HB 281-REAL ESTATE BROKER LICENSURE REQS  4:01:40 PM CHAIR OLSON announced that the next order of business would be HOUSE BILL NO. 281, "An Act relating to real estate broker licensure; relating to the real estate commission; and providing for an effective date." 4:02:30 PM TERRY HARVEY, staff to Representative Cathy Munoz, Alaska State Legislature, speaking on behalf of Representative Munoz, sponsor of HB 281, provided background information on the real estate industry in Alaska. The real estate business was an industry consisting of small local individuals who financed property through banks or local investors. Over time, the real estate business has become increasingly complex involving contracts, documents, orders, sales, trust accounts, and foreclosures. The bill addresses education requirements and experience requirements for a licensee seeking to apply for a broker license. There is one broker per real estate firm, whose duties include oversight of monetary transactions, fees, trust fund transactions, and the ultimate responsibility for all of the licensees associated with that firm. The proposed bill would require additional education credits and real estate experience of an applicant, and was brought to the legislature by the Alaska Real Estate Commission and the Alaska Association of REALTORS. Mr. Harvey said the intent of the bill is to better serve consumers, ensure high quality transactions, avoid litigation, and improve standards in Alaska. If passed, in order to apply for a broker license, a real estate licensee or associate broker would have to complete 30 hours of education, and have 48 months of experience. He said the industry supports the bill. 4:06:47 PM REPRESENTATIVE COLVER asked if the continuing education requirement follows a two-year license renewal cycle. MR. HARVEY explained the bill does not change rules on continuing education, but adds hours to the education requirement to apply for a broker license. REPRESENTATIVE COLVER expressed his concern about continuing education that is not relevant specifically to Alaska; he suggested adding a local element to the curriculum, such as weatherization. He urged the sponsor to contact real estate professionals regarding directing a portion of the education to Alaska issues and laws. REPRESENTATIVE LEDOUX observed that a bill that increases regulation on an industry is suspect. She pointed out that the bill would benefit current real estate brokers and make it more difficult for others to become brokers; in fact, it would take four years of practice to become a broker, and she questioned the bill's value to public safety. REPRESENTATIVE COLVER agreed that professional licensing creates protection for an industry, and he cautioned against exclusionary exceptions. He asked for additional background on why the legislation is necessary. REPRESENTATIVE HUGHES expressed interest in hearing about problems that the bill would address. 4:15:07 PM MR. HARVEY noted that testimony is available from those with experiences in the real estate industry which would provide the reasoning behind HB 281, such as the growth of the industry in Alaska, the responsibilities of a real estate broker, the lack of standards in Alaska, and examples of situations. [The committee treated the hearing on HB 281 as open for public testimony.] 4:16:33 PM NANCY BLATCHLEY DAVIS, chair, Alaska Real Estate Commission (AREC), informed the committee the issue was brought forward not by AREC, but by 25 various licensees who felt brokers were not sufficiently knowledgeable to protect the public. She said Alaska ranks in the bottom four of broker licensing requirements, and AREC seeks not to limit the number of brokers, but to protect the public. Ms. Davis said AREC sees cases of public harm that could have prevented with more education. Her experience was that she needed a mentor to assist with her upgrade to broker. REPRESENTATIVE LEDOUX restated her interest in examples [of problems]. MS. DAVIS said she could not provide an example because there are no issues in Sitka, but offered to provide information from AREC. REPRESENTATIVE JOSEPHSON asked whether broker applicants are normally real estate licensees. MS. DAVIS said yes, if upgrading to an associate broker or broker, licensees have been working for two years. In further response to Representative Josephson, she said currently, licensees can work for two years, upgrade to a broker and open their own business. She said the licensees who approached AREC felt there was not sufficient experience required to protect the public. REPRESENTATIVE LEDOUX asked for examples [of problems] including the length of time and experience of those involved. 4:21:54 PM KRIS CURTIS, Legislative Auditor, Legislative Audit Division, Legislative Agencies and Offices, said an audit of the activities of the Alaska Real Estate Commission did not identify a specific need to change the requirements for licensees, or identify a risk area. The audit would have shown if there was a problem reported in meeting minutes, and AREC did not respond. 4:22:54 PM TRACI BARICKMAN, Real Estate Licensee, said she was representing herself as a real estate professional and as an educator. She said she has been licensed for over 23 years - 16 years as a broker - and has supervised thousands of transactions and hundreds of licensees. She also serves as a commissioner of the Alaska Real Estate Commission, has served as an educator in real estate for 18 years, is a subject matter expert for real estate industry testing materials, both on the state and on the national level, and therefore her experience gives her insight into the conduct of licensees. Ms. Barickman said real estate is not a "buyer beware" field, and restraint of trade does not outweigh consumer protection. A broker license in Alaska can be obtained with only 85 hours of education and 2 years of experience, which is much less than in other states. She said she supports HB 281 to protect the public, and related her recent experience with brokers who could not resolve a dispute due to lack of an understanding of contract law, experience, and problem-solving skills, and clients "stood to lose" $10,000 and a $600,000 contract. Ms. Barickman said in today's climate she would not like to be in a position supervising those with minimal education. Protecting Alaskans' homes and financial future is the responsibility of educators, commissioners, and legislators. 4:26:40 PM REPRESENTATIVE COLVER inquired as to whether there is an Alaska- based continuing education curricula available. MS. BARICKMAN said broker upgrade curriculum covers general real estate knowledge in depth, including financial investments; however, a big part is Alaska law, disclosures, and trust accounts specific to Alaska. REPRESENTATIVE COLVER asked whether there is a continuing education requirement to renew licenses. MS. BARICKMAN said yes, adding that all licensees are required to have a minimum of 20 hours of continuing education every 2 years, and of that, 8 hours is mandated by AREC to be Alaska- specific, and 12 hours is elective. In further response to Representative Colver, she confirmed that the continuing education requirement is in regulation. 4:30:30 PM CHAIR OLSON announced public testimony would remain open. [HB 281 was held over.]