Legislature(1997 - 1998)

10/13/1997 01:21 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
            HOUSE LABOR AND COMMERCE STANDING COMMITTEE                        
                         October 13, 1997                                      
                             1:21 p.m.                                         
                         Anchorage, Alaska                                     
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Norman Rokeberg, Chairman                                      
 Representative John Cowdery, Vice Chairman                                    
 Representative Jerry Sanders                                                  
 Representative Joe Ryan                                                       
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Bill Hudson                                                    
 Representative Tom Brice                                                      
 Representative Gene Kubina                                                    
                                                                               
 OTHER MEMBERS PRESENT                                                         
                                                                               
 Representative Mark Hodgins (via teleconference)                              
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HOUSE BILL NO. 33                                                             
 "An Act relating to real estate licensing and the real estate                 
 surety fund; and providing for an effective date."                            
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 (* First public hearing)                                                      
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 33                                                                  
 SHORT TITLE: REAL ESTATE LICENSING                                            
 SPONSOR(S): REPRESENTATIVE(S) ROKEBERG BY REQUEST                             
                                                                               
 JRN-DATE      JRN-PG                 ACTION                                   
 01/13/97        36    (H)   PREFILE RELEASED 1/3/97                           
 01/13/97        36    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/13/97        36    (H)   LABOR & COMMERCE, FINANCE                         
 03/14/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
 03/14/97              (H)   MINUTE(L&C)                                       
 03/17/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
 03/17/97              (H)   MINUTE(L&C)                                       
 03/24/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
 03/24/97              (H)   MINUTE(L&C)                                       
 10/13/97              (H)   L&C AT  1:00 PM ANCHORAGE LIO                     
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 RON JOHNSON, Broker                                                           
 Kenai Board of Realtors                                                       
 610 Attla Way, Suite 6                                                        
 Kenai, Alaska 99611                                                           
 Telephone:  Not provided                                                      
 POSITION STATEMENT:  Testified on HB 33.                                      
                                                                               
 SCOTT CONNELLY, President                                                     
 Kachemak Board of Realtors                                                    
 331 East Pioneer Avenue                                                       
 Homer, Alaska 99603-0437                                                      
 Telephone:  (907) 235-6183                                                    
 POSITION STATEMENT:  Testified on HB 33.                                      
                                                                               
 BILL McNall, Esq.                                                             
 921 West Sixth Street                                                         
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 276-2535                                                    
 POSITION STATEMENT:  Testified on HB 33.                                      
                                                                               
 SHIRLEY ARMSTRONG, Legislative Assistant                                      
   to Representative Rokeberg                                                  
 Alaska State Legislature                                                      
 716 West Forth Avenue, Suite 640                                              
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 258-8191                                                    
 POSITION STATEMENT:  Made comments regarding HB 33.                           
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 97-59, SIDE A                                                            
 Number 0001                                                                   
                                                                               
 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                  
 Standing Committee to order at 1:21 p.m.  Members present at the              
 call to order were Representatives Rokeberg and Sanders.                      
 Representative Cowdery arrived at 1:30 and Representative Ryan                
 arrived at 1:36 p.m.  Chairman Rokeberg announced a quorum was not            
 present at the call to order and, under state statute, the meeting            
 would act as a work session.                                                  
                                                                               
 HB 33 - REAL ESTATE LICENSING                                                 
                                                                               
 Number 0058                                                                   
                                                                               
 CHAIRMAN ROKEBERG indicated the committee would address HB 33                 
 "An Act relating to real estate licensing and the real estate                 
 surety fund; and providing for an effective date."  He stated he              
 would like to declare a potential conflict of interest as he is               
 licensed real estate broker in the state of Alaska and has his own            
 real estate brokerage.  Chairman Rokeberg noted the last hearing on           
 the legislation was on March 24, 1997.  He noted he has                       
 participated in numerous work sessions and meetings with real                 
 estate groups across the state.                                               
                                                                               
 CHAIRMAN ROKEBERG said, "Today's hearing will be on House Bill 33,            
 which is real estate licensing.  For the purposes of discussion, we           
 cannot formally adopt a new version, but were we able to do that,             
 I'd like to have the consent of the committee to take up Version H            
 of House Bill 33 as the working document for our working session.             
 This supersedes Version F.  I would indicate, for the record, that            
 Version H was put together by the committee this summer to give us            
 a working document that is based on the testimony we've taken to              
 that point of approximately to the first part of August -- and the            
 way Version H came out, it came out as two separate bills, one                
 including what was called a surety fund section.  And so we split             
 the bill in two sections in Version H.  However, most of you have             
 a memorandum written by myself on September 11.  It goes to show              
 certain things about Version H, but it also helps clarify some of             
 the issues that are before the committee and need to be considered.           
 The reason we did split the bill was there was discussion at the              
 time, particularly within the real estate community, about the                
 surety fund, the fees being charged for that and there was a good             
 deal of discontent.  That has not gone away.  This committee and              
 the chairman has asked Legislative Budget and Audit (LB&A)                    
 Committee to review the surety fund and the activities of the Real            
 Estate Commission for their biannual fees.  As a result, I believe            
 that most of the changes in the surety fund -- well I felt that if            
 there was a need to do this, we would have vehicle by separating              
 it.  But I think we -- it's my judgement of the chair that we need            
 to put that back into the bill.  The next version of the bill will            
 have that surety area back into the bill because I believe the Real           
 Estate Commission has, in a large part, at least addressed some of            
 the issues brought up in the real estate community.  They have                
 lowered the amount of the fees to the real estate agents.  They've            
 come up with I believe $365.  They've drawn that back to $270.                
 They've also issued a reduction in the surety fund premium from               
 $125 to $100.  I believe this has been promulgated by the                     
 regulations."                                                                 
                                                                               
 Number 0821                                                                   
                                                                               
 CHAIRMAN ROKEBERG indicated he would review Version H for the                 
 committee members and his memorandum of September 11, 1997, as                
 there is a comparison between the two versions.  Chairman Rokeberg            
 said he would like to point out that in the areas where there is              
 controversy, he hopes it will be resolved before the legislature              
 convenes in January.                                                          
                                                                               
 CHAIRMAN ROKEBERG stated there is a quorum present as                         
 Representative Cowdery and Ryan had arrived.                                  
                                                                               
 CHAIRMAN ROKEBERG said, "The chair would entertain a motion to                
 adopt, in so far as we can statutorily, Version H of House Bill               
 33."                                                                          
                                                                               
 Number 1012                                                                   
                                                                               
 REPRESENTATIVE COWDERY made a motion to adopt Version H of HB 33,             
 for the purpose of discussion.                                                
                                                                               
 CHAIRMAN ROKEBERG asked if there was an objection.  Hearing none,             
 Version H was before the committee.                                           
                                                                               
 Number 1054                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to item three of his memorandum and                
 explained that Version H entirely deletes the concept of                      
 endorsement.  The original version of the bill came from a task               
 force established by the Real Estate Commission.  The task force              
 came up with an endorsement concept for sales licensees, property             
 managers and community association managers.                                  
                                                                               
 CHAIRMAN ROKEBERG said, "Because of subsequent meetings I've had,             
 particularly with the Anchorage Board of Realtors legislative                 
 committee, including about 20 some brokers here, that's chaired by            
 Mr. Eric Dyruo and Bill Brady, I believe, of Remax -- that                    
 particular meeting there was a -- in my other work sessions that              
 I've attended, it's the concerned opinion of the chairman that the            
 endorsement concept, which I endorsed, does not have the                      
 endorsement or approval of the vast majority of real estate                   
 practitioners in the state.  Therefore, we have opted to do what I            
 call a `light bill,' which is the bill before you, in part, to cut            
 down and diminish some of this controversy.  I think the                      
 controversy generated, in a large part, because of the concept of             
 change within any kind of business and the idea of endorsements of            
 having to go in and take specific classes for specific things and             
 then the feeling that a number of people would have to take classes           
 for all three endorsements, as well as the...  The prior bill, if             
 you recall, had a commercial endorsement in it and it was the                 
 consensus of the chair that also be removed because of the                    
 controversial nature of that particular endorsement.  So the                  
 endorsement concept, which would require a real estate licensee,              
 which now there is a universal test for prelicensing and                      
 postlicensing type education requirements as well as continued                
 education requirements, has been scrapped.  And what's been left in           
 its place, at this particular juncture, is a requirement for the              
 Real Estate Commission, however, to come up with curriculum, both             
 for continuing education for four different areas of specialty.               
 Now this is just -- it's not prelicensing or getting a license,               
 this is merely for continuing education in the areas of sales,                
 property management, community association and commercial                     
 activities.  The bill - this version of the bill mandates that                
 those areas have classes peculiar to their areas of expertise                 
 because now -- that was one of the biggest problems with the prior            
 bill, you had different endorsements.  The classes can be - could             
 cross fertilize.  In other words, you could use some core classes             
 which are 8 hours, and now there's 12 hours of elective hours,                
 presently.  There is nothing in this legislation or this bill that            
 wouldn't allow that same type of thing to happen, but still at this           
 particular juncture requires that there be 8 core hours in a                  
 specialty and 12 elective hours, for continuing education, every              
 two years on a biannual license renewal."                                     
                                                                               
