201 KAR 30:190. Educational requirements for certification.

201 KAR 30:190. Educational requirements for certification.

RELATES TO: KRS 324A.035(1), (3), 324A.040(2), 12 U.S.C. 3331-3351

STATUTORY AUTHORITY: KRS 324A.020, 324A.035(1), (3)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 324A.035(1) requires the board to establish by administrative regulation requirements for certification or licensure of appraisers of real property in federally-related transactions. KRS 324A.035(3)(d) requires the board to establish by administrative regulations requirements for education of appraisers. Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. 3331-3351, establishes requirements for certification or licensure of appraisers of real property in federally-related transactions including the education requirements promulgated by the Appraisers Qualifications Board. This administrative regulation establishes the education requirements for appraisers of real property in federally-related transactions that will be effective after December 31, 2007.

Section 1. Definitions. (1) "AQB" means the Appraiser Qualification Board of the Appraisal Foundation.

(2) "ASB" means the Appraiser Standards Board of the Appraisal Foundation.

(3) "Class hour" means sixty (60) minutes, of which at least fifty (50) minutes are instruction attended by the student, including time for examinations.

(4) "Required Core Curriculum" means the list of course topics identified in Section 7 of this administrative regulation.

Section 2. (1) Credit for the qualifying education requirements set out in this administrative regulation may be obtained only from the following providers:

(a) Colleges or universities;

(b) Community or junior colleges;

(d) State or federal agencies or commissions;

(e) Proprietary schools;

(f) Providers approved by the board in accordance with 201 KAR 30:150; and

(g) The Appraisal Foundation or its boards.

(2) Experience may not be substituted for education.

Section 3. Criteria Specific to Qualifying Education. (1) A class hour shall be credited only for educational offerings with content that follows the Required Core Curriculum in Section 7 of this administrative regulation for each respective credential.

(2) The course content requirement may be general or it may be specific to a property type.

(3) A class hour may be obtained only if:

(a) The minimum length of the educational offering is at least fifteen (15) hours; and

(b) The student successfully completes an approved closed-book examination pertinent to that educational offering.

(4) If an individual qualifying education course covers multiple topics identified within the Required Core Curriculum, there shall be appropriate testing of each component.

(5) Courses taken to satisfy the qualifying education requirements shall not be repetitive.

(6) Courses shall foster problem-solving skills in the education process by utilizing case studies as a major teaching method when applicable.

(7) USPAP courses.

(a) An applicant shall take the 15-Hour National USPAP Course, or its equivalent, and pass the associated 15-Hour National USPAP Course Examination as approved by the AQB.

(b) At least one (1) of the course instructors shall be an AQB Certified USPAP Instructor who is also a state certified appraiser.

Section 4. Qualifying Education for Associate Real Property Appraiser Effective January 1, 2008. (1) Regardless of the applicant’s accrual of education prior to January 1, 2008, any applicant who has not completed all of the elements necessary for certification and obtained his or her certification as a associate real property appraiser shall be required to fulfill the requirements of this section if the certification was not issued on or before December 31, 2007.

(2) Prior to applying for an associate real property appraiser certification, an applicant shall have completed ninety (90) class hours as specified in the Required Core Curriculum Section 7 of this administrative regulation, which shall include at least fifteen (15) hours related to market analysis and highest and best use.

(3) An applicant shall pass:

(a) The Required Core Curriculum examination for each course taken; and

(b) The 15-Hour National USPAP Course or its equivalent and examination as stated in Section 3(7) of this administrative regulation.

Section 5. Qualifying Education for Licensed Real Property Appraisers Effective January 1, 2008. (1) Regardless of the applicant’s accrual of education prior to January 1, 2008, any applicant who has not completed all of the elements necessary for certification and obtained licensure shall be required to fulfill the requirements of this section if the license was not issued on or before December 31, 2007.

(2) The prerequisite for taking the AQB approved examination shall be successful completion of 180 class hours as specified in the required core curriculum Section 7.

(3) The applicant shall successfully complete the 15-Hour National USPAP Course, or its equivalent, and examination required by Section 3(7) of this administrative regulation. There is no alternative to successful completion of the examination.

(4) An applicant for the licensed real property certificate shall hold an associate degree, or higher, from an accredited college, junior college, community college, or university, unless the requirements of subsection (5) of this section are satisfied.

(5)(a) In lieu of the associate degree, an applicant for the certified residential real property certification shall successfully pass twenty-one (21) semester credit hours in the following collegiate subject matter courses from an accredited college, junior college, community college, or university:

1. English Composition;

2. Principles of Economics (Micro or Macro);

3. Finance;

4. Algebra, Geometry, or higher mathematics;

5. Statistics;

6. Introduction to Computers-Word processing/spreadsheets; and

7. Business or Real Estate Law.

(b) If the accredited college, junior college, community college, or university accepts the College-Level Examination Program (CLEP) examinations and issues a transcript for the examination, showing its approval, it shall be accepted as credit for the college course.

