Legislature(2011 - 2012)CAPITOL 120

04/11/2012 01:00 PM House JUDICIARY


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 210 CRIMES AGAINST CHILDREN/ SUPPORT/CINA TELECONFERENCED
Heard & Held
+ SB 122 REAL ESTATE TRANSFER FEES/TITLE INSURANCE TELECONFERENCED
Moved HCS CSSB 122(L&C) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
       SB 122 - REAL ESTATE TRANSFER FEES/TITLE INSURANCE                                                                   
                                                                                                                                
2:45:10 PM                                                                                                                    
                                                                                                                                
VICE CHAIR  THOMPSON announced  that the  next order  of business                                                               
would be  CS FOR SENATE  BILL NO.  122(L&C), "An Act  relating to                                                               
research  on and  examination of  titles;  relating to  residency                                                               
requirements for  title insurance limited producers;  relating to                                                               
real estate transfer fees; and  providing for an effective date."                                                               
[Before the committee was HCS CSSB 122(L&C).]                                                                                   
                                                                                                                                
2:45:57 PM                                                                                                                    
                                                                                                                                
DANA OWEN, Staff, Senator Dennis  Egan, Alaska State Legislature,                                                               
on  behalf  of the  sponsor  of  SB  122,  the Senate  Labor  and                                                               
Commerce Standing  Committee, which  is chaired by  Senator Egan,                                                               
explained that  SB 122 would  limit who may conduct  searches and                                                               
examinations of  title to only  licensed title  insurance limited                                                               
producers,  would statutorily  stipulate that  only residents  of                                                               
Alaska may  be issued such  licenses, and would preclude  the use                                                               
of transfer fee covenants.  On  the latter point, he relayed that                                                               
in 1852, the courts in  New York outlawed transfer fee covenants,                                                               
describing them as  a vestige of feudalism, and  that since then,                                                               
41 other states have also outlawed  the practice.  In addition to                                                               
outlawing  the  use  of  transfer fee  covenants  in  Alaska  via                                                               
Section 3,  the bill  is also intended  to address  concerns that                                                               
future   imperfections   in   title   could   result   if   title                                                               
searches/examinations are  performed by people who  don't live in                                                               
Alaska.  Specifically,  Section 1 of the bill  would require that                                                               
all  title  searches be  done  through  licensed title  insurance                                                               
limited  producers,  and  Section   2  would  require  that  such                                                               
licenses   be  issued   only  to   residents  of   Alaska.     He                                                               
acknowledged,  however, that  the  drafter has  pointed out  that                                                               
Section  2 could  potentially be  ruled  unconstitutional by  the                                                               
court; each  of the prior  committees of referral  discussed this                                                               
issue but chose to retain Section 2 in the bill regardless.                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG suggested that  a severability clause be                                                               
added to the bill if the aforementioned language remains.                                                                       
                                                                                                                                
MR. OWEN said  the sponsor would not object to  the addition of a                                                               
severability  clause, and  noted  that  members' packets  contain                                                               
[memorandums]  from  Legislative   Legal  and  Research  Services                                                               
addressing the issue of Section 2's constitutionality.                                                                          
                                                                                                                                
2:51:56 PM                                                                                                                    
                                                                                                                                
KIMBERLY  GLISSEN,   General  Manager,  Alaska  Escrow   &  Title                                                               
Insurance  Agency,  Inc.,  said  she  is  in  favor  of  SB  122,                                                               
specifically, Sections  1 and 2  because she believes  steps must                                                               
be  taken  to  keep  jobs  local  and  prevent  outsourcing,  and                                                               
Section 3 because  of the savings  it will provide  to consumers.                                                               
Overall, she  opined, SB 122  will help protect  jobs, consumers,                                                               
and property owners in Alaska.                                                                                                  
                                                                                                                                
2:53:49 PM                                                                                                                    
                                                                                                                                
CHRIS NEWBILL,  Manager, Ketchikan Title Agency,  Inc., testified                                                               
in favor  of SB 122  and said she  concurs with the  testimony of                                                               
Ms. Glissen.                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GRUENBERG   noted    that   the   aforementioned                                                               
memorandums in members' packets are  dated February 15, 2012, and                                                               
March 15,  2012; and, in  response to a question,  explained that                                                               
the term, "provision" as used in Section  3 of SB 122 refers to a                                                               
provision in the document that conveys real estate.                                                                             
                                                                                                                                
