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Hawaii appraisers must now comply with the Uniform Standards of Professional Appraisal Practice (“USPAP”) whenever they are determining the fair market value or rent of property in an arbitration proceeding. The new law passed by the 2011 Hawaii State Legislature requires that whenever licensed Hawaii appraisers are acting as arbitrators to determine the fair market value or rent of real property in Hawaii, the record of award must include the appraiser’s rationale; the appraiser’s certification of compliance with USPAP; and information regarding the evidence, data, methodologies, and analysis that provided the basis for the award. The law is the latest version of a bill that has been kicking around the Legislature for more than a decade, advocated by individuals who believe that appraisers’ rent awards have exceeded true market value. The bill was opposed by appraisers and several State departments, who said it was unnecessary and would increase the cost of lease rent arbitrations. Despite the opposition of his own departments, Governor Abercrombie let the bill become law without his signature and without any explanation. It is not known how many of the legislators who voted for the bill had ever actually read USPAP, and what is required for an appraiser’s certificate of compliance under USPAP. Hawaii appraisers are now discussing how they could comply with USPAP, and the new law, in the context of their role as arbitrators in a lease rent arbitration. In the short term, the new law is expected to increase the cost and uncertainty of lease rent arbitrations in Hawaii, as unhappy parties now have a new weapon to seek to vacate an arbitration award they don’t like.
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