Legislature(2011 - 2012)CAPITOL 120
04/11/2012 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB210 | |
| SB122 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 210 | TELECONFERENCED | |
| + | SB 122 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 122 - REAL ESTATE TRANSFER FEES/TITLE INSURANCE
2:45:10 PM
VICE CHAIR THOMPSON announced that the next order of business
would be CS FOR SENATE BILL NO. 122(L&C), "An Act relating to
research on and examination of titles; relating to residency
requirements for title insurance limited producers; relating to
real estate transfer fees; and providing for an effective date."
[Before the committee was HCS CSSB 122(L&C).]
2:45:57 PM
DANA OWEN, Staff, Senator Dennis Egan, Alaska State Legislature,
on behalf of the sponsor of SB 122, the Senate Labor and
Commerce Standing Committee, which is chaired by Senator Egan,
explained that SB 122 would limit who may conduct searches and
examinations of title to only licensed title insurance limited
producers, would statutorily stipulate that only residents of
Alaska may be issued such licenses, and would preclude the use
of transfer fee covenants. On the latter point, he relayed that
in 1852, the courts in New York outlawed transfer fee covenants,
describing them as a vestige of feudalism, and that since then,
41 other states have also outlawed the practice. In addition to
outlawing the use of transfer fee covenants in Alaska via
Section 3, the bill is also intended to address concerns that
future imperfections in title could result if title
searches/examinations are performed by people who don't live in
Alaska. Specifically, Section 1 of the bill would require that
all title searches be done through licensed title insurance
limited producers, and Section 2 would require that such
licenses be issued only to residents of Alaska. He
acknowledged, however, that the drafter has pointed out that
Section 2 could potentially be ruled unconstitutional by the
court; each of the prior committees of referral discussed this
issue but chose to retain Section 2 in the bill regardless.
REPRESENTATIVE GRUENBERG suggested that a severability clause be
added to the bill if the aforementioned language remains.
MR. OWEN said the sponsor would not object to the addition of a
severability clause, and noted that members' packets contain
[memorandums] from Legislative Legal and Research Services
addressing the issue of Section 2's constitutionality.
2:51:56 PM
KIMBERLY GLISSEN, General Manager, Alaska Escrow & Title
Insurance Agency, Inc., said she is in favor of SB 122,
specifically, Sections 1 and 2 because she believes steps must
be taken to keep jobs local and prevent outsourcing, and
Section 3 because of the savings it will provide to consumers.
Overall, she opined, SB 122 will help protect jobs, consumers,
and property owners in Alaska.
2:53:49 PM
CHRIS NEWBILL, Manager, Ketchikan Title Agency, Inc., testified
in favor of SB 122 and said she concurs with the testimony of
Ms. Glissen.
REPRESENTATIVE GRUENBERG noted that the aforementioned
memorandums in members' packets are dated February 15, 2012, and
March 15, 2012; and, in response to a question, explained that
the term, "provision" as used in Section 3 of SB 122 refers to a
provision in the document that conveys real estate.
2:57:17 PM
MICHEAL PRICE, Co-Owner, Mat-Su Title Insurance Agency, Inc.;
Co-Owner, Fidelity Title Agency of Alaska, after mentioning
industry-associated positions he's held within the Alaska Bar
Association (ABA) and the Alaska Land Title Association (ALTA),
testified in support of SB 122, and expressed disagreement with
the drafter's comments in the aforementioned memorandums that
Section 2's proposed residency requirement might be found
unconstitutional. Noting that his company gets solicitations
from people in foreign countries to conduct title
searches/examinations of property in Alaska, concurred that the
intent of the bill is to require those who conduct such
searches/examinations of property in Alaska to be Alaska
residents and thereby be subject to Alaska law. He offered his
understanding that 13 states have passed a similar residency
requirement, and said he thinks Alaska has the right to do so as
well since no waiting period is required in order to become a
resident. In conclusion, he too noted that 41 states now ban
[transfer fee covenants], and asked that Alaska do so as well.
3:06:06 PM
ROGER FLOERCHINGER, Owner, President & CEO, Yukon Title Company,
Inc., testified in support of SB 122 as currently written and
stressed the importance of providing for what he termed "Alaska
hire."
3:08:07 PM
STEPHAN ROUTH, Attorney at Law, Routh Crabtree Olsen, P.S. -
mentioning that he's owned title agencies in Washington, Oregon,
Idaho, California, Nevada, Arizona, and Hawaii - said he has
concerns about Section 2 of SB 122, but characterized
Section 3's proposed ban on transfer fee covenants as something
that should have been instituted long ago. With regard to
Section 2, he noted that in the aforementioned memorandums, the
drafter has said in part: "In my opinion, it seems likely that
a court construing the proposed residency requirement would find
the provision unconstitutional". He said he appreciates the
suggestion to insert a severability clause into the bill, but
opined that a better approach - from a financial perspective,
given the high cost associated with litigating constitutionality
issues - would be to simply delete Section 2. Referring to an
earlier comment, he said his research shows that only [8] states
still have a specific residency requirement, and that the trend
is for states to instead move away from having such a
requirement. Regarding the concern about outsourcing title
searches/examinations to people in other countries, he offered
his belief that nothing in the bill would prevent that from
occurring, because the bill addresses the issue of licensure -
not the actual work itself. In conclusion, he again suggested
that Section 2 be removed from SB 122.
