Legislature(1997 - 1998)
03/17/1997 03:31 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 17, 1997
3:31 p.m.
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
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
WITNESS REGISTER
JANET SEITZ, Legislative Assistant
to Representative Norman Rokeberg
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
Telephone: (907) 465-6547
POSITION STATEMENT: Presented amendments to HB 33.
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Commerce and Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
Telephone: (907) 465-2534
POSITION STATEMENT: Explained Amendment 4 and answered
questions regarding HB 33.
CAROL MEYER, State President
Alaska Association of Realtors
951 Hermon Road
Wasilla, Alaska 99654
Telephone: (907) 376-2448
POSITION STATEMENT: Testified regarding HB 33.
RON JOHNSON, Broker and President
Kenai Board of Realtors
610 Attla Way, Number 6
Kenai, Alaska 99611
Telephone: (907) 283-4372
POSITION STATEMENT: Testified regarding HB 33.
ERIC DYRUD
Associated Brokers Incorporated
2509 Eide Street, Number 4
Anchorage, Alaska 99503
Telephone: (907) 258-8888
POSITION STATEMENT: Testified regarding HB 33 on behalf of the
Anchorage Board of Realtors' legislative
committee.
TERRY YAGER
412 East Pioneer Avenue
Homer, Alaska 99603
Telephone: (907) 235-0699
POSITION STATEMENT: Testified regarding HB 33.
STEPHEN VLAHOVICH, Associate Broker
Associated Brokers Incorporated
2509 Eide Street, Number 4
Anchorage, Alaska 99503
Telephone: (907) 258-8888
POSITION STATEMENT: Testified regarding HB 33.
SCOTT CONNELLY, President
Kachemak Board of Realtors
331 East Pioneer Avenue
Homer, Alaska 99603
Telephone: (907) 235-6183
POSITION STATEMENT: Testified regarding HB 33.
BILL McNALL, Attorney at Law
McNall and Associates, PC
921 West 6th Avenue, Suite 100
Anchorage, Alaska 99501
Telephone: (907) 276-2571
POSITION STATEMENT: Testified in support of HB 33.
CHRIS STEPHENS, President
Bond, Stephens and Johnson
3000 A Street, Suite 200
Anchorage, Alaska 99503
Telephone: (907) 563-7733
POSITION STATEMENT: Testified regarding HB 33.
KRISTAN TANNER, Broker Associate
RE/MAX of Wasilla
1590 East Financial Drive, Suite 200
Wasilla, Alaska 99654-8237
Telephone: (907) 376-4515
POSITION STATEMENT: Testified regarding HB 33.
GRAYCE OAKLEY, Executive Administrator
Real Estate Commission
Division of Occupational Licensing
Department of Commerce and Economic Development
3601 C Street, Suite 722
Anchorage, Alaska 99503-5966
Telephone: (907) 269-8197
POSITION STATEMENT: Testified regarding HB 33.
ACTION NARRATIVE
TAPE 97-23, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:31 p.m. Members present
at the call to order were Representatives Rokeberg, Cowdery,
Sanders and Ryan; there was a quorum. Representatives Hudson,
Brice and Kubina were absent.
HB 33 - REAL ESTATE LICENSING
Number 0127
CHAIRMAN ROKEBERG announced the committee would hear House Bill No.
33, "An Act relating to real estate licensing and the real estate
surety fund; and providing for an effective date." They would
consider amendments before hearing public testimony.
CHAIRMAN ROKEBERG declared a potential conflict of interest: He is
a commercial real estate broker licensed under Alaska law.
Number 0249
REPRESENTATIVE JOE RYAN said he also has a real estate salesman's
license and therefore has a potential conflict of interest.
Number 0273
CHAIRMAN ROKEBERG announced they would consider Amendment 1, which
read (original punctuation and capitalization provided):
Page 7, lines 8 & 9
Delete after (1) the current language
Insert following: courses required to earn professional
designations sponsored by National Association of Realtors,
Building Owners and Manager Association, or other recognized
national organizations;
Page 12, lines 9 and 10:
Change "limited liability company" to "limited liability
company" (drafting)
Page 12, line 29
Change "limited liability company" to "limited liability
company" (drafting)
Page 14, line 28, through Page 15, line 2:
Delete entire Section 18 and renumber following sections
accordingly
Page 15, Line 25:
Delete "for less than" before "60"
After "60 days" insert "or less"
Page 15, Line 29:
After "60" delete "or more"
Insert before "60", the words "more than"
Page 16, line 23:
After "reactivate the license" delete "to"
After "[BECOME]", delete "active status"
Page 19, line 28:
After "All" delete "exclusive"
Page 20, Lines 3 and 4
Delete after "OF THE BROKER]", the language "for at least
three years,"
Page 20, line 7
After "provide" insert following: "upon request to any
principal in a transaction"
Page 22, lines 16-25
Delete current section 37.
Renumber remaining sections accordingly.
Number 0332
CHAIRMAN ROKEBERG said the change relating to page 7 mandates the
commission to introduce these particular professional designations,
and the courses that revolve around them, into their educational
regulations. Apparently there had been resistance before. He
called on Janet Seitz to explain the remainder of Amendment 1.
Number 0409
JANET SEITZ, Legislative Assistant to Representative Norman
Rokeberg, said the portions relating to page 12 correct drafting
errors; specifically, the addition of "limited liability company"
had not been in bold type or underlined. The change beginning on
page 14, line 28, would leave the current language in the statute,
allowing the commission to adopt by regulations a system for
reevaluation of an exam that an applicant had failed.
Number 0454
REPRESENTATIVE RYAN asked for confirmation that they were
addressing version LS-0197\B.
CHAIRMAN ROKEBERG confirmed that.
REPRESENTATIVE RYAN said he didn't find the changes on page 12.
MS. SEITZ apologized and said those were on page 8.
CHAIRMAN ROKEBERG advised members to change the two references to
"Page 12" to "Page 8" on Amendment 1. Those were drafting errors.
Number 0575
MS. SEITZ continued with Amendment 1. Page 15, line 25, currently
reads, "for less than 60 days". The amendment would change it to
"60 days or less", making it more clear that a person whose license
has lapsed for 60 days or less is eligible for reinstatement by
providing the required application, licensing fees and applicable
late fees. Page 15, line 29, changes the current "60 or more" to
read "more than 60". This is for someone whose license has lapsed
for more than 60 days but less than 24 months.
MS. SEITZ explained that the amendment on page 16, line 23, clears
up cumbersome language that currently reads, "may reactivate the
license to active status by applying for"; it changes it to read,
"may reactivate the license by applying for the active license and
paying the required fees". On page 19, line 28, the amendment
deletes "exclusive" between "All" and "real estate personal
services contracts". The intent was to cover all contracts, not
just exclusive real estate personal services contracts. On page
20, line 4 should begin, "keep a complete record for at least three
years". Therefore, the initial phrase, "for at least three years,"
on line 4 would be deleted by the amendment.
CHAIRMAN ROKEBERG added that it was redundant language.
Number 0700
MS. SEITZ said page 20, line 7, currently reads, "provide an
accounting", but it doesn't say to whom. With the amendment, it
would read, "provide upon request to any principal in a transaction
an accounting".
Number 0741
CHAIRMAN ROKEBERG discussed deletion of Section 37, beginning on
page 22, line 16. It is part of the issue relating to agency and
disclosure of agency, and he finds it cumbersome and impractical.
He referred members to page 22, line 24, which says, "disclosure
and receipt of the form must be acknowledged in writing by the
prospective client or customer". He stated, "In other words,
before you can even enter into negotiations to represent via a
listing agreement and/or a[n] agency agreement as a buyer's broker,
you'd have to have a fully notarized, acknowledged agreement that
everybody understood the rules of the game as it relates to
agency."
