 Licensing & Renewals > Real Estate Appraisal > Starting an Appraisal Business
The Real Estate Council of Alberta (RECA) authorizes real estate appraisers and candidates to provide real estate appraisal services in Alberta. RECA does not authorize real estate appraisal companies to provide real estate appraisal services. For the purposes of the Real Estate Act, when a candidate or appraiser become licensed they have, in effect, started their own real estate appraisal business. In many situations, candidates and appraisers provide their services to a company that offers administrative support services to multiple appraisers and candidates.
Appraisers and candidates individually are required to meet all legislative requirements of the Real Estate Act, Real Estate Act Rules and Bylaws including but not limited to office location and record maintenance. It is important to note that the office location of the appraiser or candidate is the location from which the business is conducted, records are maintained and the appraiser or candidate has access to and control over the use of the office and records.
Candidates, however, are cautioned that a supervising appraiser must sign all appraisal reports prepared by the candidate before the report is provided to the client. For that reason, most candidates choose to work with an already established company providing real estate appraisal services.
Real estate appraisers and candidates are required to provide RECA their business name (or affiliation) and registered business address when making an application for licensing. Appraisers are not required to provide RECA with any additional documentation regarding the name of their appraisal business. However, if the appraiser changes their business name or address, their own name or address, or other contact information in the future, they are required to advise RECA immediately. Email notification to RECA at info@reca.ca of such changes is acceptable.
Registered business office
A person is not eligible to be licensed by the Real Estate Council of Alberta (RECA) as a candidate or appraiser unless the person maintains a registered business office in Alberta or the City of Lloydminster and the current address of the business office must be provided to the executive director.
The requirement to maintain a registered business office means all of the following conditions have been met:
- the office is a location from which the person conducts business;
- the person has access to and control over the use of the office premises;
- the office is the location where the records required to be maintained by the person in accordance with the Act and the Rules are kept or made available for the purposes of a review; and,
- the office location complies with the requirements of the municipality where it is located.
Record keeping requirements
The Real Estate Act and Real Estate Act Rules are very specific about the type of records that must be kept by appraisers (and candidates, as the case may be) and the way in which they must be maintained.
It is important for appraisers to understand what is meant by a “record” and their obligations with respect to keeping records. Records can be created and stored in electronic format or they can be converted to electronic format for storage purposes.
For the purposes of the Real Estate Act and Rules, “records” include:
- accounts, books, returns, statements, reports, financial documents or other memoranda of financial or non-financial information, whether in writing or in electronic form or represented or reproduced by other means, and
- the results of the recording of details of electronic data processing systems and programs to illustrate what the systems and programs do and how they operate.
Pursuant to section 110 of the Real Estate Act Rules, real estate appraisers are also required to keep and maintain service agreements, work files and notes, appraisal reports, and data or documentation to support values of adjustment entries.
Broadly, records are defined to include all records created and received while providing real estate appraisal services. Records includes traditional paper documents, and electronic documents such as faxes, emails, website data and other types of electronic contracts arising out of the use of new technologies.
As indicated, records can be in “electronic format.” In accordance with the Real Estate Act Rules, “electronic” includes “created, recorded, transmitted or stored in digital form or in any other tangible form by electronic, magnetic or optical means or by any other means that have similar capabilities for creation, recording, transmission or storage.”
Appraisers should have a record management plan to ensure that all documents and records are maintained. The Real Estate Act and Rules provide appraisers with the flexibility to create their own record keeping strategy and record keeping systems based on their own specific needs provided that all documents and records are maintained in accordance the legislative requirements.
Records normally expected to be found in appraiser/candidate offices include:
- appraisal request;
- corporate searches;
- lease and rental agreements, memorandum of understanding or letters of intent;
- architectural drawings;
- site surveys;
- site plans or plot plans;
- land title searches;
- caveat information;
- condominium plans;
- municipal searches;
- municipal/regional planning material (municipal development plans);
- EUB/ARB searches;
- airport data;
- land use maps; or other evidence to support identification of subject land use controls;
- inspection photographs of subject and comparables considered;
- rent rolls;
- balance sheets;
- developer prospectus;
- offer to purchase, Agreement for Sale, option, or listing of the property, or notes of any oral discussion of the same;
- pre-sales data;
- copies of any faxes sent or received;
- email communications pertinent to the transaction;
- MLS data pertaining to comparables considered;
- MLS data for all prior sales of the subject property;
- in-house comparables data, including evidence to support “confidential” sales or data;
- comparable data should include, sale date, listing date, sale price, listing price, legal/civic address, features, photographs;
- data to support market and economic overviews;
- data to support analysis and selection of reasonable exposure time linked to a market value opinion
- copies of previous appraisals provided to appraiser for the subject property;
- inspection notes with clearly indicated inspection date;
- inspection sketch with measurements recorded at time of inspection;
- progress report field inspection notes;
- evidence of payment for appraisal service;
- any documentation necessary to support the appraiser’s opinions and conclusions
This list is not exhaustive and is only a sample of the information that is required to be maintained by an appraiser (or candidate). The Real Estate Act s.25(9) requires appraisers to keep appraisal records and accounting records for a minimum of three years after they came into existence. The three-year period may be extended by the executive director of the Real Estate Council of Alberta in a particular case for the purposes of an investigation or prosecution under the Real Estate Act.
Appraisers should also take into consideration other legislative requirements or civil requirements. For example Canada Revenue Agency and FINTRAC have retention requirements in relation to certain records that may exceed the retention requirements under the Real Estate Act.
Whether the records are stored in paper or electronic form, the appraiser must maintain all records in Alberta. Records may be stored in a secure location accessible to the appraiser away from the business’s registered office; however, the records need to be available at the appraiser’s registered business office if requested by a RECA auditor or investigator in anticipation of an audit or during the course of an investigation.
For more information about real estate appraisal record-keeping requirements, please see RECA Information Bulletin: Records – Real Estate Appraisal.
For more information
If appraisers have any questions throughout the process, they are encouraged to contact RECA’s licensing department at (403) 228-2954 or toll-free in Alberta at 1-888-425-2754.
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