The mailing address is as follows:
Appraiser Certification Program
308 South Pierre Street
Pierre, SD 57501-3137
The telephone number remains the same, 605.773.4608. The facsimile number has changed to 605.773.5405.
Brandon J. Stelling, State-Registered - Vermillion, SD
Melissa K. Cuka, State-Registered - Yankton, SD
Jaret D. Sievers, State-Registered - Sioux Falls, SD
Mariano S. Borges, State-Certified General - Phoenix, AZ
Wade M. Bachmeier, State-Certified General - Bismarck, ND
Michelle D.M. Koeller, State-Certified General - Minneapolis, MN
Jon Beitelspacher, State-Licensed
Adam Lalim, State-Certified Residential
Brian Schmidt, State-Certified Residential
NOTICE! The 2013 appraiser renewal applications were mailed the first week in July. The applications were due in the Appraiser Certification Program office by August 17, 2013 for renewal of certificates for state-certified general, state-certified residential, state-licensed and state-registered appraisers.
In order to renew your certificate, you must submit the completed application, applicable renewal fees and verification of the required 28 hours of approved continuing education which includes the 2012-2013 Edition of the 7-Hour National Uniform Standards of Professional Appraisal Practice Update Course (USPAP Update). Appraisers are required to complete the USPAP Update during the period of January 1, 2012 through June 30, 2012. If the USPAP Update was not completed by June 30, 2012, there will be a $100 administrative penalty fee assessed.
If you have not submitted your 2013 renewal, please do so as soon as possible to avoid a late renewal penalty fee and lapse in authority to appraise.
NOTICE! The 2013 supervisory appraiser endorsement renewal applications were mailed the first week in July. The applications were due in the Appraiser Certification Program office by August 17, 2013 for renewal of the supervisory appraiser endorsement.
Pursuant to ARSD 20:14:06:01.02, an appraiser who performs an appraisal for an appraisal management company shall assure that the company is properly registered by the secretary pursuant to SDCL 36-21D and include the company's registration number in the appraisal report.
According to SDCL 36-21D, if you are solicited to provide appraisal services by a company that performs any of the following, the company is an appraisal management company:
1. Recruit, select, and retain appraisers.
2. Contract with licensed or certified appraisers to perform appraisal
3. Manage the process of having an appraisal performed, including providing
administrative duties including:
a. Receiving appraisal orders and appraisal reports;
b. Submitting completed appraisal reports to creditors and underwriters;
c. Collecting fees from creditors and underwriters for services provide; or
d. Reimbursing appraisers for services performed.
4. Review and verify the work of appraisers for compliance with the Uniform
Standards of Professional Appraisal Practice.
Pursuant to ARSD 20:77:05:01(9) an appraisal management company shall disclose its certificate of registration number within its engagement document with each utilized appraiser.
Appraisers must insist that a company disclose the South Dakota AMC Registration number in the engagement document soliciting appraisal services before accepting an appraisal assignment and the appraiser must include the number in the appraisal report. If a company is unable to provide the South Dakota AMC Registration number, the appraiser must report the company immediately to the Appraiser Certification Program. [AMC Registration numbers may be verified at the Appraiser Certification website: http://dlr.sd.gov/appraisers.]
If a company claims it is not an AMC or is exempt from registration, contact the Appraiser Certification Program immediately to verify.
(The following article from the Appraisal Institute Valuation publication, Second Quarter, 2013, reprinted with permission of the Appraisal Institute)
A commercial appraiser, defended by his E&O insurer, agreed to settle a contentious lawsuit over an alleged breach of confidentiality regarding one of his appraisals. The damages paid to the plaintiff were significant.
What happened and how can this situation be avoided?
According to the plaintiff's complaint, a lender had engaged the appraiser to perform an appraisal for a construction loan for the developer of a shopping center. Some of the information received by the appraiser included lease commitments from prospective tenants - including a well-known retailer as the anchor tenant. The appraiser completed the assignment, but for reasons unrelated to the appraisal, the lender declined to make the loan.
It was at this point that the appraiser made his alleged error. Without authorization, he mentioned the project to a different lender-client and asked if that bank would be interested in funding the developer's loan. He also emailed his lender contact a copy of the appraisal, which included information about the anchor tenant. Word spread about the project and the well-known retailer's move to that location. However, the retailer was very sensitive about the move and allegedly became so upset about the disclosure of the information that it terminated its lease commitment. The developer was thus left without his key tenant and allegedly could not obtain other funding for the project.
The developer filed a lawsuit against the appraiser, asserting that his alleged failure to keep the appraisal information confidential constituted professional negligence and a breach of fiduciary duty. Blaming failure of the project on the appraiser, the developer demanded damages well beyond the limit of the appraiser's insurance policy.
The appraiser's alleged confidentiality transgressions were difficult to defend. Although arguments in favor of the appraiser certainly existed, the appraiser was anxious to settle because of the risk of a judgment in excess of his policy limit for which he personally would be liable. Accordingly, the case settled before trial for several hundred thousand dollars. Unfortunately, a damages payment of that size usually will have a long-lasting impact on an appraiser's ability to secure affordable professional liability insurance.
There's an obvious lesson from this case regarding the importance of the confidential nature of appraisal work: Breaches of confidentiality can just as easily result in lawsuits for damages as can appraiser's valuation error.
Of course, the principal source of an appraiser's confidentiality responsibilities is found in the Uniform Standards of Professional Appraisal Practice's Ethics Rule:
"An appraiser must not disclose: (1) confidential information; or (2) assignment results to anyone other than: The client; persons specifically authorized by the client; state appraiser regulatory agencies; third parties as may be authorized by due process of law; or a duly authorized professional peer review committee."