CHAIRMAN ROKEBERG said he believes the existing statute, as
problematic as it is, is still more workable than trying to put
into place a situation where a form must be developed by the
commission and everybody must be party to it. It sets up a whole
process change, an addition, in the course of practical business.
He pointed out that Section 38, which follows, outlines
responsibilities relating to agency. With the changes in Section
38, he doesn't believe they need to go that extra step and
recommend a change in Section 37; he'd just as soon delete it.
Number 0867
REPRESENTATIVE RYAN asked whether there isn't similar language in
the listing agreement itself.
CHAIRMAN ROKEBERG agreed that many of those agreements now have
that. He emphasized the importance of clarifying, from a consumer-
protection standpoint, the agency relationship between the
salesperson and the client. This opens up a "Pandora's box of
agency," which they would revisit shortly. Unless he heard
compelling arguments to the contrary, he preferred to delete that
section, which to him is a further obstacle to business.
Number 0923
REPRESENTATIVE JOHN COWDERY made a motion to adopt Amendment 1.
There being no objection, it was so ordered.
Number 0941
CHAIRMAN ROKEBERG made a motion to adopt Amendment 2, which read:
CONCEPTUAL AMENDMENT.
Wherever in the bill the language "employed" is used, add "or
contracted" after "employed" or change the definition of
"employed" to include employees and independent contractors.
CHAIRMAN ROKEBERG explained that this resulted from a communication
from a major real estate broker who felt that without this change,
it would "diminish the stature in our ongoing battle with the IRS
as to the status between independent contractors and employed
people." Not wanting to give the Internal Revenue Service further
ammunition with which to pick on independent contractors, Chairman
Rokeberg asked that Amendment 2 be approved and forwarded to the
drafter for insertion into the bill on all 37 pages.
CHAIRMAN ROKEBERG asked whether there was any objection to
Amendment 2. There being none, it was adopted.
Number 1037
CHAIRMAN ROKEBERG made a motion to adopt Amendment 3, which read:
CONCEPTUAL AMENDMENT:
Add commercial broker endorsement.
Commercial broker license includes all activities under sales
or property management.
Commercial broker education requirements: to be decided by
Commission as with other endorsement educational requirements.
Limit all other sales transactions accomplished by real estate
services licensee to sales transactions of $500,000 or less
unless the transaction involves a residential dwelling.
Number 1049
CHAIRMAN ROKEBERG brought to members' attention a letter in the
packets from Kristan Tanner of RE/MAX of Wasilla, who had testified
the previous Friday. She was on the task force, and the letter
explained that the task force hadn't taken up a commercial
endorsement because they'd felt it wasn't within the scope of their
charge. Chairman Rokeberg said he'd had communications with a
number of people, and he believed Mr. Stephens had also testified
about this the previous Friday.
CHAIRMAN ROKEBERG said based on that, to bring this to a discussion
level, he was offering this conceptual amendment to create an
endorsement for commercial brokers, associate brokers and sales
practitioners under the new bill; to include all activities under
sales and property management presently; to require that the
educational requirements be set by the commission, as all the other
endorsement provisions are now; and to define a commercial broker's
endorsement at a sales transaction level of $500,000 or less,
unless it involves a residential dwelling.
Number 1129
CHAIRMAN ROKEBERG specified he is asking that this be drafted to
allow a property management endorsee to be able to still rent and
lease property of value over $500,000. This also allows the
commercial broker to do the leasing or renting; under the bill as
first written, a commercial lease broker would need both a sales
endorsement and a property management endorsement to operate. This
way, only a commercial endorsement is needed.
CHAIRMAN ROKEBERG stated, "So, the intention here is to clarify the
fact that there is a commercial brokerage area with different
educational requirements and classes to be offered, which is the
testimony we heard on Friday, as well as setting up a level that
they can operate somewhat differently, in terms of education and so
forth, and ... also minimize the requirement that that practitioner
is going to get multiple endorsements, unless they wanted to do
that. I think this will simplify that."
CHAIRMAN ROKEBERG emphasized that this is a conceptual amendment.
He expressed interest in hearing testimony about whether $500,000
is an adequate break-point to define what a commercial broker or
practitioner is.
Number 1249
REPRESENTATIVE RYAN noted that they had adopted Amendment 1,
recognizing national organizations. He suggested tying that into
the education requirements, rather than having the commission set
requirements. If educational programs were recognized by the
organizations and the commission, it seemed that the commission
would say that someone who completed a specific course would be
qualified for that aspect.
REPRESENTATIVE RYAN indicated they may need some small additional
requirement "because we do things so differently here in Alaska
than the rest of the country does." However, he believes the basis
of the education should reflect what the national organizations
have found through years of existence and dealing with this
problem. It would also help Alaska remain more uniform for people
who want reciprocity to do work elsewhere.
Number 1306
CHAIRMAN ROKEBERG said Representative Ryan had eloquently made the
chairman's case for why this commercial endorsement is needed, as
well as for the relevant portion of Amendment 1; by adding that new
subsection on page 7, they were mandating, by the word "must" on
line 5, that the regulations for continuing education requirements
allow the following types of courses to qualify.
CHAIRMAN ROKEBERG emphasized that although this would allow those
designated courses, the hours required and how they fit together
would be up to the commission to determine by regulation. This
also recognizes courses from an accredited college or university.
Number 1358
REPRESENTATIVE RYAN said his concern is that it doesn't become
burdensome financially or too time-consuming.
CHAIRMAN ROKEBERG indicated they would hear testimony on that. He
understood there would be cross-utilization of hours so that for
multiple endorsements, one needn't take everything two or three
times. Chairman Rokeberg pointed out that the educational
requirements on page 7 cover all licensees, not just commercial
brokers. He hoped that would assuage any concerns.
CHAIRMAN ROKEBERG asked whether there was any objection to
conceptual Amendment 3. There being none, it was adopted.
Number 1420
CHAIRMAN ROKEBERG noted that conceptual Amendment 4 would be
presented by the department. It read (numbers at left are line
numbers on original version):
Delete page 5, lines 2-3
page 9, lines 5-9
Insert: new sections
6 Sec. 08.88.162. Violations and penalties. An unlicensed
person who performs acts listed in AS 08.88.161 as those for
which a license is required, or a person using or attempting
to use the license of another, or a person who gives false or
forged evidence of any kind to the commission or to a
representative of the commission in obtaining or attempting to
obtain a license, or a person who impersonates an applicant,
or a person who knowingly uses or attempts to use an expired,
suspended, revoked or nonexistent license certificate, or a
person who falsely claims to be licensed and authorized to
practice under this chapter, or a person who violates any of
the provisions of this chapter, is guilty of a misdemeanor,
and upon conviction, is punishable by a fine of not more than
$10,000, or by imprisonment of not more than one year, or by
both.
14 Sec. 08.88.163. Civil penalty for unlicensed or unauthorized
practice. (a) In addition to penalties prescribed by any
other provision of law, if a person practices or offers to
practice real estate as defined in this chapter without being
licensed or authorized to practice in accordance with the
provisions of this chapter, the commission may enter an order
levying a civil penalty.
18 (b) A civil penalty levied under this section may not exceed
$5,000, or the amount of gain realized plus $5,000, whichever
is greater, for each offense. In levying a civil penalty, the
commission shall set the amount of the penalty imposed under
this section after taking into account the seriousness of the
violation, the economic benefit resulting from the violation,
the history of violations, and any other facts the commission
considers relevant.
22 (c) After providing a person written notice of an order
issued under this section, the commission shall grant a 30 day
period during which the person may request a hearing on the
record.
24 (d) In connection with proceedings under (a) and (b) of this
section, the commission may issue subpoenas to compel the
attendance and testimony of witnesses and the disclosure of
evidence, and may request the department to bring an action to
enforce a subpoena.
