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  • Interpretation
  • No.809【Setting up of Branch Office by Real Estate Appraiser】
  • Date
  • 2021/10/01
  • Issue
    • Is it unconstitutional to prohibit a real estate appraiser from setting up a branch office?
  • Holding
    •         Article 9, Paragraph 2 of the Real Estate Appraiser Act stipulates that “[t]he office stated in the previous Paragraph of this Article shall be restricted to one location only. No branch office is allowed.” This provision does not violate the principle of proportionality set forth in Article 23 of the Constitution, nor does it violate the intent of Article 15 of the Constitution guaranteeing people’s right to work. 
  • Reasoning
    •         The petitioner, Chen-Kang Hung (the “Petitioner”), who operated a real estate appraisal firm and handled a real estate appraisal case assigned by the Taiwan Tainan District Court, was reported for establishing a branch office and failing to sign the appraisal report, which was a violation of Article 9, Paragraph 2 of the Real Estate Appraiser Act (hereafter referred to as the “Disputed Regulation”), as well as Article 19, Paragraph 2 of the same Act. Therefore, the Disciplinary Committee for Real Estate Appraisers of Taichung City issued the Disciplinary Decision Gu-Cheng-2 of 2015 attached to the Letter Fu-Shou-Di-Jia-Yi-1040061370 of March 19, 2015, which determined that the Petitioner was in violation of the aforementioned provision. In addition, one warning and one reprimand were issued to the Petitioner pursuant to Article 36, Subparagraphs 1 and 2 of the Real Estate Appraiser Act. The Petitioner disagreed with this decision and subsequently initiated administrative remedy. However, the case was finally dismissed by the Supreme Administrative Court Judgment 105-Pan-493 (2016) (hereafter referred to as the “Final Judgment”).
      
    •         The Petitioner believed that the Disputed Regulation as applied in the Final Judgment, which restricted the office of a real estate appraiser to one location only and did not allow for the establishment of any branch office, is merely for the convenience of the administrative agency’s inspection without considering the fact that a real estate appraiser is allowed to practice nationwide according to law and needs to move around in order to  closely coordinate with the location of the real estate. This has caused real estate appraisers to be constrained by practical considerations and not being able to practice in locations other than the location where his/her office is located. Furthermore, in times of need due to major public interests or an emergency situation, if the real estate appraiser is still prohibited from practicing in other locations without any necessary and reasonable exceptions, this would be an unnecessary restriction on the freedom of occupation of the real estate appraiser. This may be in violation of Article 23 of the Constitution and may contradict the intent of Article 15 of the Constitution guaranteeing people’s right to work. The Petitioner hence filed for judicial interpretation. The Petitioner’s petition is accepted since it complies with the requirements stipulated in Article 5, Paragraph 1, Subparagraph 2 of the Constitutional Court Procedure Act, and this Interpretation is hereby rendered for the following reasons: 
      
    •         Article 15 of the Constitution stipulates that people’s right to work shall be guaranteed, people shall have the freedom to engage in work, to choose and practice an occupation (see J.Y. Interpretations Nos. 404, 510, 612 and 637). As for the restrictions imposed on the freedom of occupation, the Constitution sets different standards of permissibility due to differences in restricted content. With regard to restrictions on the freedom to practice an occupation such as working method, time, place and content, if the lawmakers intended to pursue public interest and there is a reasonable relationship between the measures of restriction adopted and the achievement of the purpose, this would comply with the principle of proportionality and would not be otherwise contrary to the intent of protecting the people's freedom to practice an occupation as provided by Article 15 of the Constitution (see J.Y. Interpretations Nos. 802 and 806).
      
    •         Article 9, Paragraph 1 of the Real Estate Appraiser Act stipulates that “[a] Real Estate Appraiser shall set up an office for his/her practice, or join a joint office run by two or more Real Estate Appraisers who practice jointly.” Paragraph 2 thereof, which is also the Disputed Regulation, stipulates: “The office stated in the previous Paragraph of this Article shall be restricted to one location only. No branch office is allowed.” Restricting a real estate appraiser from setting up branch offices, so that a real estate appraiser can practice the real estate appraisal business only with a single office, is a restriction with regard to the practice method, which interferes with the freedom to practice an occupation. Moreover, the real estate appraiser is a specialized professional whose qualification must be determined through examination in accordance with the law as stated in Article 86, Subparagraph 2 of the Constitution (see Article 2, Paragraph 1 of the Professionals and Technologists Examinations Act and Article 2, Appendix Subparagraph 28 of the Professionals and Technologists Examinations Act Enforcement Rules). The business that a real estate appraiser is engaged in is closely related to the public interests and the property of the people, which is different from the pursuit of commercial profit by general profit-making enterprises, and thus the State may subject it to appropriate control. If the purpose of regulation is to pursue public interests, and the measure is reasonably co-related to the achievement of the purpose, this does not violate the principle of proportionality provided by Article 23 of the Constitution.
      
