Legislature(1995 - 1996)
03/11/1996 03:10 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 502 - CONDUCTING AUCTIONS OF REAL PROPERTY Number 376 CHAIRMAN KOTT announced HB 502, "An Act relating to the auctioning of real estate," was the next order of business. REPRESENTATIVE GARY DAVIS, sponsor of HB 502, said he doesn't know how many people in the state realize that you have to have a real estate brokers license to auction off real estate. He said he didn't think you'd need a real estate license to be an auctioneer. Representative Davis said HB 502 corrects that situation. He told the committee he doesn't know why the original statute was written, but maybe there were some "fly by night" auctioneers in the state several years ago. The legislation makes it legal for an auctioneer to auction off real estate. The language in the bill is meant to allow a real estate auction to be performed by an auctioneer who has developed specific qualifications. If a person has completed a certified program in auctioneering and that program includes a course in real estate sales, then that person can auction real estate as long as a licensed real estate broker is present to supervise. This way, experts in both fields of auctioneering and real estate will be present to conduct their specified duties without inflicting an unnecessary hardship on the auctioneer. Representative Davis pointed out that there are boroughs and cities that have foreclosure auctions. He noted there are auctioneers in the state that do have a real estate brokers license, but there are also several who don't. Number 513 CHAIRMAN KOTT said if he wanted to auction off real estate, as an auctioneer, he would not only have to have an auctioneer license but also a real estate license. REPRESENTATIVE DAVIS said he believes that is true. He noted the license is a real estate "brokers" license. REPRESENTATIVE SANDERS said he knows real estate auctioneers who aren't brokers, they're real estate salesmen. Number 532 REPRESENTATIVE ROKEBERG said the committee has information which discusses the license requirements under AS 08.88.161, which says, "Unless a licensed real estate broker, associate broker salesman, etc., they may not auction." That is the prohibition. So it's any licensed real estate agent or above. REPRESENTATIVE ELTON asked what the process of an auction is. He said he has always considered an auctioneer as a middle person who promotes a sale and not the person that consummates the sale. Representative Elton said he thought sale was consummated between the owner and the new buyer. He asked if that is the way that an auction usually works or does the property transfer to the auctioneer who then transfers it through the auction process. REPRESENTATIVE DAVIS said he isn't sure of the answer. He asked if there was anyone on teleconference waiting to testify. CHAIRMAN KOTT said there was Mr. Blakely. REPRESENTATIVE DAVIS said he may be able to answer the question. Number 612 REPRESENTATIVE PORTER pointed out there are auctions where the auctioneer actually owns the property. Normally the auctioneer doesn't own the property but he does cut the final deal for selling by virtue of sole if it's an open auction. He said the terms of the sale contract would be the last bid that was awarded to bid. REPRESENTATIVE ELTON said that would set the value, but somebody else might actually be conducting the sale. REPRESENTATIVE PORTER said the auctioneer would offer the property in compliance with the owner's specifications. REPRESENTATIVE ELTON asked if the owner or the owner's agent could be a realtor. Number 664 REPRESENTATIVE ROKEBERG asked if there was a licensure for auctioning in Alaska. REPRESENTATIVE DAVIS said he would defer the question to Mr. Blakely. Number 691 NORM "BUD" BLAKELY, Auctioneer, referred to a letter in the committee files dated July 8, 1993, and said the letter was written by him in conjunction with Ron Johnson, a real estate broker. At the time the letter was written, Mr. Johnson was on the Real Estate Board. Mr. Johnson brought the issue before the board. He said he was told that this is a state law and in order for him to be able to sell any type of real estate, he would have to get a real estate license. Mr. Blakely informed the committee he went to school to become an auctioneer and has had, from time to time, opportunities to sell real estate, but under the present statute he cannot do so. He said he would like to be able to sell real estate. He noted he doesn't want to sell real estate full time and doesn't want to have to take the classes or the time to sell real estate. Mr. Blakely referred to the question regarding auctioneers having to have a license and said they are licensed through the state like any other business. CHAIRMAN KOTT asked Mr. Blakely to guess how many auctioneers there are that hold dual licenses. MR. BLAKELY responded that he has no idea how many there are. CHAIRMAN KOTT asked if the number of auctioneers is small. MR. BLAKELY said he doesn't have any idea, but said he thinks there may be about 12 in the Anchorage area. REPRESENTATIVE PORTER asked if the license Mr. Blakely holds is a regular business license or if it is an occupational license with certain criteria and training required in auctioneering. MR. BLAKELY said he