Cook County Judges Rule Illinois Appraiser License Act Only Applied to Federally Related Transactions

For the second time in a year, different judges in the Circuit Court of Cook County have found that the IDFPR over reached and did not have the authority to prosecute a real estate appraiser on a matter involving a non-Federally Related Transaction (“FRT”) prior to January 1, 2015. Neither case determined whether the IDFPR gained the authority to pursue non-FRT appraisals after January 1, 2015. Franklin Law Group attorneys were involved in both cases on behalf of the appraisers.

In the first matter case, the appraiser was disciplined by IDFPR for appraisals performed in 2008, 2009, and 2011. After a hearing at the IDFPR level, the appraiser was assessed  a reprimand of his licensed and was ordered to pay a $10000 fine. Fines, Reprimands, Probations, Suspensions and Revocations are all public disciplines established by the licensing statute. On Administrative Review, Cook County Circuit Judge Sophia Hall reviewed the history of the Illinois Real Estate Appraisal License Act of 2002 (225 ILCS 458/1 et Seq.) and its amendments over the years. She focused on examining its expressed original legislative intent (which was subsequently changed effective January 1, 2015) as well as the Act’s definition of a “federally related transaction.” Prior to the change in the license law effective January 1, 2015,  Section 1-5  of the Act read “Section 1-5. Legislative Intent. The intent of the General Assembly in enacting this Act is to evaluate the competency of persons engaged in the appraisal of real estate in connection with a federally related transaction and to license and regulate those persons for the protection of the public. Additionally, it is the intent of the General Assembly for this Act to be consistent with the provision of Title XI of the federal Financial Institutions Reform, Recovery and Enforcement Act of 1989. [12 U.S.C. Sec. 1331 et seq.]” Per the Act, at Section 1-10,  “[f]ederally related transaction means any real estate-related financial transaction in which a federal financial institutions regulatory agency, the Department of Housing and Urban Development, Fannie Mae, Freddie Mae or the National Credit Union Administration engages in, contracts for, or regulates and requires the services of an appraiser.” Judge Sophia Hall found in her July 17, 2017 Order and Decision that the application of the Act for appraisals prior to January 1, 2015, was expressly limited to evaluating, licensing and regulating appraisal in connection with federally related transactions.

In the second matter, the appraiser was subjected to a license suspension and a $9000 fine for appraisal assignments performed in 2012. Subsequently, Cook County Circuit Judge Neil Cohen made a similar examination of the Act, again looking at the Act’s history, expressed legislative intent, and amendments, and the definition of “federally related transaction.” He too similarly found in his November 6, 2018 Memorandum and Order the Act (in effect in 2012)   “applied only to real estate appraisal activity in connection with a federally related transaction.” Since the Act had no application to the licensee’s activities, “the Department had no authority to discipline [him] under the Act or its associated rules.”

In both cases, the public disciplines levied by the Department were null and void or reversed and, in both cases, the Department chose not to appeal. Since neither case was appealed, the opinions cannot be used as “precedence”, but they maybe cited as “persuasive” should a similar set of facts arise.

The cases referenced are Pomykacz v. IDFPR, 2015 CH 10905 and Walsh v. IDFPR, 2018 CH  07186, both in the Circuit Court of Cook County, Illinois, Chancery Division. If you have any questions, please contact the Franklin Law Group. If you are or were a real estate appraiser and received a “public discipline” in anyway related to some work done before January 1, 2015, from the Illinois Department of Financial and Professional Regulation (“IDFPR”) or its predecessor the OBRE, you may want to check whether or not the work or the complaint concerned a non-federally related transaction. Attorney advertising.

2017.07.07 Order and Decision

2018.11.06 Memorandum and Order

 

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