02/19/1996 03:10 PM House L&C

 HB 478 - REALTORS MAY PREPARE CERTAIN LEGAL DOCS                            
                                                                               
 Number 1088                                                                   
                                                                               
 CHAIRMAN KOTT announced the next order of business would be HB 478,           
 "An Act allowing licensed real estate brokers, associate real                 
 estate brokers, and real estate salespersons to prepare certain               
 documents; and providing for an effective date."                              
                                                                               
 REPRESENTATIVE ROKEBERG, prime sponsor of the measure, said the               
 bill would allow real estate agents, real estate brokers and                  
 realtors to prepare certain legal documents.  The bill was a                  
 request by the Alaska Association of Realtors in which he is a                
 member of and a practicing commercial real estate broker.                     
 Representative Rokeberg said the request from the Association of              
 Realtors was based on Rule 33.3, which was approved by the                    
 governing board of the Alaska Bar Association, transmitted in                 
 October to the supreme court for adoption.  That rule is located in           
 the committee members' packets.  The intent of the rule was to                
 define the practice of law for the purposes of the enforcement by             
 the supreme court and the Bar Association.  In so doing, he                   
 believes they threw out a net to expand their authority.  By doing            
 so, the threat that they could impede commerce by encroaching on              
 areas that have traditionally been undertaken by realtors is                  
 important and is the bases for the need of the legislation.                   
                                                                               
 REPRESENTATIVE ROKEBERG said for a number of years, the Sword of              
 Damocles has been hanging over the head of realtors because of this           
 implied threat.  He said by his reading of the Bar rule                       
 recommendations and his understanding the circumstances surrounding           
 it, it is clear that the legislation is necessary.  The Bar rule              
 goes so far to say that the court and attorneys have to approve all           
 documents used in any transactions.                                           
                                                                               
 REPRESENTATIVE ROKEBERG informed the committee that there is                  
 correspondence in the committee packets from the Bar Association              
 that denies the fact that their intent is to bring real estate                
 practitioners within the meaning of the definition.  Representative           
 Rokeberg stated that realtors are governed by a very strict code of           
 ethics and have a grievance procedure within their organizations.             
 He referred to Article 13, which was in the committee packets, and            
 said it points out clearly that under the code of ethics for                  
 realtors they will not be practicing law.  When it's necessary to             
 provide and advise clients that an attorney, accountants, etc., are           
 necessary, they are required to do so by their standard of ethics.            
 In addition, the consumers in Alaska are protected by the assurity            
 bond system which is under the licensing provisions of the state.             
 It provides monetary compensation to people who have been damaged,            
 from the assurity fund.  He noted the fund is a self funding                  
 bonding fund that operates with the dues from the real estate                 
 communities.  Representative Rokeberg explained there are a number            
 of things that would preclude any possibilities of a realtor                  
 practicing law without a license.  All the realtors of the state              
 want to be able to do is continue their practice and their business           
 as they've been doing for decades, nothing more - nothing less.               
                                                                               
 Number 1383                                                                   
                                                                               
 CRAIG JOHNSON testified via teleconference from Kodiak in support             
 of HB 478.  He recalled a recently agreed to transaction between a            
 buyer and a seller where an attorney was involved and explained it            
 involved a lot of negotiation.  Mr. Johnson said (indisc.) an                 
 attorney if the transaction was not consummated, you'd have that              
 difficulty to deal with.  There is the extra burden of meeting and            
 drafting addendums, counter offers and offers back and forth                  
 between the parties.  Mr. Johnson said he understands that on the             
 national level the trend is away from attorneys.  There has been              
 other states that have enacted legislation similar to the Bar rule            
 that Representative Rokeberg referred to.  At one time the trend              
 was to put attorneys in the loop.  Now at the national level, the             
 trend is away from that.  That seems to be appropriate for our                
 state.  It doesn't seem to be an easy solution to add attorneys               
 into the contract loop.  He noted he had faxed information to each            
 of the committee members the previous Friday.                                 
                                                                               
 Number 1513                                                                   
                                                                               
 LAURA STOHL BEALEY, Associated Island Brokers, was next to testify            
 via teleconference from Kodiak.  She informed the committee she has           
 been a real estate associate broker in the Kodiak area for 15                 
 years.  Ms. Bealey said she is testifying in support of HB 478.               
 She said it seems to her that the bill protects real estate agents            
 against what the attorneys are trying to accomplish.  The attorneys           
 are trying to accomplish something in their interest and not the              
 interest of consumer, the public or the real estate entity.  She              
 said she thinks the real estate industry has a code of ethics that            
 regulates ethical behavior very well.  They have the assurity bonds           
 protecting consumers that have been (indisc.).  Ms. Bealey said she           
 always recommends to customers and clients that they have an                  
 attorney review their paperwork if they so choose to do so.  She              
 urged HB 478 be passed.                                                       
 Number 1588                                                                   
                                                                               
 RON JOHNSON, ERA, testified via teleconference from Kenai.  He                
 informed the committee he served on the Real Estate Commission for            
 eight years, two full terms.  He has been licensed since 1982.  Mr.           
 Johnson said the law, as written, clarifies what they do today.  It           
 appears that the reason the law was written was to defend a                   
 position they have had for some time.  Mr. Johnson said he thinks             
 that the assurity fund, the realtor code of ethics and the inbred             
 fear, as a result of the required education and continuing                    
 education that has been brought about in the past few years, causes           
 the real estate community not to get involved in the practice of              
 law.  Mr. Johnson stated that his concern is the cost to the                  
 consumer.  He said he just returned from the ERA National                     
 Conference in Phoenix and said part of the discussion was with real           
 estate professionals from the East Coast.  Mr. Johnson referred to            
 Alaska and said he would suggest that the average commission in               
 closing costs and other related costs, are in the neighborhood of             
 8 percent to 10 percent of the closing of a sales transaction.  On            
 the East Coast, they're paying 12 percent to 14 percent and                   
 sometimes higher.  A great deal of their percentage cost increases            
 are relative to attorney costs.  Mr. Johnson said there isn't a               
 real estate professional in the state that won't call for an                  
 attorney to get involved if something is real technical.  He urged            
 support for the bill.                                                         
                                                                               
 Number 1738                                                                   
                                                                               
 BRUCE MARION testified via teleconference from Anchorage.  He noted           
 he is a realtor, legislative chairman for the Valley Board of                 
 Realtors, Alaska Association of Realtors, (indisc.).  Mr. Marion              
 urged the committee to support HB 478.  Realtors must meet                    
 extensive education requirements for the completion of the forms              
 which are drawn by and approved by attorneys.  The forms are                  
 commonly used by real estate practitioners with protection to the             
 consumer.  Passage of the bill would facilitate the transfer of               
 real estate in Alaska without adding an extra cost.  He thanked the           
 committee.                                                                    
                                                                               
 Number 1777                                                                   
                                                                               
 There being no further witnesses, CHAIRMAN KOTT closed public                 
 testimony.                                                                    
                                                                               
 Number 1784                                                                   
                                                                               
 REPRESENTATIVE GENE KUBINA made a motion to pass HB 478 out of the            
 House Labor and Commerce Committee with individual recommendations            
 and a zero fiscal note.  There being no objection, HB 478 moved out           
 of committee.