 Number 1443                                                                   
                                                                               
 CHAIRMAN ROKEBERG pointed out that the state of Alaska has among              
 the least number of hours required for continued education and is             
 also probably right in the bottom of the barrel for the number of             
 hours required for prelicensing.                                              
                                                                               
 Number 1516                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to item four of the memorandum and said            
 it is the requirement for community association managers to be                
 licensed.  It is contained in Section 9, pages 6 and 7, of the                
 bill.  He said this was one of the major reasons he started the               
 entire rewrite of the statute, that ultimately culminated in HB 33,           
 which would bring in community association managers under the                 
 statutory regime of the state to provide, in the form of the Real             
 Estate Commission, a body which had regulatory control over the               
 activities between the community association manages.  He pointed             
 out that a community association manager, who was a manager for 18            
 different community associations, embezzled $580,000 in the                   
 Anchorage are a few years back.                                               
                                                                               
 Number 1614                                                                   
                                                                               
 CHAIRMAN ROKEBERG said, "Instead of having the endorsement concept            
 now, this particular bill, the H Version, allows for the community            
 managers coming in, but it also provides -- this was done at the              
 suggestion of the Anchorage board, for additional bonding                     
 requirements.  However, the additional bonding, which is in Section           
 20, page 14, of Version H, I believe now after review of the entire           
 statutory regime should be deleted in its entirety.  And the reason           
 I say that is that this was suggested kind of as a last minute                
 suggestion and adopted in this draft by the Anchorage board.  I               
 don't think - we didn't have enough time to really review it.  The            
 concept being that we felt, because the surety fund is only                   
 $250,000 in (indisc.) and then we had this one case of almost a               
 half a million dollars.  However, the existing statutory regime is            
 such that an individual instance - in other words, if an individual           
 broker creates a problem, they can only claim against one other               
 let's say customer/consumer no more than $10,000, then the global             
 universe of all incidents relaying from this one incident.  In                
 other words, multiple consumers is capped at $50,000.  So the most            
 any one individual could get from the surety fund is $10,000 and              
 for one incident that would be generated by on (indisc.) type                 
 licensee, the maximum the fund could pay out to any number of                 
 consumers is $50,000."                                                        
                                                                               
 Number 1845                                                                   
                                                                               
 CHAIRMAN ROKEBERG said it is his recommendation that Section 20 be            
 deleted which required a $1 million bond for community association            
 managers.  The original idea was that there was a feeling that the            
 fund would be jeopardy if the community association managers would            
 be able to tap into the surety fund by misfeasance.  He said he               
 believes that with the existing limitations of $10,000 and $50,000,           
 there is adequate protection for the fund without the additional              
 bonding.  Chairman Rokeberg said some of the community association            
 managers, who are being brought in under the law, are not entirely            
 happy with the circumstances of how it is working out.  He said in            
 his discussions with community association people, they have                  
 indicated that they want to be covered, in a large part, by the               
 real estate law.  This is because if they were to set up a separate           
 type of a group for community association managers alone, their               
 biennial fees would be substantially higher than they would be as             
 a realtor, plus they would have to have additional fiduciary surety           
 bonding requirements added on to the biennial fees separately.                
                                                                               
 Number 2031                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to item five of his memorandum and said            
 it relates to errors and omissions insurance requirements.  He                
 explained it has generated a lot of negative response within the              
 community, but he believes it is a matter of misinformation.  One             
 of the problems is that the provision in the bill allows the Real             
 Estate Commission to go in the marketplace to investigate whether             
 a $100 annual premium amount is obtainable from the underwriting              
 insurance community.  Chairman Rokeberg said what he has indicated            
 to the Real Estate Commission, and they've agreed to informally, is           
 that they will go ahead and endeavor to see if this is at all                 
 practical prior to the legislature convening in January.  If there            
 are no underwriters willing to come forward at the lower rates, it            
 will be deleted from the bill.  Chairman Rokeberg referred to the             
 agency situation and said he had discussions with Mr. McNall about            
 that where some portions need to be clarified.  Section 32 does               
 provide for explicit a dual agency which, by implication, is                  
 already in existing law.  However, there is a problem in existing             
 law where you have to disclose what your agency relationship is               
 every time you show a house.  It currently is not being done.  He             
 said, "In other words, whenever a real estate broker or agent has             
 the clients out, statutorily, we put them in a box where they don't           
 abide by the law because they do not, at every instance, have a               
 form for each different house, if you will, which is the way this             
 law is drafted now."  He stated he would be discussing this with              
 members of the real estate community and will bring recommendations           
 back to the committee as soon as possible.                                    
                                                                               
 Number 2314                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to item seven of the memorandum                    
 pertaining to Section 33, page 20 and 21, and said it was added at            
 the request of the Real Estate Commission.  He stated the section             
 allows a real estate agent or an associate broker of a company,               
 that hires an administrative assistant that is licensed, to absolve           
 the broker from any responsibility for the payment of federal taxes           
 on that person.  Under existing law, the licensed broker is                   
 responsible for that assistant.  This would clarify the                       
 responsibility between that licensee who hires the administrative             
 assistant and not the broker.                                                 
                                                                               
 Number 2413                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to item eight regarding continuing                 
 education credits and said it is in Section 8, page 6.  He                    
 explained that he believes the section needs to be tightened.  The            
 commission, as a result of action by the committee, has come up               
 with some new regulations.  He read from subsection (1), lines 8              
 through 10, "courses required to earn professional designations               
 sponsored by the National Association of Realtors, the Building               
 Owners and Managers Association, or other recognized national                 
 organizations;".  He stated that wording is too broad.  Chairman              
 Rokeberg said he would prefer to come up with some language and get           
 direction from the commission to help tighten the language up.  His           
 approach would be to be more specific in that it should be                    
 stipulated who the national organizations are.                                
                                                                               
 Number 2622                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to Section 7, page 5, and read from                
 subsection (e), "In order for an educational course to be                     
 recognized for credit under this section, the course outline and              
 the instructor of the course must have been approved by the                   
 commission or the commission's designee before the course was                 
 conducted."  He pointed out that this is a problem for the national           
 courses because currently the commission has established a $25 fee            
 to get your course approved.  We've created a cottage industry in             
 the state of Alaska from a bunch of real estate course instructors.           
 Part of the problem is that in the past, some of the national                 
 organizations have come to the commission at the request of the               
 members, paid the $25 fee and put their courses in play, but that             
 is a pain in the neck for them.  Chairman Rokeberg said he wishes             
 that they had language to exempt the specific organizations from              
 the filing fee.  In other words, the commission, because of their             
 filing fee requirement, could overcome the statute to not allow the           
 classes.  He noted the classes can cost up to $1,000 a week and if            
 you leave Alaska to take them, it can cost you $2,000 to $3,000.              
 They are not receiving continuing education credits which is                  
 ridiculous.                                                                   
                                                                               
 Number 2819                                                                   
                                                                               
 CHAIRMAN ROKEBERG informed the committee members the commission has           
 also had some problems with the language that reads, "courses                 
 approved by commission for computer training that is specially                
 designed to be useful for persons...." although they are basically            
 going along with it.  The computer course has to be specifically              
 designed for the real estate agents taking the course.  In other              
 words, you can't take a course on how to run Windows 95, et cetera.           
                                                                               