2:57:17 PM                                                                                                                    
                                                                                                                                
MICHEAL  PRICE, Co-Owner,  Mat-Su Title  Insurance Agency,  Inc.;                                                               
Co-Owner,  Fidelity  Title  Agency of  Alaska,  after  mentioning                                                               
industry-associated  positions he's  held within  the Alaska  Bar                                                               
Association (ABA)  and the Alaska Land  Title Association (ALTA),                                                               
testified in support  of SB 122, and  expressed disagreement with                                                               
the  drafter's comments  in the  aforementioned memorandums  that                                                               
Section  2's  proposed  residency   requirement  might  be  found                                                               
unconstitutional.   Noting  that his  company gets  solicitations                                                               
from   people    in   foreign   countries   to    conduct   title                                                               
searches/examinations of  property in Alaska, concurred  that the                                                               
intent  of  the  bill  is  to  require  those  who  conduct  such                                                               
searches/examinations  of   property  in  Alaska  to   be  Alaska                                                               
residents and thereby  be subject to Alaska law.   He offered his                                                               
understanding  that 13  states have  passed  a similar  residency                                                               
requirement, and said he thinks Alaska  has the right to do so as                                                               
well since  no waiting period  is required  in order to  become a                                                               
resident.   In conclusion, he  too noted  that 41 states  now ban                                                               
[transfer fee covenants], and asked that Alaska do so as well.                                                                  
                                                                                                                                
3:06:06 PM                                                                                                                    
                                                                                                                                
ROGER FLOERCHINGER, Owner, President  & CEO, Yukon Title Company,                                                               
Inc., testified  in support  of SB 122  as currently  written and                                                               
stressed the importance  of providing for what  he termed "Alaska                                                               
hire."                                                                                                                          
                                                                                                                                
3:08:07 PM                                                                                                                    
                                                                                                                                
STEPHAN  ROUTH, Attorney  at Law,  Routh Crabtree  Olsen, P.S.  -                                                               
mentioning that he's owned title  agencies in Washington, Oregon,                                                               
Idaho,  California, Nevada,  Arizona, and  Hawaii -  said he  has                                                               
concerns   about  Section   2  of   SB  122,   but  characterized                                                               
Section 3's proposed  ban on transfer fee  covenants as something                                                               
that  should have  been  instituted  long ago.    With regard  to                                                               
Section 2, he  noted that in the  aforementioned memorandums, the                                                               
drafter has said  in part:  "In my opinion,  it seems likely that                                                               
a court construing the proposed  residency requirement would find                                                               
the  provision unconstitutional".   He  said  he appreciates  the                                                               
suggestion to  insert a  severability clause  into the  bill, but                                                               
opined that  a better  approach -  from a  financial perspective,                                                               
given the high cost  associated with litigating constitutionality                                                               
issues -  would be to simply  delete Section 2.   Referring to an                                                               
earlier comment, he said his  research shows that only [8] states                                                               
still have a  specific residency requirement, and  that the trend                                                               
is  for  states   to  instead  move  away  from   having  such  a                                                               
requirement.    Regarding  the concern  about  outsourcing  title                                                               
searches/examinations to  people in  other countries,  he offered                                                               
his  belief that  nothing in  the  bill would  prevent that  from                                                               
occurring, because  the bill addresses  the issue of  licensure -                                                               
not the  actual work itself.   In conclusion, he  again suggested                                                               
that Section 2 be removed from SB 122.                                                                                          
                                                                                                                                
3:14:20 PM                                                                                                                    
                                                                                                                                
CRYSTAL  PELTOLA, Vice  President &  General Manager,  Alaska USA                                                               
Title  Agency, concurred  with Mr.  Routh's testimony  and stated                                                               
support of Section  3 of SB 122, but  expressed concern regarding                                                               
the  constitutionality  of  Section  2.   She  pointed  out  that                                                               
Section 2,  in addition to perhaps  being unconstitutional, seems                                                               
to contradict itself in that it  says both that a title insurance                                                               
limited producer shall be licensed  in the manner provided for in                                                               
AS 21.27  - which  provides for the  licensure of  both residents                                                               
and nonresidents  - and that  a title insurance  limited producer                                                               
may not  obtain a license  unless [he/she]  is a resident  of the                                                               
state.   In conclusion,  she said Alaska  USA Title  Agency would                                                               
support SB 122 if Section 2 were deleted.                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG  noted that  Section 2  addresses what's                                                               
required to  obtain a  license, not  what's required  to maintain                                                               
such  licensure;  in  other  words, a  resident  could  obtain  a                                                               
license to be  a title insurance limited producer,  and then move                                                               
out of state and still be licensed in Alaska.                                                                                   
                                                                                                                                