Section 6. Qualifying Education for Certified Residential Real Property Appraisers Certification Effective January 1, 2008. (1) Regardless of the applicant’s accrual of education prior to January 1, 2008, any applicant who has not completed all of the elements necessary for certification and obtained certification as a certified residential real property appraiser shall be required to fulfill the requirements of this section if the certification was not issued on or before December 31, 2007.

(2) The prerequisite for taking the AQB approved examination shall be completion of 200 class hours as specified in the required core curriculum Section 7.

(3) The applicant shall successfully complete the 15-Hour National USPAP Course, or its equivalent, and the examination required by Section 3(7) of this administrative regulation.

(4) An applicant for the certified residential real property certificate shall hold an associate degree, or higher, from an accredited college, junior college, community college, or university, unless the requirements of subsection 5 of this section are satisfied.

1. English Composition;

2. Principles of Economics (Micro or Macro);

3. Finance;

4. Algebra, Geometry, or higher mathematics;

5. Statistics;

6. Introduction to Computers-Word processing/spreadsheets; and

7. Business or Real Estate Law.

(b) If the accredited college, junior college, community college, or university accepts the College-Level Examination ProgramÒ (CLEP) examinations and issues a transcript for the examination, showing its approval, it shall be accepted as credit for the college course.

Section 7. Qualifying Education for Certified General Real Property Appraiser Certification Effective January 1, 2008. (1) Regardless of the applicant’s accrual of education prior to January 1, 2008, any applicant who has not completed all of the elements necessary for certification and obtained certification as a certified general real property appraiser shall be required to fulfill the requirements of this section if the certification was not issued on or before December 31, 2007.

(2) The prerequisite for taking the AQB approved examination shall be completion of 300 class hours as specified in the required core curriculum Section 7.

(3) The applicant shall complete the 15-Hour National USPAP Course and examination.

(4) An applicant shall demonstrate that his or her education includes the core courses listed in these criteria, with particular emphasis on nonresidential properties.

(5) An applicant for the certified general real property certificate shall hold a bachelors degree or higher from an accredited college or university, unless the requirements of the subsection (6) of this section are satisfied.

(6)(a) In lieu of the bachelor's degree, an applicant for the certified general real property appraiser credential shall successfully pass thirty (30) semester credit hours or its equivalent in the following collegiate level subject matter courses from an accredited college, junior college, community college or university:

1. English Composition;

2. Micro Economics;

3. Macro Economics;

4. Finance;

5. Algebra, Geometry, or higher mathematics;

6. Statistics;

7. Introduction to Computers-Word processing/spreadsheets;

8. Business or Real Estate Law; and

9. Two (2) elective courses in accounting, geography, ageconomics, business management, or real estate.

(b) If the accredited college, junior college, community college, or university accepts the College-Level Examination ProgramÒ (CLEP) examinations and issues a transcript for the examination showing its approval, it shall be accepted as credit for the college course.

Section 8. The required core curriculum and class hours for each of the types or classification of licensees or certificate holders shall be as follows:

(1) Associate Real Property Appraiser consisting of ninety (90) class hours.

(a) Basic appraisal principles-thirty (30) class hours.

(b) Basic appraisal procedures-thirty (30) class hours.

(d) 15-Hour national USPAP course or fifteen (15) hours its equivalent-fifteen (15) hours.

(2) Licensed real estate appraiser consisting of 180 class hours.

(a) Basic appraisal principles- thirty (30) class hours.

(b) Basic appraisal procedures-thirty (30) class hours.

(d) Residential market analysis and highest and best use-fifteen (15) class hours.

(e) Residential appraiser site valuation and cost approach-fifteen (15) class hours.

(f) Residential sales comparison and income approaches-thirty (30) class hours.

(g) Residential report writing and case studies-fifteen (15) class hours.

(h) Statistics, modeling and finance-fifteen (15) class hours.

(i) Advanced residential applications and case studies-fifteen (15) class hours.

(3) Certified residential real estate appraiser consisting of 200 class hours.

(a) Basic appraisal principles-thirty (30) class hours.

(b) Basic appraisal procedures-thirty (30) class hours.

(d) Residential market analysis and highest and best use-fifteen (15) class hours.

(e) Residential appraiser site valuation and cost approach-fifteen (15) class hours.

(f) Residential sales comparison and income approaches-thirty (30) class hours.

(g) Residential report writing and case studies-fifteen (15) class hours.

(h) Statistics, modeling and finance-fifteen (15) class hours.

(i) Advanced residential applications and case studies-fifteen (15) class hours.

(j) Appraisal subject matter electives-twenty (20) class hours.

(4) Certified general real estate appraiser consisting of 300 class hours.

(a) Basic appraisal principles-thirty (30) class hours.

(b) Basic appraisal procedures-thirty (30) class hours.

(d) General appraiser market analysis and highest and best use-thirty (30) class hours.

