Real estate appraisal management companies in New Jersey are required to obtain a surety bond in order to remain licensed. This requirement was introduced after Assembly Bill 1973 was passed in early May.
Real estate appraisal management companies will further be expected to pay a higher fee for obtaining their business license as well as renewing it. For a full overview of the provisions appraisal management companies (AMCs) will need to comply with, and a detailed information on the surety bond requirement read on!
Previously, state legislation did not require real estate appraisal management companies in New Jersey to obtain a surety bond in order to become registered. No other type of financial guarantee was required of applicants either.
Under the old regulations, to get licensed, applicants were required to:
After Assembly Bill 1973, the State Real Estate Appraiser Board at the NJ Division of Consumer Affairs has now had to adopt a new set of registration requirements for real estate appraisal management companies.
According to Bill 1973 the NJ Real Estate Appraiser Board had until September 11, 2017 to adopt rules and regulations to amend the then current registration process for AMCs. Upon adopting those rules and regulations, licensees and new applicants were to be given 60 days, i.e. until November 11, to become compliant with those new regulations. At the time of writing, the Board has not yet come forward with specific rules regarding AMCs, nor with a bond form.
Among the rules and regulations the Board has to create are the setting up of procedures for registration exams as well as establishing and revising of current experience and education requirements for registered AMCs. Two further requirements introduced by this bill are the licensing fee and surety bond requirements.
Accordingly, in order to become and remain registered as a AMC in NJ, applicants and licensees will be expected to obtain a $25,000 surety bond. When applying for an initial license, an initial certification fee and/or a license fee will also need to be paid by applicants in an amount requested by the Board. A fee is will also be due when applying to renew one’s license.
Moreover, once the rules are in place, applicants will need to:
Make sure to check in with the Board to stay up to date regarding the introduction of the new rules.
Real estate appraisal management companies are required to post a bond when obtaining a license in at least 20 other states. The purpose of these bonds is to offer protection to the state as well as to appraisal management companies’ clients. Bonds stand to guarantee that AMCs will comply with the conditions laid out in the bond, which are typically the same as those specified in state laws.
This includes doing business honestly, such as performing appraisals in an objective and independent way. If such a company is found to be in breach of state laws, and has acted dishonestly by misleading its clients, the latter may file a claim against the company’s bond.
The surety which backs the bond can provide the compensation if the company refuses to or cannot do so. For this reason, it is always best to avoid the possibility of giving rise to a claim. In other words, the purpose of the bond is also to serve as a deterrent and ensure that bonded businesses remain compliant.
What are your thoughts on the new requirements for NJ real estate appraisal management companies? Do you think these requirements will improve the industry? Leave us a comment, we’d like to know what you think!
Correction: This article originally stated that Assembly Bill 1973 would require NJ real estate appraisal companies to get bonded, instead of appraisal management companies. The post has been corrected to reflect the proper requirement of the bill which concerns AMCs.
Update: Given the delay on behalf of NJ Real Estate Appraiser Board to come forward with rules and regulations for AMCs, as well as a deadline for obtaining a surety bond, the article has been updated accordingly.
Todd Bryant is the president and founder of Bryant Surety Bonds. He can be reached at (866) 450-3412, or at https://www.bryantsuretybonds.com/.