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 the Respondent committed the violations stated in the Administrative Complaint dated March 13, 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. 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 6950 Cypress Road, Suite 206, Plantation, Florida 33317. Subsequent to November 19, 2008, Mr. Facendo's business address was 13790 Northwest 4th Street, # 101, Sunrise, Florida 33325 From November 6, 2007, until the time of the final hearing in this case, Traci Lyn Trueman, a registered trainee real estate appraiser, was supervised by Mr. Facendo, and she worked full-time in Mr. Facendo's business office. Ms. Trueman registered with the Department her home address of 183 Southwest 3rd Street, Pompano Beach, Florida, 33060, rather than the business address of Mr. Facendo's office. As soon as Mr. Facendo learned that Ms. Trueman had registered her home address with the Department, he had her change the address to her business address. In 1988, Mr. Facendo moved to Fort Lauderdale, Florida. He obtained his real estate sales license, and he sold real estate in the Fort Lauderdale area until approximately 1990, when he moved to Port St. Lucie, Florida. Mr. Facendo sold real estate in the Port St. Lucie area for several years, and, because he lived and sold real estate in the Port St. Lucie area, Mr. Facendo became familiar with the real estate market in that area. In 1992, Mr. Facendo moved back to the Fort Lauderdale area and began training in order to become certified as a real estate property appraiser. Mr. Facendo received his certification in 1995, and he has appraised primarily residential real estate in Miami-Dade County, Broward County, Palm Beach County, and Port St. Lucie. In November 2006, Mr. Facendo's office received a request from South Florida Lending Group for an appraisal on the Palm Drive property, which is located in The Club at St. Lucie West Condominium. The Appraisal Report prepared by Mr. Facendo pursuant to the request had an effective date of November 30, 2006, and it was signed December 11, 2006. Mr. Facendo also compiled a workfile to support the information contained in the Appraisal Report. After receiving the request to prepare an appraisal of the Palm Drive property, Mr. Facendo consulted St. Lucie County public records and other online services available in his business office and verified that the Club at St. Lucie West Condominium was a condominium conversion project in which rental apartments built in 2003 were converted into condominium apartments in October 2005. Mr. Facendo did not include reference to the sources of the information or copies of the documentation from which he obtained the information because the sources were ones commonly used and were considered to be accurate. Mr. Facendo visited the Club at St. Lucie West Condominium sales office and met with Lori Bennett and a man named Jack. Mr. Facendo was taken to Unit 106 by Jack, where he took several pictures of the exterior of Unit 106 and inspected the unit's interior. As part of his inspection of Unit 106, Mr. Facendo looked at the floor plan and the condition of the property; made a count of the number of rooms and their functions; and noted the type of flooring, the type of amenities, and the upgrades in the unit. Mr. Facendo did not measure the floor space in Unit 106 because he had previously prepared appraisals of several units in the Club at St. Lucie West Condominium that were the same model as Unit 106, which was the Kingston model, and he had previously measured a unit whose floor plan and square footage were identical to those of Unit 106. Mr. Facendo included with the Appraisal Report a copy of the floor plan of the Kingston model, which showed both the total square feet and the square feet under air conditioning of the unit. It is not unusual, in appraisals of condominium units, to include a pre- printed sketch of the unit's floor plan rather than a sketch of the floor plan prepared by the appraiser. After inspecting the Palm Drive property, Mr. Facendo met with Ms. Bennett, who was the sales representative for Club at St. Lucie West Condominium who handled all of the appraisals for the project. Mr. Facendo and Ms. Bennett met in the Club at St. Lucie West Condominium's sales office, and Ms. Bennett gave Mr. Facendo access to a log book maintained in the sales office listing individual buyers and information regarding each unit of Club at St. Lucie West Condominium. The Club at St. Lucie West Condominium property was purchased by SunVest, LLC, in or about September 2005. The property consisted of rental apartments built in 2003 that the new owner converted into condominium apartments in October 2005. At the times pertinent to this matter, the developer was offering the condominium units for sale, and Mr. Facendo noted in the Subject section of the Appraisal Report that Unit 106 had been offered for sale during the twelve months prior to November 30, 2006, the effective date of Mr. Facendo's appraisal of the unit. Mr. Facendo did not include in the Appraisal Report any data source, offering price, or dates related to the sales history because there was no sales history on Unit 106. According to the information obtained by Mr. Facendo from the Club at St. Lucie West Condominium sales office and by checking the online version of the multiple listing services available in Mr. Facendo's business office, the developer was directly marketing and selling the condominium units and had not listed them with a multiple listing service. Mr. Facendo, therefore, stated in the sales history portion of the Appraisal Report only that "subject has been offered for sale by the developer of the condo development." Mr. Facendo reviewed the log book for the condominium units maintained in the Club at St. Lucie West Condominium sales office, and he reviewed the sales and purchase contract for Unit 106. From this information, he verified the name of the buyer, as well as the contract price of $282,990.00. Mr. Facendo also verified that the sales and purchase contract provided that the buyer was to receive $4,500.00 in sales concessions on Unit 106.4 Ms. Bennett did not allow Mr. Facendo to make a copy of the contract, and, as a result, Mr. Facendo did not include a copy of the sales and purchase contract for Unit 106 in the workfile he prepared for the appraisal. Mr. Facendo did not define the neighborhood boundaries in the Neighborhood section of the Appraisal Report by reference to streets, highways, or landmarks. Rather, in the neighborhood boundaries portion of the Neighborhood section, Mr. Facendo described the neighborhood as being "located in a residential neighborhood with good access to family amenities," and he referenced the location map attached to the Appraisal Report. The location map showed the Palm Drive property and three of the comparables grouped around an arrow located east of U.S. Interstate Highway 95.5 Mr. Facendo noted in the Present Land Use % portion of the Neighborhood section of the Appraisal Report that one-unit residences composed 60 percent of the present land use in the neighborhood. He did not include any documentation in the workfile for the Appraisal Report to support this information. In the Project Information section of the Appraisal Report, Mr. Facendo noted that, in the Club at St. Lucie West Condominium, 160 units were offered for sale, 220 units had been sold, five percent of the units were rented, and 95 percent of the units were occupied by the owners. There is no documentation in Mr. Facendo's workfile for this appraisal to support this information. Mr. Facendo noted in the Appraisal Report that there were 20 comparable properties currently offered for sale in the subject neighborhood, ranging in price from $210,000.00 to $300,000.00. He obtained this data from information provided by the developer that he reviewed in the condominium sales office. He did not include in his workfile any documentation related to these properties and their offering prices. Mr. Facendo chose four properties as comparable sales to determine the value of the Palm Drive property through a comparable-sales analysis. The four properties chosen as comparable to the Palm Drive property were located in the Club at St. Lucie West Condominium and