North Carolina Enacts BPO Legislation
What a licensed broker or appraiser must do in performing a BPO or a CMA…
North Carolina Governor Beverly Purdue signed S.B. 521 into law July 12, and the legislation will significantly expand the ability of the state’s licensed real estate brokers to offer a broker price opinion or comparative market analysis.
The legislation included two amendments provided by the state’s appraisal organizations.
Prior to the new legislation, North Carolina real estate brokers were limited to providing a CMA only in the real estate sales context, and they had to have a reasonable expectation that a listing would result from the performance of the CMA.
Under the new law, brokers (other than provisional brokers) also are permitted to perform BPOs and CMAs for other third parties “making decisions or performing due diligence related to the potential listing, offering, sale, option, lease or acquisition price of a parcel of or interest in real property,” or for an “existing or potential lien holder or other third party for any purpose other than as the basis to determine the value of a parcel of or interest in property, for a mortgage loan origination, including first and second mortgages, refinances or equity lines of credit.”
The new law also requires that BPOs and CMAs must be done according to a list of standards and clearly state that they are not appraisals and may not be used for mortgage loan origination purposes.
During consideration of the bill in the General Assembly, appraisers in the state successfully fought for the addition of two important provisions. The first one clarified that an appraiser who also is dually licensed as a real estate broker in North Carolina can provide a CMA without being bound by the requirements of the Uniform Standards of Professional Appraisal Practice. The second one clarified that “No appraiser shall be disciplined for completing an appraisal that includes a reduced scope of work or reporting level as long as it is appropriate for the intended use and is performed in accordance with the Uniform Standards of Professional Appraisal Practice.”
S.B. 521 had started out as a piece of legislation unrelated to BPO or CMA. However, real estate lobbies took advantage of the fact that the legislation already had passed the Senate (in 2011) and by amending it in the House to include the BPO/CMA language it avoided a public hearing and Senate consideration.
On July 10 — two days before the governor signed the bill — the North Carolina Real Estate Commission approved rules for promulgation that will further clarify what a licensed broker or appraiser must do in performing a BPO or a CMA. These rules will be published in the near future and will be available for public comment.