Legislature(1997 - 1998)
02/10/1998 01:50 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 33
"An Act relating to real estate licensing and the real
estate surety fund; and providing for an effective
date."
REPRESENTATIVE NORMAN ROKEBERG, SPONSOR, testified in
support of HB 33. He observed that the legislation
represents four years of hard work by members of the real
estate community, the Alaska Real Estate Commission, the
House Labor and Commerce Committee and the sponsor. The
legislation is the result of a task force formed in 1994 by
the Alaska Real Estate Commission to take up the issues of
property management and community association management.
There are no regulations for community association
management in the state of Alaska. He maintained that the
legislation enhances consumer protections. There are 2,200
real estate licenses in the state of Alaska. He referred to
an unlicensed individual that embezzled $57 thousand dollars
from 18 separate community associations in Anchorage. He
observed that the Commission rewrote a significant portion
of the real estate chapter. The Commission is given more
authority to regulate licensees. The legislation also
expands educational opportunities.
Representative Rokeberg noted that he is a commercial real
estate broker, licensed in the state of Alaska. He
emphasized that he has not sold a house in 25 years. Under
current statute, Representative Rokeberg is required to take
at least 8 of the 20 required hours every two years on
selling houses. The legislation creates specialties for
education.
The legislation updates the provisions for when a license is
required, for office locations, branch offices, record
keeping, contracts and signs. Fees are only due when there
is a written existing contract. The Conflict of Interest
declarations are expanded as the result of a 1995
Legislative Budget and Audit Committee audit. It proscribes
prohibited conduct of unlicensed activity by adopting
language promulgated by the Mississippi Real Estate
Commission. This language has been tested in federal
courts. Exceptions are expanded to 20 under AS 161.
Representative Rokeberg observed that Amendment C would add
an additional exception (copy on file). Amendment C would
allow management by a natural person of property for another
person without a fee, other than the reimbursement of
expenses (copy on file). Condominium and townhouse
associations can continue to manage their own activities. A
unit owner resident in an association project has the right
to manage that project for a profit. Only individuals that
manage more than one association would be covered under the
statute.
Representative Rokeberg emphasized that the interests of
real estate practitioners and the public have been balanced
by the legislation. He observed that the legislation has
wide support among real estate groups and the
Administration.
Representative Rokeberg provided members with Amendments A,
B and C (copy on file). He stated that Amendment A contains
language clarifications. He reviewed Amendment A. He noted
that there are three references to deletion of "a mobile
home or." He explained that mobile home dealers were
inadvertently swept into real estate activities. The
amendment clarifies that real estate licensees do not wish
to have exclusive right to manage mobile home parks.
Representative Rokeberg observed that Amendment B
incorporates recommendations by the Alaska Chapter of
Community Associations. Definitions of conduct of
investigation and community association accounts are
clarified. Association fund's may not be commingled with
funds of other associations or the licensee's.
Representative Rokeberg noted that Amendment C was added at
the request of Representative Cowdery. This amendment would
allow a person to have another person manage their property
without a fee.
In response to a question by Co-Chair Hanley, Representative
Rokeberg clarified that the proposed amendments were not
drafted by Alaska Legal Services. Alaska Legal Services did
review the amendments.
Co-Chair Hanley noted that Representative Rokeberg could
legally sell a house. He observed that Representative
Rokeberg would not be required to take refresher classes on
selling a house. He questioned if there is a prohibition on
selling houses if that portion of the education update is
not taken. Representative Rokeberg emphasized that there is
a 20-hour mandate for continuing education. Specialty
classes represent 8 of the 20 hours. He would not have to
take the residential sale portion. Co-Chair Hanley stressed
that education requirements are set to assure that the
statues are understood "across the board". He reiterated
that the legislation allows sell of homes by licensees that
are not required to take that portion of the educational
requirements.
Representative Rokeberg noted that the original legislation
would have created different types of licenses. He observed
that the proposal was controversial among the real estate
community. The legislation represents a consensus position.
Representative Rokeberg noted that the legislation would
grant current community association managers that can
demonstrate that they have performed the function for 24
months a limited community association license. A limited
community association license would restrict their activity
to management of associations only. They would be forbidden
to participate in other types of real estate activities.
Representative Rokeberg noted that the legislation provides
for the expansion of the education requirements for pre-
licensing to include community association management
topics.
Representative Rokeberg asserted that the legislation would
improve real estate education.
Co-Chair Hanley noted that the legislation prevents the
Alaska Real Estate Commission from saying that the 20-hour
requirement cannot be taken in two days.
In response to a question by Representative Martin,
Representative Rokeberg explained that the legislation
allows associations to manage themselves or retain the
services of a resident owner to manage the association for a
profit.
Representative Mulder disclosed that he has a real estate
license.