were virtually identical to Unit 106. The Palm Drive property and three of the four comparable-sales properties were located on the first floor of the condominium project, and one comparable-sales property was located on the second floor of the condominium project. All four comparable-sales properties were the Kingston Model, the same model condominium unit as Unit 106, and the comparable-sales properties were virtually identical to the Palm Drive property. Mr. Facendo noted in the Appraisal Report, however, that Unit 106 had been upgraded with granite countertops, stainless steel appliances, and new flooring. The sales price of the Palm Drive property was noted in the Appraisal Report as $282,990.00; the sales prices of the three first-floor comparable-sales properties were $272,990.00, 285,990.00, and $291,990.00, and the sales price of the second- floor comparable-sales property was $254,990.00. Mr. Facendo verified these sales prices by reviewing the log book maintained in the Club at St. Lucie West Condominium sales office and by information obtained from the HUD-1 Settlement Statements prepared for the sales transaction for each of the comparable-sales properties. The workfile contained copies of the HUD-1 Settlement Statements. Mr. Facendo also noted in the Prior Sale History section of the Appraisal Report that there was no sales history on the comparable-sales properties because they were all located in the Club at St. Lucie West Condominium. Mr. Facendo made a $10,000.00 adjustment for the view in the sales price of comparable sale # 3, a unit on the second floor of the Club at St. Lucie West Condominium, raising its adjusted sale price to $264,990.00. Mr. Facendo also made a $10,000.00 adjustment for the view in the sales price of comparable sale # 4, the unit next to Unit 106, raising its adjusted sale price to $295,990.00. Mr. Facendo did not include any documentation in the workfile to support these adjustments. Mr. Facendo looked at comparable sales outside the Club at St. Lucie West Condominium, but he decided not to use these properties as comparable-sales properties. Mr. Facendo chose four comparables in the same condominium project because the Club at St. Lucie West was a condominium conversion and was unique in the area. In his opinion, the sales prices of units in the Club at St. Lucie West Condominium would be most reliable in gauging the value of Unit 106. Based on his analysis of the four comparable-sales properties, Mr. Facendo valued the Palm Drive property at $283,000.00. Documentation was included in the workfile for the Appraisal Report that identified a sales incentive program offered to buyers by the developer of the Club at St. Lucie West Condominium. The sales incentives for buyers included payment by the developer of a three percent contribution at closing; the cost of documentary stamps and recording of the deed; owners title insurance; one year's homeowners' association fees; a one year's warranty; and a decorator's credit within 30 days of closing, the amount depending on the type of unit purchased. The page in the workfile listing the sales incentives was not dated and appeared to be part of sales literature provided by the developer. Mr. Facendo did not note, discuss, or analyze the sales incentives for the Palm Drive property in the Appraisal Report. The definition of "market value" contained in the Appraisal Report requires that the price of the property that is the subject of the appraisal reflect the "normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." To this end, appraisers must make adjustments to the comparable-sales properties, but the dollar amount of the adjustments "should approximate the market's reaction to the financing or concessions based on the appraiser's judgment." Mr. Facendo did not make any adjustments to the price of the comparable-sales properties in determining the value of the Palm Drive property. 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. The Competency Rule of the USPAP (2006) provides as follows: Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently; or alternatively, must: disclose the lack of knowledge and/or experience to the client before accepting the assignment; take all steps necessary or appropriate to complete the assignment competently; and describe the lack of knowledge and/or experience and the steps taken to complete the assignment competently in the report.[6] USPAP (2006) Standards Rule 1-1(b) and (c) provides: In developing a real property appraisal, an appraiser must: * * * not commit a substantial error of omission or commission that significantly affects an appraisal; and 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 2-1(a) and (b) 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; contain sufficient information to enable the intended users of the appraisal to understand the report properly[.] 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 Administrative Complaint dated March 13, 2009. DONE AND ENTERED this 30th 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 30th day of March, 2010.
The Issue Whether the Respondent, Antonio Prieto, committed the violations alleged in the Administrative Complaint involving the standard for the development of or the communication of a real estate appraisal and, if so, what penalty should be imposed.
Findings Of Fact At all times material to the allegations of this case, the Petitioner is the state agency charged with the responsibility of regulating persons holding real estate appraisers' licenses in Florida. At all times material to the allegations of this matter the Respondent has been a State-certified residential real estate appraiser holding license number RD0000591. On or about July 6, 1995, the Respondent prepared an appraisal report for property located at 2821 Coacoochee Street, Miami, Florida. The appraisal report completed for this property did not contain a certification page. When the Department requested Respondent's entire appraisal file for the Coacoochee property, the Respondent failed to produce a certification page in connection with the work performed for this appraisal. The Respondent acknowledged that an appraisal report without the certification page is considered incomplete. The Respondent provided no credible explanation for the failure to maintain the certification page for the Coacoochee appraisal report file. On or about September 8, 1998, the Respondent was responsible for a second appraisal report for real property located at 12695 Southwest 92nd Avenue, Miami, Florida. As of the date of the second report, the estimated value of the subject property was noted to be $395,000. In the development of the second report the Respondent acted as a supervisory appraiser to Rita Rindone, a State-registered assistant real estate appraiser. In the Respondent's presence, Ms. Rindone provided the Department with a copy of the entire work file for the second property's appraisal report. Inconsistent and incomplete information in the work file for the second property revealed errors in following USPAP standards. For example, the alleged existence of an unrecorded quit claim deed and the disparity between the subject property's listed price ($268,000) and the appraised value should have been "red flags" to the Respondent. In fact the listing was not even disclosed in the appraisal report (an error the Respondent acknowledged). As the supervisor to Ms. Rindone, the Respondent was responsible to ensure that the standards of USPAP were followed. Based upon the testimony of the expert, DeFonzo, it is determined that the Respondent's failures in connection with the second appraisal report constitute negligence, gross negligence, incompetence, or fraud. The USPAP standards require appraisers to maintain records for at least five years. Some circumstances may warrant a longer retention of records. At the minimum the Respondent should have maintained a complete work file for the relevant period of time for the Coacoochee property. The failure to make that complete file available to the Department is a violation of law. The USPAP standards require that the methodology option used in preparing an appraisal report be prominently stated. The option used for the second property was not so stated. Such failure is a violation of law.
