ISBA lawsuit seeks injunction of IDFPR discipline of two attorneys for unauthorized real estate appraisal practice

Illinois Professional Licensing Consultants 5Two Illinois attorneys face potential prosecution by the Illinois Department of Financial and Professional Regulation (IDFPR) but the Illinois State Bar Association (ISBA) filed a lawsuit seeking an injunction and declaration that IDFPR lacks the authority to regulate certain practices.

At issue in the ISBA complaint filed July 11, 2017 in the Circuit Court of Cook County, is whether the IDFPR acted with authority and appropriately when the Department initiated formal administrative prosecutions of two attorneys in April of this year. The IDFPR alleges that he attorneys engaged in the unauthorized practice of real estate appraisals in two different property tax assessment cases.

Illinois regulates real estate appraisals

The Real Estate Appraisal Licensing Act of 2002 is the controlling law on the regulation of real estate appraisers in Illinois. The legislative intent section of the statute reads in part, “The intent of the General Assembly in enacting this Act is to evaluate the competency of persons engaged in the appraisal of real estate and to license and regulate those persons for the protection of the public.[i]” The IDFPR uses its administrative rules and guidelines in issuing professional licenses to practice real estate appraisals.

At issue is whether the IDFPR was proper in disciplining the two attorneys for practicing real estate appraisal without a license to do so.

Meanwhile, it is a common practice for real estate attorneys to represent their clients before the bodies hearing challenges to real estate tax assessments and valuations. Property owners have a right to challenge the appraised value of their property and reduce their tax burden. The two attorneys in this case filed briefs supporting their clients’ tax challenges to the Property Tax Appeals Board and the DuPage County Board of Review. In its news release on point, the ISBA states, “Neither lawyer purported to submit an appraisal or act as an appraiser.[ii]

The court is likely to receive briefed arguments focused on the scope of the authority of the IDFPR, and what power the Department may have to determine what specific conduct gives rise to a violation. The ISBA contends, “the IDFPR lacks authority to prosecute, discipline, or sanction lawyers for engaging in the practice of law by advocating on behalf of clients in real estate tax assessment proceedings.[iii]

Takeaways for all professionals in Illinois

It is important in any profession to be aware of and compliant with state laws and regulations of professions. Prior to the enactment of The Real Estate Appraisal Licensing Act of 2002 an individual might have been actively engaged and working as a real estate appraiser when the law passed, then requiring the individual to obtain a license from the IDFPR. The regulation of professions may change and adapt with state law and public policy.

Just because one license may be broadly applicable, such as a license to practice law, it does necessarily mean that such licensure applies ubiquitously; regulatory bodies have authority to determine the scope of a professional practice. In this case, the limits of IDFPR authority are being tested.

As there are new developments in this case we will share that news, as many are interested in the outcome of this lawsuit.

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[i] PROFESSIONS, OCCUPATIONS, AND BUSINESS OPERATIONS

(225 ILCS 458/) Real Estate Appraiser Licensing Act of 2002.

[ii] ISBA, Illinois Lawyer Now, ISBA Files Complaint to Enjoin IDFPR Prosecution of Lawyers.

[iii] See HNii above.