Legislature(2003 - 2004)
02/23/2004 03:25 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 418-EXTEND REAL ESTATE COMMISSION Number 1520 CHAIR ANDERSON announced that the next order of business would be HOUSE BILL NO. 418, "An Act extending the termination date of the Real Estate Commission; and providing for an effective date." [HB 418 was sponsored by the House Labor and Commerce Standing Committee.] REPRESENTATIVE ROKEBERG asked that the proposed committee substitute (CS), Version D, be adopted. He explained, "The original draft is under the sunset extension for the Real Estate Commission, and I have taken the liberty of using it to do some cleanup work in this area." Number 1488 CHAIR ANDERSON moved to adopt the proposed CS, Version 23- LS1548\D, Mischel, 2/20/04, as a work draft. There being no objection, Version D was before the committee. Number 1474 REPRESENTATIVE ROKEBERG explained that Version D includes certain aspects of a former bill that could only be corrected through statute. Section 2 clarifies that a firm or business can have a policy in which its inspectors are covered, rather than have each individual licensee get his/her own individual insurance. Section 3 relates to a request to the Division of Occupational Licensing about the timing of inactive licenses and active licenses, and directs that an inactive license be reactivated; he described this change as a housekeeping measure. Section 4 is another housekeeping measure, an added request from the Division of Occupational Licensing to clarify issues surrounding notification of a licensee; sometimes the division has difficulty, and this allows access to the current mailing address and other ways to find [licensees]. REPRESENTATIVE ROKEBERG explained that Section 5 corrects a problem in the old home-inspector bill, which allows current practitioners to become home inspectors without an examination; in former HB 9, page 23, a subsection said "a certificate of registration issued under this section may not be renewed or extended", and the assistant attorneys generals said there was a need to take the exam again because of the word "not". Thus Section 5 of the current bill says that if the [license is given to the applicant], the applicant doesn't have to take an examination again [for renewal]. He called this a housekeeping measure as well. Section 6 provides for a new effective date. Number 1285 REPRESENTATIVE LYNN disclosed that he is a licensed associate real estate broker with a major company in Anchorage. He also stated support for HB 418. REPRESENTATIVE ROKEBERG disclosed that he is also a licensed real estate broker in Alaska, with a current license although he isn't actively engaged in this. CHAIR ANDERSON asked both members to vote nonetheless. Number 1245 KATHRYN CLARK, President, Alaska Association of Realtors, spoke in support of HB 418 as far as the extension of the real estate commission to the June 30, 2008, date. However, she noted that she'd been asked to suggest that the changes to the surety fund wouldn't be supported, which Mr. Feeken could speak to better. REPRESENTATIVE ROKEBERG clarified for the committee that there was a recommendation in the audit to raise the surety fund claim level from $10,000 to $20,000, and the aggregate to one licensee from $50,000 to $100,000. He said he didn't agree with this and hadn't put it in the bill "for various reasons," but noted that there are split opinions within the industry. REPRESENTATIVE ROKEBERG also referred to a recommendation in the audit that mobile homes or trailers should be subject to claims under the surety fund. He said this recommendation wasn't included in the bill either, because the industry is 100 percent opposed to it. Noting that trailers and mobile homes are personal property, not real property, he said when the mobile home dealers or sellers want to start paying into the surety fund, then they can have a claim to it, but not until that time. Number 1133 REPRESENTATIVE LYNN noted that typically realtors can list and sell mobile homes. He asked whether the buyers would have need of the surety fund. REPRESENTATIVE ROKEBERG said the realtor would be selling personal, not real, property and that the "mobile home people" don't contribute to the fund. "If they want to become real estate licensees, then that's fine," he added, saying it's an old issue that has been debated in this committee previously. He added that at one time there was licensure of mobile home dealers, which was repealed. REPRESENTATIVE LYNN asked, though, if he sold a mobile home and made some error and the buyer wanted redress, whether that person could go to the surety fund. REPRESENTATIVE ROKEBERG replied that hearing officers had made that finding based on that claim before, but he feels so strongly about it that he has contemplated adding a statutory prohibition. Number 1037 DAVE FEEKEN, Legislative Chair, Alaska Association of Realtors, Kenai, testified in favor of Version D. However, he said his association had concerns about raising the surety fund claim amounts and the mobile home issue, and was happy these recommendations weren't included in the bill. With regard to mobile homes, he said if someone who has a real estate license is subject to surety fund claims. Mr. Feeken explained that claims involving earnest money agreements require mandatory mediation; there are currently three to four claims a year with two to three mediation hearings a month. The Alaska Association of Realtors hears three to four arbitrations annually, providing this service to practically all licensees in the state, whether or not they are members of the organization. MR. FEEKEN informed the committee that when the surety fund was put in place, it covered fraud, deceit, misrepresentation, and conversion of funds. Previously, errors and omissions (E&O) insurance didn't cover fraud, deceit, and misrepresentation, but now it does. Thus he said he felt many avenues were available for the public to correct a wrong. He added that the Alaska Association of Realtors had invested a substantial amount of money and time over the last 15 years to deal with disputes and provide consumer protection. MR. FEEKEN also explained that $10,000 is the standard settlement in a claim against licensed professionals. He said E&O claims average $6,000 to $7,000; mediation cases, which currently happen at the rate of two or three a month, have average settlement claims of $5,000 to $6,000; and small claims court remedies up to $7,500, and there's currently a bill that would raise this to $10,000. He emphasized that many remedies are available to the public without resorting to a surety fund claim or a lawsuit, and he said those remedies are far more expedient than either the surety fund claim or a lawsuit, which may take multiple years. For example, it costs $75 to file for mediation. MR. FEEKEN went on to say that has been input to the industry that the surety fund claims are used to "finance further losses." He said that's a valid concern. [Chair Anderson noted that Pat Davidson was present from the Division of Legislative Audit to answer questions.] Number 0754 REPRESENTATIVE LYNN moved to report CSHB 418, Version 23- LS1548\D, Mischel, 2/20/04, out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSHB 418(L&C) was reported from the House Labor and Commerce Standing Committee.
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