SB0561

SENATE BILL 561

50th legislature - STATE OF NEW MEXICO - first session, 2011

INTRODUCED BY

Phil A. Griego

AN ACT

RELATING TO REAL ESTATE; PROVIDING FOR BROKER'S PRICE OPINIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 61-29-2 NMSA 1978 (being Laws 1999, Chapter 127, Section 1, as amended) is amended to read:

"61-29-2. DEFINITIONS AND EXCEPTIONS.--

A. As used in Chapter 61, Article 29 NMSA 1978:

(1) "agency relationship" means the fiduciary relationship created solely by an express written agency agreement between a person and a brokerage, authorizing the brokerage to act as an agent for the person according to the scope of authority granted in that express written agreement for real estate services subject to the jurisdiction of the commission;

(2) "agent" means the brokerage authorized, solely by means of an express written agreement, to act as a fiduciary for a person and to provide real estate services that are subject to the jurisdiction of the commission; in the case of an associate broker, "agent" means the person who has been authorized to act by that associate broker's qualifying broker;

(3) "associate broker" means a person who, for compensation or other valuable consideration, is associated with or engaged under contract by a qualifying broker to participate in an activity described in Paragraph (4) of this subsection or to carry on the qualifying broker's business as a whole or partial vocation;

(4) "broker" or "qualifying broker" means a person who for compensation or other consideration from another:

(a) lists, sells or offers to sell real estate; buys or offers to buy real estate; or negotiates the purchase, sale or exchange of real estate or options on real estate;

(b) leases, rents or auctions or offers to lease, rent or auction real estate;

(c) advertises or [holds himself out as] makes any representation of being engaged in the business of buying, selling, exchanging, renting, leasing, auctioning or dealing with options on real estate for others as a whole or partial vocation; [or]

(d) engages in the business of charging an advance fee or contracting for collection of a fee in connection with a contract under which the broker or qualifying broker undertakes primarily to promote the sale of real estate through its listing in a publication issued primarily for that purpose or for the purpose of referral of information concerning real estate to brokers, qualifying brokers or associate brokers; or

(e) prepares a broker's price opinion; (5) "broker's price opinion" means a written estimate, analysis or conclusion prepared by an active licensed broker that details the probable selling price of a particular piece of real property and provides a varying level of detail about the property's condition and neighborhood, the local real estate market and comparable sales. A broker's price opinion is not an appraisal;

[(5)] (6) "brokerage" means a licensed qualifying broker and the licensed real estate business represented by the qualifying broker and its affiliated licensees;

[(6)] (7) "brokerage relationship" means the legal or contractual relationship between a person and a brokerage in a real estate transaction subject to the jurisdiction of the commission;

[(7)] (8) "client" means a buyer, seller, landlord or tenant who has entered into an express written agreement with a brokerage for real estate services subject to the jurisdiction of the commission;

[(8)] (9) "commission" means the New Mexico real estate commission;

[(9)] (10) "customer" means a buyer, seller, landlord or tenant who uses real estate services without entering into an express written agreement with a brokerage subject to the jurisdiction of the commission;

[(10)] (11) "license" means a qualifying broker's license or an associate broker's license issued by the commission;

[(11)] (12) "licensee" means a person holding a valid qualifying broker's license or an associate broker's license subject to the jurisdiction of the commission;

[(12)] (13) "real estate" means land, improvements, leaseholds and other interests in real property that are less than a fee simple ownership interest, whether tangible or intangible;

[(13)] (14) "real estate salesperson" means a person who, for compensation or other valuable consideration, is associated with or engaged under contract by a broker to participate in an activity described in Paragraph (4) of this subsection or to carry on the broker's business as a whole or partial vocation; and

[(14)] (15) "transaction broker" means a qualifying broker, associate broker or brokerage that provides real estate services without entering into an agency relationship.

B. A single act of a person in performing or attempting to perform an activity described in Paragraph (4) of Subsection A of this section makes the person a qualifying broker. A single act of a person in performing or attempting to perform an activity described in Paragraph (3) of Subsection A of this section makes the person an associate broker.

C. The provisions of Chapter 61, Article 29 NMSA 1978 do not apply to:

(1) a person who as owner or lessor performs any of the activities included in this section with reference to property owned or leased by the person, the employees of the owner or lessor or the employees of a qualifying broker acting on behalf of the owner or lessor, with respect to the property owned or leased, if the acts are performed in the regular course of or incident to the management of the property and the investments, except when the sale or offering for sale or the lease or offering for lease of the property constitutes a subdivision containing one hundred or more parcels;

(2) isolated or sporadic transactions not exceeding two transactions annually in which a person acts as attorney-in-fact under a duly executed power of attorney delivered by an owner authorizing the person to finally consummate and to perform under any contract the sale, leasing or exchange of real estate on behalf of the owner; and the owner or attorney-in-fact has not used a power of attorney for the purpose of evading the provisions of Chapter 61, Article 29 NMSA 1978;

