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 the Respondent committed the violations stated in the Amended Administrative Complaint filed September 30, 2009, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Florida Real Estate Appraisal Board ("Board") is the entity responsible for licensing, regulating, and imposing discipline upon real estate appraisers operating in Florida. See §§ 475.613(2) and .624, Fla. Stat. (2007). The Department is the state agency responsible for investigating complaints and, upon a finding of probable cause by the Board, issuing administrative complaints and prosecuting disciplinary actions involving real estate appraisers in Florida. See § 455.225(1)(a), (4), and (6), Fla. Stat. At all times pertinent to these proceedings, Mr. Facendo was a state-certified real estate appraiser, having been issued license number RD-2598, and his business office was located in Plantation, Florida. In August 2007, Mr. Facendo's office received a request from University Capital Funding, a mortgage broker, for an appraisal on property known as 901 Southwest Worchester Lane, Port St. Lucie, Florida 34953 ("Worchester Lane property"). After receiving the request, Mr. Facendo consulted the Multiple Listing Service with respect to the Worchester Lane property and the neighborhood. Mr. Facendo then went to the Worchester Lane property, measured the property, inspected the interior and exterior of the property, and looked at the homes that were comparable to the Worchester Lane property. Mr. Facendo returned to his office and analyzed the data he had collected during the site visit. He used print sources and online services available in his office to verify the flood zones, neighborhood composition, land sales, and other information necessary to complete the appraisal. Mr. Facendo prepared the Appraisal Report for the Worchester Lane property and provided it to University Capital Funding. Mr. Facendo also compiled a workfile containing documentation he used to develop the Appraisal Report. The Appraisal Report contained three errors:2 Mr. Facendo included the incorrect zoning classification for the Worchester Lane property, identifying it as RM-143, residential multi-family, rather than the correct RS-2, residential; he identified the wrong location for the Worchester Lane property on the map included with the Appraisal Report,3 and he failed to include the lot number in the legal description of the property. Mr. Facendo stated in the Appraisal Report that the property was not in a FEMA (Federal Emergency Management Association) special flood hazard area, and he referenced FEMA Map # 12111C0290F, dated August 19, 1991. He did not include a copy of the map in the workfile he compiled when preparing the Appraisal Report. Mr. Facendo included in the Appraisal Report information regarding neighborhood characteristics, one-unit housing trends, one-unit housing, and present land use percentage. He indicated that the neighborhood was over 75 percent built-up and stable; that one-unit housing trends showed that the supply and demand for housing in the neighborhood were in balance, with marketing conditions partially stable to declining, and time exposure typically between three-to-six months; that the one-unit housing prices ranged from a low of $188,000.00 for new housing to a high of $450,000.00 for housing six years old, with a median of $305,000.00 for housing three years old; and that the present land use consisted of 80 percent one-unit housing and 20 percent commercial. Mr. Facendo did not include in his workfile documentation to support this information. Mr. Facendo concluded that the value of the Worchester Lane property was $305,000.00 when calculated under the Sales Comparison Approach method. In the Appraisal Report, Mr. Facendo identified 88 comparable properties currently for sale in the neighborhood, ranging in price from $175,000.00 to $360,000.00, and 72 comparable sales in the neighborhood within the previous 12 months, ranging in price from $188,000.00 to $450,000.00. Mr. Facendo did not include in his workfile documentation to support the number of properties currently for sale or the number of properties sold within the past 12 months. Mr. Facendo concluded that the value of the Worchester Lane property was $296,990.00 when calculated under the Cost Approach to Value method. Mr. Facendo placed a value of $60,000.00 on the property's home site. He calculated the square footage replacement cost new using the cost estimator in his online copy of the Marshall & Swift Residential Cost Handbook and noted in the Appraisal Report that this was the source of his cost data. Mr. Facendo also noted as a comment on the cost approach that he used the Marshall & Swift Residential Cost Handbook "& local builders [estimates]" as the sources of the cost figures he used to estimate the value of the Worchester Lane property using the cost approach. Finally, Mr. Facendo also consulted the South Florida 2007 Blue Book Construction and the 2007 National Building Cost Manual for cost data, but he did not mention these sources in the Appraisal Report. Mr. Facendo did not include in the workfile he compiled for the Appraisal Report documentation to support his opinion of site value, copies of the Marshall & Swift online calculations of the replacement cost new, copies of the local and national builder's data he used in his calculations, or copies of the Marshall & Swift data to support the square footage prices he used to calculate the value of the Worchester Lane property. Mr. Facendo signed the Appraisal Report on August 22, 2007, and noted on the Appraisal Report that it was effective August 22, 2007. In October 2007, JP Morgan Chase Bank, N.A.,4 ordered a review of Mr. Facendo's August 22, 2007, Appraisal Report of the Worchester Lane property. The review appraiser, John Nickerson, prepared a One-Unit Residential Appraisal Field Review Report ("Review Appraisal"), which he signed and dated October 8, 2007. In the review report, Mr. Nickerson opined that there were a number of errors in Mr. Facendo's Appraisal Report, including the zoning classification, the legal description, and the location of the property. Mr. Nickerson also criticized the comparable properties used by Mr. Facendo in the Sales Comparison section of the Appraisal Report and the site value assigned by Mr. Facendo in the Cost Approach section of the Appraisal Report. At some point, Mr. Facendo was advised by Chase Home Lending of the results of Mr. Nickerson's Review Appraisal, and he was provided with a copy of the report.5 In a letter to Chase Home Lending dated August 25, 2008, Mr. Facendo responded to the concerns raised by Mr. Nickerson in the Review Appraisal about Mr. Facendo's Appraisal Report. Mr. Facendo explained the basis for his choice of comparable properties and for the value he placed on the building site, and he discussed his reasons for believing that the conclusions regarding comparable properties and site valuation reached by Mr. Nickerson were flawed. As directed by an employee of Chase Home Lending, Mr. Facendo modified his August 22, 2007, Appraisal Report to include the correct zoning classification of RS-2, residential. Mr. Facendo was expressly directed by the employee of Chase Home Lending not to change anything on the face of the original Appraisal Report except for the zoning classification. Mr. Facendo followed this direction, and he did not revisit the Worchester Lane property or change any other information in the original Appraisal Report. The corrected Appraisal Report was, therefore, not a new appraisal report based on new information gathered in August 2008 regarding the Worchester Lane property. The corrected Appraisal Report was not effective in August 2008, and did not supersede the original Appraisal Report of August 22, 2007, except for the zoning classification correction.6 Mr. Facendo submitted the corrected Appraisal Report on the Worchester Lane property to Chase Home Lending on or about August 25, 2008, but he did not alter the original signature date or effective date of August 22, 2007. Mr. Facendo did not, however, include a copy of the original Appraisal Report in the workfile that he transmitted to the Department during the course of its investigation; the workfile contained a copy of only the corrected Appraisal Report. In signing the Appraisal Report, Mr. Facendo certified and agreed that he had complied with the USPAP that were effective when the report was prepared in August 2007. The Ethics Rule of the USPAP (2006) provides in pertinent part as follows: Record Keeping An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment. The workfile must include: the name of the client and the identity, by name or type, or any other intended users; true copies of any written reports, documented on any type of media; summaries of any oral reports or testimony, or a transcript of testimony, including the appraiser's signed and dated certification; and all other data, information, and documentation necessary to support the appraiser's opinions and conclusions and to show compliance with this Rule and all other applicable Standards, or references to the location(s) of such other documentation. USPAP (2006) Standards Rule 1-1(c) provides: In developing a real property appraisal, an appraiser must: * * * (c) not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results. USPAP (2006) Standards Rule 1-4(a) and (b) provides: In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results. When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. When a cost approach is necessary for credible assignment results, an appraiser must: develop an opinion of site value by an appropriate appraisal method or technique; analyze such comparable cost data as are available to estimate the cost new of the improvements (if any); and analyze such comparable data as are available to estimate the difference between the cost new and the present worth of the improvements (accrued depreciation). USPAP (2006) Standards Rule 2-1(a) provides: Each written or oral real property appraisal report must: clearly and accurately set forth the appraisal in a manner that will not be misleading[.] USPAP (2006) Standards Rule 2-2(b)(viii) provides: Each written real property appraisal report must be prepared under one of the following three options and prominently state which option is used: Self-Contained Appraisal Report. Summary Appraisal Report, or Restricted Use Appraisal Report.[footnote omitted.] * * * The content of a Summary Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: * * * (viii) summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Appraisal Board enter a final order dismissing all counts of the Amended Administrative Complaint dated September 30, 2009. DONE AND ENTERED this 4th day of March, 2010, in Tallahassee, Leon County, Florida. PATRICIA M. HART Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 2010.