27 (e) A person aggrieved by the levy of a civil penalty under
this section may file an appeal with the superior court for
judicial review of the penalty under AS 44.62.560.
29 (f) If a person fails to pay a civil penalty within 30 days
after entry of an order under (a) of this section, or within
10 days after the court enters a final judgement in favor of
the commission of an order stayed pending an appeal under (e)
of this section, the department may initiate other action to
recover the amount of the penalty.
32 (g) An action to enforce an order under this section may be
combined with an action for an injunction under AS 08.88.037.
Number 1444
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development (DCED), explained
that conceptual Amendment 4 was the DCED's hasty response to some
issues concerning the civil fining authority in the bill. She
believed Representative Ryan had expressed concerns about this.
MS. REARDON informed members that the sheet she'd distributed
contained what she believed was the initial language proposed by
the task force. It is nearly identical to language in AS 08.48.295
relating to the State Board of Registration for Architects,
Engineers and Land Surveyors. It says the Real Estate Commission
may charge someone with unlicensed real estate activity; allow that
person a hearing to defend himself or herself against the charges;
and if the person is found to have practiced illegally, fine the
individual. The right of appeal is to the superior court.
Number 1513
MS. REARDON explained that the only difference in language is in
item (c) on line 22 of the conceptual amendment, which says, "after
providing a person with written notice of an order, the commission
shall grant a 30 day period in which a person may request a
hearing." In contrast, the architects, engineers and land
surveyors law says, "before issuing a person a written notice" that
this opportunity for a hearing occurs. Ms. Reardon said she would
be comfortable with either, although perhaps it would be more
comfortable if the hearing opportunity came before the issuing of
the order; that is more in line with the way the department does
all of its other disciplinary types of activities.
MS. REARDON stated her belief that this would be an improvement
over language in the proposed committee substitute on page 9, line
5, and on page 5, line 2, for which it would substitute. It is
also similar to language that passed the House the previous year
but didn't make it through the Senate before adjournment.
CHAIRMAN ROKEBERG asked whether that was on the "architects bill."
MS. REARDON replied that it was for all division activities. They
had a civil penalties authority bill that made it to the Senate
Finance Committee. By Representative James, it got caught up with
an issue of attorneys practicing without licenses. Nonetheless,
Ms. Reardon believed the concept was generally acceptable to the
previous year's House. She asked whether that addressed concerns
expressed the previous Friday.
Number 1613
CHAIRMAN ROKEBERG asked whether Ms. Reardon's conversations with
the Department of Law had led to this.
MS. REARDON said yes. It is language in statute, as well as
language that they had signed off on in last year's bill that
didn't pass. She said it seemed comfortable to that department.
Number 1620
CHAIRMAN ROKEBERG referred to inquiries made the previous Friday
about procedural aspects and responsibilities.
MS. REARDON explained, "The way this would work is similar to when
the department charges a license holder with a violation of their
license law. First, there's an investigation. And if the
department feels like there is sufficient evidence, we show the
evidence to the attorney general's office. If they agree that
there's sufficient evidence of a violation of the law to proceed,
we file what we call an `accusation.' It's a charging document
saying, `We accuse you of the following.' And that would be what
would occur under ... paragraph (c), if you substituted `before
issuing' instead of `after providing.' We issue this accusation;
the person has a hearing, which is given under the Administrative
Procedure Act, to defend themselves, to say, `No, I'm not breaking
the law.'"
MS. REARDON continued, "The hearing officer issues a finding and a
recommendation, and the Real Estate Commission makes the ultimate
decision about whether the person is or isn't breaking the law and
whether the fine or other penalty that the hearing officer
recommends is warranted. The commission is not permitted under the
Administrative Procedure Act to increase the fine or the penalty
over what the hearing officer recommended unless they decide to
hear the whole case themselves a second time. The appeal is not to
the very same commission that made the decision; the appeal is to
superior court. That is where all appeals of division disciplinary
actions, or board or commission disciplinary actions, take place,
under our entire occupational licensing law." Ms. Reardon noted
that license denials are a different issue.
Number 1721
CHAIRMAN ROKEBERG asked Ms. Reardon to address line 13, "punishable
by a fine of not more than $10,000." He stated his understanding
that there are limits in the bill of $5,000.
MS. REARDON replied that the centralized licensing statute
governing her division contains a fining ability of $5,000 for
licensees who violate the law. This $10,000 threshold would be for
unlicensed activity. She indicated she was checking to see where
that came from, then stated, "Personally, I think I would be happy
with any amount you were willing to allow."
Number 1808
CHAIRMAN ROKEBERG announced his intention to address amendments and
take public testimony that day, after which they would create a new
committee substitute. An additional public hearing would be held
Monday, March 24. If committee members or the public wished to
recommend changes, he would hear them meantime.
Number 1855
MS. REARDON advised members that the $10,000 had come from the
architects, engineers and land surveyors model.
CHAIRMAN ROKEBERG stated his understanding that the task force had
recommended $5,000. He said he would amend conceptual Amendment 4
to say $5,000, indicating they could later revisit it if they
wanted to. He specified that was on line 13.
Number 1882
MS. REARDON stated, "I believe also, as a conforming amendment for
this, that on page 24, line 3, Section 29, you may need to delete
one of the misdemeanor references there. In AS 08.88.401(d),
you'll see that it lists another misdemeanor penalty for violations
of .161." She explained that conceptual Amendment 4 already says,
"a violation of 08.88.161 is this misdemeanor punishable by a
$5,000 fine now, under your change; so, we'd have two different
misdemeanors going to the same violation of .161, unless you get
rid of the one on page 24. But that's ... kind of a `draft
thing.'"
Number 1937
CHAIRMAN ROKEBERG agreed and said they would make sure it fits.
Number 1979
REPRESENTATIVE RYAN asked whether there was similar licensing for
automobile dealers and their sales people.
CHAIRMAN ROKEBERG indicated there is a bill addressing that topic.
Number 1979
REPRESENTATIVE RYAN said he could see making it this stiff for
architects or engineers, because a building's collapse could do
physical harm. However, for misbehavior by someone peddling a
piece of property, rather than "whacking them so hard," he'd be
interested in forever banning them from that discipline, keeping
them from ever getting a license. He asked the chairman's opinion.
CHAIRMAN ROKEBERG deferred to Ms. Reardon.
Number 2018
MS. REARDON explained that the issue here is unlicensed activity;
there are no licenses to take away. The offense is already a class
A misdemeanor. The problem is that the district attorneys' office
has many priorities higher than unlicensed occupational licensing
activity.
MS. REARDON stated, "We're saying, `Let's also have the option of
just a fine ... by the commission, because since we have laws that
say you have to have a license, when you operate without a license,
if there's no penalty ever - because the DA's office never really
can take those cases - people who do bother to get licenses resent
it. And so, we were looking for a way, keeping it out of the
courts, that we could do some enforcement of unlicensed activity."
Number 2065
REPRESENTATIVE RYAN noted Ms. Reardon's indication that she didn't
care whether they used "Before" or "After" on line 22 of conceptual
Amendment 4. He said he'd feel more comfortable being a little
more proactive, using "Before" rather than "After", which may stop
some of this activity without going through the whole procedure.
CHAIRMAN ROKEBERG asked whether Representative Ryan was saying they
should know more about the circumstances and notify a person who
was being accused.
Number 2101
REPRESENTATIVE RYAN replied that if the commission has enough
information to issue an order, they could call the offender and
tell them. He stated, "And if the person says, `Well, fine, I'll
go away and sin no more,' then we save ourselves a lot of money on
all the process we have to go through to issue orders and enforce
them. So, I would be more comfortable with `Before'."
Number 2125
CHAIRMAN ROKEBERG agreed. He suggested striking "After providing"
and inserting "Before issuing" on line 22 of the amendment.
