Legislature(1997 - 1998)
04/18/1998 09:43 AM Senate L&C
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSHB 33(FIN) am - REAL ESTATE LICENSING
CHAIRMAN LEMAN brought HB 33 back before the committee. He said
questions were raised on Section 34 at the March 19 hearing, and
since then, he has met with a number of people on both sides of the
issue and a committee substitute was drafted with some minor
changes and editing. However, he said he wanted to deal with the
major issues regarding Section 34, as well as property management,
as separate amendments before the committee.
ANNETTE KREITZER, committee aide for the Senate Labor and Commerce
Committee, speaking to the draft L&C SCS, said the most significant
change is the language on page 17, lines 20 - 23, relating to a
commission on a transaction. The other changes are very minor
grammar changes that do not change the meaning of the sections.
CHAIRMAN LEMAN noted the language on page 17, relating to the
negotiation of a commission, was suggested by some of the people in
the real estate industry. He then stated testimony would be taken
from witnesses waiting to testify before the committee via
teleconference.
Number 342
DICK WARD, Executive Director of the VETS, which is the military
reunion service of the American Legion, said he was a Realtor for
15 years and served as a national director of the National
Association of Realtors. He said there is some controversy with
Section 34, particularly the portion that would prohibit rebates to
principles in their own real estate transactions. The industry is
rapidly changing and there is a broad based move to allow consumers
to get involved with negotiating discounts and other rebates. VETS
is such a group, and they have just completed negotiating with the
Veterans Administration for them to allow, at the federal level,
veterans to receive rebates and discounts on real estate
transactions. He requested that HB 33 be amended to allow
principles to receive these rebates and discounts.
CHAIRMAN LEMAN asked if he was recommending that both the buyer and
seller be eligible for the rebates and discounts, and MR. WARD
acknowledged that was correct.
CHAIRMAN LEMAN said a concern of people involved in the real estate
business, the insurance business, mortgage banking, etc., is full
disclosure, and he asked Mr. Ward if he favored full disclosure of
any of the services associated with these transactions. MR. WARD
replied that his group would not support or encourage any hidden
conditions, and they believe the full nature of any relationship
should be required to be disclosed in the best interest of all
parties.
JERRY ROYCE, representing the Alaska Association of Realtors,
stated the association supports the right for consumers to be able
to negotiate the real estate fees, and they support the legislation
as it was passed by the House because it protects Alaskan consumers
from misleading schemes and kick-backs by out-of-state unlicensed
and unregulated corporations that damage Alaskan consumers and
businesses while claiming Alaskans are incapable of conducting
commerce. The association supports the rights of Alaska's citizens
to receive the greatest benefits with the least cost in a real
estate transaction, and HB 33, as passed by the House, ensures and
maximizes those consumer rights.
CHAIRMAN LEMAN said Mr. Royce had spoken to protecting Alaskan
consumers from unlicensed and unregulated corporations, and he
said if that is happening, he thinks it may be the fault of
enforcement, not the Legislature. MR. ROYCE explained that the
reason why the Real Estate Regulatory Agency supported this
regulatory change was because of an opinion by an assistant
attorney general that basically put the Real Estate Commission on
notice that they really didn't have statutory authority to enforce
unregulated activity by unlicensed people.
DIRK BLUMENDAHL, a corporate counsel for the Amway Corporation,
which is based in Michigan, said he was speaking on behalf of over
4,300 Alaska citizens who are independent Alaskan distributors in
opposition to the bill. Amway is very concerned about any law
which could hurt these Alaskan citizens and the very small Alaska
businesses.
MR. BLUMENDAHL said Amway distributors participate in a program
called the Amway Realty Network, which is available in 44 states,
including Alaska, and is designed and intended strictly for the
Amway distributors to use. Amway's program is a no-cost benefit
for distributors to help them save money when they buy or sell
their personal real estate, including their homes. Alaska brokers
participate in the program voluntarily, and they are licensed under
the Alaska real estate licensing law, and the consumer is
protected, not only by this law, but by Alaska consumer protection
laws. Many participating Alaska brokers, and elsewhere, believe
Amway's program and others like it, bring to them business they
otherwise might not have had, including people who would have sold
their property on their own without using the services of a
Realtor. After a real estate transaction has been completed, a
portion of the commission is sent to the Amway Realty Network and
a cash rebate check is sent back to the Alaska distributor. In
1997, the average rebate, nationwide, to distributors for a
transaction was $525, so they feel that the bottom line is that
Amway's program reduces the cost of real estate services to
Alaska's consumers.