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 determining the Respondent has violated Sections 475.624(14), and (15), Florida Statutes, and imposing an administrative fine in the amount of $3000.00, together with suspending the Respondent's license for a period of five years. Further, it is recommended that prior to being actively licensed, the Respondent be required to complete a continuing education course to establish familiarity with USPAP and all rules and regulations governing licensees in this state. DONE AND ENTERED this 23rd day of December, 2002, in Tallahassee, Leon County, Florida. _________________________________ J. D. PARRISH 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 23rd day of December, 2002. COPIES FURNISHED: Buddy Johnson, Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202 James R. Mayfield, Esquire 18080 Palm Point Drive Jupiter, Florida 33458 Stacy N. Robinson Pierce, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Suite N308 Orlando, Florida 32802
The Issue The issues are whether Respondent violated Sections 475.624(2), 475.624(14), and 475.624(15), Florida Statutes, and if so, what penalty should be imposed.
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 here a state-certified residential real estate appraiser. In January 1998, Petitioner issued Respondent residential real estate appraiser certificate number RD-0002524, with a business location of 2607 South Woodlawn Boulevard, No. 271, Deland, Florida, 32720. On or about March 5, 1998, Deborah Jeane Palfrey, as the buyer, and United Capital of Central Florida, Inc. (UCCF), as the seller, entered into a contract for sale and purchase of residential property ("the property") located at 236 Steward Terrace, Deltona, Florida. The contract lists the purchase price of the property as $54,500. Testimony developed at hearing indicates that UCCF did not own the property in fee simple. Instead, UCCF had an assignable contract to purchase the property. UCCF eventually assigned this contract to Ms. Palfrey. In March 1998, John E. Parrot owned both UCCF and Realnet USA. Both companies were located at the same address in Orlando, Florida. Both companies were involved to some extent in the real estate investment business. Competent evidence indicates that Realnet USA was a mortgage broker. Michael Mullvain was vice-president of UCCF and, as such, had signature authority for that company. Mr. Mullvain, a licensed real estate broker, also was the general manager of Realnet USA. On or about March 5, 1998, Mr. Mullvain and/or his assistant at Realnet USA, Tammie Wright, faxed a request for an appraisal of the property to Certified Appraisal Service (CAS), which was located in Winter Park, Florida. The appraisal request was made on behalf of USCCF and directed to the attention of Cecil and Teresa Wright. UCCF and Realnet USA were frequent clients of CAS. Realnet USA had requested CAS to provide as many as 200 similar appraisals in the past. The appraisal request for the property stated that the projected sale price was $79,000. The request contained the following comments: "House to be brought up to FHA specifications with central A/C, new kitchen, and baths." The request also included the following statement: "Cecil: Paul said you have already done some research on the property for him. Please go ahead with drive-by appraisal as usual." In requesting a drive-by appraisal, Mr. Mullvain intended for the appraiser to take note of needed repairs. He wanted an estimate of what the property would be worth based on the repairs being requested. At the time that the appraisal request was made, Mr. Mullvain knew that the property was distressed. His purpose in requesting the appraisal was to determine what the property would be worth if it was brought up to minimum Federal Housing Administration (FHA) standards. These standards require that all surface areas be serviceable. They also require anything that functions to function properly. FHA specifications take into consideration paint, carpet, kitchen, central air conditioning, windows, etc. In other words, the house must be habitable to pass an FHA appraisal inspection. Mr. Mullvain understood that he was ordering a proposed appraisal based on a comparable market analysis of the property's future value after repairs. He did not expect an appraisal based on a cost approach and an income approach, as well as a sales comparison approach. When Mr. Mullvain ordered the appraisal, he did not intend for it to be used by anyone other than UCCF. However, Mr. Mullvain testified that a salesperson would have given the appraisal to potential buyers upon request or in a package to provide additional information about the property. According to its normal business practice, Realnet USA prepared a rehabilitation summary for the property, showing the expected cost of repair. This document listed the following repair items and costs: (a) landscape, $100; (b) roof, $0.00; (c) exterior, $600; windows/doors, $100; (d) kitchen, $200; (e) plumbing-bath, $200; (f) paint & ceilings, $650; (g) carpet, $200; (h) subcontractors, $500; (i) central A/C, $100; (j) termite, $100; (k) appliances, $250; and (l) other, $0.00. The total expected repair cost was $3,000. Realnet USA kept this rehabilitation summary in its file for the property. No one provided a copy of the document to Respondent. Respondent occasionally worked for CAS as an independent contractor. Cecil Wright would call Respondent and ask her to prepare appraisals for Realnet USA. Respondent understood that all appraisal reports for Realnet USA should produce a proposed estimate of value based on the assumption that improvements were to be "better than new" when repairs and renovations were complete. Respondent prepared these reports on forms specified by Mr. Wright and sent them to him without signing her name under her typed signature and without identifying her state-certified residential appraiser number. In March 1998, Mr. Wright requested Respondent to prepare an appraisal report on the property for Realnet USA. He asked her to use a Federal Home Loan Mortgage Corporation (Freddie Mac) form contained in his computer software. Respondent understood that she would be using the forms to prepare a "restricted appraisal," showing the estimated market value of the property as it would exist after improvements were made to bring the house up to FHA specifications, including central air conditioning, a new kitchen, and new baths. Respondent also understood that the appraisal was intended only for Realnet USA's use. After accepting the assignment, Respondent went to the property. She observed the neighborhood and the exterior and interior of the house. She took pictures of the property. As to the exterior of the house, Respondent observed wood damage. She concluded that the damage was probably the result of termites or some other kind of pest infestation. There were little holes in the back of the house. As to the interior of the house, Respondent noted that the kitchen needed new cabinets and appliances. One of two baths needed repairs because the toilet shared plumbing with the kitchen refrigerator's icemaker, which was located on the other side of the wall. The other bathroom had a brick shower stall. Respondent saw that someone had renovated a one-car garage, changing it into living space, but leaving the supporting roof beams exposed. After visiting the property, Respondent performed the necessary research to complete her assignment. This research included performing a computer search of the local multiple listing service and public records to find comparable properties. Respondent did not make and file copies of documents that supported any of her research results. She did take pictures of the properties that she chose as comparable. On March 9, 1998, Respondent produced the report described below. The computer-generated cover page identifies Realnet USA as the entity requesting the appraisal and provides a file number. The following is the only other information on the cover page: In accordance with your request, I have personally made an exterior inspection from the street in front of the real property at: 235 Steward Terrace Deltona, Florida 32738 The purpose of this report is to estimate the market value of the subject property observed. In my opinion, the estimated market value of the property as of March 7, 1998, is: $79,000 Seventy-Nine Thousand The attached report contains the description, analysis, and supportive data for