The Issue The issues in this case are whether Respondent violated the provisions of Section 475.624(2), (14) and (15), Florida Statutes (2006)1/, as alleged in the Administrative Complaint, and if so, what penalty should be imposed?
Findings Of Fact The Department of Business and Professional Regulation, Division of Real Estate, is the state agency charged with the licensing and regulation of property appraisers in the State of Florida, pursuant to Section 20.165 and Chapters 455 and 475, Florida Statutes. Respondent, James Lester, Jr., is a Florida state certified general appraiser, holding license number RZ2783. He has been licensed by the Florida Real Estate Appraisal Board since 1991, initially holding a certified residential appraisal license and then a general appraisal license. Kenneth Ardire and Bradley Scott Bozeman formerly worked in the office referred to as J. Lester Company. The business was owned by Respondent's father. Bozeman was a residential appraiser and Ardire was a registered trainee appraiser supervised by Bozeman. During the time material to this Amended Administrative Complaint, Respondent did not act in a supervisory capacity with respect to either Bozeman or Ardire. Neither man currently works for the firm, and Bozeman's appraiser's license has been revoked. In February 2006, Ardire and Bozeman prepared a vacant land appraisal report (Report 3) related to property located on Highway 71 in White City, Florida, for Vision Bank. Respondent was not involved in the preparation of the vacant land appraisal and did not sign the report. Vision Bank also requested a subdivision analysis of the property. Ardire and Bozeman were assigned the report regarding the subdivision analysis because they had prepared the prior report on the same property. They were assigned to this task by an employee in the office other than Respondent. Preparation of a subdivision analysis is considered a commercial appraisal, as opposed to a residential appraisal. Neither Ardire nor Bozeman is licensed to prepare commercial appraisals. For reasons that are unclear, Ardire provided a "draft" report to Vision Bank, which shall be referred to as Report 2. Report 2 is unsigned and contains only the names of Bozeman and Ardire. Report 2 was provided by Vision Bank to Donald Giles, another licensed appraiser. Based on his review of Report 2, Giles filed a complaint with the Department. The complaint was identified as DBPR Case No. 2007-3522. In response to a request from the Department, Bozeman supplied to DBPR a copy of what is now referred to as Report 1 and its supporting work papers. This report indicates that it was prepared by Respondent, Bozeman and Ardire. Based on this report and workfile, DBPR Case No. 2008-1566 (the current proceeding) was initiated against Respondent. Neither report has numbered pages. Reports 1 and 2 differ in the following ways: Report 1 lists all three appraisers, with purported signatures for each. Report 2 lists only Ardire and Bozeman and contains no signatures. However, both reports state on the second page of the cover letter that "the appraisals attached were written, valued, analyzed and concluded by Kenneth Ardire and Bradley Scott Bozeman." The cover letter for Report 1 is on company letterhead, and is addressed to Vision Bank. The cover letter for Report 2 is on plain paper, and is addressed to Capital City Bank, at the same address listed for Vision Bank. The first page of Report 2 lists Vision Bank as the intended user. On the page labeled "Extraordinary Assumptions," Report 2 contains a sixth assumption which states: "The appraiser completing this assignment has a small interest in the property. However, the appraiser was not biased in his final conclusion of value." This assumption is omitted in Report 1. The certification page in Report 2 also lists Bozeman as having a minor interest in the property, lists Ardire and Bozeman but contains no signatures. The certification page for Report 1 has no reference to Bozeman's interest and has three purported signatures (Ardire, Bozeman and Respondent). On the page entitled Certificate of Value, Report 1 has three signature blocks and three purported signatures (Ardire, Bozeman, and Respondent). Report 2 contains two signature blocks (for Ardire and Bozeman) but no signatures. The third paragraph of the section entitled "Approaches to Value Omitted" in Report 2 contains the following sentences: "The market approach is unique since not all properties are alike. In this case the appraiser compared an area in Lands Landing in Wewahitchka and Honey Hill Subdivision in Wewahitchka." These two sentences are omitted from this section of the report in Report 1. With respect to the Highest and Best Use Discussion, the first two pages in both reports are identical. Report 1 includes an additional two pages entitled "Introduction to the Appraisal Process," which appears to be general information related to the appraisal process as opposed to specific information related to the appraisal performed. The written information contained in the "Public and Private Restriction" section is identical. However, Report 1 also includes maps and pictures of the area. Both reports contain the Land Appraisal Report (Report 3) signed by Ardire and Bozeman. Report 1 contains additional information with respect to the vacant land