Legislature(2015 - 2016)BELTZ 105 (TSBldg)

02/18/2016 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
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+ Bills Previously Heard/Scheduled: TELECONFERENCED
-- Public Testimony --
Moved SB 18 Out of Committee
Heard & Held
Heard & Held
Heard & Held
            SB 158-REAL ESTATE BROKER LICENSURE REQS                                                                        
1:44:07 PM                                                                                                                    
VICE CHAIR  GIESSEL announced  the consideration  of SB  158. She                                                               
noted that this is the first hearing.                                                                                           
WESTON  EILER, Staff,  Senate Labor  and  Commerce Committee  and                                                               
Senator  Mia Costello,  stated that  SB  158 was  brought to  the                                                               
committee by  the real estate  industry in Alaska.  He introduced                                                               
the legislation paraphrasing the following sponsor statement:                                                                   
     Senate  Bill 158  raises  the application  requirements                                                                    
     for a  real estate broker  license in Alaska.  The bill                                                                    
     requires  applicants seeking  to become  a real  estate                                                                    
     broker  to have  been  a real  estate  licensee for  48                                                                    
     month  rather than  24 months.  It  also increases  the                                                                    
     continuing education requirements  for a broker license                                                                    
     applicant from  15 hours to  30 hours. Senate  Bill 158                                                                    
     will improve  the standards  and training  necessary to                                                                    
     become  a broker  and provide  the  public with  better                                                                    
     protection when engaging in real estate transactions.                                                                      
     In Alaska, a  real estate licensee is tied  to a broker                                                                    
     and works  for the broker  or an associate broker  in a                                                                    
     branch   office.   The   broker  is   responsible   for                                                                    
     supervision of the real licensee  and even receives the                                                                    
     employee's   license  from   the  Alaska   Real  Estate                                                                    
     Commission  and returns  it to  the  commission if  the                                                                    
     relationship  with  the   broker  is  terminated.  Real                                                                    
     estate   brokers  are   responsible  for   real  estate                                                                    
     brokerage  trust accounts  that  include earnest  money                                                                    
     deposits,  security deposits,  collected rental  money,                                                                    
     and other money collected in  the trust until the funds                                                                    
     are  distributed  according  to  the terms  of  a  real                                                                    
     estate transaction.                                                                                                        
     These  are  major   responsibilities  that  affect  the                                                                    
     public  when involved  in  a  real estate  transaction.                                                                    
     Added  training and  experience will  help protect  the                                                                    
     public  as brokers  become better  prepared to  perform                                                                    
     the duties required of a broker.                                                                                           
     This  bill  is  supported  by the  Alaska  Real  Estate                                                                    
     Commission, Alaska's  licensing agency, and  the Alaska                                                                    
     Association of Realtors.                                                                                                   
MR.  EILER  noted the  letters  of  support  in the  packet,  and                                                               
referenced   a  spreadsheet   of   the   education  and   license                                                               
requirements  in  all  the  states.   It  shows  that  the  time,                                                               
education, and experience  required in Alaska is  much lower than                                                               
other states.  SB 158 will  bring Alaska into line  with national                                                               
standards, he said.                                                                                                             
SENATOR MEYER asked  if this is being done to  match other states                                                               
or to address a problem.                                                                                                        
MR.  EILER  replied  the  industry   requested  this  because  of                                                               
unfortunate consequences  when someone perhaps was  operating out                                                               
of their  depth. He added, "It  is more being brought  forward to                                                               
just  help  rectify  and  ensure   merit  and  qualification  for                                                               
SENATOR  STEVENS  asked  how  and   where  a  licensee  gets  the                                                               
additional education.                                                                                                           
MR.  EILER  offered  to  provide  a list  of  what  is  currently                                                               
available  and suggested  individuals in  the room  could provide                                                               
1:50:29 PM                                                                                                                    
SENATOR STEVENS said  he'd like to be sure this  isn't an onerous                                                               
VICE CHAIR GIESSEL  asked Ms. Hovenden what problem  SB 158 seeks                                                               
to fix.                                                                                                                         
1:51:15 PM                                                                                                                    
JANEY  HOVENDEN, Director,  Division  of Corporations,  Business,                                                               
and  Professional Licensing,  Department  of Commerce,  Community                                                               