the conclusions, final estimate of value, descriptive photographs, limiting conditions and appropriate certifications. Next, Respondent filed in the two-page Freddie Mac form. The form states as follows at the top: "This form may be used if the second mortgage will not exceed $15,000 and value is based on 'as is' condition." On the form, Respondent typed in UCCF as the borrower. She indicated that the 1,556 square-foot house had six rooms, including three bedrooms, two baths, a family room, and no garage/carport. She noted that the house had central air conditioning. In the Field Report section of the form, Respondent provided information regarding the neighborhood, adding the following comments: "The subject is located in well-established neighborhood conveniently located to schools, shopping, employment, places of worship, and major arteries. There are no apparent adverse factors which would affect the subject's marketability." Respondent also typed information about the property, indicating that it was a detached, rambler-style, building with frame/siding exterior walls and a composite shingle roof material. In the section for favorable or unfavorable comments including any deferred maintenance, Respondent stated as follows: "When renovated to meet FHA/HUD standards, the subject will be a well built dwelling that projects good eye appeal. Functional utility will be average. The subject will meet expectations of purchases in this price range." In a section of the form labeled "Market Comparable Analysis Prior to Improvement," Respondent used the data she had collected from the local multiple listing service and public records to describe four pieces of property that she considered comparable. The four houses that Respondent listed as comparable were located one to fifteen miles from the subject property. Respondent listed the sale price of each house all of which sold between September 1997 and December 1997. Comparable one through four sold for $79,000; $77,700; $85,700; and $77,200, respectively. Respondent included the following general comments about her sales comparable approach: "Sale 3 is located more than one mile from the subject but was included for support purposes to the report. Depreciation is based on the subject being renovated and having an effective life of 3 years. Depreciation is calculated using 1% per year of effective age." Under the general comments in very fine print, the form states as follows: The information shown in this report is derived from an inspection of the neighborhood and exterior inspection of the subject property and market comparisons. The estimated market value is based upon this information and the knowledge of the undersigned. This report is not to be construed as an appraisal report. Respondent filled in the blank for the estimated value of the subject property as $79,000 as of March 7, 1998. She typed in her name as the person completing the report without signing her name under her typed signature and without identifying her state-certified residential appraiser number. Respondent attached the following to the report before she sent it to Cecil Wright at CAS: (a) subject property photo addendum containing three pictures that Respondent took of the property; (b) comparable property photo addendum containing pictures that Respondent took of the four comparable houses described in the report; (c) sketch/area table addendum of the subject property that Respondent prepared. Respondent testified that she also attached some certification pages to her report. However, the record contains no such documents. Respondent expected Mr. Wright to complete the report and sign his name as her supervising/review appraiser. Respondent did not keep a copy of the report she sent to Mr. Wright. The record contains two copies of Respondent's report, the first of which was eventually sent to Realnet USA. The first report contains the following alterations from the work personally prepared by Respondent: (a) An unidentified individual added Respondent's alleged hand-written initials under her typed name at the end of the Freddie Mac form; and (b) An unidentified individual added the alleged signature of Cecil Wright and his alleged state-certified residential appraiser number at the end of the Freddie Mac form. The first copy of the report includes only the cover page and the Freddie Mac form described above that Respondent prepared. It does not include the pictures or sketch prepared by Respondent or any other addendum. Respondent copied the second copy of the report from CAS's files after the initiation of Petitioner's investigation in this case. The second copy of the report includes the pictures and sketch prepared by Respondent but does not contain hand-written initials under Respondent's typed name or Mr. Wright's alleged signature and appraiser number at the end of the Freddie Mac form. Instead, it contains the following additions: (a) three maps prepared by an unidentified individual showing the location of the subject property and the four comparable properties; (b) a CAS certification page, attached by an unidentified individual; and (c) a page setting forth a certification and statement of limiting conditions together with contingent and limiting conditions, attached by an unidentified individual. The first certification page, attached to the second copy of the report, states as follows in relevant part: CERTIFIED APPRAISAL SERVICE CERTIFICATION * * * The appraiser has inspected all improvement on this property, but does not warrant the condition of the roof, floors, appliances, plumbing, electrical, heating and air conditioning. Only a visual inspection has been made and it is assumed that all are in serviceable condition for the purpose of this appraisal. Unless noted, it is assumed the subject property is free from termite infestation. * * * The value estimate is -as is- unless otherwise stated. Certification of Appraiser/Review Appraiser (If applicable) As of the date of this report, Cecil Wright, SRA has completed the requirement of the continuing education program of the Appraisal Institute. Cecil Wright is a State-Certified Residential Appraiser-No.RD 0000219. Additional Certification of the Appraisal Institute The appraisal analysis and opinion were developed and this appraisal report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice, as promulgated by the Appraisal Standards Board of the Apraisal [sic] Foundation, and the requirements of the code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. * * * Definition of Client Neither all nor any part of the contents of this report shall be conveyed to any person or entity, other than the appraiser's or firm's client (the client is defined as the person or firm ordering the appraisal from the appraiser), through advertising, solicitation materials, public relations, news, sales, or other media without the written consent or approval of the authors, particularly as to valuation conclusions. . . . Termite information The appraiser makes a cursory inspection of the exterior wood on the dwelling for the purpose of determining whether there is wood rot, possible termite damage or any other wood related problems. The appraiser is not qualified to determine if any damage is caused by termites as this is beyond our expertise. Should we find any rotted wood damage that requires attention it will be mentioned in the appraisal report. . . . The last certification page attached to the second copy of the report, states as follows in relevant part: CERTIFICATION AND STATEMENT OF LIMITING CONDITIONS Certification: The drive-by inspector certifies and agrees that: * * * The drive-by inspector has inspected the exterior of the property only and that inspection may be limited to what can be seen from the street. To the best of the drive-by inspector's knowledge and belief, all statements and information in this report are true and correct and that the drive-by inspector has not knowingly withheld any significant information. It is assumed that the interior is in good condition but it must be noted that a more complete exterior inspection and/or an interior inspection could produce a substantial change in value from that value indicated in this report. All contingent and limiting conditions are contained herein (imposed by the terms of the assignment or by the undersigned affecting the analyses opinion, and conclusions contained in this report). All conclusions and opinions concerning the real estate that are set forth