(3) transactions in which a person acts as attorney-in-fact under a duly executed power of attorney delivered by an owner related to the attorney-in-fact within the fourth degree of consanguinity or closer, authorizing the person to finally consummate and to perform under any contract for the sale, leasing or exchange of real estate on behalf of the owner;

(4) the services rendered by an attorney at law in the performance of the attorney's duties as an attorney at law;

(5) a person acting in the capacity of a receiver, trustee in bankruptcy, administrator or executor, a person selling real estate pursuant to an order of any court or a trustee acting under a trust agreement, deed of trust or will or the regular salaried employee of a trustee;

(6) the activities of a salaried employee of a governmental agency acting within the scope of employment; or

(7) persons who deal exclusively in mineral leases or the sale or purchase of mineral rights or royalties in any case in which the fee to the land or the surface rights are in no way involved in the transaction."

SECTION 2. A new section of Chapter 61, Article 29 NMSA 1978 is enacted to read:

"[NEW MATERIAL] BROKER'S PRICE OPINION.--

A. A licensed broker may charge and collect a fee for and may prepare a broker's price opinion for the following persons under the following circumstances:

(1) an owner of real property or the legal representative of the owner;

(2) an existing or potential seller for the purposes of listing and selling real property;

(3) an existing or potential buyer for the purposes of purchasing real property;

(4) a third party making decisions or performing due diligence related to the potential listing, offering, sale, exchange, option, lease or acquisition price of real property; or

(5) an existing or potential lienholder; provided that a broker's price opinion shall not be substituted for an appraisal by a state licensed or certified real estate appraiser if an appraisal is required by applicable law.

B. A broker shall not knowingly prepare a broker's price opinion for use as an appraisal when an appraisal is required by law or otherwise.

C. The commission may adopt rules prescribing the manner in which a broker's price opinion shall be prepared in accordance with the provisions of this section."

SECTION 3. Section 61-30-3 NMSA 1978 (being Laws 1990, Chapter 75, Section 3, as amended) is amended to read:

"61-30-3. DEFINITIONS.--As used in the Real Estate Appraisers Act:

A. "appraisal" or "real estate appraisal" means an analysis, opinion or conclusion prepared by a real estate appraiser relating to the nature, quality, value or utility of specified interests in or aspects of identified real estate or real property, for or in expectation of compensation, and shall include the following:

(1) a valuation, analysis, opinion or conclusion prepared by a real estate appraiser that estimates the value of identified real estate or real property; and

(2) an analysis or study of real estate or real property other than estimating value;

B. "appraisal assignment" means an engagement for which an appraiser is employed or retained to act or would be perceived by third parties or the public as acting as a disinterested third party in rendering an unbiased appraisal;

C. "appraisal foundation" means the appraisal foundation incorporated as an Illinois not-for-profit corporation on November 30, 1987 and to which reference is made in the federal real estate appraisal reform amendments;

D. "appraisal report" means any communication, written or oral, of an appraisal regardless of title or designation and all other reports communicating an appraisal;

E. "board" means the real estate appraisers board;

F. "broker's price opinion" means a written estimate, analysis or conclusion prepared by a licensed real estate broker that details the probable selling price of a particular piece of real property and provides a varying level of detail about the property's condition and neighborhood, the local real estate market and comparable sales. A broker's price opinion is not an appraisal;

[F.] G. "certified appraisal" or "certified appraisal report" means an appraisal or appraisal report given or signed and certified as such by a state certified real estate appraiser and shall include an indication of which type of certification is held and shall be deemed to represent to the public that it meets the appraisal standards defined in the Real Estate Appraisers Act;

[G.] H. "federal real estate appraisal reform amendments" means the federal Financial Institutions Examination Council Act of 1978, as amended by Title 11, Real Estate Appraisal Reform Amendments;

[H.] I. "general certificate" or "general certification" means a certificate or certification for appraisals of all types of real estate issued pursuant to the provisions of the Real Estate Appraisers Act and the federal real estate appraisal reform amendments;

[I.] J. "real estate" or "real property" means leasehold or other estate or interest in, over or under land, including structures, fixtures and other improvements and interests that by custom, usage or law pass with a conveyance of land, though not described in a contract of sale or instrument of conveyance, and includes parcels with or without upper and lower boundaries and spaces that may be filled with air;

[J.] K. "real estate appraiser" means any person who engages in real estate appraisal activity in expectation of compensation;

[K.] L. "residential certificate" or "residential certification" means a certificate or certification, limited to appraisals of residential real estate or residential real property without regard to the complexity of the transaction, issued pursuant to the provisions of the Real Estate Appraisers Act and as provided under the terms of the federal real estate appraisal reform amendments;

[L.] M. "residential real estate" or "residential real property" means real estate designed and suited or intended for use and occupancy by one to four families, including use and occupancy of manufactured housing;

[M.] N. "specialized services" means those services that do not fall within the definition of an appraisal assignment and may include specialized financing or market analyses and feasibility studies that may incorporate estimates of value or analyses, opinions or conclusions given in connection with activities such as real estate brokerage, mortgage banking, real estate counseling and real estate tax counseling, provided that the person rendering such services would not be perceived by third parties or the public as acting as a disinterested third party in rendering an unbiased appraisal or real estate appraisal, regardless of the intention of the client and that person;