 Number 2902                                                                   
                                                                               
 CHAIRMAN ROKEBERG said, "With that subsection (1), under Section 8,           
 the approval, the tightening of that up and the approval for the              
 university courses and the national courses need to be tightened              
 up."                                                                          
                                                                               
 Number 2931                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to item nine of the memorandum, and said           
 it pertains to Section 37, pages 22 to 25.  He referred to                    
 subsection 19 and said he would like to have input from the                   
 committee members to resolve some of the language.  Chairman                  
 Rokeberg said, "These are provisions that except those people from            
 having to have a license.  There is a number of these things that             
 came down here.  The first thing I'd like to bring to the attention           
 of the committee is on page 23, line 18, subsection (9) -- I can't            
 remember if this is new or not.  This is a major change and I'm not           
 sure we had this in our last go round.  I know the current law.               
 I'm talking about the last in section F -- Version F.  Anyway,                
 whether we did or not makes little difference because we have it              
 now.  And what we're doing here is clearly defining who can do real           
 estate business and who can't.  Previously, there was allowed --              
 the corporation, partnership, et cetera, they were performing acts            
 that require a license, under the statute, in their regular course            
 of business were exempt, but now we're changing that to incidental            
 to their regular course of business.  What we're doing here is                
 clearly stating, for final after all these years, who can do real             
 estate and who can't.  And with these numerous exceptions that we             
 have - some 19 here, this clearly will state that nobody can do               
 these things unless they're an attorney or there -- as stipulated,            
 that's one of the exceptions up here.  And that there is 19                   
 different categories you come into, but this will clarify a problem           
 that I know has been in the business for a number of years about              
 who needs to be licensed.  It particularly comes into play when the           
 people are managing property and own buildings - managing it and so           
 forth, but it didn't work previously licensed.  Now they have been            
 under the more recent versions of the law and this I think                    
 clarifies very strongly that these people need to be licensed to do           
 this.  I do need to review this slightly further and I want to talk           
 to the homebuilders about it - whether the sales of a homebuilder             
 may be restricted with this type of language.  We may have to put             
 some other exemptions in here given this, but I just want to bring            
 it to the committee's attention.  This could be a very, very major            
 controversial issue, although I hope it isn't, because it really              
 goes a long way in clarifying who can do business in this state.              
 And this is an important issue.  There is another thing we can talk           
 about later where it comes back into play on."                                
                                                                               
 Number 3340                                                                   
                                                                               
 CHAIRMAN ROKEBERG said the major thing is on page 24, subsection              
 (19).  This provision was a result of the drafting by legal counsel           
 in Juneau.  It is a generic request to meet the requirements that             
 Representative Cowdery brought to the committee.  It would allow              
 relatives and so forth to act as managers of properties.  He                  
 pointed out that on line 13, subsection (19), the words, "an                  
 attorney in fact..."  He said, "I think it is important and I think           
 a lot of the people in the real estate community have appreciated             
 this where anybody who is going to act, as there is in the older              
 law where you can have an attorney in fact, or have a power of                
 attorney.  If you had that, you were limited to two transactions.             
 What we're doing here is expanding the number of people who can act           
 for that property owner, but we are requiring them to have a power            
 of attorney giving them that ability.  But we're also limiting it             
 to their relative.  The question that I have and I want to ask the            
 committee to consider is, `How far do we go?'  Frankly, I think the           
 way this is drafted now goes a little too far.  We're talking about           
 nephews and aunts and uncles and nieces, but also I think it does             
 exclude step relationships, which I think is a problem in this day            
 and age of multiple extended families, divorce and the like.  In              
 many instances, there are closer relationships between a stepchild,           
 if you will, than there would be an aunt, uncle or niece."                    
                                                                               
 Number 3538                                                                   
                                                                               
 REPRESENTATIVE JOHN COWDERY said subsection (19) talks about                  
 authorizing the specific real estate transaction.  He asked if that           
 means whoever signs the document agrees to it or does it mean the             
 person puts it together and the principal still signs for it.                 
 Representative Cowdery said his mother can still sign her                     
 documents, but he puts a package together for her approval.  She              
 goes to the title company and signs the title document.                       
                                                                               
 CHAIRMAN ROKEBERG said it could be limited in the power of                    
 attorney.  He said he wants to leave wording in the bill so they              
 have the ability for one party to act for another.  He said you can           
 limit the degree in which a power of attorney is drafted to the               
 powers you're going to be granting the other party.  For example,             
 if a person would want to limit their stepchild to manage your                
 property and limit him to the acceptance and collection of rent and           
 the ongoing upkeep and maintenance of rental property, you could              
 limit him to that.  You could also exclude his ability to sell your           
 property.                                                                     
                                                                               
 Number 3750                                                                   
                                                                               
 CHAIRMAN ROKEBERG pointed out that on page 24, items (16) and (17)            
 are specifically added for community association activities.  He              
 said (16) indicates that an owner of a unit of a self-managed                 
 community association, managing the community association without             
 remuneration, would be an exemption.  Chairman Rokeberg said if you           
 were, for example, a condominium owner and wished to act on behalf            
 of an association, which is allowed, it may be appropriate to                 
 reimburse you for your time.                                                  
                                                                               
 Number 3913                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to subsection (17) and said it provides            
 that a developer retains control of at least 51 percent of the                
 association which is consistent.  He noted that he needs to double            
 check on the Alaska Common Ownership Act regarding consistency.               
                                                                               
 Number 3945                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred the committee members the transitional             
 provisions on page 26.  He said the prior version of the bill                 
 allowed community association managers, if they had two years of              
 experience, to become licensed community association managers with            
 their endorsement.  They could only conduct their activities and              
 wouldn't have to take a licensing examination, but would take only            
 the continuing education examinations.  Chairman Rokeberg said he             
 thinks Version H is drafted too stringent.  It would allow the                
 community association manager to petition the commission that they            
 be granted a license.  Now they're able to practice for a year                
 after the effective date at which on or before that time, they                
 would have to pass the real estate examination.  Chairman Rokeberg            
 said the implications are that after one year, if you didn't pass             
 that examination, you'd be out of business if you were a community            
 association business manager or broker.  Previously, they were able           
 to petition the commission and were then granted a license                    
 endorsement in which they could only practice in that particular              
 profession.  They were grandfathered in.  Chairman Rokeberg said it           
 is the committee's ultimate decision to decide whether or not these           
 people should be required to pass an examination for the general              
 sales of real estate because we no longer have endorsements.                  
                                                                               
 TAPE 97-59, SIDE B                                                            
 Number 0443                                                                   
                                                                               
 CHAIRMAN ROKEBERG indicated that Version H of HB 33 does not                  
 provide for grandfathering and, therefore, it mandates that these             
 people become licensed within one year which will allow them to               
 sell real estate.  Chairman Rokeberg said, "There is another                  
 concept that I have discussed with a number of people and that is             
 for the establishment of a provisional license to allow for the               
 transition of these people with experience at those levels, a                 
 broker, an agent of community manager associations, to transition             
 into it where their actions would be upon the effective date of the           
 legislation.  They would apply to the commission and receive a                
 provisional license for only their activities as it relates to                
 community management associations and not their ability to sell               
 real estate."  He asked what the fair way is to handle those people           
 who have commitments.  Chairman Rokeberg indicated he gave a                  
 presentation to the Anchorage Chapter of the Community Association            
 Management Institute and noted there were about 30 people in                  
 attendance of which only about 35 percent were licensed realtors.             
 Chairman Rokeberg noted he also has been involved in the                      
 development and activities of community associations because he has           
 acted a community association president; he has taught property               
 management at the University of Alaska and was involved with the              
 establishment of the first specialized property management                    
 department in the Alaska real estate market.  He stated the most              
 important thing is that these people be able to be included under             
 the licensing law and that it be done in a fair and reasonable                
 manner.  He asked if the grandfather provision should exist                   
 indefinitely or should people be required to become licensed after            
 two years.                                                                    
                                                                               
 Number 1001                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to item 11 and said the previous version           
 of the bill allowed the Real Estate Commission to establish a                 
 separate state code of ethics by regulation.  He said that has been           
 taken out of the bill because there was opposition by the realtors            
 in Anchorage.  He noted the National Association of Realtors has a            
 code of ethics.                                                               
                                                                               
