The Ministry of Land, Infrastructure and Transport announced on the 20th that the revised Enforcement Decree and Enforcement Rules of the Appraisal Act, which include the designation of appraisal standard-setting institutions and the introduction of an appropriateness review system, will take effect from the 21st.
This revision is a follow-up legislative measure to implement the Appraisal Act amended in July last year.
The revision includes the duties and designation requirements of the appraisal standard-setting institutions. The standard-setting institution is a dedicated private corporation or organization specialized in researching, establishing, and revising the detailed standards of appraisal practice, which serve as the detailed criteria for appraisals.
The appraisal practice standards were established in 2013 and have been used as practical work standards for appraisers; however, professional review and systematic management reflecting market changes have been insufficient.
Accordingly, the Ministry of Land, Infrastructure and Transport judged that a dedicated organization specializing in researching appraisal standards is necessary, and established the legal basis for its installation through the amendment of the Appraisal Act last year, and this time revised the subordinate statutes to specify the details.
The Ministry is forming a dedicated team of experts including appraisers and lawyers to thoroughly review the functions, organizational structure, and necessary personnel of the standard-setting institution, and plans to designate the institution within this year.
The standards and procedures for the appropriateness review of appraisal reports have also been organized.
The appropriateness review of appraisal reports refers to the mutual review by appraisal corporations, etc., to verify whether issued appraisal reports comply with principles and standards, aiming to strengthen the self-regulation function of the appraisal market.
The appropriateness review of issued appraisal reports can be requested by the appraisal client, related administrative agencies, or the counterparty to a transaction or contract that intends to directly use the appraisal results.
The review will be conducted by appraisal corporations that have at least two appraisers with more than five years of practical experience and over 100 appraisal cases.
The Ministry will continuously monitor the impact and effects on the market after the system's implementation and plans to identify additional improvements through consultation with experts and the industry if necessary.
Lee Rang, Director of the Real Estate Appraisal Division at the Ministry, said, "We expect that this revision will further enhance the professionalism and fairness of the appraisal industry."
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