In response to a question by Representative Mulder,
Representative Rokeberg noted that the Commission cannot
assess civil penalties. The legislation would allow a civil
penalty of up to $5 thousand dollars beyond the amount that
the person benefited. He noted that the activity would have
to be egregious before the Department of Law would
prosecute. The Alaska Real Estate Commission requested the
authority to assess fines. The Commission did not have any
authority over non-licensed activity. Representative Mulder
asked if other boards are allowed to assess fines.
RON JOHNSON, PRESIDENT, KENAI PENINSULA BOARD OF REALTORS
testified on HB 33. He referred to Amendment A. He noted
that "financial institution" would be substituted for
"banks" on page 18, line 4. He questioned if the Federal
Deposit Insurance Corporation (FDIC) covers financial
institutions. If they are not covered by FDIC they would
not be insured funds. He suggested that "sales person" could
be replaced with "real estate services licensee". He
asserted that mobile homes are not a real estate item. He
observed that a restriction on the number of hours that can
be taken in a day would hurt rural areas. He maintained
that the ability of person to retain information is not
affected by the amount hours that they sit in a chair.
Representative Rokeberg noted that "financial institution"
was inserted on the request of the State Bank and Securities
Commission. He stressed that to the best of his knowledge
"real estate services licensee" is used where it can be
used. He observed that there are three types of licenses.
He stressed that the term licensee cannot be used to
distinguish between other types of licenses.
ART CLARK, REAL ESTATE UNLIMITED, ANCHORAGE testified in
support of HB 33. He observed that he also represents the
Alaska Association of Realtors and is on the Board of
Directors for the Community Association Institute. He spoke
in support of the amendments. He spoke against limiting the
number of educational hours that can be taken in a day.
LARRY SPENCER, ALASKA REAL ESTATE COMMISSION explained that
there are seven members on the Commission. There are two
public members, one from each judicial district and two
members at large. Judicial district members are licensees.
Co-Chair Therriault expressed concern that the legislation
would overrule policy set by the Commission. He questioned
why the Commission felt the number of educational hours
should be restricted to 7 per day.
DEBRA BRITT, PIONEER MANAGMENT ANCHORAGE testified in
support of HB 33. She noted that she manages community
associations. She spoke in support of the amendments.
SHANE OSOWSKI, PRESIDENT, COMMUNITY ASSOCIATIONS INSTITUTE,
ANCHORAGE testified in support of HB 33. He observed that
he is an attorney practicing real estate construction law.
He noted that Representative Rokeberg has incorporated his
comments into the bill. He spoke in support of the
amendments.
DAVID GARRISON, ASSOCIATE BROKER, ANCHORAGE testified in
support of HB 33. He questioned the affect of section 30,
page 19.
WILLIAM BRADY, REMAX, ANCHORAGE testified in support of HB
33. He noted that he is also the Chairman of Industry
Issues for the State Association of Realtors. He spoke in
support of the amendments. He clarified that the intent is
to break down educational requirements of licensees who are
practicing in different areas of real estate. He maintained
that it is not fair to a commercial agent or a property
manager to take classes dealing with residential property
sales. The legislation would allow licensees to take the
core hours specific to their area of expertise. He noted
that the Commission is not recommending a limit on hours
that can be taken in a day.
(Tape Change, HFC 98 - 26, Side 1)
JOHN CARMAN, HOME STATE MORTGAGE, ANCHORAGE testified in
support of HB 33. He spoke in support of the provision to
exclude unlicensed parties from receiving fees from real
estate transactions.
CLAIR RAMSEY, REAL ESTATE COMMISSION, ANCHORAGE testified in
support of HB 33 and urged the Committee to pass HB 33
during this legislative session.
RON POLLOCH, JACK WHITE REAL ESTATE, ANCHORAGE testified in
support of HB 33. He observed that the legislation balances
many interests. The legislation clarifies that an
unlicensed person cannot receive a fee. He referred to the
civil penalty provisions. He noted that the Alaska Real
Estate Commission has no jurisdiction against an unlicensed
person performing a licensed activity.
ERIC DYRUD, ANCHORAGE BOARD OF REALTORS, ANCHORAGE testified
in support of HB 33. He urged prompt passage of the
legislation.
BOB BAER, TOTEM, ANCHORAGE testified in support of HB 33.
He is also chairman of Concern Advocates for Real Estate
Services.
Mr. Spencer testified in support of HB 33. He stated that
he is a member at large of the Alaska Real Estate
Commission. He emphasized that the legislation represents
over four years of work. The Alaska Real Estate Commission
has passed a resolution in support of civil penalties for
unlicensed activities. Currently, unlicensed activities are
referred to the Department of Law. He observed that the
Division of Occupational Licensing has limited attorney
time. Only egregious offenses are pursued. The Alaska Real
Estate Commission recognizes the need to restate and
reinterpret current laws restricting fees or commissions to
licensed persons. He emphasized that the legislation
enhances consumer protection by regulating the practice of
professional management of condominium associations.