 CHAIRMAN ROKEBERG referred to the committee to page 6, line 29, of            
 Version H, and said currently, a license is required to collect               
 rent for any real estate.  He said, "As a practical matter, this              
 has caused me some heartache because when receptionists or certain            
 other staff people of brokerage houses are at the front desk and              
 clients come in and want to pay their rent, they're not able to               
 accept it.  You have to actually be a licensee to be able to accept           
 rents and I think that I would like to look at modifying that with            
 language that would allow an employee of that licensee to accept              
 that rent.  They would be required to issue a written receipt if,             
 in fact, if they -- if they can collect the rent if they issue a              
 written receipt as evidence by that.  Therefore, the broker would             
 still be responsible because of the agent/principal relationship              
 (indisc.) would exist between and employee and employer."                     
                                                                               
 Number 1216                                                                   
                                                                               
 CHAIRMAN ROKEBERG indicated the committee members have some                   
 information from Grayce Oakley which relates to some changes in the           
 bill that revolved around the reimbursement or fee-sharing based on           
 relocation companies.  He noted it has to do with a defected                  
 regulation promulgated by the commission in the summer.  He said he           
 believes there needs to be some statutory changes.  Chairman                  
 Rokeberg indicated he would address the issue later in the meeting.           
                                                                               
 Number 1445                                                                   
                                                                               
 RON JOHNSON, Broker, Kenai Board of Realtors, testified via                   
 teleconference from Kenai.  He referred to Version H, pages 6, 8,             
 9, 10, 12, 20, 21, 22, 26 and 27 and said "real estate services               
 licensee" was dropped and the term "salesman" was included.  He               
 indicated he like to see it changed at least to "real estate                  
 licensee," but would prefer, "real estate services licensee."                 
                                                                               
 CHAIRMAN ROKEBERG noted that has been brought to his attention and            
 he agrees.                                                                    
                                                                               
 Number 1539                                                                   
                                                                               
 MR. JOHNSON referred to page 1, line 13, item (4), "certify courses           
 required under this chapter;" and asked if it would be better to              
 approve the courses as well as approving the instructors.  He asked           
 if the courses should be certified.  Mr. Johnson asked if it                  
 wouldn't be better approve the instructors and approve the courses            
 rather than certify one and approve the other.                                
                                                                               
 CHAIRMAN ROKEBERG said Section 2 allows the commission to designate           
 or have an assistant do the functions.                                        
                                                                               
 MR. JOHNSON said his thinking was to keep the language so that the            
 assistant would approve everything rather than approve some things            
 and certify some things.                                                      
                                                                               
 Number 1635                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked if he is saying that if they are going to             
 approve the courses, they should approve the instructors for those            
 courses as a policy matter.                                                   
                                                                               
 MR. JOHNSON answered in the affirmative.                                      
                                                                               
 Number 1644                                                                   
                                                                               
 MR. JOHNSON referred to page 3, line 18, and said the words,                  
 "Department of Law" were changed to "Department of Commerce and               
 Economic Development."  He asked if that will allow the commission            
 to do their own policing.                                                     
                                                                               
 CHAIRMAN ROKEBERG responded that is the intention.  He said the               
 commission is having difficulty getting the Department of Law to              
 provide the manpower to prosecute some of the cases.  Chairman                
 Rokeberg said the change was requested by the commission to try to            
 bring the in-house ability to pursue cases, with their                        
 investigators, through the administrative hearing process and to be           
 the moving party rather than having the Department of Law be the              
 moving party.                                                                 
                                                                               
 MR. JOHNSON questioned whether the Department of Commerce has any             
 policing authority.                                                           
                                                                               
 CHAIRMAN ROKEBERG responded, "That's why we're trying to give it to           
 them in statute."                                                             
                                                                               
 Number 1804                                                                   
                                                                               
 MR. JOHNSON referred to page 6, line 29, "(3) collect rent for the            
 use of real estate;" and said if you pursue the collection of rent,           
 it would be licensed, but to accept rent a license is not required.           
 He pointed out that was the result of a discussion about seven                
 years ago on whether the communication information could be given             
 by an unlicensed person to a licensed person.  At that time, it was           
 determined by the commission that collecting rent was receiving               
 rent and collecting rent meant you would actually be out pursuing             
 the collection of the rent.  Mr. Johnson said accepting rent is               
 alright because someone would be sitting there and accepts rent as            
 it comes through the door.  It is like accepting the mail.  To                
 actually go out and pursue collection of rents required a license.            
                                                                               
 Number 1914                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked if there was an opinion from the                      
 commission.                                                                   
                                                                               
 MR. JOHNSON said he believes it was in their policy manual, but               
 suggested checking with Ms. Oakley.                                           
                                                                               
 CHAIRMAN ROKEBERG said the law currently says, "the collection of             
 rent."  He said he thinks the wording needs to be modified.                   
                                                                               
 Number 2000                                                                   
                                                                               
 REPRESENTATIVE JOE RYAN said if a tenant hasn't paid their rent for           
 several months and they are evicted, the landlord decides to turn             
 the account over to a collection company, and the collection                  
 company very aggressively tries to collect the rent.  He questioned           
 whether the collection company has to licensed by the real estate             
 commission to collect that debt.                                              
                                                                               
 MR. JOHNSON said as he recalls, that particular situation was                 
 discussed and it was determined that past-due rents are debt rather           
 than rents that are due.                                                      
                                                                               
 CHAIRMAN ROKEBERG said it is something that needs to be clarified.            
                                                                               
 Number 2133                                                                   
                                                                               
 MR. JOHNSON suggested condominium associations or homeowner                   
 associations should have limited specific licenses so that they               
 don't get into the sales picture.                                             
                                                                               
 CHAIRMAN ROKEBERG pointed out that is basically what the                      
 endorsement concept is, but it also added property management.                
                                                                               
 MR. JOHNSON explained he was and probably still is in favor the               
 endorsement concept.  The problem with it is that created a                   
 perceived headache in the eyes of some of the brokers.  Rather than           
 an endorsement, maybe there should be a specific license that is a            
 condominium homeowners association license.                                   
                                                                               
 CHAIRMAN ROKEBERG asked Mr. Johnson how he feels about making the             
 transition provisional with limitations and then require them to              
 get a real estate license after two years, or all new people who              
 come aboard have to get a real estate license.                                
                                                                               
 MR. JOHNSON said if there was a specific limited real estate                  
 license, he could live with that.  To require them to get a regular           
 real estate license might be counter productive.                              
                                                                               
 CHAIRMAN ROKEBERG stated they would be required to pass the real              
 estate exam.  They would have gone through the requirements of                
 meeting the license requirements.                                             
                                                                               
 MR. JOHNSON suggested limiting it to the law portion of the exam.             
                                                                               
 CHAIRMAN ROKEBERG said it would set up a de facto endorsement.  He            
 indicated this is something the committee needs to consider.                  
                                                                               
 Number 2613                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked, "My comments about deleting the                      
 endorsements and the commercial endorsement, particularly, is that            
 pleasing to the folks down in Kachemak Bay?"                                  
                                                                               
 Number 2633                                                                   
                                                                               
 SCOTT CONNELLY, President, Kachemak Board of Realtors, responded              
 via teleconference.  He said he is sure that it will be pleasing.             
                                                                               