report not included in Report 2. On the page labeled "Land Sales Comparison Chart," under the Section entitled "Reconciliation and Land Value Estimate," Report 2 contains the sentence, "All the sales are zoned for similar use and felt to have the same potential for use as the subject." This sentence is omitted from Report 1. On the page labeled "Income Approach," Report 2 contains the sentence, "Method 2 is the financing and development method." This sentence is omitted in Report 1. Report 1 contains a blank page entitled "Addendum" followed by pages from a book with a heading "Subdivision Analysis." While there are differences between Report 1 and Report 2, they do not make a significant difference in terms of the quality and usefulness of the reports. Section 475.628, Florida Statutes, requires that appraisers comply with the USPAP. Section 475.628 was last amended in 1998, and was enacted in 1991. USPAP is adopted by the Appraisal Foundation, which is authorized by Congress as the Source of Appraisal Standards and Appraiser Qualifications. Pursuant to Section 475.611(1)(q), Florida Statutes, "Uniform Standards of Professional Appraisal Practice" means the most recent standards approved and adopted by the Appraisal Standards Board of the Appraisal Foundation. Section 475.611 was also enacted in 1991, and the language of this subsection has been unchanged, although renumbered, since that time. To this end, the Department has submitted as Exhibit 5 the USPAP Standards that became effective January 1, 2005. The most recent amendments for each section of the Standards is reflected on page four of the exhibit. None of these amendments relevant to these proceedings occurred prior to 1998. The Department alleges that Report 1 and the workfile for the report do not conform to several components of the USPAP standards in effect in 2005. Specifically, the Conduct portion of the Ethics Rule provides in part that "[a]n appraiser must not communicate assignment results in a misleading or fraudulent manner. An appraiser must not use or communicate a misleading or fraudulent report or knowingly permit an employee or other person to communicate a misleading or fraudulent report." Report 1 violated this section of the Ethics Rule contained in USPAP in that it was difficult for a reader of the report to determine exactly what was being appraised. Moreover, the inclusion of the gross sell-out amount on the first page, described as "potential gross income" in bold type is also misleading, because non- appraisers would infer that the potential gross income was the concluded value of the property. The Recordkeeping portion of the Ethics Rule addresses the need for appraisers to keep a workfile for each appraisal. The rule provides in pertinent part: An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment. The workfile must contain: the name of the client and the identity, by name or type, of any other intended users; true copies of any written reports, documented on any type of media; summaries of any written 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. With respect to Report 1, the workfile does not include documentation regarding marketing information for Gulf County, as listed in the report, and also lacks documentation to support any highest and best use analysis, including the four criteria necessary to establish the highest and best use for the property. It also lacks documentation to support the statements in Report 1 regarding the respective public and private restriction section, and lacks any plans or specifications to indicate the type of infrastructure proposed for the subdivision. The workfile also lacks documentation to support the income approach used, and contains no information to support the construction costs, closing costs, real estate taxes, expenses or other calculations used in the Calculations and Comments Section of Report 1. Also missing is any documentation from the identified engineers to support the data used for construction costs. Finally, there is also no documentation to support the data or calculations in the two-year discounted cash flow analysis in Report 1. With respect to Report 3, the workfile lacks documentation to support the single family price ranges in the neighborhood section of the report; lacks documentation to support the information in the Market Data Analysis Section; and lacks any multiple listing services (MLS) data or public records for the comparable sales used in the report. The Amended Administrative Complaint refers to the Scope of Work Rule. This rule is in actuality entitled Standard 1: Real Property Appraisal, Development and states: "In developing a real property appraisal, an appraiser must identify the problem to be solved and the scope of work necessary to solve the problem, and correctly complete research and analysis necessary to produce a credible appraisal." Report 1 identifies the problem as "estimating the value of the proposed subdivision and determines [sic] a value on a typical lot." However, the Report does not identify the scope of work and does not complete the research and analysis necessary to complete the appraisal properly. Standards 1-1(a), (b) and (c) require the following: In developing a real property appraisal, an appraiser must: be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a credible appraisal; 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. Report 1 violates these