in the report were prepared by the drive-by inspector whose signature appears on the report, unless indicated as 'reviewer.' No change of any item in the report shall be made by anyone other than the appraiser or the reviewer whose names appear on the report, and the appraiser, the reviewer, or their firm shall have no responsibility for any such unauthorized change. CONTINGENT AND LIMITING CONDITIONS The certification of the drive-by inspector is subject to the following conditions in addition to any other specific and limiting conditions as are set forth by the drive-by inspector in the report: * * * 5. The inspector assumes that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The inspector assumes no responsibility for such conditions, or for engineering which might be required to discover such factors. * * * Disclosure of the contents of the report is governed by the Bylaws and Regulations of the professional appraisal organization with which the inspector is affiliated. Neither all, not any part of the content of the report, or copy thereof (including conclusions as to the property value . . .) shall be used for any purposes by anyone but the client specified in the report, the mortgagee or its successors and assigns . . . without the previous written consent of the inspector, nor shall it be conveyed by anyone to the public . . . without the written consent and approval of the inspector. On all reports, subject to satisfactory completion, repairs, or alteration, the report and value conclusion are contingent upon completion of the improvements in a professional workmanlike manner. At the end of this last certification page, an unidentified individual signed Respondent's alleged initials as the drive-by inspector. Mr. Wright's alleged signature and appraiser number also appears at the bottom of the page. Respondent's three-page appraisal report did not include the following or state why these factors were not considered: (a) a label or title indicating that the report was restricted in scope as opposed to a conventional summary report; (b) an accurate statement regarding the report's intended use or purpose; (c) a statement regarding the property's highest and best use; (d) a cost approach analysis including an estimate of site value and an estimate of the value of the improvement, together with comments describing the sources used to compute the cost estimate, site value, and square footage; (e) an income approach analysis; (f) a history of prior sales or listing information for the property even though Respondent knew it had been on the market for 18 months for $61,500 and had not sold for that price; (g) an addenda explaining relevant information and including any departures from USPAP not otherwise included in the report; (h) a standard language explaining the scope of appraisal and the appraisal process; (i) a standard language of additional comments, explanations and limiting conditions; (j) a statement of contingent and limiting conditions and appraiser's certification, including the supervisory appraiser's certification; and (k) the signature of appraiser and/or supervisory appraiser, together with their respective state certification numbers. On or about August 12, 1998, William Wynn, inspected the subject property. He prepared a Uniform Residential Appraisal Report on August 17, 1998. Mr. Wynn's report lists Deborah Palfrey as current owner and borrower. It lists Pinnacle Financial Corp. as lender/client. Mr. Wynn's report describes the neighborhood of the property. The report includes comments describing market conditions and factors that affect the marketability of the properties in the neighborhood. Mr. Wynn's report described the property's site, stating that its highest and best use was its present use. It also includes a description of improvements on the property, indicating that the interior floors, walls, trims/finish, bath floor, bath wainscot, and doors were in good condition. Mr. Wynn added the following comments about the condition of the improvement: "The improvements are of average quality construction maintained in good condition. No repairs required at the time of inspection. The garage has been converted into living area." Mr. Wynn's report provides an estimate of the property's value using the cost approach. Regarding the cost approach, Mr. Wynn made the following comments: See attached sketch. Cost calculations are based on Marshall and Swift Guidelines and information for local contractors. Physical depreciation is based on observed conditions and estimated by the age/life method. Land [is] valued by abstraction, sales comparison, and typical ratio of land to improvement for the area. The estimated remaining economic life is 49 years. Mr. Wynn's report provides an estimate of the property's value using a sales comparison analysis. In making this analysis, Mr. Wynn compared the subject property to three comparables. Regarding the sales comparison approach, Mr. Wynn made the following relevant comments: The subject and the three comparable sales are located in Deltona Lakes. See the addendum for additional comments explaining the adjustments for the differences in gross living area and explanation for sales dated over six months. The three closed sales used in the sales comparison approach provide a reliable range of value for the appraiser property. *See Addendum. * * * The subject was listed at $57,500, in the first part of 1998. The subject sold for $50,000 March 1998. Mr. Wynn's report states that the appraisal was made "as is" and not subject to repairs. As part of the final reconciliation, the report states as follows: Emphasis is on the sales comparison approach because it reflects current market trends for similar properties. Typically homes in the subject's neighborhood are not purchased for income; therefore, the income approach was not applied. Cost approach is not required. Mr. Wynn concluded in his report that the property's estimated value was $60,000 as of August 12, 1998. He then signed his name and identified his state certification number. Mr. Wynn attached a General Text Addendum to his report, which states as follows: The comparables are closed sales in the subject's market area. All three sales are considered to be reasonable substitutes for the appraised property. Sale #2 and #3, although dated over six months is [sic] considered a reliable value indicator due to stable market conditions for the time period covered. The subject has a family room 19.9 x 19.8 that is a garage converted to heated and air-conditioned living area. The adjustments for the differences in living area are made at a lower than typical amount ($20 per sq. foot) because the ceiling in the family room has exposed roof trusses (painted). There is no finished drywall ceiling in the family room to cover the roof trusses. The appraiser was not able to bracket the subject in gross living area with a similar comparable sale. Mr. Wynn attached the following additional information to his report: (a) two maps showing the location of the subject property and the comparables; (b) three pictures of the subject property and pictures of the comparables; (c) a sketch/area table addendum; (d) a copy of his curriculum vitae; (e) a definition of market value; (f) a statement of contingent and limiting conditions; (g) an appraiser's certification; and (h) a supervisory appraiser's certification. Mr. Wynn then signed his name to the report and identified his state certification number. Mr. Wynn did not have a supervisory appraiser in making his report. In September 1998, Peter T. Woods, a state-certified general appraiser, requested his employee, Walter A. Drumb, a state-certified residential appraiser, to perform an appraisal of the subject property. Subsequently, Mr. Drumb prepared a Summary Appraisal Report using the form for a Uniform Residential Appraisal Report. The report lists Jean Palfrey as the borrower and Pinnacle Financial Corp. as the lender/client. Mr. Drumb's report states that "[t]he intended use of the appraisal is to aid in mortgage loan negotiations." Mr. Drumb's report also comments that "[t]he dwelling appears to be of average quality construction and in good physical condition with no functional inadequacies noted." In making his report, Mr. Drumb used two approaches: (a) the cost approach; and (b) the sales comparison analysis. The report states that the income approach was not used "due to a lack of reliable market rental data in the subject neighborhood." Regarding