 Number 2745                                                                   
                                                                               
 BILL McNALL, Esq., came before the committee to testify on behalf             
 of himself.  He noted he is an attorney of real estate law in                 
 Anchorage and was on a task force of Community Association                    
 Institute.  Mr. McNall informed the committee that a community                
 association might be managed by funded or licensed compensated                
 officers or directors who live in the association.  He pointed out            
 there was a recent article where there was a complaint about how              
 self-managed associations couldn't have some discretion.  Mr.                 
 McNall said, "One of the fundamental thoughts behind community                
 associations is this is a neighborhood concept, you have                      
 neighborhood members serving on the board and doing it as                     
 volunteers."  Mr. McNall pointed out that there have been national            
 discussions on how to get bring in professional mangers, attorneys,           
 realtors and people who are trained managers.  He said they are               
 asked to serve on the association boards as what is called a super            
 board member.  They have done that because boards get stuck, they             
 don't know what to do.  They're sometimes more directed by their              
 own personal pocketbook and what the monthly/annual budget might              
 mean than they are about what the legal obligation to the                     
 association might be.  Mr. McNall said he has represented over 200            
 associations and he can say that issue is often the most common               
 issue they have to deal with, or it knows what it has to do, but              
 just doesn't want to do it because it is very unpopular.  Mr.                 
 McNall said, "If you're going to allow them to build into the                 
 budget a salary for themselves as officers, or a salary for                   
 themselves as directors, my concern would be that they'll do what             
 Congress has done to us which is to consistency see a need for                
 budget cuts, but their own personal salaries go up.  So it's an               
 issue that I'm quite concerned about.  The ultimate concern is that           
 if you're going to allow these folks to be able to be paid for                
 their services, you're going to have to probably take a look at the           
 association's documents because this will be a major change -- And            
 certainly build in the right for the association members to say               
 `yes' to that by a majority or maybe super majority, as well as the           
 association's lenders - people that hold the mortgages on these               
 properties, who have that property as security for their loans,               
 probably would be obligated under the Common Uses Ownership Act to            
 say `yes' as well."                                                           
                                                                               
 Number 3049                                                                   
                                                                               
 MR. McNALL said, "My concern is that if you don't pay your bills,             
 if you have some people serving at $5,000 or $10,000 a year in                
 these positions and you have federal withholding, you have state              
 tax bills that have to be paid and those are not paid, then what              
 you'll have is a lien, not against the individual officer's home,             
 but against every home in the subdivision - every house that's in             
 that condominium or every unit in the condominium project.  And I             
 think it's one of those steps you have to look at very, very                  
 careful because I think that it's right for abuse, if you will."              
                                                                               
 CHAIRMAN ROKEBERG asked if he recommends against allowing it.                 
                                                                               
 MR. McNALL said until we see some amendments to the Common Uses               
 Ownership Act, the Uniform Act and some solution at the national              
 level, he isn't sure that the state would want to jump into that.             
                                                                               
 Number 3258                                                                   
                                                                               
 CHAIRMAN ROKEBERG said, "The issue that we talked about in terms of           
 transition -- would you care to venture an opinion on that?  And              
 the fact that the endorsement concept I think is dead on arrival              
 now in terms of it's ability to be passed in the legislation."                
                                                                               
 MR. McNALL said he doesn't object to Mr. Johnson's approach as an             
 endorsement concept as that is what we started out with.  He said,            
 "The goal that the committee had was to -- we didn't care                     
 necessarily what the mechanism was.  What they got out of it was              
 the mandatory educational requirements, so what you had was                   
 community association managers being educated as a community                  
 association managers, not as sales people.  And so I think you've             
 achieved that and I think that what you ought to put in - a one-              
 year or two-year requirement doesn't make any difference to me                
 whatsoever as long as what it's tied to is the achieving of the               
 educational goal for that time period.  So you got to do 20 hours             
 a year.  They want to get licensed at the end of two years, they              
 better be able to show they got 20 hours in year one and 20 hours             
 in year two because ultimately, that's exactly the issue (indisc.)            
 have to do it and I have two specific examples if you'd care to               
 listen."                                                                      
                                                                               
 MR. McNALL said in Washington, D.C., the American Bar Association,            
 Real Property Section, has a separate committee dealing with                  
 community association properties of which he is a member of.  He              
 said they are dealing with "Megan's Law," which is about the little           
 girl that was seriously sexually abused by one of her neighbors.              
 Mr. McNall said, "The question is in a state like Alaska where you            
 have mandatory public registration of these folks and a manager --            
 all they have to do is dial the phone to find out where these                 
 abusers live and there is one in our condo project and they don't             
 call, what's the liability of the association?"  He said it is an             
 issue that people have talked about, but nobody has looked at it              
 and asked, "What is the responsibility for the association or the             
 manager of that association?"  He said you would only get to that             
 issue if you're taking courses that will talk about those sort of             
 issues.  You won't get that in a sales/service course, you'll only            
 get it in a specific educational program designed for these people.           
                                                                               
 Number 3505                                                                   
                                                                               
 MR. McNALL explained he is very concerned about the issue of the              
 association's liability, as an association, for acts of violence              
 within the association where the association has some knowledge               
 that there are violent people in the project.  So there could be a            
 spousal abuse problem, you have gangs in the association, et                  
 cetera.  You may wind up, as an association, liable like a                    
 landlord.                                                                     
                                                                               
 MR. McNALL said if there is a landlord that knows of a dangerous              
 condition on their property, they really do have some obligations             
 to tell the people that are on the property about the dangerous               
 condition.  They may have an obligation to disclose conditions they           
 may not even know about because they have some duty to investigate            
 their property.  In the community association context or the                  
 community association manager context, you would probably agree               
 that if there is obvious stuff, maybe there is some duty to                   
 disclose to the members or to the (indisc.) about this dangerous              
 condition.                                                                    
                                                                               
 TAPE 97-60, SIDE A                                                            
 Number 0154                                                                   
                                                                               
 MR. McNALL said, "If you got the right case, with the right abused            
 child, with the right family and the right abuser, the amount of              
 the judgement would have no end of zeros after it and that would be           
 against the association for failing to warn.  How in the world                
 would you ever have enough insurance or how would those owners                
 because the liability for that, after the insurance runs out,                 
 becomes a part of each and every owner's life.  You, as an owner of           
 a condo, wind up having to pay your pro rata share."                          
                                                                               
 Number 0247                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked Mr. McNall if he has a personal opinion               
 about the issue of the limited license versus the provisional                 
 license.                                                                      
                                                                               
 MR. McNALL said they have provided for a specialized curriculum of            
 education in a specialized area.                                              
                                                                               
 CHAIRMAN ROKEBERG indicated that there is the transition issue and            
 he would like to make it as painless as possible.  He asked Mr.               
 McNall if a limited license would work.                                       
                                                                               
 MR. McNALL responded that a limited license would work, but it has            
 to be tied to the educational program.  He said at 40 hours of                
 education over two years, that person should be able to become a              
 full-blown licensee.                                                          
                                                                               
 Number 0420                                                                   
                                                                               
 MR. JOHNSON said he also thinks it would work, but added he doesn't           
 see the necessity.  He noted he sees Mr. McNall's side of the                 
 argument which makes sense.                                                   
                                                                               
 Number 0438                                                                   
                                                                               
 CHAIRMAN ROKEBERG said, "But the other situation about putting up             
 a provisional license and then requiring after the two-year period,           
 we're mandating a real estate examination or lose their business.             
 Would that be too objectional to the community association                    
 membership now or...?"                                                        
                                                                               
 Number 0455                                                                   
                                                                               
 MR. McNALL said you would get into a philosophical discussion at              
 that point that.  "After two years and all the education, they                
 can't pass the licensing exam, should they be in business?"  That             
 is a lot of work and a lot of day-to-day application of things.               
                                                                               
 CHAIRMAN ROKEBERG asked how new entries would come into the                   
 business once the limited license is established.  He suggested               
 there be a grandfather provisional or limited license, but anybody            
 that is a new entry into the business would have to take the real             
 estate exam if they wanted to work in that type of business.                  
                                                                               
 MR. McNALL said, "I think that the managers that I recall                     
 testifying at the committee or coming to talk about their concerns            
 were extremely concerned about having somebody killed in a car                
 accident and not being able to get anybody to come in and do any              
 work because they would have to go get a license first.  And I                
 think we talked about some sort of right to hire off the street and           
 then get them registered with the Real Estate Commission and have             
 them, over a period of time, take the classes and, of course, learn           
 how to do this."                                                              
                                                                               
 CHAIRMAN ROKEBERG asked how new people would get into the business,           
 after the transition is made, if we have a limited license.  He               
 said they would be setting up an endorsement.  By deleting the                
 endorsement concept, you would have to replace it with something.             
 Chairman Rokeberg said he doesn't want to see one exclusive                   
 endorsement just for community association people.  He stated he              
 believes people who are duly experienced and are licensed realtors            
 should be able to do community association work, which they                   
 currently can do.  All they have to do is go out and hang their               
 shingle up.                                                                   
                                                                               