standards because, as discussed more fully below, the report contains several significant errors, including the failure to discuss the four criteria for analyzing highest and best use. Standards Rule 1-2(d) requires that in developing a real property appraisal, an appraiser must identify the effective date of the appraiser's opinions and conclusions. Report 1 stated that the value date of the report and the date of the report itself, were the same as the date of the inspection of the property, June 7, 2006. Mr. Grimes, the Department's expert, explained that this was a violation of the standard because in a situation where the appraiser is estimating a value for a project that is not now in existence, the hypothetical nature of the valuation must be adequately explained, and the effective date of the appraisal should reflect the date in the future when the subdivision is scheduled to be completed. Mr. Grimes' testimony is credited. Standards Rule 1-3 requires the following: When the value opinion to be developed is market value, and given the scope of work identified in accordance with Standards Rule 1-2(f), an appraiser must: identify and analyze the effect on use and value of existing land use regulations, reasonably probable modifications of such land use regulations, economic supply and demand, the physical adaptability of the real estate, and market area trends; and develop an opinion of the highest and best use of the real estate. Report 1 does not provide an analysis of the highest and best use of the property. While the factors related to such an analysis are defined, there is no discussion of these factors related to the actual property being appraised. Standards Rule 1-4(a),(c) and (g) provides: In developing a real property appraisal, an appraiser must collect, verify, and analyze all information applicable to the appraisal problem, given the scope of work identified in accordance with Standards Rule 1-2(f). (a) When a sales comparison approach is applicable, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. * * * When an income approach is applicable, an appraiser must: analyze such comparable rental data as are available and/or the potential earnings capacity of the property to estimate the gross income potential of the property; analyze such comparable operating expense data as are available to estimate the operating expenses of the property; analyze such comparable data as are available to estimate rates of capitalization and/or rates of discount; and base projections of future rent and/or income potential and expenses on reasonably clear and appropriate evidence. Comment: In developing income and expense statements and cash flow projections, an appraiser must weigh historical information and trends, current supply and demand factors affecting such trends, and anticipated events such as competition from developments under construction. * * * (g) An appraiser must analyze the effect on value of any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal. While the Amended Administrative Complaint refers to all three subparagraphs listed above, the evidence presented dealt solely with the deficiencies related to Standards Rule 1- 4(c). Mr. Grimes opined that with respect to Report 1, the income approach to the cash flow analysis did not support the conclusions, projections on income, and with respect to this project, the sale of lots over a period of time. The statements made in the report are conclusory in nature, with little or no explanation of the basis for forming the conclusions. Standards Rule 1-6(a) and (b) provides: In developing a real property appraisal, an appraiser must: reconcile the quality and quantity of data available and analyzed within the approaches used; and reconcile the applicability or suitability of the approaches used to arrive at the value conclusion(s). Report 1 indicates that there are three traditional approaches to value in the valuation process: the cost approach, the direct sales comparison approach, and the income capitalization approach. While the report states that all three approaches will be considered, the appraisal report omits any discussion of the cost approach and the direct sales comparison approach. By omitting these approaches from the analysis, the report omits an important "check and balance" process that would have caught what Mr. Grimes considered to be a substantial error in the discounted cash flow analysis. Standards Rule 2-1 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 intended users of the appraisal to understand the report properly; and clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions used in the assignment. Hypothetical conditions and extraordinary assumptions are considered to be two different things. As noted in Report 1, an extraordinary assumption is defined as an assumption that presumes certain information to be factual. If found to be false, the information could alter the appraiser's opinions or conclusions. A hypothetical condition is something that assumes conditions contrary to known facts about physical, legal or economic characteristics of the property being appraised, or about conditions external to the property, such as market conditions or trends, or about the integrity of data used in the analysis. Hypothetical conditions and extraordinary assumptions should be explained separately in an appraisal report, so that the intended user is in a better position