03/11/1996 03:10 PM House L&C

 HB 502 - CONDUCTING AUCTIONS OF REAL PROPERTY                               
                                                                               
 Number 376                                                                    
                                                                               
 CHAIRMAN KOTT announced HB 502, "An Act relating to the auctioning            
 of real estate," was the next order of business.                              
                                                                               
 REPRESENTATIVE GARY DAVIS, sponsor of HB 502, said he doesn't know            
 how many people in the state realize that you have to have a real             
 estate brokers license to auction off real estate.  He said he                
 didn't think you'd need a real estate license to be an auctioneer.            
 Representative Davis said HB 502 corrects that situation.  He told            
 the committee he doesn't know why the original statute was written,           
 but maybe there were some "fly by night" auctioneers in the state             
 several years ago.  The legislation makes it legal for an                     
 auctioneer to auction off real estate.  The language in the bill is           
 meant to allow a real estate auction to be performed by an                    
 auctioneer who has developed specific qualifications.  If a person            
 has completed a certified program in auctioneering and that program           
 includes a course in real estate sales, then that person can                  
 auction real estate as long as a licensed real estate broker is               
 present to supervise.  This way, experts in both fields of                    
 auctioneering and real estate will be present to conduct their                
 specified duties without inflicting an unnecessary hardship on the            
 auctioneer.  Representative Davis pointed out that there are                  
 boroughs and cities that have foreclosure auctions.  He noted there           
 are auctioneers in the state that do have a real estate brokers               
 license, but there are also several who don't.                                
                                                                               
 Number 513                                                                    
                                                                               
 CHAIRMAN KOTT said if he wanted to auction off real estate, as an             
 auctioneer, he would not only have to have an auctioneer license              
 but also a real estate license.                                               
                                                                               
 REPRESENTATIVE DAVIS said he believes that is true.  He noted the             
 license is a real estate "brokers" license.                                   
                                                                               
 REPRESENTATIVE SANDERS said he knows real estate auctioneers who              
 aren't brokers, they're real estate salesmen.                                 
                                                                               
 Number 532                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG said the committee has information which              
 discusses the license requirements under AS 08.88.161, which says,            
 "Unless a licensed real estate broker, associate broker salesman,             
 etc., they may not auction."  That is the prohibition.  So it's any           
 licensed real estate agent or above.                                          
                                                                               
 REPRESENTATIVE ELTON asked what the process of an auction is.  He             
 said he has always considered an auctioneer as a middle person who            
 promotes a sale and not the person that consummates the sale.                 
 Representative Elton said he thought sale was consummated between             
 the owner and the new buyer.  He asked if that is the way that an             
 auction usually works or does the property transfer to the                    
 auctioneer who then transfers it through the auction process.                 
                                                                               
 REPRESENTATIVE DAVIS said he isn't sure of the answer.  He asked if           
 there was anyone on teleconference waiting to testify.                        
                                                                               
 CHAIRMAN KOTT said there was Mr. Blakely.  REPRESENTATIVE DAVIS               
 said he may be able to answer the question.                                   
                                                                               
 Number 612                                                                    
                                                                               
 REPRESENTATIVE PORTER pointed out there are auctions where the                
 auctioneer actually owns the property.  Normally the auctioneer               
 doesn't own the property but he does cut the final deal for selling           
 by virtue of sole if it's an open auction.  He said the terms of              
 the sale contract would be the last bid that was awarded to bid.              
                                                                               
 REPRESENTATIVE ELTON said that would set the value, but somebody              
 else might actually be conducting the sale.                                   
                                                                               
 REPRESENTATIVE PORTER said the auctioneer would offer the property            
 in compliance with the owner's specifications.                                
                                                                               
 REPRESENTATIVE ELTON asked if the owner or the owner's agent could            
 be a realtor.                                                                 
                                                                               
 Number 664                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG asked if there was a licensure for                    
 auctioning in Alaska.                                                         
                                                                               
 REPRESENTATIVE DAVIS said he would defer the question to Mr.                  
 Blakely.                                                                      
                                                                               
 Number 691                                                                    
                                                                               
 NORM "BUD" BLAKELY, Auctioneer, referred to a letter in the                   
 committee files dated July 8, 1993, and said the letter was written           
 by him in conjunction with Ron Johnson, a real estate broker.  At             
 the time the letter was written, Mr. Johnson was on the Real Estate           
 Board.  Mr. Johnson brought the issue before the board.  He said he           
 was told that this is a state law and in order for him to be able             
 to sell any type of real estate, he would have to get a real estate           
 license.  Mr. Blakely informed the committee he went to school to             
 become an auctioneer and has had, from time to time, opportunities            
 to sell real estate, but under the present statute he cannot do so.           
 He said he would like to be able to sell real estate.  He noted he            
 doesn't want to sell real estate full time and doesn't want to have           
 to take the classes or the time to sell real estate.  Mr. Blakely             
 referred to the question regarding auctioneers having to have a               
 license and said they are licensed through the state like any other           
 business.                                                                     
                                                                               