 MR. McNALL indicated that is correct.  He said, "In my office I               
 have looked at, again, for association to -- really can afford to             
 push the issue -- the problems created by the very same people that           
 you want to have out there or that are currently able to do that              
 without having any education whatsoever.  And I know they're                  
 managing today and I know that the stuff they're managing they're             
 not doing right because they don't know, because they haven't taken           
 the classes because they take advantage of associations - small               
 corporations off the seat of their pants.  That was the thrust of             
 trying to come up with separate licensing and separate educational            
 (indisc.)."                                                                   
                                                                               
 Number 0811                                                                   
                                                                               
 CHAIRMAN ROKEBERG said he calls the limited license the de facto              
 endorsement.  He calls the provisional license the transition                 
 license that would require, at certain point, the new entries.  He            
 said a new entry would have to take the real estate examination to            
 be licensed as a realtor.  He referred to the provisional                     
 grandfathered person and asked if he would ever need to take the              
 licensing exam.  The other issue would be do you put a two-year               
 hurdle out there and make sure the person takes the exam.                     
                                                                               
 MR. McNALL said he personally would like to see a two-year hurdle.            
                                                                               
 CHAIRMAN ROKEBERG said they're going to take the generic exam.  He            
 said if there is the requirement that new people should be                    
 licensed, grandfathered people should be licensed too.                        
                                                                               
 MR. McNALL said, "I think in two years, as an owner of a business -           
 - that I'm truly going into this business and am planning on doing            
 a good job of making my living at it, and one of the things I have            
 to wind up being is a licensed -- or passing the brokers license --           
 that I'll make sure that I get there.  I'll take the proper                   
 classes, I'll get the proper experience because I really am looking           
 at this as an area in which I can make a living.  If I can't get              
 there in two years, then maybe I shouldn't be doing this.  And I              
 know that you can't pass a law that makes everything for everybody,           
 Norm, but I don't know that we need to.  It seems to me that we               
 just have some folks out there that may not make that hurdle, but             
 that's why we have them there."                                               
                                                                               
 Number 1001                                                                   
                                                                               
 CHAIRMAN ROKEBERG said he thinks it is a little unfortunate because           
 it may push some of the people out of business that are in it now.            
 He said he would agree with Mr. McNall that if they can't pass that           
 exam, they shouldn't be in the business.                                      
                                                                               
 MR. McNALL said he doesn't see the exam as being that difficult.              
 You have to study for it, learn it and be able to apply it.  It is            
 not designed to keep people out.                                              
                                                                               
 Number 1100                                                                   
                                                                               
 CHAIRMAN ROKEBERG said the homebuilders have recommended some                 
 changes in the Alaska Common Ownership Act.  He provided Mr. McNall           
 with information regarding the requested changes.                             
                                                                               
 Number 1128                                                                   
                                                                               
 MR. JOHNSON referred to the memorandum and information from Grayce            
 Oakley of the Real Estate Commission and said on page 4, there is             
 a suggestion for some changes regarding listings and management               
 contracts.  They want to take the personal service contract out and           
 call them listings.  He said this would suggest looking more                  
 towards putting some teeth in it.  We have property management                
 contracts.  He asked why we can't have property marketing                     
 contracts.  There would be more of a perception that it really is             
 a contract rather than an agreement that could be taken lightly.              
 Mr. Johnson said something he has a problem with is if the state              
 does an involuntary corporate dissolution, that in effect puts the            
 corporation out of business.  However, the state will allow you to            
 voluntarily undo the dissolution by bringing your dues current.  He           
 said he did one that was five years dissolved and the state let him           
 reinstate it.  He noted he just did it to see what would happen.              
 If the corporation is dissolved, in fact, out of business then the            
 broker is terminated because he is working for a corporation that             
 is no longer in business.  All the licensees working under that               
 broker that are attempting to get their two-year time frame to be             
 able to qualify for their associate broker, their time stops and              
 they get a break in their term.  Mr. Johnson referred to when a               
 corporation decides to change the broker and the listings or market           
 agreements are owned by the broker, does there have to be a new               
 contract because the broker's name has changed.  He asked, "Do we             
 want to address the brokerage as being the property or the holder -           
 - property owner of the listing agreements or marketing                       
 agreements?"  Mr. Johnson pointed out that there was a lawsuit                
 about two years ago as a cooperating broker was refusing to pay a             
 commission based on the fact that the corporation that the broker             
 was working for was in involuntary dissolution.                               
                                                                               
 CHAIRMAN ROKEBERG indicated that is something he hasn't addressed,            
 but would check into it.                                                      
                                                                               
 Number 1440                                                                   
                                                                               
 MR. JOHNSON referred to page 16, line 15, and said the word "agent"           
 is included.  He suggested staying with the word "licensee."                  
                                                                               
 CHAIRMAN ROKEBERG agreed with the suggestion.                                 
                                                                               
 Number 1528                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to page 3, line 20, Version H,                
 which relates to the release for publication and asked if it would            
 be appropriate to require that all the publications to be on the              
 Internet.                                                                     
                                                                               
 CHAIRMAN ROKEBERG said he didn't know if the Department of Commerce           
 or the Real Estate Commission has a home page.                                
                                                                               
 AN UNIDENTIFIED speaker suggesting using "electronic media."                  
                                                                               
 SHIRLEY ARMSTRONG, Legislative Assistant to Representative                    
 Rokeberg, Alaska State Legislature, informed the committee members            
 that "electronic media" can cover television, radio, Internet, et             
 cetera.                                                                       
                                                                               
 CHAIRMAN ROKEBERG said he didn't want to create a fiscal note.  A             
 radio ad would mean a fiscal note.                                            
                                                                               
 MS. ARMSTRONG said the bill will have a fiscal note because of the            
 addition of property managers to the bill.                                    
                                                                               
 CHAIRMAN ROKEBERG said it should be a positive fiscal note.                   
                                                                               
 MS. ARMSTRONG indicated she would check into the issue.                       
                                                                               
 Number 1839                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to page 4, line 2, (8), and                   
 suggested including the wording "power of attorney."                          
                                                                               
 CHAIRMAN ROKEBERG pointed out that the section has to do with a               
 legally incompetent person.  He said, "There may an individual that           
 would be the personal representative of that particular individual            
 that may not be licensed properly or so forth."                               
                                                                               
 Number 1932                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to page 5, line 13, subsection 4,             
 and asked if it should be compulsory.                                         
                                                                               
 CHAIRMAN ROKEBERG responded, "That's probably a good point.  They             
 want to be able to charge, but there were certain instances where             
 they should have to be able to charge because they're using like              
 the surety fund for education.  There is a `may.'  Look up on line            
 4, `The commission also may recover all or a portion of the                   
 expenses incurred under this subsection...'"                                  
                                                                               
 MS. ARMSTRONG indicated it makes it permissible and not mandatory.            
                                                                               
 Number 2048                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to page 4, line 31, "...must have             
 been approved by the commission or the commission's designee before           
 the course was conducted", and asked if a grandfather clause is               
 needed.                                                                       
                                                                               
 CHAIRMAN ROKEBERG explained that the courses can change.  He said             
 it is a two-year biennial cycle and there are some that reoccur.              
                                                                               
 REPRESENTATIVE COWDERY indicated that some people could have passed           
 a course that is no longer in existence.                                      
                                                                               
 CHAIRMAN ROKEBERG said the way the regulations currently are, every           
 two years they have to go to the commission to get their courses              
 approved.  He indicated there is a course called, "Case Law," but             
 if there has been some cases that changed after a two-year period,            
 you can't use the same course outline.  It should be updated.  He             
 referred to the wording, "commission's designee," and said they               
 want the ability to be able to contract that out to somebody so               
 they don't have to spend all their time going over it.                        
                                                                               
 Number 2250                                                                   
                                                                               
 CHAIRMAN ROKEBERG said, "One other thing that has been brought to             
 my attention, there are some regulations that before they had the             
 30 days - got to be submitted 30 days prior - they increased it to            
 60 or 90 days which is causing some real heartburn because                    
 sometimes there may be a nationally recognized guest speaker coming           
 up that they don't know about 90 days in advance, and they want to            
 be able to have it approved by the Real Estate Commission."                   
                                                                               