3:14:20 PM
CRYSTAL PELTOLA, Vice President & General Manager, Alaska USA
Title Agency, concurred with Mr. Routh's testimony and stated
support of Section 3 of SB 122, but expressed concern regarding
the constitutionality of Section 2. She pointed out that
Section 2, in addition to perhaps being unconstitutional, seems
to contradict itself in that it says both that a title insurance
limited producer shall be licensed in the manner provided for in
AS 21.27 - which provides for the licensure of both residents
and nonresidents - and that a title insurance limited producer
may not obtain a license unless [he/she] is a resident of the
state. In conclusion, she said Alaska USA Title Agency would
support SB 122 if Section 2 were deleted.
REPRESENTATIVE GRUENBERG noted that Section 2 addresses what's
required to obtain a license, not what's required to maintain
such licensure; in other words, a resident could obtain a
license to be a title insurance limited producer, and then move
out of state and still be licensed in Alaska.
3:17:32 PM
TERRY BRYAN, Vice President & State Manager, First American
Title Insurance Company, characterized SB 122's proposed
residency requirement as disruptive to the flow of commerce and
inconsistent with common sense, particularly given that the end
product - the title insurance policies themselves - all
originate outside of Alaska, and given that no other segment of
the real estate industry in Alaska operates under such a
residency requirement. With regard to the concern that future
imperfections in title could result if title
searches/examinations are performed by people who don't live in
Alaska, he predicted that the marketplace would remedy any such
problems that actually do arise.
3:22:06 PM
HOWARD HANCOCK, Chief Title Officer, Fidelity Title Agency of
Alaska, relayed that he was testifying in support of SB 122. He
offered his understanding that the current practice of the
Division of Insurance - as stated on its web site - is to grant
licenses to residents only, even though AS 21.27.150(5) appears
to allow for the issuance of what's called a nonresident limited
producer license. The intent of SB 122, he surmised, is to
correct what industry feels to be conflicting statutory
provisions and provide guidance to the division in light of its
existing practices. Further, it would help protect the jobs of
title examiners in Alaska, who understand the industry laws
unique to the state. In conclusion, he reiterated his support
for SB 122, and urged the committee to pass it.
3:24:44 PM
LINDA HALL, Director, Anchorage Office, Division of Insurance,
Department of Commerce, Community & Economic Development
(DCCED), in response to questions, indicated the
administration's attorneys have reviewed the aforementioned
memorandums from the drafter and have concurred that Section 2
might potentially be found unconstitutional, though she's not
yet received a written legal opinion on the issue.
3:26:15 PM
JERRY REED, President, Alaska USA Mortgage Company, LLC, said
that generally his company is in support of Section 3 of SB 122,
but is not in support of Section 2, believing that it would
limit both consumer choice and market competitiveness.
VICE CHAIR THOMPSON, after ascertaining that no one else wished
to testify, closed public testimony on SB 122.
The committee took an at-ease from 3:28 p.m. to 3:29 p.m.
3:29:57 PM
REPRESENTATIVE GRUENBERG made a motion to delete Section 2.
REPRESENTATIVE HOLMES objected, and said she'd prefer that
Section 2 be left in the bill.
REPRESENTATIVE GRUENBERG cautioned against adopting a
potentially unconstitutional provision, spoke about the cost of
litigating Section 2's constitutionality, and predicted that
that provision isn't going to work as intended anyway because
merely having an office in Alaska would suffice for purposes of
obtaining licensure even though the actual work gets conducted
elsewhere by nonresidents. He too noted that in the
aforementioned memorandums, the drafter has said in part: "In
my opinion, it seems likely that a court construing the proposed
residency requirement would find the provision unconstitutional
as a violation of the privileges and immunities clause of the
U.S. Constitution".
REPRESENTATIVE HAWKER expressed disfavor with Amendment 1, and
offered his belief that it remains unclear what the ultimate
consequences of adopting Section 2 will be.
A roll call vote was taken. Representatives Lynn, Keller, and
Gruenberg voted in favor of Amendment 1. Representatives
Holmes, Pruitt, Thompson, and Hawker voted against it.
Therefore, Amendment 1 failed by a vote of 3-4.
3:33:30 PM
REPRESENTATIVE GRUENBERG made a motion to adopt Conceptual
Amendment 2, to add a severability clause to SB 122.
REPRESENTATIVE HAWKER objected and pointed out that all
legislation is automatically severable [under AS 01.01.030].
REPRESENTATIVE PRUITT concurred, and said he does not see the
necessity of adding a severability clause to the bill.
REPRESENTATIVE GRUENBERG argued that including a severability
clause wouldn't do any harm and would be prudent.
3:37:16 PM
A roll call vote was taken. Representatives Gruenberg and Lynn
voted in favor of Conceptual Amendment 2. Representatives
Holmes, Keller, Pruitt, Thompson, and Hawker voted against it.
Therefore, Conceptual Amendment 2 failed by a vote of 2-5.
3:37:54 PM
REPRESENTATIVE KELLER moved to report HCS CSSB 122(L&C) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, HCS CSSB 122(L&C) was
reported from the House Judiciary Standing Committee.