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