Number 2142
REPRESENTATIVE RYAN moved that as an amendment to conceptual
Amendment 4.
CHAIRMAN ROKEBERG asked whether there was any objection. There
being none, the amendment to conceptual Amendment 4 was adopted.
Number 2156
CHAIRMAN ROKEBERG announced he wanted to split the amendment.
Conceptual Amendment 4(A) would be lines 6 through 13. Conceptual
Amendment 4(B) would be lines 14 through 33, as amended. He wanted
to hold off on 4(A) for now and see how it fits with the bill.
Number 2192
CHAIRMAN ROKEBERG asked whether there was any objection to adopting
conceptual Amendment 4(B), as amended. There being no objection,
it was so ordered.
Number 2205
REPRESENTATIVE COWDERY expressed concern about unlicensed people
who help others sell or manage properties, including large tracts
of acreage, valuable lake-front property, apartment complexes and
warehouses. For example, it could be on behalf of one's mother.
In spite of past abuses, he was concerned that the legislature not
close the door to people who want to assist in a situation like
that, tying those people into violations and penalties. He
suggested working out another exception addressing such situations.
Number 2280
CHAIRMAN ROKEBERG informed listeners that in the committee
substitute to be drafted, the area that mandates errors-and-
omissions (E&O) insurance would be changed to make any mandate for
E&O insurance contingent upon the state's and the commission's
finding an insurance carrier that will issue a policy for $200 or
less a year. In addition, the commission had indicated they don't
want to actually collect those premiums and so forth. "And we're
going to be fixing that," Chairman Rokeberg said. "And rather than
bring it as a conceptual amendment, I'll just inform you."
Number 2316
CHAIRMAN ROKEBERG referred to the "brokerage sign deal." He said
that there had been some miscommunication with the drafter and that
the committee would change that. There were also some problems in
terms of the subdivision of out-of-state lands and the ability of
an owner to market those under the existing law. He stated, "Now
we've opened up the law. We're going to take a look at these
things. And anybody that knows why the subdivided land of an ...
owner is restricted out-of-state, they'll let us know." The final
area was one Representative Cowdery had mentioned: The committee
would look at making sure that the public and the commerce of the
state are protected as far as restrictions go; that may include
looking at the family members of a property owner.
Number 2355
MS. REARDON suggested it may help Representative Cowdery to refer
to page 31, line 21, which refers to attorneys in fact, which she
believes are people with powers of attorney, being excluded from
the licensing requirements if they have fewer than two sales
transactions a year. "I don't know whether that will take care of
a situation like the family situation you're describing or not, but
it could possibly," she stated.
MS. REARDON suggested when thinking about minor clean-up amendments
that might be useful from the department's point of view, several
places in the bill refer to the commission's ability to assign or
designate some of its tasks; it might be helpful if it said they
could designate them to the department or to department employees.
When it just says "designate or assign," it could be to anyone.
Number 2400
CHAIRMAN ROKEBERG replied that he'd looked into that. He
explained, "We're concerned that because those provisions are in
the examination portion of the title, that we need to be able to
designate an examining contractor or contractee to be able to do
some of those tasks. So, that's the rationale there." He
indicated they would look at that further.
CHAIRMAN ROKEBERG announced that on teleconference were the
Anchorage, Homer, Kenai and Mat-Su Legislative Information Offices
(LIOs). He asked that testimony be limited to three minutes.
Number 2426
CAROL MEYER, State President, Alaska Association of Realtors,
testified via teleconference from the Mat-Su LIO. Referring to a
comment at the previous hearing that indicated her organization had
adopted and approved this bill, she stated, "That is not the case
as of today. A legislative committee will be meeting Friday, the
21st of March, and we will be going over this with all of the
legislative chairs within all of the boards." She expressed
appreciation that there would be another hearing March 24.
CHAIRMAN ROKEBERG indicated Ms. Seitz would provide an outline or
the new committee substitute for the March 21 meeting. He asked
where that would occur.
MS. MEYER said it would be at RE/MAX in Anchorage at 11:30 a.m.
She requested that information be provided before that day.
TAPE 97-23, SIDE B
Number 0006
CHAIRMAN ROKEBERG requested that anyone wanting a copy provide a
fax number. He asked Ms. Meyer's personal opinion on whether the
committee was headed in the right direction with this bill.
MS. MEYER replied that from the looks of it, it is pretty much what
they've looked at for the past three years and therefore is "pretty
well right on line." She'd had several calls to her office that
morning regarding mandatory E&O insurance. She noted that someone
else would be addressing that. "That would be the only controversy
that I might see coming up; so, we'll just have to work that one
out," she concluded.
Number 0046
CHAIRMAN ROKEBERG asked whether Ms. Meyer would inquire about the
creation of a commercial endorsement at her organization's coming
meeting.
MS. MEYER agreed to do so and said she liked the idea.
CHAIRMAN ROKEBERG asked whether Ms. Meyer had any problem with
mandating that regulations adopted by the commission include the
"professional-designated curriculums" for educational requirements.
Number 0067
MS. MEYER responded, "No, I think that is great." She noted that
the National Association of Realtors (NAR) has gone over those
guidelines for agents to get those designations. They are not
easy, and there are many hours involved with them, with excellent
educators. Ms. Meyer herself is a "GRI, ... headed for a CRS."
MS. MEYER stated, "I don't think we need to duplicate efforts to
have the Real Estate Commission also adopt their outlines, when
it's already been adopted by NAR and the other designees that are
doing it. So, I really am glad to see this in there, as well as
the technology. There's been problems with the technology,
continued education, before. As we all know, though, with
technology, our kids know more about how to do this stuff than us.
... I think for us to continue to do the type of business and to be
able to service the customer out there, our clients or customers,
we must have this information also. They're the ones that are
demanding it of us."
Number 0113
CHAIRMAN ROKEBERG said he'd like to get a reading later on the
deletion of Section 37, regarding disclosure of agency information.
MS. MEYER indicated they would discuss that at Friday's meeting.
CHAIRMAN ROKEBERG asked Ms. Meyer to explain the designations she
had mentioned.
MS. MEYER explained that "GRI" stands for Graduate Residential
Institute. There are three separate weeks of courses covering
residential topics as well as some commercial topics and a little
property management and investment. She said "CRS" stands for
Certified Residential Specialist; it relates to "residential
specializing as far as selling property for investment sources."
Number 0180
RON JOHNSON, Broker and President, Kenai Board of Realtors,
testified via teleconference from Kenai. A former member of the
Real Estate Commission for two full terms, he'd served as chairman
for more than two years and had served under three governors.
MR. JOHNSON said AS 08.01.035 outlines the terms of appointment and
how the commission is formed, but there is no provision for
removal. He stated, "In the past two years, a couple of the ...
governor changes have caused the Real Estate Commission to be
severely cut, you might say, politically. And it has created some
problems. I would recommend that the committee look to the
possibility of requiring that the only way you get off once you're
appointed is if ... you die or resign or something such as that."
In addition, the real estate law requires disclosure of agency but
doesn't define what "agency" is; he'd like to see that addressed.
Number 0242
MR. JOHNSON asked the committee to consider putting the Real Estate
Commission under banking, securities and insurance. He explained,
"Banking, securities and insurance is what we do. We deal with
paper, we deal with money, and we deal with insurances, and the
fact that we do have a surety fund that carries quite a bit of
money around in it. I think the Real Estate Commission, because of
the sureties fund, has that unique ability that ... would benefit
the general public and the licensed industry if they had a
commission that was a little bit more stable. If the governor was
allowed one appointment per year, that would give him four seats on
... the commission by the end of a four-year term, and I think ...
the public would be better served."