the cost approach, Mr. Drumb included the "as is" value of site improvements and made the following comments: "No functional or external obsolescence noted. Cost approach was prepared using Marshall and Swift Residential Cost Handbook and local cost estimates. See attached addendum for measurements. Estimated remaining economic life: 52 years." Regarding the sales comparison analysis, Mr. Drumb made the following comments: "The subject conveyed in March 1998 for $50,000. The public records reveal no prior sales of the comparable sales within the past year." Mr. Drumb concluded that the property had an estimated market value of $63,000 as of September 11, 1998. His report indicates that the appraisal was made "as is" and not subject to repairs and alterations. Mr. Drumb signed his report and identified his state-certified residential appraiser number. Mr. Woods also signed the report as the supervising appraiser and identified his state-certified general appraiser number. Mr. Drumb included an addendum to his report that explained his choice of comparables. He included a floor plan, pictures of the subject property and the properties used as comparables, a map showing the locations of the subject property and comparables, and a subdivision plat. Mr. Drumb included a page in his report that explained the scope of the appraisal and the appraisal process in detail. Finally, Mr. Drumb attached three pages to his report, setting forth additional comments, explanations, and limiting conditions. Included in these comments was a statement of limiting conditions and appraiser's certification. Mr. Drumb and his supervisory appraiser, Mr. Woods, signed the final certification page and identified their state-certified appraiser numbers. Petitioner's investigator, Robert Baird, has personal knowledge of the property as he resided on the same street as the property at all times material here. In late 1997 or early 1998, prior to investigating the complaint, Mr. Baird viewed the property and thought that it was in a state of disrepair. Mr. Baird inspected the property for second time on or about May 17, 1999, as part of his investigation. At that time, the property appeared to have been renovated as compared to its condition in early 1998. In the course of the investigation, Mr. Baird interviewed Respondent. During the interview, Respondent stated that her estimated value of the property included "with improvements." Respondent later admitted that she "could understand how individuals could misunderstand her estimate of value if they were not aware that it was based on proposed renovations." In either case, Respondent was unable to furnish Mr. Baird with documentation to support her estimated value of the property with or without improvements. Respondent admitted in the hearing that the cost of renovating the house could have been more than the renovated house would have been worth. She admitted that, based on her personal experience, the proposed renovations could cost in excess of $20,000, excluding any termite or wood rot. Respondent knew Realnet USA wanted the appraisal to help it "determine whether the house was worth it to purchase or not." If Respondent's estimated value of the property was $79,000 as it existed on March 7, 1998, and as stated on the cover page of her report, then her estimated value was substantially higher than the property's "as is" market value. If Respondent's estimated value of the property was $79,000, taking into consideration the appraisal request for an estimate of the market value after proposed renovations to meet minimum FHA standards, then Respondent failed to place a stated value on the estimated cost for each proposed renovation. During the hearing, Respondent admitted that USPAP required her to prepare an addendum to include necessary information such as prior sales history when the restricted form she was using did not include that information. She acknowledged that she was required to comply with 1998 USPAP even if she was unfamiliar the publication's contents and despite her client's request for something less than a conventional appraisal. Competent evidence indicates that appraisal reports by state-certified residential appraisers are seldom, if ever, free of errors. Certain information is always subjective as it is based upon the appraisers' personal experience and expertise. Additionally, there appears to be some confusion in the profession as to the precise information that a "restricted appraisal" must include. Nevertheless, USPAP requires the all appraisal reports prepared by state-certified residential appraisers to contain certain basic information or an explanation as to any departures from those requirements. At times, a supervisory/review appraiser will make changes to an appraiser's report. Knowing that a supervisory appraiser has this prerogative, does not mean that an appraiser is allowed to submit an incomplete appraisal report with the expectation that the review appraiser will complete the report and sign the appraiser's name. Clear and convincing evidence in this case indicates that the three-page appraisal report prepared by Respondent and submitted to Mr. Wright was substantially deficient and resulted in Realnet USA's receipt of an ambiguous, contradictory, and misleading appraisal based on unverifiable data.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Petitioner enter a final order, suspending Petitioner's certification for one year followed by one year of probation in which Respondent shall be required to complete 30 hours of continuing education courses in addition to the courses required to maintain licensure and imposing an administrative fine in the amount of $2,000. DONE AND ENTERED this 20th day of July, 2001, in Tallahassee, Leon County, Florida. 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 20th day of July, 2001. COPIES FURNISHED: Steven W. Johnson, Esquire Steven W. Johnson, P.A. 1801 East Colonial Drive Suite 101 Orlando, Florida 32803 Sunia Y. Marsh, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street, Suite N-308A Orlando, Florida 32801-1772 Herbert R. Fisher, Chairperson Florida Real Estate Commission Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue The issue is what penalty should be imposed for a violation by Respondent of the Uniform Standards of Professional Appraising Practice.
Findings Of Fact At all material times, Respondent has been a certified general real estate appraiser, holding license number 000894. He has worked as an appraiser for 14 years and has held his real estate license for 15 years. He has never previously been disciplined. By letter dated March 16, 1995, Respondent sent what he entitled as a "letter of opinion of value for property located at [address omitted]." The letter of opinion states that the document "is not a Real Estate Appraisal Report, rather [it is] an opinion of value." The letter estimates the value of appraised property as $65,000-$70,000. The client for whom the letter of opinion was prepared was satisfied with the process by which Petitioner prepared the letter of opinion and the letter of opinion itself. The letter of opinion caused no one any damage or inconvenience. Standard 2-2 of the Uniform Standards of Professional Appraisal Practice (USPAP) states: "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 Appraisal Report." SMT-7, which is commentary that accompanies certain standards of the USPAP, provides: Various nomenclature has been developed by clients and client groups for certain appraisal assignments. The development of this Statement on Appraisal Standards is a response to inquiries about several types of appraisal assignments, and it is appropriate to clarify the meaning of these terms for future reference. The term Letter Opinion of Value has been used to describe a one-page letter sent to a client that stated a value estimate and referenced the file information and experience of the appraiser as the basis for the estimate. This type of service does not comply with USPAP, and should be eliminated from appraisal practice. USPAP recognizes that the results of any appraisal assignment may be presented in a letter format provided that the content items in one of the three report options under Standards Rule 2-2 are addressed. The Restricted Report is the minimum report format and replaces the concept of the Letter Opinion of Value. Respondent has stipulated to a violation of USPAP Standard 2-2 in the preparation of the March 15, 1995, letter.
