Today’s new law is brief and simple, something probably that those in the real estate industry can appreciate given the context of Act 212. Sorry for all the paperwork realtors, but you know us attorneys, we would like to have everything documented, recorded, and filed property!
What Does Act 212 do?
The purpose and intent of the law is to permit and establish requirements for a licensed real estate broker or sales person to prepare broker price opinions for use in real estate transactions where an appraisal is not required. (Btw, I realize "opinionated" does not mean this, but it is a play on words!)
How Does it do That?
Simple, the legislature inserted an exception into HRS § 466K-4, which sets the standards for real estate appraisers.
The exception reads as follows:
(c) This section shall not apply to a real estate broker or real estate salesperson licensed pursuant to chapter 467 who provides an opinion as to the estimated price of real estate, regardless of whether the real estate licensee receives compensation, a fee, or other consideration for providing the opinion; provided that:
(1) The opinion as to the estimated price of real estate shall state that it is not an appraisal;
(2) The real estate licensee shall not represent that the licensee is a certified or licensed real estate appraiser; and
(3) If the real estate licensee receives compensation related to the sale of property, the licensee shall not receive any additional compensation, fee, or other consideration for providing an opinion as to the estimated price of that property.
How to Make Use of this Exception
So the main takeaway from this Act if you are a real estate broker or sales person is to make sure that opinion is:
- stated as NOT an appraisal;
- do not represent yourself as an appraiser;
- and finally, if you receive compensation connected to the sale of property you do not get anything else form providing an opinion to that property.
Yes, this law is already in effect.
For Further Context
If you read the Hawaii Association of Realtor’s testimony from April 5, 2011 before the Senate Committee on Commerce and Consumer Protection (CPN) it explains their support for this change. Here is an excerpt:
Over the last several years, due to the economic crisis, loan delinquencies have increased,which in turn have required more estimated analysis to determine the market price of the collateral for these delinquent loans. Thus, each property that falls into distress may need atleast one price opinion, and more often two or more price opinions, to determine the mostappropriate disposition of the property -- whether it be loan modification, short sale, orforeclosure.
For example, a lender might use a price opinion to determine whether a short sale transaction should be approved, or whether a delinquent loan should be modified. In thesetypes of situations, the price opinion can assist with the decision to list, offer, sell,exchange, option, lease, or acquire real property in a real estate transaction, or alternatively, help struggling homeowners stay in their home.
Anyway, realtors enjoy giving your opinions, now you can become opinionated like an attorney! Thanks for reading this post and be sure to look for my next post. It will be a poll to choose the subject matter for my next talk to be held at The Box Jelly!
*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.