Number 0283
CHAIRMAN ROKEBERG asked that Mr. Johnson fax recommendations
regarding removal of real estate commissioners to 465-2040, noting
that the committee hadn't addressed that issue. He expressed hope
that the industry would resolve the agency issue that coming summer
and that it could be brought back next session, but he acknowledged
that may be optimistic.
MR. JOHNSON said he believes a single paragraph specifically
outlining what agency is would suffice. Although there is a legal
requirement to disclose to a principal that a person is an agent of
the seller or buyer, a limited dual agent, et cetera, a good share
of the membership doesn't understand the concept of agency. He
cautioned that although the realtor organization is indeed the
leader in offering educational programs, for example, perhaps only
50 percent of licensees in the state are members of realtor
organizations. He wouldn't want to limit the ability of non-
realtor licensees to get the same education, at the same level.
CHAIRMAN ROKEBERG requested that Mr. Johnson provide suggestions.
He pointed out that there is a statutory reference to, and
acceptance of, the principle of dual agency in this bill. He drew
Mr. Johnson's attention to Sections 37 and 38.
Number 0418
ERIC DYRUD, Associated Brokers Incorporated, testified via
teleconference from Anchorage on behalf of the Anchorage Board of
Realtors' legislative committee. They are pleased they'll be able
to review changes at the next hearing. Mr. Dyrud referred to AS
08.88.071 and said one recommendation is suspending the license of
a broker convicted of a felony or other acts. "He could still be
a salesman," he stated. "But if you'll note, there's enacting
language in there that says he cannot get a license if he applies
for it, if he's convicted of forgery, theft, extortion, conspiracy,
et cetera. But there is nothing in the legislation that says if he
is a broker that he's subject to the same limitations."
CHAIRMAN ROKEBERG asked where that is in the bill, version B.
MR. DYRUD said it starts on page 9, line 31, continuing to page 10.
They recommend that if someone with a broker's license is convicted
of a felony or those similar acts, that license would be revoked.
As he understands it, if he were a broker now and convicted of
forgery, that would not be grounds to remove his broker's license.
CHAIRMAN ROKEBERG said they'd look at that. He suggested that Mr.
Dyrud check with Ms. Oakley and others on the task force for input,
then forward suggestions to the committee. He asked him to provide
a fax number, in order to provide a copy of the next committee
substitute or inform him where it could be obtained.
MR. DYRUD said the fax is (907) 276-5696.
Number 0599
TERRY YAGER testified via teleconference from Homer, saying he is
a sales person speaking as a licensee. He and his peers in the
industry have concerns regarding the new subsections, insurance
regulations, endorsements, and the terminology about service
licensees. On March 13, a sponsor statement was faxed to his
office. He and his peers have numerous questions and would like to
see a broader sponsor statement as to what direction the committee
is ultimately heading with the bill, specifically regarding the
service licensee terminology.
MR. YAGER said he sees what is possibly a shifting of liability,
and the surety fund seems to be a concern with the E&O insurance
addition and the endorsement additions. "We are all, I think, in
favor of making our job more professional and certainly protecting
the citizens of Alaska, but I think our concern is with protecting
us as licensees," he stated. Again expressing concern about the
general direction this is going, he asked, "Is it going to go into
something long-term, like the state of Colorado, for example?"
CHAIRMAN ROKEBERG said he appreciates some of those concerns. They
would take their time with the bill to ensure that everyone
affected had the opportunity to look it over and react to it. He
suggested that those wanting a copy of the committee substitute
could fax a request or obtain a copy from their local LIO office.
Number 0848
STEPHEN VLAHOVICH, Associate Broker, Associated Brokers
Incorporated, testified via teleconference from Anchorage, saying
he'd received the bill that day. His initial response to
conceptual Amendment 3: "I think it stinks." He finds it to be an
insult to professionalism. He has 20 years' business experience
and has been involved in many transactions in excess of $500,000;
he believes that he is qualified. These commercial brokers
endorsements would have to be held by the agent involved in the
transaction, as well as the broker. To him, this "looks like
restraining trade or kind of shutting the door behind you once
you're in." He asked whether property management firms hold
brokers licenses at this time.
An unidentified speaker on teleconference said yes.
MR. VLAHOVICH asked, "Okay, so you would have to have a broker's
license to be on the commission. And now we've changed the
language to read just `licensee,' which means any sales person
could serve on the commission?"
Number 0946
CHAIRMAN ROKEBERG explained, "It's just a language situation.
Brokers, associate brokers and sales people, if you will, the
practitioners, ... they're the service licensees now, because of
the different endorsements. So, all those designations that we are
traditionally used to still remain in the law; it's just that ...
they're a slight change in terminology." He said a service
licensee would have to have an endorsement in their specialty.
MR. VLAHOVICH asked whether that person would have to be a broker.
CHAIRMAN ROKEBERG said no. He stated, "It's like a salesman now.
You'd just be a service licensee then. It's the same thing." He
encouraged Mr. Vlahovich to notify them of any further concerns.
Number 1001
SCOTT CONNELLY, President, Kachemak Board of Realtors, testified
via teleconference from Homer, saying some of his questions and
concerns had already been voiced. He expressed curiosity as to why
"real estate services practitioner" is repeatedly being inserted.
In addition, he sees the term "personal services contract"
replacing the term "listing." This lingo harks back to the Real
Estate Commission's task force, and he felt that some of their
recommendations had been slipped in, to one degree or another here.
MR. CONNELLY stated, "Whether that's good, bad or indifferent I
don't want to get into today. But it brings up some questions if
we're not generating listings anymore, we're generating personal
services contracts, as a sort of a second avenue to an agency
relationship with a seller." He said later sections about agency
disclosure need more definition and seem to mix terminology. If he
had a personal services contract with the seller, how could he
possibly be a dual agent if he wasn't actually an agent of the
seller? He needed a little more definition along those lines.
MR. CONNELLY read from the first paragraph of the sponsor statement
sent on March 13th: "Licensure of property managers and community
association managers is needed". He understood that property
managers are already required to be licensed, although there may be
a need for a tighter rein to avoid abuse. He also isn't happy with
the concept of mandatory E&O insurance, although he believes a
person would be foolish not to have it, if it is affordable.
MR. CONNELLY agreed with Ron Johnson that passing legislation that
requires membership in a national organization is probably a
mistake. He explained, "NAR offers excellent courses. They're
probably not a bad benchmark to look to for the commercial
designations. However, there's a lot of people that are not
members of NAR that may not have access to those courses. And what
if NAR ... changes their courses in the future to be in conflict
with the legislation, and all of a sudden, we're in the position of
having to respond to a private organization in our legislation?"
Number 1174
CHAIRMAN ROKEBERG responded to Mr. Connelly's concerns. The term
"practitioner" was previously "sales person", "salesman" or "sales
agent". Now there are property managers and community association
managers, who are not sales people. That is the only reason for
that nomenclature change.
CHAIRMAN ROKEBERG referred to the suggestion that the term
"personal services contract" sounds like the agency task force.
When he'd first read the bill, he'd had the same opinion. However,
it was pointed out that "personal service contract" already exists
in the statute; this basically is where listing or a sales
agreements are. There are various contracts entered into between
practitioners and the public that are personal service contracts,
not strict listings. In the prior statute, the word "listing" was
used a number of times. But because they are expanding the scope
to include property managers and community association managers,
the term "listing" would not be inclusive enough for those
contractual agreements. He assured Mr. Connelly that the use of
"personal service contract" has absolutely nothing to do with an
existing task force considering agency right now.
Number 1266
CHAIRMAN ROKEBERG stated, "And you're right that property managers
are now required to be licensed. However, community association
managers are not. And if you picked up on the conceptual amendment
I made about deleting the mandated E&O insurance for anybody, only
if it was readily available, as contemplated by the commission, and
available ... to the practitioners of the state for under $200 per
annum, would it even be made available; and at that time, it would
be mandated. The only reason it's mandated is the commission
believes, and I agree with them, that to obtain a very low premium
for everybody, we'd have to bring everybody on board. In other
words, you have to have an economy of scale to get a low premium.