Recommendation It is RECOMMENDED that, in the absence of an agreement of the type described in the preceding paragraph, the Board of Real Estate Appraisers enter a final order reprimanding Respondent. ENTERED on September 30, 1996, in Tallahassee, Florida. ROBERT E. MEALE, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this September 30, 1996. COPIES FURNISHED: Henry M. Solares Division Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900 Steven W. Johnson Senior Attorney Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900 Attorney Clifford R. Rhoades 227 North Ridgewood Drive Sebring, Florida 33870
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, Andrew S. Meltzer, committed the violations alleged in the Administrative Complaint involving the standards for the development of or the communication of real estate appraisals and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner (Department) is the state agency charged with the responsibility of regulating persons holding real estate appraisers' licenses in Florida. At all times material to the allegations of this matter the Respondent has been a State-certified residential real estate appraiser holding license number 3190. He is 38 years old and has been a real estate appraiser for approximately seventeen years. During that time, he has never been disciplined nor has he been removed from a bank's approved list of appraisers. On or about October 23, 2006, the Respondent prepared a Uniform Residential Appraisal Report for property located at 9900 Southwest 72nd Avenue, Pinecrest, Florida ("the subject property"), for the F S Lending Group. In September 2007, an investigator for the Department received a copy of an appraisal report (Report One) from a closing agent. The report showed that "Aida Martinez" was the name of the buyer. Based on his investigation and her admissions, the investigator found that Martinez was a "straw buyer" and was paid $10,000 for the use of her name and credit report. The person who is alleged to have paid her was not available to talk to investigators due to possible criminal proceedings, but the Department's investigator made it clear that he found no evidence of a connection between that person and the Respondent. A copy of the contract, also provided by the closing agent, showed a different name for the buyer, "Aida Barrero" or "Aida Barren," as best the handwriting and poor quality of the copy could be read. In addition, an addendum to the contract for a purchase price of $999,000, provided that "seller will contribute [provide concessions in the amount of] $173,000 at closing with (sic) to the buyer (for repair of subject property and buyer closing costs). The amount that seller will receive for the property will be $825,000 less seller (sic) closing costs and mortgage payoff if any." Report One has the Respondent's digital signature on it. A mortgage loan on the subject property is now in foreclosure, but no one from the Department contacted the lender to see what appraisal was the basis for making the loan. Based on the fact that the property was listed for sale, Report One has an incorrect "no" answer on page 1 to a question regarding a current or other sales listings in the last 12 months. Based on the provisions in the contract, it also has an incorrect "no" answer to whether there are seller's concessions. When an investigator showed Report One to him, the Respondent immediately retrieved what has been designated "Report Two" from his computer files. Report Two on page 1 named the buyer as "Barren" using only the last name as is customary for the Respondent, and using the same name that was on the appraisal order form sent to the Respondent. Report Two has what appears to be a signed transmittal page to F S Lending Group. It also has a correct "yes" answer on page 1 to the question regarding a current or sales listings in the last 12 months, unlike Report One. Like Report One, it erroneously has a "no" answer on page 1 regarding seller's concessions and is, in all other respects, the same as Report One. The witnesses agreed that the most likely explanation for Report One is that page 1 was altered fraudulently after Report Two was no longer within the Respondent's control. The Respondent's appraisal work file for the subject property included another report (Report Three) that also listed "Barren" as the buyer, but had no signature on it, and was an earlier draft of Report Two. Although the Department's expert said an oral communication of its contents could make Report Three an appraisal, he and the Department's investigator had no evidence of that and agreed that it was not an appraisal. A three-page excerpt of the contract in the Respondent's work file did not include and did not refer to the addendum to the contract with concessions that indicated work needed to be done on the house and that the purchase price was reduced. The three pages were clearly not the entire sales contract, based on missing page and item numbers on the standard form. The Respondent admitted that he only instructs clients to send the "first page, signature pages, addendum pages, and anything that would [a]ffect the purchase price." He said that he only asks for pertinent pages and he could not survive in the industry if he reviewed seventy or a hundred page construction contracts, although he checked the box on the appraisal from that says, "I did analyze the contract for sale of the subject property." The Department's expert prepared a One-Unit Residential Appraisal Field Report (field report) to evaluate Report One that is, except for the name of the buyer and the answer regarding the sales listing, applicable to Report Two. He cited numerous errors and omissions in Report One. He admitted, however, that his work was "sloppy" because he listed the incorrect property address as 12745 Southwest 72 Avenue, the address for the subject property, not 9900 Southwest 72nd Avenue. In his review, the Department's expert found that the Respondent incorrectly categorized the pool on the subject property as a structural improvement rather than a site improvement. Comparable one in Report Two was a superior property, so the Respondent used matched paired sales data that he keeps in his office among other reference material, including the Marshall and Swift publication on cost estimates. He made adjustments for square footage and room count accordingly. The Department's expert testified that USPAP required documentation for any adjustments, and, regarding where the records had to be kept, responded as follows: Q. Now, and again I'm referring to comp number, report number two, comp number one. What documentation does he need in his file to support his adjustment for the site square footage? A. Either -- I would say the best support would be a paired, p-a-i-r-e-d, sales analysis. Q. Does that have to be in the work file? A. Yes. No-no-no-no. It does not have to be in the work file. It could be somewhere in your office readily accessible . . . Adjustments to comparable two were reasonable based on the Respondent's observation that it was "a lot more superior," and his determination, after talking to the realtor that it was completely "renovated like new" which he wrote in his notes. The MLS listing also reported that the renovations were made in 2006. The Respondent received conflicting information from two different data sources concerning the square footage for comparable two, so he called the realtor and used the figure that the realtor verified in his analysis, as the Department's expert testified he should have done. No adjustment was made based on his note that the comparable was "similar in square footage" and less than a 100-square foot difference. The Department's expert differed with the selection and adjustment of comparables three and four due to lot sizes and bedroom/bathroom counts. The subject property is on a lot of 15,832 square feet, or less than half an acre, has four bedrooms and two and a-half baths, with 2,639 square feet of livable, air conditioned space. Comparable three has a lot size of 32,670 square feet, although the living area is similar, and it has only one half bath more than the subject. Although comparable three has a much larger site, the sales price was only $25,000 difference, because of its condition. So the Respondent reasonably made a consistent negative adjustment based on sales history. Comparable four is within a half mile of the subject property, in the Pinecrest area, but it has a lot size of 33,541 square feet, has five bedrooms and four full baths, and has 4,283 square feet of livable space. The Respondent agreed that, as a rule, comparables should have not