3:17:32 PM                                                                                                                    
                                                                                                                                
TERRY  BRYAN,  Vice President  &  State  Manager, First  American                                                               
Title   Insurance  Company,   characterized  SB   122's  proposed                                                               
residency requirement as  disruptive to the flow  of commerce and                                                               
inconsistent with  common sense, particularly given  that the end                                                               
product  -   the  title  insurance  policies   themselves  -  all                                                               
originate outside of  Alaska, and given that no  other segment of                                                               
the  real  estate  industry  in  Alaska  operates  under  such  a                                                               
residency requirement.   With regard  to the concern  that future                                                               
imperfections     in    title     could    result     if    title                                                               
searches/examinations are  performed by people who  don't live in                                                               
Alaska, he predicted  that the marketplace would  remedy any such                                                               
problems that actually do arise.                                                                                                
                                                                                                                                
3:22:06 PM                                                                                                                    
                                                                                                                                
HOWARD  HANCOCK, Chief  Title Officer,  Fidelity Title  Agency of                                                               
Alaska, relayed that he was testifying  in support of SB 122.  He                                                               
offered  his  understanding  that  the current  practice  of  the                                                               
Division of Insurance -  as stated on its web site  - is to grant                                                               
licenses to  residents only, even though  AS 21.27.150(5) appears                                                               
to allow for the issuance  of what's called a nonresident limited                                                               
producer  license.   The intent  of SB  122, he  surmised, is  to                                                               
correct  what   industry  feels   to  be   conflicting  statutory                                                               
provisions and provide  guidance to the division in  light of its                                                               
existing practices.   Further, it would help protect  the jobs of                                                               
title  examiners  in Alaska,  who  understand  the industry  laws                                                               
unique to  the state.   In conclusion, he reiterated  his support                                                               
for SB 122, and urged the committee to pass it.                                                                                 
                                                                                                                                
3:24:44 PM                                                                                                                    
                                                                                                                                
LINDA HALL,  Director, Anchorage  Office, Division  of Insurance,                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED),    in    response    to   questions,    indicated    the                                                               
administration's  attorneys  have   reviewed  the  aforementioned                                                               
memorandums from  the drafter and  have concurred that  Section 2                                                               
might  potentially be  found unconstitutional,  though she's  not                                                               
yet received a written legal opinion on the issue.                                                                              
                                                                                                                                
3:26:15 PM                                                                                                                    
                                                                                                                                
JERRY  REED, President,  Alaska USA  Mortgage Company,  LLC, said                                                               
that generally his company is in  support of Section 3 of SB 122,                                                               
but  is not  in support  of Section  2, believing  that it  would                                                               
limit both consumer choice and market competitiveness.                                                                          
                                                                                                                                
VICE CHAIR THOMPSON,  after ascertaining that no  one else wished                                                               
to testify, closed public testimony on SB 122.                                                                                  
                                                                                                                                
The committee took an at-ease from 3:28 p.m. to 3:29 p.m.                                                                       
                                                                                                                                
3:29:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG made a motion to delete Section 2.                                                                     
                                                                                                                                
REPRESENTATIVE  HOLMES  objected,  and  said  she'd  prefer  that                                                               
Section 2 be left in the bill.                                                                                                  
                                                                                                                                
REPRESENTATIVE   GRUENBERG    cautioned   against    adopting   a                                                               
potentially unconstitutional  provision, spoke about the  cost of                                                               
litigating  Section  2's  constitutionality, and  predicted  that                                                               
that provision  isn't going  to work  as intended  anyway because                                                               
merely having an  office in Alaska would suffice  for purposes of                                                               
obtaining licensure  even though  the actual work  gets conducted                                                               
elsewhere  by   nonresidents.     He  too   noted  that   in  the                                                               
aforementioned memorandums,  the drafter has  said in part:   "In                                                               
my opinion, it seems likely  that a court construing the proposed                                                               
residency requirement  would find the  provision unconstitutional                                                               
as a  violation of  the privileges and  immunities clause  of the                                                               
U.S. Constitution".                                                                                                             
                                                                                                                                