An appraiser also may have other confidentiality obligations. For consumer-related transactions, for example, the appraiser has a duty to safeguard nonpublic personal information under the Gramm-Leach-Bliley Act and its state law counterparts. An appraiser also may have contractual responsibilities for handling confidential information under engagement agreements or in vendor agreements with lenders, government agencies or appraisal management companies. Lastly, Appraisal Institute professionals have responsibility under Ethical Rule 4-1:
"It is unethical to disclose confidential information or an analysis, opinion, or conclusion specific to a service...to anyone other than: (a) the client and those persons specifically authorized by the client; and (b) third parties, when and to the extent that the Member is legally required to do so by statute, ordinance, or court order; and (c) the duly authorized committees of the Appraisal Institute."
Cases involving alleged "loose lips" (and resulting sizeable damages) fortunately are rare - and avoidable with good judgment. Much more common are confidentiality issues that arise from the subpoenas, which may require testimony in a deposition, arbitration or trial, or may require the appraiser to produce documents such as reports and work files.
A typical subpoena situation may involve a dissolution proceeding case. An appraiser will have performed a valuation for a lender regarding a property owned by a business partnership (or perhaps by a married couple), and then the next year, the partners are in court fighting about the value of the property. One partner's attorney, in an attempt to obtain evidence of value, serves a subpoena on the appraiser for the deposition testimony and the work file.
Our office hears from many appraisers in this position, and their first query often is, "I don't have to respond to the subpoena because of USPAP's confidentiality rule, right?" Well, they probably do have to comply with the subpoena's demand and probably will have to provide testimony as a percipient witness and produce the file. Their next question: "My appraisal report contains a statement that my services do not include testimony, so the attorney has to pay me, right?" The attorney probably only will have to pay the appraiser as a percipient witness what the normal daily witness fee is in their state (here in California, that would be $35), plus mileage. Limiting conditions don't form a contract.
It's important for appraisers to know that, as a general matter, the legal effect of a valid subpoena trumps USPAPss confidentiality rule. In the words of one federal court, "[t]he law does not afford an evidentiary privilege to professional appraisers. Moreover, the USPAP rules themselves explicitly contemplate the production of such documents to 'third parties as may be authorized by due process of law.'" U.S. v. 2,091.712 Acres of Land, Case No. 4:09-CV-88-BO, E.D. North Carolina (2010).
Accordingly, if an appraiser has been served with a valid subpoena, the appraiser generally will have to comply, unless the appraiser or another party in the case files a motion to quash the subpoena or limit the appraiser's obligations on a stronger basis than that of USPAP's confidentiality rule. For example, the appraiser may have valid ground to limit the subpoena if the appraisal documents contain 'trade secrets" or when an attorney's work product protection applies to the work of a non-testifying expert appraiser. Nevertheless, even though it may not be the prevailing view, individual judges sometimes can be persuaded that an appraisal for one client simply is not the business of an unrelated third party and might still excuse an appraiser from compliance. The bottom line is still that appraisers simply can't ignore a subpoena.
Unless you've agreed to provide expert witness testimony, any obligations you have for testimony under a regular subpoena are limited to percipient (or factual) witness testimony in court, arbitration or deposition, which means two things:
1. You still have the duty of confidentiality under USPAP outside those settings
and should not talk about confidential appraisal matters outside of your
2. You only should have to answer factual questions, such as your prior opinion
of value in the appaisal report. As a percipient witness, you should not be
asked to give a new option of value or to guesstimate what the property
might now be worth. These are the province of "expert testimony" and further
would require that you compy with USPAP in developing and reporting them.
As a practical matter, I usually advise appraisers who have received a subpoena to first inform their client and then call the attorney responsible for the subpoena and find out why their testimony or documents are requested â€“ and I stress that they not disclose anything confidential to the attorney. Based on that discussion, an appraiser may be able to dissuade the attorney from calling them as a witness (if so desired).
How can this power of persuasion be used? If, for example, an attorney plans to call an appraiser in order to bolster value based on a prior lending appraisal, the appraiser might say something along the lines of, "I don't think my testimony will be very helpful to your client because the copy of the report you're looking at is more than a year old and was prepared solely for my client's lending use. If I testify, I'm going to have to make it really clear to the court that my report shouldn't be considered because of its age, because the market has changed and because the report was prepared only for that prior purpose."
If the appraiser is a persuasion pro, they might even be able to turn the call into a business development opportunity: "Would you like me to perform a current, credible appraisal for your intended use?"
Some appraisers and commentators - but not this author - hold the opinion that confidentiality rules for appraisers may bar an appraiser from providing confidential appraisal information to the appraiser's own legal defense counsel without specific client authorization. That position would leave the appraiser in that untenable position of having to ask for a client's authorization to provide information to defense counsel while being threatened or sued by that same client, or leave the appraiser unable to obtain authorization when the client no longer exists, as in the case of a bank failure.
The confidentiality rules for appraisers are less detailed than confidentiality rules for medical and legal services, which typically expressly recognize the professional's right to provide information to legal counsel. If they wish, appraisers can clarify such a right for themselves by including a provision in their engagement agreements such as "Client specifically authorizes Appraiser to disclose information relating to the appraisal assignment(s), including information which may be considered confidential, to third persons as reasonably necessary to Appraiser's response to or defense of threatened or actual legal or regulatory actions." Note that the engagement agreements must be signed by the client in order for authorization to disclose information to be effective.
700 Governors Drive
Pierre, SD 57501-2291