thinks the state requires a business license. He noted he went to a school in Montana that has certain criteria which he had to meet. He said he was tested at the end of the term and was given a certificate from that school. REPRESENTATIVE PORTER asked if that is a requirement for an occupational license. MR. BLAKELY said he doesn't think it is in the state of Alaska, but pointed out some states require it. Number 827 REPRESENTATIVE KUBINA said his thoughts of an auctioneer is a guy that is up there almost "yodeling," calling out, and recognizing people who are giving bids. He said to him the bill sounds like it is saying that you can have an auctioneer doing that. He referred to subparagraph (2) and said it seems to him that there would be a person doing the calling and a licensed broker who would actually make the transaction. CHAIRMAN KOTT said that is his interpretation of the bill. REPRESENTATIVE PORTER noted you don't have to be a veterinarian to auction off a horse. Number 908 REPRESENTATIVE DAVIS said Representative Kubina's statement is correct. The transfer of real estate is a legal document, so an auctioneer wouldn't want that responsibility to make sure the process moves forward correctly when it comes to the consummation of the deal. He said that the bill says that a broker needs to be present for those purposes. REPRESENTATIVE ROKEBERG asked how many people would be affected by the legislation. REPRESENTATIVE DAVIS pointed out there was testimony indicating that we don't know how many auctioneers are in the state, but there was a guess of 12 in the Anchorage area. REPRESENTATIVE ROKEBERG asked if there are licensed real estate brokers and competent auctioneers in the state of Alaska. REPRESENTATIVE DAVIS said he thinks there are two. REPRESENTATIVE ROKEBERG pointed out that there has been real estate auctions going on in the state of Alaska for a number of years. REPRESENTATIVE DAVIS said he isn't sure how the court house foreclosure auctions/sales are have been pursued. REPRESENTATIVE ROKEBERG said there have been a number of auctions in the state of Alaska for real property over the years. He said he doesn't think there has ever been a problem before. The fact of the matter is several auctioneers are licensed real estate agents that do perform this function. KEN LANCASTER, Broker, Beluga Realty, came before the committee to testify. He said he fully supports Representative Davis' bill agrees totally with his sponsor statement. Mr. Lancaster informed the committee said he has been in real estate and has been licensed for 20 years. He said he believes there is one licensed real estate broker auctioneer combination on the Kenai Peninsula, one in Anchorage and he has heard of one in Fairbanks. He said there is a lot of property being auctioned off, obviously not by realtors, and that's where the possibility of some misdoing could happen. If there isn't a realtor involved, maybe it isn't being done properly. Number 1116 CHAIRMAN KOTT asked Mr. Lancaster if he is suggesting that there are about three people in the state that have a dual license. REPRESENTATIVE ROKEBERG said he would like to point out that there is not a license procedure for auctioneers in the state and he has introduced a bill that would address the licensing of auctioneers. REPRESENTATIVE PORTER said it seems to him that there is a requirement in the Municipality of Anchorage to license auctioneers. REPRESENTATIVE ROKEBERG said it seems to him it is just a business license. REPRESENTATIVE PORTER said he thinks that in addition to the state business license, the Municipality of Anchorage requires an auctioneer license with occupational criteria. REPRESENTATIVE ROKEBERG referred to selling real estate and asked how often auctions are used. MR. LANCASTER informed the committee that auctions aren't a common element of real estate marketing, but they do come up occasionally. He said there are probably about six a year that he is aware of. He noted with state sales, many auctions are related to subdivisions with recreational property. MR. LANCASTER informed the committee that in other countries one of the rules is that after property is on the market so long, like six months, it automatically goes to auction. Their auctioneers are licensed professionally by the country. He noted New Zealand is one he is familiar with. Number 1290 REPRESENTATIVE PORTER said from the testimony he has heard, there just could be some auctions of real estate going on where the auctioneer doesn't have a real estate license and the bill would provide some additional protection. REPRESENTATIVE ROKEBERG asked Mr. Lancaster if he has ever used an auction to sell property. MR. LANCASTER said he hasn't. He explained he has never found the opportunity to have that licensed auctioneer in the vicinity where they could do that. What typically happens, those sales are held over and are taken to Anchorage or Homer to auction them off with Dick Sinhorst (Sp.?) or Gold Strike Realty of Anchorage. Number 1401 MR. BLAKELY pointed out an auctioneer is a professional like any other. He said he has had an opportunity to sell a subdivision for an estate but he couldn't do it because he was not a licensed real estate person. Mr. Blakely referred to cities and boroughs that sometimes have auction