Legislature(2003 - 2004)
05/01/2004 05:12 PM Senate JUD
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* first hearing in first committee of referral
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HB 29-REAL PROPERTY TRANSACTIONS/LICENSEES
CHAIR SEEKINS informed members that the working document before
the committee was version C and that Senator French had a
proposed amendment.
SENATOR FRENCH moved to adopt Amendment 1, which reads as
follows.
23-LS0189\C.1
Bannister
A M E N D M E N T 1
OFFERED IN THE SENATE BY SENATOR FRENCH
TO: SCS CSSSHB 29(L&C)
Page 5, following line 18:
Insert a new subsection to read:
"(c) Notwithstanding (b)(2) of this section, before a
buyer makes or accepts an offer in a real estate
transaction, a real estate licensee who is handling the
real estate transaction for the buyer shall disclose to the
buyer that a murder or suicide occurred on the real
property that is the subject of the real estate transaction
if
(1) the murder or suicide occurred within one
year before the date that the licensee first showed the
real estate to the buyer; and
(2) the licensee is aware that the murder or
suicide occurred on the real estate."
SENATOR FRENCH then informed members that he wished to amend
Amendment 1 by deleting the language on lines 4 and 5 that
reads, "who is handling the real estate transaction for the
buyer".
CHAIR SEEKINS noted without objection, Amendment 1 was amended.
SENATOR OGAN objected to the adoption of Amendment 1 as amended
for the purpose of discussion. He then asked how much the
disclosure of a murder or suicide could significantly devalue a
property.
MS. PEGGY ANN McCONNOCHIE, Alaska Association of Realtors, said
that is in the eye of the beholder, which is why disclosure is
necessary. She explained:
We're not saying it has to be disclosed in a negative
way but, for example, there are certain cultures whose
culture prohibits them from buying a home in which
there has been a murder or suicide. Other people will
not care. They just want the house. They don't care if
that happens. But the fact is it still needs to be
disclosed and we thank Senator French for helping us
with the wording because we believe that this wording
makes it far more clear since those are the two
problem areas that we feel are material facts and need
to be disclosed if they're known by the licensee
within the past 12 months.
REPRESENTATIVE ROKEBERG, sponsor of HB 29, added that the reason
this issue arose is because of case law and other actions
throughout the country. These circumstances have given rise to
lawsuits because of the psychological impact. Because this bill
will specifically codify more of the duties of realtors, he
believes it is necessary to clarify this matter. He thanked
Senator French.
CHAIR SEEKINS announced with no further objection, Amendment 1
as amended was adopted.
SENATOR FRENCH noted he had a few questions and first asked for
a clear example of a conflict of interest that a real estate
licensee would have if this bill is enacted.
REPRESENTATIVE ROKEBERG pointed out that Section 3, which
pertains to conflicts of interest, is already part of the
statute. He said the other subsections under AS 08.88.391
provide more detail and that it is the relationships that give
rise to a conflict of interest.
SENATOR FRENCH referred to "specific assistance" on page 3, line
10, and throughout the bill, and asked if a realtor can provide
specific assistance to a person without representing that
person.
MS. McCONNOCHIE said the Alaska Realtors Association wanted to
define at what point the services of a real estate licensee are
being used, "And that's when specific assistance happens." She
pointed to the definition of "specific assistance" at the end of
the bill and repeated that realtors need to know when their
services begin and when they do not.
SENATOR FRENCH asked why hosting an open house is not included
in that definition.
MS. McCONNOCHIE replied, "Because typically when you're coming
into a house and I am sitting there, intrinsically I'm
representing the owner of the house. Consequently I'm not going
to offer you specific assistance, which could be in fact,
against my client's - the seller's - best interest."
SENATOR FRENCH said he was thinking of it in opposite terms but
realizes that realtor is already representing the seller.
REPRESENTATIVE ROKEBERG indicated that the bill requires a
written disclosure statement about the type of relationship
between the licensee and a prospective buyer or seller. To
provide specific assistance would require the host of an open
house to have any prospective buyer jump up and sign a form
before allowing the person to look around, which is not likely
to happen.
SENATOR FRENCH then referred to lines 23-25 on page 3 and asked
for an explanation.
MS. McCONNOCHIE said an example would be if she represented
Senator French when selling his real estate. If, after the sale,
Senator French did not intend to buy another piece of property
but planed to rent, she could not represent him if she was
representing the owner of a home that he wanted to rent.
CHAIR SEEKINS asked if that would also apply to a home sale
rather than a rental.
MS. McCONNOCHIE explained that she could represent him to sell
his home and buy another home, but she could not do that if she
was also working for the owner of the property for sale or
lease.
SENATOR FRENCH asked about the duties of a neutral licensee
[Sec. 08.88.645].
REPRESENTATIVE ROKEBERG said the former relationship that may
have been created by dual agency is redefined in that section.
He stated, "They are to cover similar situations. They are not -
they may be analogous but they're not the same."
SENATOR FRENCH said his question revolves around the language on
page 9 in subsection (5), which talks about what a realtor can
and cannot do when working as a neutral licensee with a buyer
and seller on either side. He said he finds subsection (5)(b)(2)
to be problematic because it almost allows the realtor to do
what the realtor is prohibited from doing in (5)(A) and (B). He
suggested changing the word "would" to "should" in (5)(b)(2).
MS. McCONNOCHIE clarified that the relationship between the
buyer, seller, and realtor would not be adversarial and the
realtor would not be trying to advocate for either party. The
realtor would, in effect, be working as a go-between for the two
parties. If Senator French was buying a house through her, and
she had prior written permission from both parties to be a
neutral agent and he told her he would pay a certain price and
that she could take that price to the seller, but the seller
gave her permission to offer a lower price, she could inform
Senator French of the lower price.
CHAIR SEEKINS said he understands (5)(B) to say that with
written consent, the neutral agent could "work both sides of the
street."
MS. McCONNOCHIE agreed and repeated that this relationship would
not be adversarial and the realtor would be working to create a
win-win situation for both parties, which this legislation will
allow. She pointed out what is most often more important to both
parties are the terms of the transaction rather than the price.
REPRESENTATIVE ROKEBERG told members this bill is the result of
a significant amount of effort that goes back eight years. He
believes HB 29 is a major consumer protection bill and is an
excellent example of the proper balance between protecting the
consumer and allowing commerce to move forward. He added that in
1992 the fire agency provisions of law were adopted, but they
are broken and the statute has been modified to make the system
work better for all parties. He complimented the people in the
industry for working on consumer protection. For example,
realtors will have to provide a pamphlet to every client of the
rights and obligations of the licensee.
CHAIR SEEKINS asked if anything in the bill will make it
difficult for a person to craft their own documents consistent
with state law to sell or buy a home.
REPRESENTATIVE ROKEBERG said nothing whatsoever. This
legislation only applies to licensees regulated under Title 8,
occupational licensing.
CHAIR SEEKINS asked if HB 29 puts constraints on the licensee
and not on the way a buyer wants to buy.
REPRESENTATIVE ROKEBERG replied, "This regulates the conduct of
a licensee."
SENATOR FRENCH declared a conflict of interest with this
legislation as his wife is a real estate agent.
SENATOR OGAN moved SCS CSHB 29(JUD) from committee with
individual recommendations and its zero fiscal note.
The motion carried with Senators French, Ogan and Seekins in
favor.
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