[N.] O. "state certified appraisal" means any appraisal that is identified as a state certified appraisal report or is in any way described as being prepared by a state certified real estate appraiser;

[O.] P. "state certified real estate appraiser" means a person who holds a current, valid general certificate or a current, valid residential certificate issued pursuant to the provisions of the Real Estate Appraisers Act;

[P.] Q. "state licensed real estate appraiser" means a person who holds a current, valid license issued pursuant to the provisions of the Real Estate Appraisers Act; and

[Q.] R. "state apprentice real estate appraiser" means a person who holds a current, valid registration issued pursuant to the provisions of the Real Estate Appraisers Act."

SECTION 4. Section 61-30-10 NMSA 1978 (being Laws 1990, Chapter 75, Section 10, as amended) is amended to read:

"61-30-10. REGISTRATION, LICENSE OR CERTIFICATION REQUIRED--EXCEPTIONS.--

A. It is unlawful for [any] a person in this state to engage or attempt to engage in the business of developing or communicating real estate appraisals or appraisal reports without first registering as an apprentice or obtaining a license or certificate from the board under the provisions of the Real Estate Appraisers Act.

B. No person, unless certified by the board as a state certified real estate appraiser under a general certification or residential certification, shall:

(1) assume or use [any] a title, designation or abbreviation likely to create the impression of a state certified real estate appraiser;

(2) use the term "state certified" to describe or refer to [any] an appraisal or evaluation of real estate prepared by [him] the person;

(3) assume or use any title, designation or abbreviation likely to create the impression of certification as a state certified real estate appraiser firm, partnership, corporation or group; or

(4) assume or use [any] a title, designation or abbreviation likely to create the impression of certification under a general certificate or describe or refer to [any] an appraisal or evaluation of nonresidential real estate by the term "state certified" if the preparer's certification is limited to residential real estate.

C. A state apprentice real estate appraiser who is registered but does not hold a license or certificate is authorized to prepare appraisals of all types of real estate or real property, provided such appraisals are not described or referred to as being prepared by a "state certified real estate appraiser" holding a residential or general certificate or by a "state licensed real estate appraiser" and provided, further, such person does not assume or use [any] a title, designation or abbreviation likely to create the impression of certification as a state certified real estate appraiser or licensure as a state licensed real estate appraiser.

D. A holder of a license or residential certificate is authorized to prepare appraisals of nonresidential real estate, provided such appraisals are not described or referred to as "state certified by a general certified appraiser" and provided, further, the holder of the certificate does not assume or use [any] a title, designation or abbreviation likely to create the impression of general certification.

E. To perform in federally related transactions, as referenced in the federal Financial Institutions Reform, Recovery and Enforcement Act, a real estate appraiser shall, at a minimum, meet the requirements for licensing as currently defined.

[F. The requirement of registration, licensing or certification shall not apply to a real estate broker or salesperson who, in the ordinary course of business, gives an opinion of the price or value of real estate for the purpose of securing a listing, marketing of real property, affecting a sale, lease or exchange, conducting market analyses or rendering specialized services; provided, however, this opinion of the price or value shall not be referred to or construed as an appraisal or appraisal report and no compensation, fee or other consideration is expected or charged for such opinion, other than the real estate brokerage commission or fee for services rendered in connection with the identified real estate or real property.]

F. The requirement for registration, licensing or certification as a real estate appraiser shall not apply to a real estate broker who prepares a broker's price opinion. As used in this subsection, the term "broker" refers to both associate and qualifying brokers. A licensed broker may charge and collect a fee for and may prepare a broker's price opinion for the following persons under the following circumstances:

(1) an owner of real property or the legal representative of the owner;

(2) an existing or potential seller for the purposes of listing and selling real property;

(3) an existing or potential buyer for the purposes of purchasing real property;

(4) a third party making decisions or performing due diligence related to the potential listing, offering, sale, exchange, option, lease or acquisition price of real property; or

G. The requirement of registration, licensing or certification shall not apply to real estate appraisers of the property tax division of the taxation and revenue department, to a county assessor or to the county assessor's employees, who as part of their duties are required to engage in real estate appraisal activity as a county assessor or on behalf of the county assessor and no additional compensation fee or other consideration is expected or charged for such appraisal activity, other than such compensation as is provided by law.

H. The prohibition of Subsection A of this section does not apply to persons whose real estate appraisal activities are limited to the appraisal of interests in minerals, including oil, natural gas, liquid hydrocarbons or carbon dioxide, and property held or used in connection with mineral property, if that person is authorized in [his] the person's state of residence to practice and is actually engaged in the practice of the profession of engineering or geology.

I. The process of analyzing, without altering, an appraisal report that is part of a request for mortgage credit is considered a specialized service as defined in Subsection [M] N of Section 61-30-3 NMSA 1978 and is exempt from the requirements of registration, licensing or certification."

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