CUSTOMARY AND REASONABLE APPRAISAL FEES by Mel Black

The North Carolina Appraisal Board took action February 15 to move along a possible administrative rule that would seek, if approved, to require an AMC to pay customary and reasonable fees to appraisers. It was a split voice vote of 5-3, if I counted correctly.  The issue has been dealt with at the federal level in Sec 226.42 (f) of Regulation Z of the Truth in Lending Act.  _ With the Board Members looking at this possible rule, there are two different questions — One on the substantive content of the rule and one a procedural question of whether the Board has the authority make such a rule. - Substantively, the issue is very simple.  Of course it is a good thing for appraisers to receive a fair fee. Who wouldn’t agree with this?  Professionals should be able to negotiate a fair and reasonable fee for services.  Appraisers perform vital services, have a duty to perform competently and ethically, and face problems when we breach that duty.  We should be paid appropriately.  That is not the issue. - The issue is all about procedure and the Board’s statutory authority to adopt the rule. The new AMC law gives the Board the authority to adopt rules that are reasonably necessary to implement, administer, and enforce the provisions of the law.   While the statue allows the Board to prohibit an AMC from withholding timely payment, the law is notably silent on the authority to require a customary and reasonable fee or otherwise address the amount of compensation for appraisers.  During discussion at the meeting last week, one of the Appraisal Board members who voted “no” articulately explained the procedural situation and noted that the matter was simply outside the Board’s authority and scope. - The proposed rule will next go to the Rules Review Committee for an evaluation of the Board’s authority to adopt the rule.  With the North Carolina Administrative Procedures Act providing that an agency may not adopt a rule that establishes a fee or other charge for providing a service in fulfillment of a duty (with only a few narrow exceptions), it should be an interesting evaluation. - If the rule is ultimately turned down by the Rules Review Commission, appraisers and appraiser groups in North Carolina who want this rule would do well to study and understand administrative procedures in our state and move their focus from Six Forks Road to Jones Street.