Mr. BLUMENDAHL said Amway believes HB 33 would, in essence, ban a
cash rebate program to Alaska's consumers bringing into question
equal protection issues, as well as freedom of contract issues.
They believe HB 33 is being proposed for only reason, and that is
to eliminate competition within the Alaska marketplace. He urged
the committee to vote against the legislation.
TAPE 98-22, SIDE B
Number 585
CHAIRMAN LEMAN asked if in Amway's experience in the other 43
states, they are aware of unlicensed entities participating in
these transactions. MR. BLUMENDAHL responded that all he could
speak to was Amway's program, but in their program, only licensed
Realtors are used all across the spectrum.
RUTH BLACKWELL, representing the Alaska Real Estate Commission and
testifying in Juneau, voiced the Commission's support for HB 33,
as passed by the House. She said she was available for questions
from the committee.
CHAIRMAN LEMAN asked Ms. Blackwell is she had the opportunity to
look at the draft L&C SCS. MS. BLACKWELL replied she had looked at
it, but she did not see a need for stating in it that commissions
are negotiable because it is already an industry standard.
Number 516
REPRESENTATIVE NORMAN ROKEBERG, prime sponsor of HB 33, said this
legislation is about a whole change in merchandising of how real
estate business is conducted, as well as the mortgage business in
this country. All of these people are in this to make money, they
have an obligation to their shareholders to produce a profit, and
to think otherwise is really a smoke screen.
REPRESENTATIVE ROKEBERG stated he thinks the draft L&C SCS and the
amendments are unnecessary, redundant and not of any need. He
thinks requiring somebody to negotiate a commission, when it is
basic common law, may end up increasing the commission. He prefers
that the committee pass out the bill as it came from the House.
Number 430
CHAIRMAN LEMAN asked if the committee wished to adopt the committee
substitute and work with the other amendments, or to start with the
base bill and work through each amendment. He added that he
preferred to start with the committee substitute.
SENATOR KELLY said his preference is to listen to the Alaska Real
Estate Commission and move forward the bill that was brought to the
committee without either the committee substitute or Representative
Rokeberg's amendments.
CHAIRMAN LEMAN relinquished the chair to VICE CHAIRMAN MACKIE and
then moved the adoption of SCS CSHB 33(L&C). SENATOR KELLY
objected. The roll was taken with the following result: Senator
Leman voted "Yea" and Senators Miller, Kelly and Mackie voted
"Nay." The motion failed on a 1-3 vote.
Number 417
CHAIRMAN LEMAN moved the adoption of Amendment No. 1. SENATOR
KELLY objected, stating he was objecting because the Alaska Real
Estate Commission doesn't feel the amendment is necessary.
CHAIRMAN LEMAN said the amendment provides that nobody would be
involved in real estate transactions unless they are a licensee,
but payments could be made to the principles in the transactions,
which would be either the buyers or the sellers. He said it gets
to the issue that Mr. Royce talked about, which is unlicensed
people participating in the transactions, but it allows for rebate
type programs that are existing all across the country.
VICE CHAIRMAN MACKIE called for a roll call vote on the adoption of
Amendment No. 1. The roll was taken with the following result:
Senator Leman voted "Yea" and Senators Miller, Kelly and Mackie
voted "Nay." The motion failed on a 1-3 vote.
VICE CHAIRMAN MACKIE said the next amendment was one offered by
Representative Rokeberg. REPRESENTATIVE ROKEBERG stated he wanted
to withdraw the amendment. Hearing no objection, the amendment was
not offered.
CHAIRMAN LEMAN stated that he is a member of a number of discount
buyers clubs and marketing organizations that may or may not be
affected by this legislation. He then asked for the pleasure of
the committee on the legislation.
SENATOR MACKIE moved that CSHB 33(FIN) am and the accompanying
fiscal note be passed out of committee with individual
recommendations. CHAIRMAN LEMAN objected. The roll was taken with
the following result: Senators Miller, Mackie and Kelly voted
"Yea" and Senator Leman voted "Nay." The motion carried on a 3-1
vote.
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