So, I agree with you: I would not support any mandating of it
unless there was an extremely low premium that's approved by the
commission."
Number 1314
CHAIRMAN ROKEBERG said finally, the recognition that the NAR offers
courses doesn't mandate that anyone become a realtor. He agreed
that only perhaps 50 percent of those licensed to do business are
actually realtors in this state. He said, "The point is that the
commission, via their regulations, would now be required to give
certain elective course credit for those courses which heretofore
have not been given any course credit, when a person could spend
several thousands of dollars traveling in and out of the state, for
example, to take these courses, which are very arduous and many of
which have examinations after the end, are not now granted any
credit under elective or continuing education. So, that's what
those things do, and hopefully that answers your questions."
Number 1362
BILL McNALL, Attorney at Law, McNall and Associates, PC, testified
via teleconference from Anchorage. He has been a director and
president of the local chapter of the community association
institute in Anchorage, which he helped found 12 years before. He
has taught numerous community association management classes, as
well as many agency classes. He was on the task force that created
this legislation. He noted that the legislation preceded the
agency task force proposals by probably a year.
MR. McNALL stated, "I think that the bill is a good one. I think
it is absolutely necessary. As you are well aware, the standards
by which we judge community association managers and property
managers really don't exist very much. We haven't done a lot of
education; we haven't looked at other places for those standards.
And it kind of leaves us guessing sometimes ... what the rules
really are. And, of course, we all know that if we don't have
rules, the court is always happy to supply them. And we're trying
to avoid that. And I think this bill goes a long way to helping us
create those regulations and rules, so we all know ... what we're
supposed to be doing."
MR. McNALL expressed some concern about members' apparent response
to mandatory E&O insurance. Referring to information in the
packets regarding the embezzlement of $500,000 by Ronald Thornton
from ten condominium associations, he said without a surety fund or
insurance, there is no recourse for low-end condominium owners who
cannot afford litigation; Mr. Thornton had neither. There is also
potential liability because managers may not handle an
association's fund properly. Mr. McNall concluded, "So, it's one
of those Catch-22s that I think certainly will be addressed with
the educational process, and I really applaud you for bringing this
bill forward."
Number 1522
CHAIRMAN ROKEBERG asked whether Mr. McNall had questions about the
proposed deletion of Section 37, page 22, beginning at line 16.
MR. McNALL responded that this represents the rules to follow when
advising people that one may wind up being a dual agent. He
stated, "And the consensus that I had, and people in the legal end
of this business come to, is you want to make that disclosure
early-on, so you're not surprising them later. And the problem, of
course, is if you really, truly disclose that right up-front,
before you establish much of a relationship, it's kind of a
meaningless contact. The idea is: How do you establish that at
the appropriate time?" He does a lot of real estate work in his
practice, defending some brokers and pursuing others; most have no
clue about what a dual agent is or when that begins. Anything to
help that situation would be laudable. Other than that, he didn't
know whether he could comment further on this section.
CHAIRMAN ROKEBERG noted that in Section 38, they were recognizing
in statute the existence of dual agency in Alaska. He asked
whether Mr. McNall's concern was the timing of that.
MR. McNALL said yes.
CHAIRMAN ROKEBERG indicated the committee would look at that.
Number 1643
MR. McNALL and CHAIRMAN ROKEBERG discussed the idea of eliminating
liability for dual agency, including its providing immunity for
real estate dealers and its relationship to consumer protection.
CHAIRMAN ROKEBERG requested the citation for a Minnesota case
relating to that, "the Dyna (ph) Realty case," which he said was
causing legislative changes in Alaska.
MR. McNALL said he didn't have it with him but could obtain it.
Number 1792
REPRESENTATIVE RYAN referred to the scenario mentioned by
Representative Cowdery, with a family member managing property for
an elderly mother, for example, without a license or endorsement.
He asked, "Do you have any problems of anybody doing this under a
statutory power of attorney or ... power of attorney in fact?"
MR. McNALL indicated he had no particular problem unless it
entailed violating rules about conveying property when getting on
in years or inadequate estate planning. Although it may look like
a fraudulent conveyance later on, the simple answer would be no,
let them do it with a power of attorney. "An attorney in fact can
do all that good stuff," he concluded.
Number 1879
CHAIRMAN ROKEBERG noted that the existing statute limits it to two
transactions a year, which he believes is a defect now that they
are talking about expanding community association and property
management. Two transactions a year would be like renting a one-
bedroom unit in a 12-plex owned by one's mother.
MR. McNALL agreed there would be circumstances where one would want
that power of attorney to be broad in scope, in order to turn over
management responsibilities to one's child.
Number 1920
REPRESENTATIVE COWDERY cited the example of a family member
spending the winters in Arizona and wanting someone they trust to
take care of things while they're gone. Estate planning would be
a separate issue. He believes this kind of situation is fairly
common in Alaska, and he wouldn't want to close the door on that.
Sometimes people use powers of attorney, but sometimes they just
ask a family member.
CHAIRMAN ROKEBERG indicated the committee would review the number
of power-of-attorney and attorney-in-fact transactions. That may
take care of concerns registered by members.
Number 1999
MR. McNALL commented, "One of the things that I've seen is folks
using that exact tool, if you will, to avoid the regulations of any
duties of a power of attorney and will do 20 or 30 transactions a
year. And at some point, they do get caught. But ... because it
takes a lot of work on the commission's part to pursue those, they
basically can get away with it. It would be nice to have some
guidelines that would be fairly clear about when you can do that
and what the circumstances are."
CHAIRMAN ROKEBERG asked whether Mr. McNall would recommend giving
the holder of an attorney of fact unlimited capabilities under the
statute to conduct transactions.
MR. McNALL suggested Chairman Rokeberg didn't want to open that
door as broadly as he might be implying.
CHAIRMAN ROKEBERG asked whether a better approach might be having
the level of relationship be the first level of bloodline.
MR. McNALL replied that the most egregious situation he could think
of involved two brothers. It might be better to have the person
granting the power of attorney explain it to the commission and
have the commission decide whether the reason is adequate. He said
if his mother needed to go outside for medical reasons and he was
going to rent out her house or manage her (indisc.) for her, he
should be able to do that. However, that could be done with a
(indisc.) statement or affidavit.
Number 2120
REPRESENTATIVE RYAN asked whether they weren't stretching this
concept of a fee for service to an extreme, to try to tell people
what they can do with their individual property. He proposed an
example where he owns real property and chooses to have his brother
or best friend look after it. He has the right to do what he wants
with it, as long as he doesn't break the law. He stated, "And yet,
here's a Real Estate Commission, who are a bunch of people who hire
out to do me a service, telling me they want to restrict my options
in what I can do with my property and whom I can have look after
it. And I find that to be a little offensive, because you have
absolutely no interest in the property whatsoever."
Number 2240
MR. McNALL responded, "I don't know that that's what this does,
sir. It seems to me that what we're saying is ... you can use this
tool, a power of attorney in fact or power of attorney, to have
anybody you want to manage the property in your absence. I think
the only question is, is should we put some upper limit on that.
I'm sure you'd give somebody a power of attorney to allow them,
say, to rent out your property or manage your property; you'd
probably limit it so they couldn't just sell your property. But
assuming ... that they're doing what you want them to do, that's
not a limitation on what you do with your property."
REPRESENTATIVE RYAN replied, "No, but you expressed a concern, sir,
that pretty soon we'd have a bunch of people out here managing
property illegally, inasmuch as they would be out of the grasp of
the Real Estate Commission, as though a person who owns a piece of
property and wants to have a friend or relative do something with
it is going to make that illegal. Perhaps I missed a connection
there, but that's the way it appeared to me."
