Legislature(1995 - 1996)
02/19/1996 03:10 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.