Co-Chair Therriault asked the position of the Alaska Real
Estate Commission regarding to the number of training hours
that can be taken per day. Mr. Spencer noted that the
Commission has taken actions in the education areas to make
the 20-hour component more effective. The Commission
originally recommended limiting training to seven hours per
day. Marketing courses were eliminated. Computer courses
were eliminated. Credit for people that arrive late was
eliminated. The real estate industry resisted the seven-
hour restriction. The Alaska Real Estate Commission
concluded that they did not have documentation to support
the premise that educational quality would be more effective
with a seven hour per day limit. The Commission also
recognized the difficulty of individuals in rural areas that
have to fly in to take educational classes. The Alaska Real
Estate Commission does not regulate the number of hours per
day.
Representative Rokeberg spoke in support of section 7. He
noted that expansion the 20-hour biannual educational
requirement was discussed.
Co-Chair Therriault noted that section 7 on pages 5 and 6
delineates the specific types of courses that the Commission
must accept.
Representative Rokeberg stated that section 7 balances
competing interests within the industry. He noted that the
Commission has not always recognized courses offered at
national conventions. He noted that the conventions offer
six-day courses with tuition of $1 thousand dollars or more.
He pointed out that these nationally recognized courses lead
to professional designations.
Mr. Spencer reviewed educational requirements. He noted
that the bill conforms to recommendations of the Alaska Real
Estate Commission Task Force.
Representative Rokeberg stated that there is a need to write
regulations into law. He observed the importance of real
estate law.
In response to a question by Representative Grussendorf, Mr.
Spencer noted that property managers do not generally sell
houses. He added that a small number of individuals are
involved in strictly commercial real estate.
Co-Chair Therriault expressed concerns that individuals who
are not required to take continuing education relating to
residential sales may sell a house.
Representative Rokeberg maintained that there are only 5 - 6
uniquely specialized individuals.
Mr. Spencer noted that next year's core courses include
ethics, disclosure and agency contracts.
CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL
LICENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
testified in support of HB 33. She maintained that the
legislation provides enhanced consumer protection and fixes
some holes in the statutes.
In response to a question by Representative Mulder, Ms.
Reardon noted that the Board of Architects and Land
Surveyors has a similar statute that permits them to charge
people committing an unlicensed activity. She noted that
the Division has requested similar civil penalty authority.
Money could be collected through garnishment of permanent
fund dividends. She stressed that the civil penalties will
contribute to enforcement of licensing laws.
Representative Mulder noted that the reciprocity section was
deleted. Representative Rokeberg noted that there are no
reciprocity arrangements with other states.
Co-Chair Therriault referred to section 7, subsection (4).
This subsection would mandate that the Commission approve
"courses offered and attended at a national convention for
real estate licenses if the courses were approved for
continuing education credit by the real estate licensing
board of the state in which the convention was held." He
questioned why the state of Alaska should recognize
educational requirements of states that do not recognized
Alaskan real estate licenses.
Representative Rokeberg clarified that the Commission did
not request section 7, subsection (4). Representative Kelly
pointed out that convention courses would focus on the
issues that cross state boundaries.
Co-Chair Therriault questioned why the decision is not left
to the Alaska Real Estate Commission. Representative Kelly
stressed that real estate courses are difficult to find.
Representative Rokeberg asserted that the legislation
expands opportunities for education to better courses.
Representative Davis stated that subsection (4) seems to
give the courses credibility.
In response to a question by Co-Chair Therriault, Ms.
Reardon noted that the Commission currently has subpoena
power.
Ms. Reardon noted that other regulatory agencies issue
fines.
In response to a question by Representative Mulder,
Representative Rokeberg observed that the Endorsement
Concept has been deleted from the legislation.
Representative Davies expressed concern with page 3, line
25. Representative Rokeberg noted that existing law
requires the Commission to publish disciplinary actions
three times. The legislation would allow the Commission to
release the information in their newsletter.
Representative Davies suggested that "must" be changed to
"shall" on page 5, line 31 and a caveat be added stating
that "unless the Commission finds in writing reasons for
disallowing" a course it will be approved.
Representative Davies questioned the deletion of "natural"
on page 6, line 25. Representative Rokeberg spoke in support
of deleting "natural".
In response to a question by Representative Mulder,
Representative Rokeberg noted that section 1, on page 1
clarifies that real estate can mean an interest in a mobile
home. The legislation exempts real estate licensees from
mobile home dealer licensing requirements.
Ms. Reardon noted that there are other problems with
statutes relating to mobile home dealer licensing.
Co-Chair Therriault referred to section 48, page 28. He
noted that section 48 states that the chapter does not apply
to a person who manages a total of four or fewer residential
units for other persons. He interpreted the statute to
state that a person who manages a total of four or fewer
residential units for other persons is exempt from the
Title. He suggested that they could sell a home. He noted
that the person should not be exempted from the provisions
of the Title. The activity should be exempted.
Mr. Reardon added that page 30, line 1 should exempt the
bookkeeper or accounting function not the person.
HB 33 was HELD in Committee for further consideration.
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