 MS. ARMSTRONG said they don't want somebody going and taking a                
 course and then it's approved after the fact.  It wasn't approved             
 before.  She said some allowances are going to have to be made for            
 some of the national organizations because they're not going to               
 come to the Alaska Real Estate Commission.  Ms. Armstrong said if             
 you happen to be near Harvard University and you drop in and take             
 a course on real estate, Harvard is not going to come to the Real             
 Estate Commission and get approval.  She said criteria is going to            
 have to be established for the courses.                                       
                                                                               
 CHAIRMAN ROKEBERG said the commission needs a little bit of                   
 flexibility.  He said, "When you go out and take the course here              
 for the twenty hours, you get an hour per hour.  I mean you take a            
 university course - it's a three-hour course - it's for a whole               
 semester.  I mean how many hours do you have in there?  How long is           
 a semester?  It varies, three months say...."                                 
                                                                               
 MS. ARMSTRONG pointed out it is about 36 hours.                               
                                                                               
 CHAIRMAN ROKEBERG said, "So you only get 36 hours for one college             
 course, so the commission should be able to have the right to                 
 adjust that per hour."                                                        
                                                                               
 Number 2713                                                                   
                                                                               
 REPRESENTATIVE RYAN said the commission has gotten themselves in a            
 position that a lot of people do who have altruistic ideas.  They             
 said, "Well, you know, continuing education would be a good idea              
 and everybody else is doing it, so why don't we do it?'  Well then            
 when they got in there, well they had to qualify what would be                
 continuing education so they had to take time from their schedule             
 to look through all these curriculums, decide if this meets that              
 and so forth.  So the date from 30 days went to 60 days goes to 90            
 days.  Now they're proposing in your legislation that they hire               
 somebody else to do that because it's getting to be a lot of work.            
 Where is the money going to come to pay those guys.  Well, it comes           
 out of the surety fund or fee increase from members that                      
 participate - the licensees.  And it's another case where I really            
 want to do the right thing, but I didn't realize it took this much            
 time and so it's going to cost some more and well who is going to             
 foot the bill?  Well, I'm certainly not, I'll just pass it on to              
 the next guy."  Representative Ryan indicated that the bill is sort           
 of the same kind of thing.  He informed the committee that he feels           
 when he has a problem with someone, it is always a good thing to              
 first talk to them to try and establish some common ground.  He               
 said he tried to call the members of the Real Estate Commission,              
 but wasn't able to get a hold of anybody and left messages for them           
 to return the calls.  He said since he never received any return              
 calls, he figured that nobody on the Real Estate Commission wanted            
 to talk to him.  Representative Ryan said, "So necessarily I could            
 take an adversarial position and feel fully justified because you             
 guys didn't want to talk to me.  Now if I don't go along with your            
 programs or are very critical of you, I can be justified."  He said           
 it is his understanding that the instructor qualifying his program            
 gets a contribution from the Real Estate Commission to help that              
 instructor qualify their program and that money comes from the dues           
 or surety fund for which he pays....                                          
                                                                               
 CHAIRMAN ROKEBERG asked what he means by the commission is paying             
 the instructors.                                                              
                                                                               
 REPRESENTATIVE RYAN said money will be paid to the instructors to             
 develop a course curriculum and course outline for a program the              
 instructor wants to put on for which it would charge members                  
 (indisc.) a fee.                                                              
                                                                               
 CHAIRMAN ROKEBERG said he hasn't heard that the commission would              
 pay the fee to the instructor.                                                
                                                                               
 REPRESENTATIVE RYAN said that is what he was told.  He said, "We              
 pay these dues and we pay the surety fund deal, and the commission            
 decides to use the money for that purpose -- and then the guy                 
 that's running the course comes back and whacks us for $240 or                
 $250.  It's a nice business, you know, when your development costs            
 get paid, or a great portion of them, and then you turn around and            
 other then renting a hall and providing a little coffee, it's a               
 nice margin business."                                                        
                                                                               
 REPRESENTATIVE RYAN said then there are national organizations that           
 are recognized throughout the industry as being the experts, who              
 can come up and put on a course, but a person won't get any credit.           
 They don't get credit because they didn't come 90 days in advance.            
 He said he is really beginning to wonder whether the tail is really           
 wagging the dog.  The regulations are getting very critical on the            
 disclosure.  Mr. Ryan said in his opinion, the Real Estate                    
 Commission is acting like the state government does with his money.           
 They're doing what they think is a good idea and sending him the              
 bill.  Representative Ryan indicated concern in that he tried to              
 contact people on the commission to ask questions and didn't even             
 receive a return phone call.                                                  
                                                                               
 Number 3241                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to the cost of the surety fund and asked           
 Representative Ryan if he was in attendance when he suggested a               
 LB&A audit.  He said he would also like to look into it further.              
                                                                               
 REPRESENTATIVE RYAN informed Chairman Rokeberg that a                         
 representative from the Board of Realtors told him earlier in the             
 year that there was a $2,500 claim last year against the surety               
 fund.                                                                         
                                                                               
 REPRESENTATIVE RYAN explained he has been an airline transport                
 pilot and was in navigation for 40 years, which has considerable              
 risks, and he didn't have to go through anywhere near the kind of             
 stuff he had to go through to get a real estate license.                      
                                                                               
 CHAIRMAN ROKEBERG said he would admit that they are regulating                
 another aspect of the business on the part of consumer protection.            
 He noted it is his goal to simplify some of the activities and make           
 it more equitable by pursuing with the legislation.                           
                                                                               
 Number 3623                                                                   
                                                                               
 REPRESENTATIVE RYAN said, "If you look at the surety fund,                    
 basically what are being told - all the people that participate in            
 this business are being asked to be responsible for the actions,              
 whether they're civil or criminal actions of certain individuals,             
 those individuals should be criminally or civilly held liable for             
 their own actions and the rest of the people who are not engaging             
 in that kind of activities shouldn't have to be financially                   
 responsible."                                                                 
                                                                               
 Number 3651                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to wording on page 6, line 29, "(3)           
 collect rent for the use of real estate;" and said he believes that           
 is broad.  He said he thinks that kids do it for their parents all            
 the time and tellers at banks collect money for banks.  He said he            
 thinks that area should be tightened up.                                      
                                                                               
 TAPE 97-60, SIDE B                                                            
 Number 0655                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to wording page 7, line 2, "assist            
 in..." and questioned whether "assist" is too broad.  He also                 
 referred to page 7, line 15, "attempt or offer to do..." and asked            
 if that might be too broad also.                                              
                                                                               
 REPRESENTATIVE COWDERY referred to page 7, line 20, "In addition to           
 penalties prescribed by any other provision of law," and said he              
 wonders if the penalties should be applied current licensees now.             
                                                                               
 Number 0907                                                                   
                                                                               
 REPRESENTATIVE RYAN said, "Think about what this thing says.  We              
 are allowing the Real Estate Commission to levy a civil penalty               
 which is basically what a court does."  Representative Ryan pointed           
 out that the Real Estate Commission is strictly a regulatory agency           
 that has no judicial authority whatsoever.  He asked why they would           
 want to give that kind of power to them.  Representative Ryan said,           
 "With civil penalties you usually go to court.  You get whacked               
 with a civil and/or criminal penalty.  Now we're going to let                 
 administrative or actually a regulatory agency whacking people with           
 civil penalties.  We already have a remedy under law."                        
                                                                               
 CHAIRMAN ROKEBERG stated there is a provision for an appeal to                
 superior court.                                                               
                                                                               
 Number 1011                                                                   
                                                                               
 MS. ARMSTRONG pointed out that the section will add a big fiscal              
 note to the bill.                                                             
                                                                               
 CHAIRMAN ROKEBERG said the rational for the enforcement provisions            
 is that they can't get the Department of Law to do anything.                  
                                                                               
 Number 1049                                                                   
                                                                               
 REPRESENTATIVE COWDERY questioned the bonding requirement on page             
 14, lines 13 through 21.                                                      
                                                                               
 CHAIRMAN ROKEBERG indicated that section will be deleted.                     
                                                                               
 Number 1132                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred the committee to the section                  
 titled, "Exceptions" on page 22, line 30.                                     
                                                                               
 CHAIRMAN ROKEBERG interrupted by saying that Section 36 will also             
 be deleted.                                                                   
                                                                               