    •         The quality of real estate appraisal has significant impact on transaction security and the social economy. A real estate appraiser, commissioned by his /her clientele, can undertake an appraisal of land, buildings, crops, and interest upon them (see Article 14, Paragraph 1 of the Real Estate Appraiser Act). The appraisals and valuations of court-related real estates, the appraisal of reserve price for real estate auctions, the value assessment of assets acquired or disposed of by public companies, the credit evaluation of loans from financial institutions and  related assets, appraisals for the distribution of rights and interests in joint developments or the market price assessment of land expropriation compensation  all rely on real estate appraisers. Determining the price of an appraisal subject is the core practice of real estate appraisers. The process of price determination will be specifically described in an appraisal report (see Articles 5, 8, 13 to 16 of the Regulations on Real Estate Appraisal). Due to the exclusive and irreplaceable nature of the practice of the specialized professionals, the professionals shall personally perform and be responsible for their services. Moreover, in a real estate appraisal process, the determination of the price of an appraisal subject is closely linked to the preparation of an appraisal report, which must be personally executed by the real estate appraiser to ensure the quality of the appraisal. The Disputed Regulation considers that there is no restriction as to where a real estate appraiser carries out his/her practice. Accordingly, in order to unify the management of real estate appraisers and for the consistency of the reputation and practice of real estate appraisers, real estate appraisers are prohibited from establishing branch offices. They are allowed to set up only one office in one location to facilitate the management and prevent the lending of their license (see The Meeting Minutes of the Legislative Yuan Gazette 51(89): 62).  This is to maintain the quality of real estate appraisals to protect the property rights of clients and ensure real estate transaction security, as well as stabilizing the order of the financial market. Since the purpose is to pursue public interests, this should be considered as legitimate.
      
    •         With the intention of ensuring the quality of the real estate appraisals, the Real Estate Appraiser Act imposes various restrictions on real estate appraisers as to the methods of their practice. The Disputed Regulation expressly provides that a real estate appraiser shall set up an office for his/her practice in one location so that the competent authority can unify the management of the business and more effectively inspect whether real estate appraisers conduct their business in compliance with the law (see Articles 2, 10, and 21 of the Real Estate Appraiser Act and the Inspection Directions for Real Estate Appraisal Business). In addition, a survey should be conducted for the status of the subject in the real estate appraisal process. The professional knowledge required for the appraisal is usually closely linked to the humanities and customs of the appraisal subject (see Articles 3 and 4 of the Regulations on Real Estate Appraisal). Nevertheless, although it may be more convenient for a real estate appraiser to carry out his/her practice by establishing a branch office, this may act as inducement for the real estate appraiser to pass the cases that were entrusted to him/her on to be carried out by others illegally for undeserved and additional benefit to his/her real estate appraisal practice. Therefore, the prohibition of establishing branch offices by the Disputed Regulation helps to reduce the aforementioned inducement and could be considered to be effective in preventing the unlawful conduct of a real estate appraiser failing to perform the appraisal personally. Although the Disputed Regulation restricts the real estate appraiser to set up only one office, the real estate appraiser may, according to the legislative intent of Article 9 of the Real Estate Appraiser Act, still practice nationwide with one office. Since there is basically no restriction on the area of practice (see Article 9 of the Legislative Explanation of the Meeting Minutes of the Legislative Yuan Gazette 51(89): 62), there is no necessity for exceptions for the real estate appraiser to be able to carry out his/her appraisal practice in places other than his/her office location in times of need due to major public interests or emergency situations. Consequently, problems concerning the conduct of the real estate business are different from the circumstances in J.Y. Interpretation No. 711.
      
    •         In summary, the adopted means and the achievement of purpose under the Disputed Regulation are reasonably co-related and thus the Disputed Regulation does not violate the principle of proportionality under Article 23 of the Constitution, nor does it violate the intent of guaranteeing people’s right to work provided by Article 15 of the Constitution.
      
    •         The Disputed Regulation restricts real estate appraisers from setting up branch offices. Although this is related to the efficiency of administrative management, the legislation intends for real estate appraisers to set up an office in one location and practice nationwide. Hence, the lawmakers should review the Disputed Regulation as appropriate by noting and considering the development of the real estate appraiser’s industry as well as the improvement of the public's level of trust in the real estate appraiser profession, while also taking into account other factors, such as the evolution of regulations concerning the establishing of offices and branch offices by other specialized professionals.
      
    •         Besides, the Petitioner alleged that Article 36, Subparagraph 1 of the Real Estate Appraiser Act violated Articles 15 and 23 of the Constitution. However, after reviewing the claim, it is difficult to determine a specific violation thereof from an objective point of view. Thus, this part of the petition does not comply with Article 5, Paragraph 1, Subparagraph 2 of the Constitutional Court Procedure Act and shall not be accepted in accordance with Paragraph 3 of the same Act.
      
    • ______________________
      
    • *Translated by Y. Y. CHIN
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