 CHAIRMAN KOTT asked Mr. Blakely to guess how many auctioneers there           
 are that hold dual licenses.                                                  
                                                                               
 MR. BLAKELY responded that he has no idea how many there are.                 
                                                                               
 CHAIRMAN KOTT asked if the number of auctioneers is small.                    
                                                                               
 MR. BLAKELY said he doesn't have any idea, but said he thinks there           
 may be about 12 in the Anchorage area.                                        
                                                                               
 REPRESENTATIVE PORTER asked if the license Mr. Blakely holds is a             
 regular business license or if it is an occupational license with             
 certain criteria and training required in auctioneering.                      
                                                                               
 MR. BLAKELY said he thinks the state requires a business license.             
 He noted he went to a school in Montana that has certain criteria             
 which he had to meet.  He said he was tested at the end of the term           
 and was given a certificate from that school.                                 
                                                                               
 REPRESENTATIVE PORTER asked if that is a requirement for an                   
 occupational license.                                                         
                                                                               
 MR. BLAKELY said he doesn't think it is in the state of Alaska, but           
 pointed out some states require it.                                           
                                                                               
 Number 827                                                                    
                                                                               
 REPRESENTATIVE KUBINA said his thoughts of an auctioneer is a guy             
 that is up there almost "yodeling," calling out, and recognizing              
 people who are giving bids.  He said to him the bill sounds like it           
 is saying that you can have an auctioneer doing that.  He referred            
 to subparagraph (2) and said it seems to him that there would be a            
 person doing the calling and a licensed broker who would actually             
 make the transaction.                                                         
                                                                               
 CHAIRMAN KOTT said that is his interpretation of the bill.                    
                                                                               
 REPRESENTATIVE PORTER noted you don't have to be a veterinarian to            
 auction off a horse.                                                          
                                                                               
 Number 908                                                                    
                                                                               
 REPRESENTATIVE DAVIS said Representative Kubina's statement is                
 correct.  The transfer of real estate is a legal document, so an              
 auctioneer wouldn't want that responsibility to make sure the                 
 process moves forward correctly when it comes to the consummation             
 of the deal.  He said that the bill says that a broker needs to be            
 present for those purposes.                                                   
                                                                               
 REPRESENTATIVE ROKEBERG asked how many people would be affected by            
 the legislation.                                                              
                                                                               
 REPRESENTATIVE DAVIS pointed out there was testimony indicating               
 that we don't know how many auctioneers are in the state, but there           
 was a guess of 12 in the Anchorage area.                                      
                                                                               
 REPRESENTATIVE ROKEBERG asked if there are licensed real estate               
 brokers and competent auctioneers in the state of Alaska.                     
                                                                               
 REPRESENTATIVE DAVIS said he thinks there are two.                            
                                                                               
 REPRESENTATIVE ROKEBERG pointed out that there has been real estate           
 auctions going on in the state of Alaska for a number of years.               
                                                                               
 REPRESENTATIVE DAVIS said he isn't sure how the court house                   
 foreclosure auctions/sales are have been pursued.                             
                                                                               
 REPRESENTATIVE ROKEBERG said there have been a number of auctions             
 in the state of Alaska for real property over the years.  He said             
 he doesn't think there has ever been a problem before.  The fact of           
 the matter is several auctioneers are licensed real estate agents             
 that do perform this function.                                                
                                                                               
 KEN LANCASTER, Broker, Beluga Realty, came before the committee to            
 testify.  He said he fully supports Representative Davis' bill                
 agrees totally with his sponsor statement.  Mr. Lancaster informed            
 the committee said he has been in real estate and has been licensed           
 for 20 years.  He said he believes there is one licensed real                 
 estate broker auctioneer combination on the Kenai Peninsula, one in           
 Anchorage and he has heard of one in Fairbanks.  He said there is             
 a lot of property being auctioned off, obviously not by realtors,             
 and that's where the possibility of some misdoing could happen.  If           
 there isn't a realtor involved, maybe it isn't being done properly.           
                                                                               
 Number 1116                                                                   
                                                                               
 CHAIRMAN KOTT asked Mr. Lancaster if he is suggesting that there              
 are about three people in the state that have a dual license.                 
                                                                               
 REPRESENTATIVE ROKEBERG said he would like to point out that there            
 is not a license procedure for auctioneers in the state and he has            
 introduced a bill that would address the licensing of auctioneers.            
                                                                               
