AB 948 – New Appraisal Disclosure
As California continues its efforts to combat racism and bias in real estate transactions, real estate appraisers are now in the legislature’s crosshairs. Approved by Governor Gavin Newsom on September 28, 2021, Assembly Bill (AB) 948 attacks the issue from both ends of the appraisal process: during the complaint process which may take place after an appraisal, and pre-appraisal, with additional training added to appraisal licensees’ continuing education requirements.
The Bureau of Real Estate Appraisers (“BREA”) will be required to include a check box within their existing complaint form, asking the complainant whether they believe the appraisal is below market value. Further, complainants will have the option to include their demographic information on the form. The BREA will need to study this demographic information and provide a report of their findings to the state legislature before July 1, 2024.
This bill, after July 1, 2022, will require that every contract for the sale of single-family residential real property contain a notice stating that any appraisal of the property is required to be unbiased, objective, and not influenced by improper or illegal considerations.
Prohibited Bases For Appraisal
To prevent discrimination during the appraisal process, licensees are prohibited from basing their appraisal on the basis of (detailed further in the bill):*
- Gender expression
- National origin
- Marital status
- Source of income
- Sexual orientation
- Familial status
- Employment status; or
- Military status
This applies to all individuals who may be present or impacted by the appraisal, including the property’s prospective or current owners, prospective or current tenants, and present owners or tenants of properties in the vicinity of the subject property.
This bill applies to “a licensed person”:
- as defined by B&P Code s 10011 – in other words, a DRE salesperson or broker;
- a person covered by the licensing requirements of Division 9 (commencing with Section 22000) of the Financial Code (CFL’s);
- Division 20 (commencing with Section 50000) of the Financial Code (RML’s); and
- a depository institution chartered under federal or state law.
What Loans Does This Bill Apply To?
The bill would also require the notice to be delivered by a licensed person, as defined, refinancing a first lien purchase money loan secured by residential real property containing no more than 4 dwelling units. Broken down, this bill applies to:
- All refinances of 1st lien purchase money loans secured by 1-4 unit properties.
- Includes consumer purpose and business purpose loans.
- Includes owner-occupied and non-owner occupied properties.
This bill adds Civil Code 1102.6g.(a) After July 1, 2022, every contract for the sale of real property shall contain, in no less than 8-point type, the following notice:
“Any appraisal of the property is required to be unbiased, objective, and not influenced by improper or illegal considerations, including, but not limited to, any of the following: race, color, religion (including religious dress, grooming practices, or both), gender (including, but not limited to, pregnancy, childbirth, breastfeeding, and related conditions, and gender identity and gender expression), sexual orientation, marital status, medical condition, military or veteran status, national origin (including language use and possession of a driver’s license issued to persons unable to provide their presence in the United States is authorized under federal law), source of income, ancestry, disability (mental and physical, including, but not limited to, HIV/AIDS status, cancer diagnosis, and genetic characteristics), genetic information, or age. If a buyer or seller believes that the appraisal has been influenced by any of the above factors, the seller or buyer can report this information to the lender or mortgage broker that retained the appraiser and may also file a complaint with the Bureau of Real Estate Appraisers at https://www2.brea.ca.gov/complaint/ or call (916) 552-9000 for further information on how to file a complaint.”
The bill also adds Civil Code 1102.6g.(b) The notice described in subdivision (a) shall also be delivered by a licensed person refinancing a first lien purchase money loan secured by residential real property containing no more than four dwelling units, either prior to, or with, the loan estimate as required by the federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.), or the mortgage loan disclosure statement as required pursuant to Section 10240 of the Business and Professions Code.
Where Can You Add The Notice?
The notice described in subdivision (a) may be included as part of the disclosure required under Section 1002.14(a)(2) of the federal Equal Credit Opportunity Act (Regulation B) (12 C.F.R. Sec. 1002 et seq.). Civil Code 1102.6g.(b)
This Appraisal Anti-Discrimination Notice has already been added to all applicable loan documents generated on DossDocs.com.
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