Legislature(2003 - 2004)

05/04/2004 01:55 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CSHB 418(FIN)-REAL ESTATE COM'N/LICENSEE/HOME INSPECT                                                                  
                                                                                                                                
CHAIR  CON   BUNDE  announced   CSHB  418(FIN)   to  be   up  for                                                               
consideration. He  moved to  adopt Amendment  1 and  objected for                                                               
discussion  purposes and  explained  that  Legislative Audit  had                                                               
suggested having  mobile homes fall  under real  estate licenses,                                                               
but that issue  is currently under discussion by  the Real Estate                                                               
Board and doesn't need to be addressed now.                                                                                     
                                                                                                                                
                                                    23-LS1548\I.3                                                               
                       A M E N D M E N T                                                                                    
                                                                                                                                
OFFERED IN THE SENATE                          BY SENATOR BUNDE                                                                 
     TO:  CSHB 418(FIN)                                                                                                         
                                                                                                                                
Page 3, following line 11:                                                                                                      
     Insert a new bill section to read:                                                                                         
   "*Sec. 6.  AS 08.88.470 is amended to read:                                                                                  
          Sec. 08.88.470.  Findings and payment.  At the                                                                        
     conclusion  of the  commission's  consideration  of a  claim                                                               
     made under AS 08.88.460, it shall  make written findings and                                                               
     conclusions on the  evidence.  If the  commission finds that                                                               
     the  claimant  has   suffered  a  loss  in   a  real  estate                                                               
     transaction  as   a  result  of   fraud,  misrepresentation,                                                               
     deceit, or the  conversion of trust funds  or the conversion                                                               
     of  community association  accounts under  the control  of a                                                               
     community association manager  on the part of  a real estate                                                               
     licensee, the commission may  award a claimant reimbursement                                                               
     from the real estate surety  fund for the claimant's loss up                                                               
     to $20,000 [$10,000].   Not more than  $20,000 [$10,000] may                                                           
     be paid  for each  transaction regardless  of the  number of                                                               
     persons  injured or  the number  of parcels  of real  estate                                                               
     involved in the transaction."                                                                                              
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
SENATOR HOLLIS FRENCH arrived at 1:55 p.m.                                                                                      
                                                                                                                                
CHAIR  BUNDE  continued explaining  that  the  other concern  was                                                               
raising the loss limit from $10,000 to $20,000.                                                                                 
                                                                                                                                
MS. JANET SEITZ, staff to  Representative Rokeberg, sponsor, said                                                               
that  he did  not  support  raising the  limit  because it  could                                                               
impact the licensing fees for the  real estate agents and also he                                                               
believes that anything above $10,000 should be taken to court.                                                                  
                                                                                                                                
SENATOR RALPH  SEEKINS asked how  many past claims  above $10,000                                                               
had been taken to court.                                                                                                        
                                                                                                                                
MS.  SEITZ said  that the  audit indicated  that recent  payments                                                               
were all above $10,000 and more into the $20,000 range.                                                                         
                                                                                                                                
CHAIR  BUNDE  showed   the  committee  a  list   of  states  that                                                               
administer a real  estate recovery fund and Alaska  at $10,000 is                                                               
joined  by four  other  states. The  rest of  the  states are  at                                                               
$15,000 - $50,000.                                                                                                              
                                                                                                                                
MS. PAT  DAVIDSON, Division of Legislative  Audit, explained that                                                               
her audit  found five disbursements  out of the surety  fund over                                                               
the  last  four  years.  All   the  actual  claims  reported  and                                                               
substantiated by the  hearing officers were in  excess of $10,000                                                               
and  one was  in excess  of  $20,000, which  is one  of the  main                                                               
reasons she recommended changing the threshold.                                                                                 
                                                                                                                                
SENATOR SEEKINS asked what the size of the fund is now.                                                                         
                                                                                                                                
MS. DAVIDSON  answered that it was  $467,000 at the end  of FY03.                                                               
It has  a floor  of $250,000 and  was supposed to  have a  cap of                                                               
$500,000 originally. Statute also provides  a $125 cap that could                                                               
be paid into  the surety fund per licensee. Right  now it is $60.                                                               
In  summary, the  fund  is close  to its  cap  and licensees  are                                                               
making substantially  less than the maximum  contributions to the                                                               
fund.                                                                                                                           
                                                                                                                                
SENATOR  SEEKINS  noted   that  there  didn't  seem   to  be  any                                                               
foreseeable shrinkage of  the size of the fund based  on the last                                                               
four years history.                                                                                                             
                                                                                                                                
MS. DAVIDSON responded that the  funds appear to be adequate, but                                                               
individual claims  run differently  and don't have  a predictable                                                               
nature.                                                                                                                         
                                                                                                                                
CHAIR BUNDE asked when the $10,000 cap was set.                                                                                 
                                                                                                                                
MS.  DAVIDSON   answered  in  1974   when  the  fund   was  first                                                               
established in  statute. If one  used the CPI for  inflation, the                                                               
cap would be over $30,000.                                                                                                      
                                                                                                                                
CHAIR BUNDE asked how much real estate licenses would go up.                                                                    
                                                                                                                                
MS. DAVIDSON replied that statutes  were amended in 1998 limiting                                                               
the fee to no  more than $125. The current fee is  set at $30 per                                                               
licensee.                                                                                                                       
                                                                                                                                
SENATOR FRENCH  noted a  conflict of  interest as  his wife  is a                                                               
real estate professional.                                                                                                       
                                                                                                                                
CHAIR BUNDE noted it and  then removed his objection to Amendment                                                               
1. There were no other objections and Amendment 1 was adopted.                                                                  
                                                                                                                                
SENATOR SEEKINS  moved to pass  SCS CSHB 418(L&C)  from committee                                                               
with  individual   recommendations  and  attached   fiscal  note.                                                               
Senators  Gary Stevens,  Bettye  Davis, Seekins  and Chair  Bunde                                                               
voted yea and SCS CSHB 418(L&C) moved from committee.                                                                           

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