 REPRESENTATIVE COWDERY questioned whether under the "Exceptions"              
 section, the provision, "a person who is not licensed under this              
 chapter..." was pertinent.  He questioned the meaning of the                  
 wording, "(4) a public official in the conduct of official duties;"           
 on page 23, line 10.                                                          
                                                                               
 CHAIRMAN ROKEBERG said it means that you can auction off a                    
 foreclosed house.  He said he assumes that is what the intent is.             
                                                                               
 Number 1312                                                                   
                                                                               
 REPRESENTATIVE RYAN read from (9), subparagraph (A), on page 23,              
 "as a vocation;".                                                             
                                                                               
 CHAIRMAN ROKEBERG said the exemption under this permit does not               
 apply to a person who performs a vocation.  He said it is sort of             
 a double negative.                                                            
                                                                               
 Number 1512                                                                   
                                                                               
 CHAIRMAN ROKEBERG said, "What we should do is delete that one                 
 portion under 161, that front one on page 6 about collecting rent.            
 Go back and look at collecting rent under what property management            
 - how that's defined.  And then put the exemption in there for the            
 employee or the debt collector."                                              
                                                                               
 MS. ARMSTRONG said it would be an employee of the licensee.                   
                                                                               
 CHAIRMAN ROKEBERG agreed and said, "and/or a..."                              
                                                                               
 REPRESENTATIVE RYAN said to collect somebody else's debt, you have            
 to be licensed.                                                               
                                                                               
 Number 1607                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to wording page 24, line 12, "a               
 resident manager", and asked if it is redundant with page 23, line            
 28.                                                                           
                                                                               
 CHAIRMAN ROKEBERG said it looks like it to him.                               
                                                                               
 Number 1730                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to page 24, line 13, relating to              
 discrimination against stepchildren.                                          
                                                                               
 CHAIRMAN ROKEBERG interrupted and asked if the committee agrees it            
 should be included.                                                           
                                                                               
 REPRESENTATIVE COWDERY asked how you can list all relatives.                  
                                                                               
 CHAIRMAN ROKEBERG said he thinks niece, nephew, aunts and uncle               
 should be deleted and add stepchildren.                                       
                                                                               
 REPRESENTATIVE COWDERY said it should be family related.                      
                                                                               
 CHAIRMAN ROKEBERG asked if aunts and uncles should be included.               
                                                                               
 REPRESENTATIVE COWDERY asked if he could manage for his great                 
 granddaughter.                                                                
                                                                               
 CHAIRMAN ROKEBERG said Representative Cowdery could deed it to his            
 great granddaughter and manage for her.  He asked if nephews and              
 nieces goes too far.                                                          
                                                                               
 AN UNIDENTIFIED SPEAKER suggested they be included.                           
                                                                               
 REPRESENTATIVE COWDERY agreed.                                                
                                                                               
 Number 1206                                                                   
                                                                               
 REPRESENTATIVE RYAN suggested using the wording "extended family."            
                                                                               
 CHAIRMAN ROKEBERG said Ms. Armstrong handed him a note and, for the           
 record, that the committee did take out nieces, nephews, et cetera.           
                                                                               
 REPRESENTATIVE RYAN suggested using "extended family to a second              
 generation."                                                                  
                                                                               
 MS. ARMSTRONG suggested using "and step relationships," which would           
 cover the whole family.                                                       
                                                                               
 Number 2315                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to page 25, line 6, subsection (4),           
 and said it talks about contiguous property owned by the same                 
 owner.  He said, "Say I'm a resident manger for property on `B'               
 street where I live, does this bar me from -- I think it does, also           
 managing property for the same owner on `L' street."                          
                                                                               
 CHAIRMAN ROKEBERG said he wouldn't be a resident manager and would            
 be barred from doing that.  He said there should be another                   
 resident manager.  Chairman Rokeberg said if there was a ten-plex             
 on one side of the street and a ten-plex on the other side of the             
 street, they wouldn't be contiguous.  Chairman Rokeberg said the              
 way the bill is drafted, he couldn't do it.                                   
                                                                               
 Number 2532                                                                   
                                                                               
 MS. ARMSTRONG said, "A resident manager means a person who resides            
 on rented or leased property or on contiguous property owned by the           
 same owner, manages the property for their benefit and is either              
 employed by the owner or contracts with him."                                 
                                                                               
 CHAIRMAN ROKEBERG said there is a definition of "adjacent" under              
 the state procurement code where you actually have a building                 
 across the street from another building.  He informed the committee           
 the definition of "resident manager" is being expanded.                       
                                                                               
 MS. ARMSTRONG said they are actually fine tuning it.  It doesn't              
 change anything.                                                              
                                                                               
 REPRESENTATIVE RYAN asked a question regarding community                      
 associations.  [Note:  The question was indiscernible as                      
 Representative Ryan was not close to the microphone.]                         
                                                                               
 Number 2742                                                                   
                                                                               
 CHAIRMAN ROKEBERG said a resident manager does not manage a                   
 community association.  He noted "property management" is defined             
 on page 25, line 21.  "Community association management" is defined           
 on page 25, line 12.  He said "real estate transaction" is defined            
 on page 25, line 28.                                                          
                                                                               
 Number 2847                                                                   
                                                                               
 MS. ARMSTRONG said property management is managing property - an              
 off-site manager.  A resident manager is a manager who is on-site.            
                                                                               
 CHAIRMAN ROKEBERG said he can see a situation where there is one              
 building on one side of the street and one building on the other              
 side of the street and there would be one resident manager.                   
                                                                               
 MS. ARMSTRONG said if you have a complex that covers a whole area,            
 the new definition allows the person to be able to manage the whole           
 complex even though there is a street in between.                             
                                                                               
 Number 2933                                                                   
                                                                               
 CHAIRMAN ROKEBERG said he would either delete "contiguous property"           
 or add "adjacent."                                                            
                                                                               
 MS. ARMSTRONG indicated she would have the drafter of the bill                
 check into what it means.                                                     
                                                                               
 Number 3113                                                                   
                                                                               
 CHAIRMAN ROKEBERG referred to page 4 of the information from Ms.              
 Oakley regarding listings and management contracts and said there             
 was an agency task force that was trying to create a whole new                
 scheme called, "personal service contracts."  He said the term                
 "personal service contracts" raised ire within the real estate                
 community that they wanted to delete the term and insert                      
 "listings," which is already defined in statute.  He said Mr.                 
 Johnson brought up the problem with the term "listing," but it is             
 just wordsmithing.                                                            
                                                                               
 CHAIRMAN ROKEBERG said, "What a lot of this has to do with, very              
 briefly, is a whole -- the state Real Estate Commission passed a              
 regulation this summer about the disclosure of parties to                     
 compensation in a transaction.  And I've looked into this deeply              
 and concluded that the commission made a grievous error in the                
 structure of that.  However, what they were trying to accomplish is           
 something needed and I think it's needed in statute -- and what               
 that has to do with -- it has nothing to do with the refrigerator             
 and making a deal or a deal between a broker and a broker or a                
 broker and a seller or buyer -- what it has to do with is the                 
 relocation companies and the extortion there of and the requirement           
 by relocation companies of real estate agents and brokers to pay              
 substantial dollars which have gone from a low of 10 percent,                 
 historically, up to as much as 35 plus percent.  And also what's              
 called the affinity kickbacks and the referral fees paid to                   
 nonlicensed consumers which are members of affinity groups.  This             
 is a national phenomenon."                                                    
                                                                               
 Number 3620                                                                   
                                                                               
 REPRESENTATIVE RYAN referred to page 2, line 2, of the memorandum             
 and said the word "salesman" has been deleted and "salesperson" was           
 inserted.  He said he had some business cards printed specifically            
 to say "real estate salesman."  He asked why he would have to                 
 become salesperson.                                                           
                                                                               
 CHAIRMAN ROKEBERG indicated he would like to change the word to               
 "licensee."                                                                   
                                                                               
 Number 3935                                                                   
                                                                               
 CHAIRMAN ROKEBERG thanked the committee members for their                     
 participation.  He indicated the bill would be heard again at a               
 later date.                                                                   
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 Number 3940                                                                   
                                                                               
 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Committee            
 meeting at 3:52 p.m.                                                          
                                                                               

Document Name Date/Time Subjects