to understand the true value of the appraisal. Report 1 lists 6 conditions and assumptions all together. They are that the proposed subdivision is based on 21 lots; that all plans and specs (unidentified) are to be approved and accepted by all governmental authorities; all work will be completed in a quality workmanship manner with quality materials; assumed the subject property can be developed as proposed; and information on the number of lots was made available by the engineer Bailey, Bishop and Lane. The report does not differentiate which are considered hypotheticals and which are considered extraordinary assumptions. The report does not contain sufficient information to enable the intended user of the appraisal to understand the report and to use it for its intended purpose, i.e., to determine whether the highest and best use for the land is subdivision development. Standards Rule 2-2(b) provides in pertinent part: 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. * * * (b) The content of a Summary Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: * * * state the intended use of the appraisal; summarize information sufficient to identify the real estate involved in the appraisal, including the physical and economic property characteristics relevant to the assignment; * * * (vi) state the effective date of the appraisal and the date of the report; * * * summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions; state the use of the real estate existing as of the date of value and the use of the real estate reflected in the appraisal; and, when reporting an opinion of market value, summarize the report and rationale for the appraiser's opinion of the highest and best use of the real estate; . . . Report 1 states that the intended use of the appraisal is to determine the fair market value of the property. It also provides sufficient information to identify the real estate involved. However, as noted at finding of fact 18, the effective date of the appraisal, the date of the property inspection and the date of the report are the same. Where, as here, the appraisal is determining value of a proposed subdivision as completed at some future time, the date of the report cannot be the effective date of the appraisal. The report fails to have any discussion or analysis with respect to the property's highest and best use, and has little or no reasoning or analysis to support the opinions and conclusions contained in the report. Report 1 contains what purports to be Respondent's signature. Clearly, by signing an appraisal report, a property appraiser takes responsibility for the contents of that report. When speaking with the investigator during the investigation of this case, Respondent stated that he had little recollection of the appraisal, but given that his signature was on it, he acknowledged responsibility for whatever errors it contained. However, at hearing, Respondent disputed that it was actually his signature. Respondent's testimony that the signatures contained in Report 1 are not his is credited. Included in the record of this proceeding are other documents, including past appraisals prepared by Respondent, that contain what he acknowledges to be his signature. After carefully reviewing all of the signatures in evidence, it cannot be said with any degree of certainty that the signatures included in Report 1 are indeed the signatures of Respondent.2/
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED that: The Florida Real Estate Appraisal Board enter a final order dismissing the Amended Administrative Complaint. DONE AND ENTERED this 24th day of November, 2009, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON 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 24th day of November, 2009.
The Issue The issues in this case are whether Respondent, Jessalyn Rodriguez, committed the violations alleged in a seven-count Administrative Complaint, filed with the Petitioner Department of Business and Professional Regulation on June 10, 2008, and, if so, what disciplinary action should be taken against her Florida real estate appraiser certification.
Findings Of Fact The Parties. Petitioner, the Department of Business and Professional Regulation, Division of Real Estate (hereinafter referred to as the “Division”), is an agency of the State of Florida created by Section 20.165, Florida Statutes. The Division is charged with the responsibility for the regulation of the real estate industry in Florida pursuant to Chapters 455 and 475, Florida Statutes. Respondent, Jessalyn Rodriguez, is, and was at the times material to this matter, a Florida-certified residential real estate appraiser having been issued license number 4120. The last license issued to Ms. Rodriguez is now an inactive Florida-certified residential real estate appraiser license at 12071 Southwest 131st Avenue, Miami Florida 33166. Appraisal of 6496 Southwest 24th Street. On or about June 1, 2007, Ms. Rodriguez developed, signed and communicated an appraisal report (hereinafter referred to as the “Appraisal”), for property located at 64967 Southwest 24th Street, Miami, Florida 33155 (hereinafter referred to as the “Subject Property”). At the time the Appraisal was made, Ms. Rodriguez was a Florida-certified residential real estate appraiser. The Subject Property, however, was zoned BU-1, a commercial district. The Administrative Complaint entered against Ms. Rodriguez, however, does