Number 2309
MR. McNALL clarified that it wasn't a desire to make it illegal.
Rather, the issue is what to do when someone tries to avoid
regulations and rules about being a licensed personal service
contract provider to do certain things, rather than acting in good
faith. For example, if someone has 30 rental units and doesn't
want to pay a commission, hire real estate licensees, or do the
work himself, he may bring in relatives to assist, operating
outside the law. It isn't a good-faith violation of the rules but
conspiring and scheming to avoid the regulations. If people are
allowed to do 20 transactions a year, some would do it for reasons
that aren't the nice reasons Representative Ryan described.
Number 2389
REPRESENTATIVE RYAN responded, "You will find a lot of immigrant
families who come to America and in 10 or 15 years are doing quite
well, just because of the familial relationships of everybody
working very hard and pooling their resources to get ahead,
something that perhaps some of us who have been in America for 300
or 400 years should go back and revisit. And these people do the
things you have just described. And by working very hard and
having family members do things, they prosper in this country and
take care of the American opportunity. We start limiting these
sort of things to someone with a license and we're taking away part
of the opportunity. I think there's a fine line we have to find
here. And I'd thank you much for your comments, sir."
Number 2444
MR. McNALL replied, "It seems to me if I'm going to leave town and
have somebody competent to take care of my property for me, I'd
much rather turn it over to a licensed real estate agent, where
there's adequate E&O insurance and a surety fund, so in case
there's a problem, I have some recourse when I come back, as
opposed to trying to figure out how my Aunt Sue might take care of
my property, when she really doesn't have a clue about what she
needs to be doing."
REPRESENTATIVE COWDERY commented about different family
relationships.
TAPE 97-24, SIDE A
Number 0025
CHRIS STEPHENS, President, Bond, Stephens and Johnson (commercial
real estate brokerage firm), testified via teleconference from
Anchorage, indicating he'd testified at the previous hearing
regarding the commercial endorsement. He strongly supports it and
thinks the need for it is abundantly clear. He doesn't believe the
education requirements are burdensome, nor is it unreasonable to
obtain additional education to gain expertise in the area in which
one will practice. He believes it is necessary for the protection
of the public. Mr. Stephens pointed out that one doesn't have to
be a NAR member to take their courses, at least the commercial
courses with which he is familiar. Although there is a different
fee structure for nonmembers, anybody may take them.
MR. STEPHENS said Section 37 highlights the differences, perhaps,
between commercial and residential. Lines 23 and 24 talk about
getting a commercial services contract before one can do anything.
However, anyone who does commercial real estate learns quickly that
many companies would never sign such a document. It would be
shipped to a corporation's legal department, and it would never be
seen again. In the commercial sector, that isn't practical, as
well-meaning as it is.
Number 0191
MR. STEPHENS believes the amendment relating to leasing commercial
property makes sense. As he understood the bill was drafted
originally, it required a property management endorsement to lease
commercial property. In Anchorage, at least 90 percent of
commercial leasing is done by brokers, not by property managers.
It doesn't make sense to have commercial brokers get property
manager endorsements for something they've already been doing for
a long time. Therefore, he applauds that change.
MR. STEPHENS noted two problems with using a dollar amount to
define "commercial." First, over time, inflation will cause the
dollar amount to mean something different. And second, for those
without a commercial endorsement, it could be a strong economic
incentive to make sure that a transaction is below $500,000, which
gives an unwanted incentive. He suggested defining "residential"
with language such as, "the sale or lease of single-family houses
and rental units up to four units, and unimproved single-family
lots," thereby staying away from dollar definitions.
Number 0339
CHAIRMAN ROKEBERG explained that as he conceived drafting the
commercial endorsement, a duly-endorsed property manager would be
able to let premises for above the $500,000 mark. He wanted to set
it up so that a property manager could do the leasing or renting as
set forth in the bill, but a commercial endorsee also could do it
without having a property management endorsement. The issue then
becomes whether a property management endorsee could lease
something with a value over $500,000, such as a gross aggregate of
rental receipts.
CHAIRMAN ROKEBERG concurred about limiting the definition
monetarily, suggesting if that were retained, it should be related
to the Consumer Price Index (CPI). However, not putting a value on
it may be problematic without going into a mass of definitions. He
expressed the desire for input from the entire real estate
community, to come up with an acceptable definition that will do
the job without placing a burden on anyone.
Number 0496
MR. STEPHENS said he agreed, stating, "I think the property
managers on the commercial side, they do commercial leasing, and
that should be part of the ... property management endorsement on
the commercial side, and I think that brokers do, too." He
commented in his experience, real estate values don't necessarily
follow the CPI. Therefore, hooking the dollar amount in the bill
to the CPI may not achieve what they are trying to achieve.
CHAIRMAN ROKEBERG said he appreciated that. He suggested they may
need a periodic review.
Number 0552
KRISTAN TANNER, Broker Associate, RE/MAX of Wasilla, testified via
teleconference from the Mat-Su LIO, specifying that she is a
licensee with the "CCIM" designation also held by Chris Stephens.
MS. TANNER said the task force agreed with Representatives Cowdery
and Ryan that there are definitely situations that need to be
excepted from the present law, because currently in statute, there
is no remedy or exception for the mother-in-law who gets sick and
goes out of state. Their desire was to create a number of
exceptions; she mentioned exceptions listed on pages 29 through 33,
some of which are currently available and some of which aren't.
MS. TANNER explained, "We truly tried to expand it because we
agreed that there were different times when the law obviously
created a situation where somebody was in violation and truly that
was not the spirit of the people that were participating in a
specific transaction." She suggested if the committee reviewed all
those exceptions, they'd find that the majority of concerns would
fall within those, with the one exception that the power of
attorney may need to be expanded to a different number.
MS. TANNER offered to answer questions regarding endorsements and
how the hours for continuing education would cross over.
CHAIRMAN ROKEBERG reported that Ms. Tanner had submitted written
testimony, received that day. He expressed appreciation for that.
Number 0731
REPRESENTATIVE RYAN asked about the time and expense involved in
obtaining endorsements through continuing education.
MS. TANNER explained the idea behind the task force: Someone who
wants a sales endorsement and a property management endorsement
would need eight hours of core requirements for each endorsement,
which totals 16, plus four more for continuing education. For a
third endorsement, one would use those four additional elective
continuing education hours and then pick up four more, for a total
of 24 hours. They had tried to design it so as not to be overly
burdensome in terms of either hours or cost. In contrast, for one
endorsement currently, eight hours of core classes and 12 hours of
continuing education are required, for a total of 20 hours.
Number 0883
CHAIRMAN ROKEBERG asked whether Ms. Tanner was aware of the draft
regulations, separate from this bill, about continuing education.
He asked whether she had been involved in any of those.
MS. TANNER replied, "Briefly. I was not involved with them."
CHAIRMAN ROKEBERG said he'd ask Ms. Oakley about that. He asked
Ms. Tanner what "CCIM" stands for.
MS. TANNER replied, "Certified Commercial Investment Member."
Number 0934
CHAIRMAN ROKEBERG mentioned the exceptions and said an existing
area of law is vexing the committee and the staff. He referred to
page 30, lines 2 and 3, and said, "It's in the existing statute
now, where it refers to `unless the transaction involves land
defined in'. And this is the subdivision statute; that is not in
Alaska. ... And that's also picked up in the next, .900, section."
He asked whether the task force had considered that and requested
an explanation.
MS. TANNER said she wasn't sure she could explain it. She stated,
"You look on page 31, line 17; it's put back in there." She
indicated Mr. McNall may be able to answer specifically.
