What is Real-Estate Tax Insider Edition | David E Wish

1. What is Real-Estate Tax Insider Edition DAVID E WISH Michael. J. Elliott

2. IDFPR Illinois Department of Financial and Professional Regulation (the “Department) • Organized under the Executive Branch • Regulate appraisers, real estate brokers and many others

3. Attorney Prosecutions April, 2017 • Nader • Bass November, 2013 • Peter Curielli

4. Peter Curielli Case Residential Real Estate Closing • Peter Curielli was the buyer’s broker (and an attorney) • His law partner, John Curielli, represented the buyer • Short sale • Contentious • Complaint to IDFPR filed by Seller’s broker and Seller’s attorney

5. Peter Curielli Case A long journey … • Prosecution filed in late 2013 • November, 2013 – settlement discussions • December, 2013 – declaratory judgement action & TRO • October, 2014 – declaratory & TRO dismissed; appeal filed • July, 2015 – hearing before the department • August, 2015 – Appellate Court decision • November, 2015 – decision by the Department • $9,500 fine • Indefinite suspension, but not less than 1 year

6. Peter Curielli Case A long journey … • February, 2016 – Curielli files for Administrative Review to the Circuit Court of Lake County • September, 2017 – Court reverses decision of the Department and rescinds the sanctions • October, 2017 – Department appeals (2nd appeal)

7. Peter Curielli Case What law did Peter allegedly violate? • One cannot be the attorney and a broker in the same transaction Specifically, what did Peter do? • Wrote 3 emails to the Seller’s attorney and broker • “[took] issue with figures in the HUD-1” • “[directed] who gets the attorney’s fee” • “language … about what the contract requires”

8. Peter Curielli Case How did the Department act? • Fairly enforcing the law or hostile? • Like they had an agenda? • Failed to provide due process • Refused to tell Peter what he did wrong • Lined up their witnesses • Fact and expert witnesses • Court deemed inadmissible • Won’t let it go

9. Peter Curielli Case The Court’s decision • Peter was denied due process • Department’s decision reversed and sanctions rescinded • Peter’s acts were not the practice of law • Even if they were, he did not violate the act because the client had its own attorney • John was The attorney • Arguable, Peter may hay been an attorney

10. Nader Case PTAB Appeal • Uniformity • Market value Documents • PTAB appeal form • Data on 7 sales comps (publically available) • Legal brief • Transmittal letter

11. Bass Case DuPage County Board of Review Appeal • Market value • Income & expenses analysis Documents • Income/expense data • Legal brief • Transmittal letter

12. ISBA ISBA sued the Department in July, 2017 • Declaratory judgement ➢ No authority to prosecute attorneys • Injunctive relieve • Writ of prohibition

13. Departments Position What is an appraisal? The Appraisal Act “Appraiser” defined broadly as: A person who performs a real estate appraisal • “Appraisal” The act or process of developing an opinion of value • Combine These Definitions: An appraiser is a person who develops an opinion of value of real estate. •

14. The ISBA’s Position #1 - Don’t Forget About USPAP The Appraisal Act requires the Department to: “adopt as part of its rules, the Uniform Standards of Appraisal Practice (USPAP)”

15. The ISBA’s Position #2 – USPAP changes the definition of appraiser Who is an appraiser? One who develops an opinion of value of real estate in an independent, impartial and objective way

16. The ISBA’s Position #3 – Lawyers are held to a different standard Illinois Rules Of Professional Conduct • “[a]s advocate, a lawyer zealouslyasserts the client’s position under the rules of the adversary system” • Lawyers have an “obligation to zealously protect and pursue the client’s legitimate interests, within the bounds of the law”

17. The ISBA’s Conclusions 1. The Attorneys did not perform appraisals 2. They acted as advocates 3. Advocacy by attorneys does not constitute appraisal of real estate 4. The Department has no authority to prosecute, discipline, sanction or interfere with attorneys while representing their clients 5. The attorney’s activities constituted the practice of law and only the Supreme Court can regulate attorneys

18. Compare The Positions The Department -- Appraisers Opinions Independent, impartial Reliance on their opinion as fact The ISBA -- Lawyers Advocate, argue & Advocate zealously Persuade the decision maker through advocacy

19. Status • ISBA case is pending • Bass & Nader cases are stayed pending the outcome of the ISBA case • Department voluntarily filing no new prosecutions against attorneys pending the outcome of the ISBA case • Department filed a motion to dismiss ➢ Premature – need to exhaust administrative remedies ➢ Yes we can

20. Appraisal Act Exclusions Real estate brokers doing CMAs or broker price opinions pursuant to the Real Estate Licensing Act Assessor’s when performing their duties under the Property Tax Code People or legal entities who appraise properties owned by them “for the sole use” of them • • •

21. THANK YOU