented by the Division is sufficient to establish with the requisite degree of certainty that Mr. Rutan failed to carry out his responsibilities as Mr. Suarez's supervisory appraiser, failed to review Juan Carlos Suarez’s appraisal for accuracy, and failed to inspect the inside of the subject property, which caused or contributed to the substantially over-stated valuation of the subject property.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Appraisal Board enter a final order finding that William Rutan is guilty of violating Section 475.624(10), (14), and (15), Florida Statutes, as alleged in Counts I through IV of the Administrative Complaint and revoking Mr. Rutan's Florida certification as a real estate appraiser. DONE AND ENTERED this 31st day of August, 2005, in Tallahassee, Leon County, Florida. S PATRICIA M. HART Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of August, 2005.