and  Economic Development,  related that  this is  something that                                                               
the  industry has  been requesting  for some  time. Doubling  the                                                               
requirement  for  education  and  experience  will  provide  more                                                               
public safety measures that the industry says are needed.                                                                       
SENATOR  STEVENS  asked  how  and   where  a  licensee  gets  the                                                               
additional education and who pays for it.                                                                                       
MS. HOVENDEN replied  the licensees would be required  to pay for                                                               
the  additional   education.  She  offered  to   follow  up  with                                                               
information  about   how  and  where   the  education   would  be                                                               
SENATOR STEVENS asked if individuals  would be required to take a                                                               
test.  If  so,  who  audits  the  test  and  where  would  it  be                                                               
MS. HOVENDEN said she'd have to check on that.                                                                                  
1:53:23 PM                                                                                                                    
VICE CHAIR GIESSEL opened public testimony.                                                                                     
1:53:38 PM                                                                                                                    
NANCY  BLASHLEY  DAVIS,  Chair, Alaska  Real  Estate  Commission,                                                               
Sitka, Alaska, testified  in support of SB 158.  She related that                                                               
the commission  received testimony from 15-20  licensees that two                                                               
years experience  and 15 hours  of continuing education  does not                                                               
necessarily prepare  someone to become  an associate broker  or a                                                               
broker. A  broker does  things like  handling trust  accounts and                                                               
procedure manuals in addition to  monitoring the licensees. These                                                               
things aren't necessarily learned as a licensee.                                                                                
She confirmed that Alaska is near  the bottom of all 50 states in                                                               
the amount  of continuing  education it  requires, and  this will                                                               
bring  Alaska closer  to what  other states  are doing.  The bill                                                               
also increases  from two years  to four  years the time  before a                                                               
licensee  can  become  an  associate  broker  or  a  broker.  The                                                               
industry  feels  this will  provide  better  protections for  the                                                               
MS.  DAVIS told  the  committee that  the  classes are  available                                                               
online; they must be presented  to the Real Estate Commission and                                                               
the topics  approved. Individuals must  take and pass a  test and                                                               
fulfill  the continuing  education requirements  in order  to get                                                               
the broker or  associate broker license. She  explained that each                                                               
real estate  business is  owned by  one broker  and can  have any                                                               
number of  associate brokers and  licensees. She opined  that the                                                               
additional knowledge  and experience will  save time and  cost to                                                               
the commission because there will  be fewer cases to investigate.                                                               
She noted  the bill has no  fiscal impact and reported  that each                                                               
licensee  must   pay  for  their   classes.  She   discussed  the                                                               
availability  of  classes   highlighting  that  instructors  will                                                               
travel  to a  community if  there is  sufficient interest  in the                                                               
class.  Larger  communities  have  more  options  and  accredited                                                               
classes are also offered at real estate conventions.                                                                            
She  related  her personal  experience  that  she had  two  years                                                               
experience before  she opened her brokerage  and didn't initially                                                               
feel qualified  to handle  trust accounts.  She was  fortunate to                                                               
have a good mentor, but that's not always the case.                                                                             
2:00:05 PM                                                                                                                    
SENATOR  STEVENS  asked  for   assurance  that  these  additional                                                               
requirements don't become  onerous for someone living  in a rural                                                               
MS. DAVIS explained  that the university can proctor  the test in                                                               
Sitka so  travel isn't necessary.  She didn't know  about smaller                                                               
communities  farther   north  but  assumed  the   test  could  be                                                               
proctored at an education facility in the community.                                                                            
VICE CHAIR GIESSEL asked if anyone had spoken against the bill.                                                                 
MS. DAVIS answered she is unaware of any opposition.                                                                            
2:02:34 PM                                                                                                                    
ERROL  CHAMPION,  Chair,  Legislative  Issues  Committee,  Alaska                                                               
Association of  Realtors, Juneau,  Alaska, noted that  his letter                                                               
of support was  in the packets. Addressing  earlier questions, he                                                               
clarified that the bill does not  change the broker test; it just                                                               
changes the required hours of  continuing education from 15 hours                                                               
to 30 hours  and extends the time before a  licensee can apply to                                                               
take the  broker test from two  years to four years.  He provided                                                               