not allege that Ms. Rodriguez committed any violation by performing an appraisal on commercially zoned property. Errors and Omissions in the Appraisal. Ms. Rodriguez on her sketch of the Subject Property contained in the Appraisal indicates that the total square footage of the Subject Property is 2,105 square feet. On the sketch, she breaks down the property into a 34.0 x 55.6 area of 1890.4 square feet, and a 5.0 x 43.0 area of 215 square feet. In her documentation for the Appraisal, Ms. Rodriguez notes that the adjusted square footage of the Subject Property is 1,890 square feet and that the property appraiser reported the square footage at 1,709 square feet. Ms. Rodriguez failed to verify that the reported 2,105 square feet contained in the Appraisal was accurate. Ms. Rodriguez admitted in her Answer and Response to Administrative Complaint, Respondent’s Exhibit 1, that she failed to verify that a rear addition to the Subject Property, most likely the 5.0 x. 43.0 additional area she measured, had not been permitted through Miami-Dade County. This unpermitted addition would account for the discrepancy in the square footage of the Subject Property noted in Ms. Rodriguez’s notes. Had she investigated the discrepancy in square footage, it is possible she would have discovered the unpermitted addition and reported it in the Appraisal. Ms. Rodriguez indicates in the Appraisal that the Subject Property has a “porch.” The “porch” she was referring to is a rather small area in the front of the Subject Property which has an overhang. The evidence failed to prove that this area, which is depicted in photos accepted in evidence, does not constitute a “porch.” Ms. Rodriguez incorrectly indicated in the Appraisal that the Subject Property had a “patio.” Her suggestion that a “grass area” constituted a patio is rejected as unreasonable. While the Subject Property has a small “yard,” it does not have a patio. Ms. Rodriguez failed to indicate in the Appraisal that the Subject Property did not have any “appliances.” The fact that appliances were to be installed after closing fails to excuse this omission. Ms. Rodriguez did not make any adjustment for, or any explanation of, the 13-year age difference between the Subject Property and comparable sale 3. The Supplemental Addendum section of the Appraisal incorrectly reports that the Subject Property had wood floors and that it had a new pool deck. Ms. Rodriguez has admitted these errors, indicating that they are “[t]ypographical error[s] but did not effect value since no monetary adjustment was made.” Failure to Document. Ms. Rodriguez’s documentation for the Appraisal lacked a number of items, all of which Ms. Rodriguez admits were not maintained. The missing documentation included the following items which were not contained in her work file: Support for a $40 per square foot adjustment for comparable sale 1 and comparable sale 3 in the Sales Comparison Approach section of the Appraisal; Support for a site size adjustment made to comparable sale 1 and comparable sale 2 in the Sales Comparison Approach section of the Appraisal; Support for a $1,500.00 “bathroom” adjustment to comparable sale 1, comparable sale 2, and comparable sale 3 in the Sales Comparison Approach section of the Appraisal; Support for a $5,000.00 “good” location adjustment made to comparable sale 1 and comparable sale 2 in the Sales Comparison Approach section of the Appraisal; Support for the $4,000.00 garage adjustment made to comparable sale 2 in the Sales Comparison Approach section of the Appraisal; Support for the $15,000.00 pool adjustment made to comparable sale 2 in the Sales Comparison Approach section of the Appraisal; Support for the $350,000.00 Opinion of Site Value in the Cost Approach section of the Appraisal; Support for the $10,000.00 adjustment for the “As Is” Value of Site Improvements in the Cost Approach section of the Appraisal; Support for the $20,000.00 adjustment for Appliances/Porches/Patios/Etc. in the Cost Approach section of the Appraisal; and Marshall and Swift pages for the time frame that the Appraisal was completed to justify the dwelling square footage price in the Cost Approach section lf the Appraisal.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Commission: Finding that Ms. Rodriguez is guilty of the violations alleged in Counts One through Seven of the Administrative Complaint as found in this Recommended Order; Placing Ms. Rodriguez’s appraiser license on probation for a period of two years, conditioned on her successful completion of the 15-hour USPAP course; Requiring that she pay an administrative fine of $2,000.00; and Requiring that she pay the investigative costs incurred in this matter by the Division. DONE AND ENTERED this 23rd of February, 2009, in Tallahassee, Leon County, Florida. LARRY J. SARTIN 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 February, 2009. COPIES FURNISHED: Ainslee R. Ferdie, Esquire Ferdie & Lones, Chartered 717 Ponce de Leon Boulevard Suite 223 Coral Gables, Florida 33134 Jessalyn Rodriguez 9972 Southwest 125th Terrace Miami, Florida 33176 Robert Minarcin, Esquire Department of Business & Professional Regulation 400 West Robinson Street, N801 Orlando, Florida 32801-1757 Thomas W. O’Bryant, Jr., Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Hurston Building-North Tower, Suite N802 Orlando, Florida 32801 Ned Luczynski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