REPRESENTATIVE HAWKER  expressed disfavor  with Amendment  1, and                                                               
offered  his belief  that it  remains unclear  what the  ultimate                                                               
consequences of adopting Section 2 will be.                                                                                     
                                                                                                                                
A roll  call vote was  taken.  Representatives Lynn,  Keller, and                                                               
Gruenberg  voted  in  favor  of  Amendment  1.    Representatives                                                               
Holmes,   Pruitt,  Thompson,   and  Hawker   voted  against   it.                                                               
Therefore, Amendment 1 failed by a vote of 3-4.                                                                                 
                                                                                                                                
3:33:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  made  a  motion  to  adopt  Conceptual                                                               
Amendment 2, to add a severability clause to SB 122.                                                                            
                                                                                                                                
REPRESENTATIVE  HAWKER   objected  and   pointed  out   that  all                                                               
legislation is automatically severable [under AS 01.01.030].                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT  concurred, and  said he  does not  see the                                                               
necessity of adding a severability clause to the bill.                                                                          
                                                                                                                                
REPRESENTATIVE  GRUENBERG argued  that  including a  severability                                                               
clause wouldn't do any harm and would be prudent.                                                                               
                                                                                                                                
3:37:16 PM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.  Representatives  Gruenberg and Lynn                                                               
voted  in  favor  of Conceptual  Amendment  2.    Representatives                                                               
Holmes, Keller,  Pruitt, Thompson,  and Hawker voted  against it.                                                               
Therefore, Conceptual Amendment 2 failed by a vote of 2-5.                                                                      
                                                                                                                                
3:37:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KELLER  moved to report  HCS CSSB 122(L&C)  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.   There being  no objection, HCS CSSB  122(L&C) was                                                               
reported from the House Judiciary Standing Committee.                                                                           

Document Name Date/Time Subjects
SB0210 R.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
Sponsor Statement SB 210.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB0210-2-2-032612-LAW-Y.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB0210-3-2-032612-DPS-N.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB0210-4-2-032612-ADM-Y.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB0210-5-2-032612-CRT-Y.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB0210-6-2-032612-ADM-N.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
Support Board Resolution on SB 210.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB0122D.pdf HJUD 4/11/2012 1:00:00 PM
SB 122
HCS CSSB 122 (L&C) Sponsor Statement.pdf HJUD 4/11/2012 1:00:00 PM
SB 122
SB122-DCCED-INS-03-14-12.pdf HJUD 4/11/2012 1:00:00 PM
SB 122
SB 122 Summary of Changes H L&C.pdf HJUD 4/11/2012 1:00:00 PM
SB 122
SB 122 Supporting Document - Email Howard Hancock, Fidelity Title 2-28-12.PDF HJUD 4/11/2012 1:00:00 PM
SB 122
SB 122 Opposing Document - Email Crystal Peltola, Alaska USA Title 3-1-12.PDF.msg.PDF HJUD 4/11/2012 1:00:00 PM
SB 122
SB 122 Supporting Document - Email Kimberly Glisson, Alaska Escrow and Title 2-28-12.PDF HJUD 4/11/2012 1:00:00 PM
SB 122
SB 122 Supporting Document - Email Terri Wesley, Mat-Su Title 2-28-12.PDF HJUD 4/11/2012 1:00:00 PM
SB 122
SB210CSSB(FIN)-LAW-CRIM-04-10-12.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB 210 HCS (JUD) parts list.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
HCS CSSB210 ver O.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB 122 lttr opposing, Old Repub. Title 1-10-12.PDF HJUD 4/11/2012 1:00:00 PM
SL&C 2/2/2012 1:30:00 PM
SB 122
Amendment {number} for SB 210 .pdf HJUD 4/11/2012 1:00:00 PM
SB 186
SB 122 Supporting document USA Title Agency.pdf HJUD 4/11/2012 1:00:00 PM
SB 122
SB 122 Leg Legal memo 031512.pdf HJUD 4/11/2012 1:00:00 PM
SB 122
SB 122 Legal Opinion.pdf HJUD 4/11/2012 1:00:00 PM
SB 122
CS for SB 210 (FIN) ACLU Review 2012 04 11.pdf HJUD 4/11/2012 1:00:00 PM
SB 210
SB 210 HCS (JUD) parts list.pdf HJUD 4/11/2012 1:00:00 PM
SB 210