licensure  data as  of the  end of  January: 414  broker licenses                                                               
were  renewed, 361  associate broker  licenses were  renewed, and                                                               
there  were  1,630  licensees.  He  shared  his  experience  with                                                               
documents that weren't absolutely correct  but didn't rise to the                                                               
level where the  consumer filed a complaint with  the Real Estate                                                               
Commission. He  knows that  the number  of complaints  is growing                                                               
but that's  to be expected  when the average licensee  does fewer                                                               
than six transactions per year.  This doesn't provide much hands-                                                               
on experience,  particularly with the advent  of foreclosures and                                                               
short sales,  he said.  The broker  has much  more responsibility                                                               
and there should be more  training in accounting. The Real Estate                                                               
Commission agrees this legislation is needed.                                                                                   
2:06:52 PM                                                                                                                    
SENATOR  MEYER   asked  the  difference  between   a  broker,  an                                                               
associate broker, and a licensee.                                                                                               
MR.  CHAMPION  explained that  everyone  is  a licensee  and  any                                                               
licensee can  become an associate  broker or broker.  The statute                                                               
provides  that there  will  be  only one  broker  and one  broker                                                               
license in  an office, but there  can be any number  of associate                                                               
brokers. The training and experience requirements are the same.                                                                 
SENATOR MEYER asked if a broker can have listings.                                                                              
MR. CHAMPION confirmed  that a broker can  represent clients that                                                               
are either buying or selling.  He noted that the statute provides                                                               
that only the broker can handle the funds.                                                                                      
SENATOR MEYER  asked if  someone could build  homes and  be their                                                               
own broker.                                                                                                                     
MR. CHAMPION  clarified that a  contractor is able to  sell homes                                                               
he/she builds without a broker license.                                                                                         
SENATOR MEYER asked if this is all disclosed to the buyer.                                                                      
MR.  CHAMPION answered  yes; both  parties must  sign a  consumer                                                               
pamphlet that they know who a broker or licensee represents.                                                                    
SENATOR MEYER asked how the commission is divided.                                                                              
MR. CHAMPION  explained that  the listing  broker decides  how to                                                               
distribute the commission. It's negotiable  and is paid broker to                                                               
SENATOR STEVENS asked  if the broker assumes  legal and financial                                                               
responsibility for every transaction going through the office.                                                                  
MR. CHAMPION  answered yes; statute  provides that the  broker is                                                               
responsible  for the  contents  and integrity  of  every file  in                                                               
every transaction.                                                                                                              
2:13:08 PM                                                                                                                    
VICE CHAIR GIESSEL asked Director Hovenden  if she had a sense of                                                               
the number  of complaints filed  with the Real  Estate Commission                                                               
and the commission's liquidity.                                                                                                 
MS. HOVENDEN agreed to follow up  and send the numbers to Senator                                                               
Costello's  office.  Her recollection  is  that  the Real  Estate                                                               
Commission is in good standing.                                                                                                 
2:15:47 PM                                                                                                                    
SENATOR MEYER  asked Mr.  Eiler the reason  that the  term "must"                                                               
was  changed to  "shall" on  page 1,  line 5.  He commented  that                                                               
shall seems to be a weaker terms.                                                                                               
WESTON   EILER  deferred   the  question   until  he   talked  to                                                               
legislative legal.                                                                                                              
2:16:43 PM                                                                                                                    
VICE  CHAIR  GIESSEL  held  SB   158  in  committee  with  public                                                               
testimony open.                                                                                                                 

Document Name Date/Time Subjects
SB 18 - Version H.PDF SL&C 2/18/2016 1:30:00 PM
SB 18
SB 18 - Fiscal Note.pdf SL&C 2/18/2016 1:30:00 PM
SB 18
SB 18 - Sponsor Statement.pdf SL&C 2/18/2016 1:30:00 PM
SB 18
SB 108 - Fiscal Note DCCED.pdf SL&C 2/18/2016 1:30:00 PM
SB 108
SB 108 - Fiscal Note DOA.pdf SL&C 2/18/2016 1:30:00 PM
SB 108
SB 108 - Testimony - R. Banks - Alaska Securitites Act Reform-Crowdinvesting.pdf SL&C 2/18/2016 1:30:00 PM
SB 108
SB 108 Sectional Analysis.pdf SL&C 2/18/2016 1:30:00 PM
SB 108
SB 141 - Fiscal Note.pdf SL&C 2/18/2016 1:30:00 PM
SB 141
SB 108.PDF SL&C 2/18/2016 1:30:00 PM
SB 108
SB 141 - Sectional Analysis.pdf SL&C 2/18/2016 1:30:00 PM
SB 141
SB 141 - Sponsor Statement.pdf SL&C 2/18/2016 1:30:00 PM
SB 141
SB 141.PDF SL&C 2/18/2016 1:30:00 PM
SB 141
SB 158 - Assoc. Realtor Letter.pdf SL&C 2/18/2016 1:30:00 PM
SB 158
SB 158 - Comparative Education Experience Other States.pdf SL&C 2/18/2016 1:30:00 PM
SB 158
SB 158 - Fiscal Note.pdf SL&C 2/18/2016 1:30:00 PM
SB 158
SB 158 - Real Estate Commission Letter.pdf SL&C 2/18/2016 1:30:00 PM
SB 158
SB 158.PDF SL&C 2/18/2016 1:30:00 PM
SB 158
Public Comment - Concerns with SB 158.pdf SL&C 2/18/2016 1:30:00 PM
SB 158