more than a ten percent adjustment, and that, as the Department's expert noted, lenders require only three comparables. To provide as much information as possible, the Respondent included a fourth comparable with a greater adjustment down because it had a tar and gravel roof, and because the realtor told him "it needed updating." He made it the fourth comparable because it was the least desirable one, but he did not include the fact that it had a tennis court, as he should have. He failed to note that it was gated property, although the Department's expert agreed that whether a gate adds or does not add value to property is "a matter of professional opinion." He also agreed that the differences between a tar and gravel roof and a tile roof would not usually be documented in a work file. It was appropriate to make adjustments based on the condition of the property. As USPAP required, the Respondent inspected the comparables from the street. In reviewing the Respondent's work, the Department's expert observed only the subject property from the street, but not the comparables and testified as follows: Q. But you did not inspect each of the comparable sales at least from the street? A. Correct, correct. * * * Q. -- you testified that you did not inspect the comparables? A. I agree. * * * Q. Correct. And that goes to the whole point where you were earlier discussing that it's hard to verify what he did because you actually didn't go out and see the comparables? A. Correct. Q. Which is contrary to what you were supposed to do? A. Correct. The Respondent made a mathematical error in the calculation of the depreciation at 22% when it should have been 20%, resulting in an underestimate of $8,541. Although he correctly noted that the subject property was listed for sale for $999,000, the Respondent failed to include the Multiple Listing Service (MLS) history, including,". . . data source(s), offering price(s), and date(s)" of listings in the twelve months prior to the effective date of the appraisal. The sales prices for the subject property were listed as $885,000 in June 2006; reduced to $875,000 in July 2006, reduced again to $849,990 in August 2006; and increased to $999,000 on October 14, 2006. The Department's investigator testified that the listing broker said she raised the price based on an appraisal that was faxed to her, but he agreed that it could not have been based on the Respondent's appraisal since the price increase took effect on October 14, 2006, and the Respondent's appraisal report was dated October 23, 2006. Concerning the MLS listings, the Respondent said he called and asked the realtor why the listing price was increased. He accepted the realtor's explanation that improvements in the last six months, a new roof and a new garage door, would justify the increase in the sales price. In his notes, the Respondent wrote "property renovated" and "big realtor" because the realtor was well-known and he believed he could rely on her representations. He also saw the new roof himself, and it made sense to him that a million dollar house could have a 10% increase in value because of those improvements. While this may have been a logical explanation, the Respondent failed to document it in his work file despite the fact that the MLS fluctuations were a "red flag," possibly indicating fraud. The Department's expert found no support in the work files for the Respondent's allocation of 61% of the total value of $903,100, or $550,000 ($34.74), to the site value, but agreed that differences in value based on what buyers might pay for additional land is a matter of legitimate differences in "appraiser opinion." In summary, the Department's expert established that Report Two was inaccurate and misleading because it (1) did not include the terms of the entire contract that affected the price; (2) did not show the value of the pool in the appropriate category; (3) did not report the MLS listings history for the subject property for the past year; (4) had an incorrect value for depreciation; and (5) did not show the tennis court on comparable four. Based on the evidence, the Department did not show, as alleged in paragraph 7 (A) through (D) of the Administrative Complaint, that the Respondent made errors and omissions on Report One other than those carried over from Report Two, before it was altered. Report One was not alleged or proven to be the document communicated by the Respondent's client. Based on the evidence, Report Two is the only accurate representation of the Respondent's work appraising the subject property. Paragraph 8 (A) of the Administrative Complaint alleging that the name of the borrower was incorrect is not supported by the evidence. The Department's assertion in paragraph 8 (B) that the MLS listing history is incomplete is clearly and convincingly supported by the evidence. Paragraph 8 (C) of the Administrative Complaint, alleging that the Respondent failed to review all agreements for sale, and paragraph 8 (D), regarding the misstatement on seller's concessions, are clearly and convincingly established by the evidence. The Department's allegations in paragraphs 9 (A)-(D), related to Report Three, are not established by clear and convincing evidence based on the witnesses' agreement that Report Three was not an appraisal report. With regard to Report Two, the only appraisal report for the subject property that was shown to have been developed and communicated by the Respondent, the evidence is not clear and convincing that the Respondent made the following errors and omissions: as alleged in paragraph 10 (A) and (B), that adjustments for room count and square footage were not explained for comparable sales one and that discrepancies were not resolved for comparable sale two; in paragraph 10 (C), that room count and square footage adjustments for comparable three are not accurate and supported; and in paragraph 10 (D), that room count and square footage adjustments for comparable four are not accurate and supported. With regard to Report Two, the evidence is clear and convincing, as alleged, in paragraph 10 (E) and (F), that the Respondent omitted the tennis court on comparable four and showed no adjustment or reasonable explanation for not doing so. The evidence was not clear and convincing, as alleged in paragraph 10 (G), that different comparables should have been used. The evidence is clear and convincing that the Respondent made a mathematical error in determining the amount of depreciation in Report Two, as alleged in paragraph 11 (A). Depreciation of improvements, as alleged in paragraph 11 (b), is not clearly and convincingly shown to be erroneous. The comparisons of Reports One, Two, and Three in paragraph 12 are rejected as irrelevant, because Report One is altered except for the mistakes carried over from Report Two, and Report Three was a draft. Charges related to Report Three are also not proved for the same reason. Paragraph 13 is established by clear and convincing evidence because the entire sales contract is not in the working files for the subject property. 32. Paragraphs 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25 and 26, all related to the absence of documentation for comparable adjustments, the square footage price, value of improvements, and condition are not supported by clear and convincing evidence based on the testimony of Department's expert regarding the required documentation and his incomplete review of the comparables. Paragraph 27, alleging that Aida Martinez was a "straw buyer" is supported by the undisputed evidence presented by the Department.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Florida Real Estate Appraisal Board: Finding the Respondent guilty on Counts I, II, III, IV, V, VI, VII, IX, X and XI. Recommending suspension of the Respondent's appraisal license for a period of 30 days, followed by probation for a period of six months. Requiring the Respondent to pay an administrative fine of $7,500; and Requiring the Respondent to pay the investigative costs of $1,501.50. DONE AND ENTERED this 17th day of March, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 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, 2009. COPIES FURNISHED: Robert Minarcin, Esquire Department of Business & Professional Regulation 400 West Robinson Street, N801 Orlando, Florida 32801-1757 Daniel Villazon, Esquire Daniel Villazon, P.A. 1420 Celebration Boulevard, Suite 200 Celebration, Florida 34747 Thomas W. O'Bryant, Jr., Director Division of Real Estate Department of Business & Professional Regulation 400 West Robinson Street, N802 Orlando, Florida 32801-1757 Ned Luczynski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