(e) Statistics, modeling and finance-fifteen (15) class hours.

(f) General appraiser site valuation and cost approach-thirty (30) class hours.

(g) General appraiser sales comparison approach-thirty (30) class hours.

(h) General appraiser income approach-sixty (60) class hours.

(i) General appraiser report writing and case studies-thirty (30) class hours.

(j) Appraisal subject matter electives-thirty (30) class hours.

(5) The required core curriculum classes shall cover the topics set out in this subsection.

(a) Basic appraisal principles.

1. Real property concepts and characteristics, including basic real property concepts, real property characteristics, and legal description.

2. Legal consideration including forms of ownership, public and private controls, real estate contracts, and leases.

3. Influences on real estate values, including governmental influences, economic influences, social influences, environmental, geographic and physical influences.

4. Types of value including market value and other value types.

5. Economic principles including classical economic principles and application and illustrations of the economic principles.

6. Overview of real estate markets and analysis including market fundamentals, characteristics, and definitions, supply analysis, demand analysis, use of market analysis.

7. Ethics and how they apply in appraisal theory and practice.

(b) Basic appraisal procedures.

1. Overview of approaches to value.

2. Valuation procedures.

a. Defining the problem;

b. Collecting and selecting data;

c. Analyzing;

d. Reconciling and final value opinion; and

e. Communicating the appraisal.

3. Property description.

a. Geographic characteristics of the Land or Site;

b. Geologic characteristics of the Land or Site;

c. Location and neighborhood characteristics;

d. Land/site considerations for highest and best use; and

e. Improvements-architectural styles and types of construction.

4. Residential applications.

1. Preamble and ethics rules.

2. Standard 1.

3. Standard 2.

4. Standards 3 to 10.

5. Statements and advisory opinions.

(d) Residential market analysis and highest and best use.

1. Residential markets and analysis.

a. Market fundamentals, characteristics and definitions;

b. Supply analysis;

c. Demand analysis; and

d. Use of market analysis.

2. Highest and best use.

a. Test constraints;

b. Application of highest and best use;

c. Special considerations;

d. Market analysis; and

e. Case studies.

(e) Residential appraiser site valuation and cost approach.

1. Site valuation.

a. Methods; and

b. Case studies.

2. Cost approach.

a. Concepts and definitions;

b. Replacement or Reproduction cost new;

c. Accrued depreciation;

d. Methods of estimating accrued depreciation; and

e. Case studies.

(f) Residential sales comparison and income approaches.

1. Valuation principles & procedures-sales comparison approach.

2. Valuation principles & procedures-income approach.

3. Finance and cash equivalency.

4. Financial calculator introduction.

5. Identification, derivation and measurement of adjustments.

6. Gross rent multipliers.

7. Partial interests.

8. Reconciliation.

9. Case studies and applications.

(g) Residential report writing and case studies.

1. Writing and reasoning skills.

2. Common writing problems.

3. Form reports.

4. Report options and USPAP compliance.

5. Case studies.

(h) Statistics, modeling and finance.

1. Statistics.

2. Valuation models (AVM’s and mass appraisal).

3. Real estate finance.

(i) Advanced residential applications and case studies.

1. Complex property, ownership and market conditions.

2. Deriving and supporting adjustments.

3. Residential market analysis.

4. Advanced case studies.

(j) General appraiser market analysis and highest and best use.

1. Real estate markets and analysis.

a. Market fundamentals, characteristics and definitions;

b. Supply analysis; and

c. Demand analysis.

d. Use of market analysis.

2. Highest and best use.

a. Test constraints;

b. Application of highest and best use;

c. Special considerations;

d. Market analysis; and

e. Case studies.

(k) General appraiser sales comparison approach.

1. Value principles.

2. Procedures.

3. Identification and measurement of adjustments.

4. Reconciliation.

5. Case studies.

(l) General appraiser site valuation and cost approach.

1. Site valuation.

a. Methods; and

b. Case studies;

2. Cost approach.

a. Concepts and definitions;

b. Replacement or Reproduction cost new;

c. Accrued depreciation;

d. Methods of estimating accrued depreciation; and

e. Case studies;

(m) General appraiser income approach.

1. Overview.

2. Compound interest.

3. Lease analysis.

4. Income analysis.

5. Vacancy and collection loss.

6. Estimating operating expenses and reserves.

7. Reconstructed income and expense statement.

8. Stabilized net operating income estimate.

9. Direct capitalization.

10. Discounted cash flow.

11. Yield capitalization.

12. Partial interests.

13. Case studies.

(n) General appraiser report writing and case studies.

1. Writing and reasoning skills.

2. Common writing problems.

3. Report options and USPAP compliance.

4. Case studies. (31 Ky.R. 2062; Am. 32 Ky.R. 259; eff. 8-25-2005; 34 Ky.R. 1795; 2394; eff. 6-6-2008; 37 Ky.R. 2052; 5-6-2011.)