The Louisiana Real Estate Appraisers Board has agreed to stop fixing compensation levels for residential real estate appraisal services in Louisiana as part of a settlement reached with the Federal Trade Commission, after the agency alleged that the Board’s conduct violated federal antitrust law.
Under the terms of the proposed settlement, the Board cannot adopt a fee schedule for appraisal services, or take any other actions that have the effect of raising, stabilizing, or fixing compensation levels for appraisal services. The Board must rescind its rule in the Louisiana Administrative Code, known as Rule 31101, which empowered the Board to fix compensation levels for appraisal services.
The proposed settlement also requires the Board to provide notice of the settlement order to its members and employees, as well as to each appraisal management company licensed by the Board.
According to the FTC’s 2017 complaint, the Board’s actions regulating prices exceeded the requirements of the 2010 Wall Street Reform and Consumer Protection Act, popularly known as “Dodd-Frank,” which requires appraisal management companies to compensate appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised. The Board required appraisal fees to equal or exceed the median fees identified in survey reports commissioned and published by the Board. It then investigated and sanctioned appraisal management companies that paid fees below the specified levels. The FTC’s complaint alleged that Dodd-Frank neither requires nor authorizes the restrictions on free-market price competition implemented by the Board.
In April 2018, the Commission issued a summary decision rejecting two of the Board’s affirmative defenses. The Board sought review of this decision in both the U.S. District Court for the Middle District of Louisiana and the U.S. Court of Appeals for the Fifth Circuit. After a number of stays that resulted in delay, in October 2020, the Court of Appeals rejected the Board’s efforts to block the administrative trial. Shortly before the proceeding was scheduled to begin, the FTC and the Board reached a proposed settlement.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 4-0. The FTC will publish the consent agreement package in Federal Register shortly. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.