sales on properties which are delinquent for taxes and said he isn't able to do that without obtaining a real estate license. He said he really doesn't want to sell real estate as a real estate sales person. Number 1471 REPRESENTATIVE KUBINA made a motion to move HB 502 with individual recommendations. REPRESENTATIVE ROKEBERG objected. He said he has given committee members a letter from the Alaska Association of Realtors objecting to HB 502. He said he thinks the reason there is one word in the real estate licensing statute where realtors are (indisc.) perhaps professional profession, but they are certainly a licensed profession with significant education, continuing education, and other safeguards for the consuming public that requires that they perform their jobs in a responsible manner. Representative Rokeberg said there is no licensure for auctioneers in Alaska. He said a constituent in his district requested he introduce a bill that requires licensing of auctioneers, but because of the crunch of business, it hasn't been able to be pursued. However, he thinks there is a need for this type of thing and as a result, he is very concerned that we would allow a totally unlicensed person to have the ability to market real estate. Notwithstanding the fact, the bill rightly conjoins the operation of auctioneering with a licensed broker. Representative Rokeberg said HB 502 is an addition to the real estate law. It is a number of pages long and is an intrusion of the auctioneers into the real estate title and statute. He noted there are individuals who are dually qualified to do this, they have businesses and are protecting a business they have worked hard for. By passing HB 502, we could be allowing people who are unlicensed auctioneers to encroach on certain areas and could possibly destroy certain businesses that are in existence. Representative Rokeberg said he thinks HB 502 should be put in a subcommittee. Number 1692 REPRESENTATIVE KUBINA said as he reads the bill, it gives all real estate people who don't feel comfortable about (indisc.) people, to be sitting right next to an auctioneer as he auctions off real estate and then the real estate broker would still do all the work. He said the bill gives the ability to have things auctioned, to all real estate people and not only the three in the state. REPRESENTATIVE ROKEBERG indicated the bill would allow auctioneers to enter the real estate market sales. As things currently are, it offers real estate people to get into the auctioneering business and visa versa. It certainly isn't a total effort for auctioneers to enter into real estate with the caveat that a broker be present, which he thinks is a strong recommendation in the legislation and it serves the purpose that the realtors are objecting to. REPRESENTATIVE ELTON said he would like to point out that not only does a real estate broker or an associate broker have to be present, they have to be supervising. The bill allows a broker to contract with an auctioneer to move a piece of property. He said he sees the bill as something that enhances the realtor and gives the realtor another option. REPRESENTATIVE ROKEBERG said he thinks he heard testimony that there has been real estate auctions in Alaska that were probably carried out without the auctioneer being a licensed broker. There has been clear breaches of this existing statute previously. The reason there probably hasn't been problems is that there is no enforcement. The Real Estate Commission has one executive director and one or two investigators in which to police their entire industry of 2,200 people. He asked Chairman Kott if he could tell him how many enforcement people the Department of Commerce has to enforce their licensing. They've got very little. He said he is looking at the (indisc.). The bill would allow someone to conduct a real estate auction because they say there is nothing forbidding it. They could say, "Well, we're under the supervision of a broker." Right now, the only enforcement procedure to police this is to have it done under the Department of Commerce, the Real Estate Commission and the executive director and investigators. By passing this bill, it would be taken out from underneath them. REPRESENTATIVE PORTER said if there are or aren't enough resources to do inspections, there are aren't enough resources to do inspections under this bill or under the existing situation. He said he would submit whoever is supposed to be doing those things, all they have to do is get a copy of the newspapers to find out where the auctions are and who is doing them. It is not that tough of a deal. Representative Porter said he sees HB 502 as eliminating perhaps several of those sales that aren't occurring under the correct supervision, enhancing realtors positions to do more and perhaps taking a little work away from three people, which isn't a big deal when you're balancing the betterment for the most. He said he would submit that the committee move HB 502. Number 2103 REPRESENTATIVE ROKEBERG withdrew his objection. CHAIRMAN KOTT said there is a motion to move HB 502 from committee with individual recommendations and the accompanying zero fiscal note. He asked if there was an objection. Hearing none, HB 502 moved from the House Labor and Commerce Committee.