CHAIRMAN ROKEBERG asked whether an individual would receive credit
from the commission for having a degree in economics or business.
MS. TANNER asked whether that was regarding a new license.
CHAIRMAN ROKEBERG said either a new license or any continuing
education course.
MS. TANNER replied that currently, if someone wants credit for a
university class that they will take, it must be approved by the
commission. She's not aware of any approval for a course that was
taken previously. Ms. Tanner does agree with the bill regarding
real estate courses that can be taken through the university for
continuing education.
CHAIRMAN ROKEBERG responded, "Right. If they're approved by the
commission and the amount of hours granted (indisc.) would be by
regulation by the commission, but they specifically provide for
credit of those courses, which has been absent to date."
Number 1072
MR. McNALL stated, "The section that you are asking questions about
is related to the interstate land sale practices act, which is
federal and controls the area. And I don't think we'd pass a law
that would contradict that area."
CHAIRMAN ROKEBERG said there is a "definition reference" in the
Alaska statute, as far as land sale subdivisions.
MR. McNALL said he believes that is correct.
CHAIRMAN ROKEBERG continued, "And we were curious about the
antecedents to it. The best I could come up with was ... the sales
of property, very much like the residential-type promotions, the
... general development corporation sales of Florida tidal flats
that went on for a number of decades and the like. ... But there
has been some concerns expressed that if a person did happen to own
out-of-state property and they wanted to subdivide that land, why
couldn't they sell that property? So, that's the nature of the
inquiry. This is in the existing statute."
MR. McNALL said he couldn't answer further but perhaps Ms. Oakley
could.
Number 1156
GRAYCE OAKLEY, Executive Administrator, Real Estate Commission,
Division of Occupational Licensing, Department of Commerce and
Economic Development, responded via teleconference from Anchorage,
"I believe that there are, in the fine print of the law, of the
interstate land sales practices act, there are a number of things
where if there's a building on a lot or something like that, it
doesn't have to be done through a licensee. ... That law was put in
place for the large subdivisions of vacant lots that were being
marketed as ocean-front lots in Arizona, or wonderful places to go,
and that were really swamp land in Florida or something like that.
And as you mentioned, they were the type of thing that was by a
general development corporation. And it was an attempt to keep
people from being taken unfair advantage of. It was a consumer-
protection bill to keep people from being hoodwinked by the fast-
talking promoters of those kinds of properties."
MS. OAKLEY continued, "One other thing that I would like to mention
that was touched on briefly by Catherine Reardon with regard to the
use of the term `designee,' and I know we haven't had a chance to
discuss this very much, but the reference on page 2, line 15, is
much broader than just having to do with testing. It says the
commission may assign or designate, and we would say designate to
just department employees, the ability to issue licenses and
endorsements to certified courses under this chapter, to approved
instructors, to negotiate the terms of a repayment when somebody
(indisc.) shouldn't have to pay back the surety claim, unless they
do it on an installment contract. Those kinds of things are all
encompassed in there; it's not restricted to the testing service
employees."
MS. OAKLEY continued, "And the one on page 14, line 24, that does
refer specifically to the testing service, says at the beginning,
`If the commission authorizes the department to contract with a
national testing service', then they can delegate that this
designated person shall review the examination or approve its
contents. And so, I would like to urge you to take another look at
that language with regard to the designee, because it could, from
a personnel standpoint, ... create or present some potential
problems with regard to people who are not employees of the state
being designated to do certain tasks."
Number 1310
CHAIRMAN ROKEBERG asked whether Ms. Oakley could make a
recommendation about the designee to clear up that matter.
MS. OAKLEY said she'd be glad to address each one.
Number 1335
REPRESENTATIVE RYAN said he didn't know whether it was just the
organization hired by the Real Estate Commission to administer the
test, but he'd spent a lot of time as a training officer in
aviation; one basic concept of testing is to sample an individual's
knowledge to see how comprehensive it is regarding the subject
being tested and to determine what will bring that person's
proficiency up to 100 percent.
REPRESENTATIVE RYAN stated, "Yet this organization will tell you
either you passed or you failed; they will not tell you what areas
that you need for further study. And if you successfully pass one
portion of the test, either the national or the Alaska state, and
you fail another, you have to come back and retake both portions
again." He saw no purpose for that, other than keeping people out
of the profession, and he wanted to hear a justification.
Number 1451
MS. OAKLEY agreed when people pass the test, they receive no grade.
But when a person fails, there is a bar graph on the score report
form that shows the areas in which the person did or didn't do well
enough. The reason for taking the whole test again after failing
one part is that otherwise, there would be two different time lines
going, leading to problems of getting the application in within six
months of passing the exam. Ms. Oakley concluded, "And that's just
a call that the commission has made. It's something that could be,
I suppose, looked at again. But that's what has been in place for
more than the ten years that I have worked for the commission."
Number 1513
REPRESENTATIVE RYAN said he didn't recall anyone getting a failing
grade that provided some idea of the "level of incompetency."
MS. OAKLEY replied that if the score is failing, below 75, the
person receives the score.
REPRESENTATIVE RYAN asked whether that had been true in the last
couple of years.
MS. OAKLEY said it had been true as long as she'd been there, and
certainly the whole time they'd been with ASI (ph) as a testing
service.
REPRESENTATIVE RYAN asked that Ms. Oakley check to ensure that is
actually happening, as that hadn't been his own experience. He'd
had to retake the test but hadn't received a score, nor did he
remember a bar graph.
Number 1564
REPRESENTATIVE COWDERY asked Ms. Oakley's views regarding the
concerns he had mentioned earlier, involving family situations and
executors as well.
MS. OAKLEY replied, "With regard to a person acting as a receiver
or trustee, administrator, executor or guardian, that's already in
one of the exceptions listed on page 30. And as far as the family
member exemption, that one is one that I think the task force spent
a lot of time and probably a lot of rationale, both pro and con, on
whether family members should be able to step in and do, without
having the benefit of a license. And I have to say I can see both
the pros and the cons of that, too."
MS. OAKLEY continued, "But if we are to look at the ultimate
mission of the Real Estate Commission being that of protecting the
consuming public, as opposed to looking out for the benefit of the
licensees, basically a consumer-protection (indisc.) that we have
licensing for in the first place, and so, the vast majority of the
family use that you are talking about, I think the vast majority of
those instances would come within the exception of the four units
or less. And that was one of the main reasons that they
established that level of exceptions in the proposed bill."
MS. OAKLEY continued, "Beyond that, it is certainly arguable, but
... it was the feeling of the task force that that did need to be
licensed activity, simply because of the number of tenants involved
and the amount of money collected in security deposits. And when
you ... think about the numbers that I gave you last Friday of
dollars that we have paid out on surety claims, where there were
security deposits that had evaporated and not gotten to where they
really belonged, that was an overriding concern and the reason that
they felt that anything more than four units did need to have the
protection that is afforded through the surety fund that a licensed
real estate agent has as a recourse to ... their clients."
Number 1724
CHAIRMAN ROKEBERG asked Ms. Oakley to provide the committee with
minutes from the task force on that topic, particularly relating to
management of properties by family members. Although that is
existing statute in large part, they want to take a hard look at
that whole section relating to exceptions. In addition, he stated,
"Also, I'd be kind of curious now about looking at the term `as a
vocation' that's on page 31, line 31, what that really means; I
think it's in the existing statute, and it's reenacted as that, as
a vocation or for compensation."
MS. OAKLEY responded, "That's all within the bit of whether there
should be an exemption for corporations or not."
CHAIRMAN ROKEBERG asked whether anyone else wished to testify. He
thanked participants, invited further comments and advised
listeners that the new committee substitute would be issued as soon
as it could be drafted. The bill would be heard again March 24.
ADJOURNMENT
Number 1861
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee meeting at 5:37 p.m.
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