 REPRESENTATIVE PORTER said it seems to him that there is a                    
 requirement in the Municipality of Anchorage to license                       
 auctioneers.                                                                  
                                                                               
 REPRESENTATIVE ROKEBERG said it seems to him it is just a business            
 license.                                                                      
                                                                               
 REPRESENTATIVE PORTER said he thinks that in addition to the state            
 business license, the Municipality of Anchorage requires an                   
 auctioneer license with occupational criteria.                                
                                                                               
 REPRESENTATIVE ROKEBERG referred to selling real estate and asked             
 how often auctions are used.                                                  
                                                                               
 MR. LANCASTER informed the committee that auctions aren't a common            
 element of real estate marketing, but they do come up occasionally.           
 He said there are probably about six a year that he is aware of.              
 He noted with state sales, many auctions are related to                       
 subdivisions with recreational property.                                      
                                                                               
 MR. LANCASTER informed the committee that in other countries one of           
 the rules is that after property is on the market so long, like six           
 months, it automatically goes to auction.  Their auctioneers are              
 licensed professionally by the country.  He noted New Zealand is              
 one he is familiar with.                                                      
                                                                               
 Number 1290                                                                   
                                                                               
 REPRESENTATIVE PORTER said from the testimony he has heard, there             
 just could be some auctions of real estate going on where the                 
 auctioneer doesn't have a real estate license and the bill would              
 provide some additional protection.                                           
                                                                               
 REPRESENTATIVE ROKEBERG asked Mr. Lancaster if he has ever used an            
 auction to sell property.                                                     
                                                                               
 MR. LANCASTER said he hasn't.  He explained he has never found the            
 opportunity to have that licensed auctioneer in the vicinity where            
 they could do that.  What typically happens, those sales are held             
 over and are taken to Anchorage or Homer to auction them off with             
 Dick Sinhorst (Sp.?) or Gold Strike Realty of Anchorage.                      
                                                                               
 Number 1401                                                                   
                                                                               
 MR. BLAKELY pointed out an auctioneer is a professional like any              
 other.  He said he has had an opportunity to sell a subdivision for           
 an estate but he couldn't do it because he was not a licensed real            
 estate person.  Mr. Blakely referred to cities and boroughs that              
 sometimes have auction sales on properties which are delinquent for           
 taxes and said he isn't able to do that without obtaining a real              
 estate license.  He said he really doesn't want to sell real estate           
 as a real estate sales person.                                                
                                                                               
 Number 1471                                                                   
                                                                               
 REPRESENTATIVE KUBINA made a motion to move HB 502 with individual            
 recommendations.                                                              
                                                                               
 REPRESENTATIVE ROKEBERG objected.  He said he has given committee             
 members a letter from the Alaska Association of Realtors objecting            
 to HB 502.  He said he thinks the reason there is one word in the             
 real estate licensing statute where realtors are (indisc.) perhaps            
 professional profession, but they are certainly a licensed                    
 profession with significant education, continuing education, and              
 other safeguards for the consuming public that requires that they             
 perform their jobs in a responsible manner.  Representative                   
 Rokeberg said there is no licensure for auctioneers in Alaska.  He            
 said a constituent in his district requested he introduce a bill              
 that requires licensing of auctioneers, but because of the crunch             
 of business, it hasn't been able to be pursued.  However, he thinks           
 there is a need for this type of thing and as a result, he is very            
 concerned that we would allow a totally unlicensed person to have             
 the ability to market real estate.  Notwithstanding the fact, the             
 bill rightly conjoins the operation of auctioneering with a                   
 licensed broker.  Representative Rokeberg said HB 502 is an                   
 addition to the real estate law.  It is a number of pages long and            
 is an intrusion of the auctioneers into the real estate title and             
 statute.  He noted there are individuals who are dually qualified             
 to do this, they have businesses and are protecting a business they           
 have worked hard for.  By passing HB 502, we could be allowing                
 people who are unlicensed auctioneers to encroach on certain areas            
 and could possibly destroy certain businesses that are in                     
 existence.  Representative Rokeberg said he thinks HB 502 should be           
 put in a subcommittee.                                                        
                                                                               
 Number 1692                                                                   
                                                                               
 REPRESENTATIVE KUBINA said as he reads the bill, it gives all real            
 estate people who don't feel comfortable about (indisc.) people, to           
 be sitting right next to an auctioneer as he auctions off real                
 estate and then the real estate broker would still do all the work.           
 He said the bill gives the ability to have things auctioned, to all           
 real estate people and not only the three in the state.                       
                                                                               
 REPRESENTATIVE ROKEBERG indicated the bill would allow auctioneers            
 to enter the real estate market sales.  As things currently are, it           
 offers real estate people to get into the auctioneering business              
 and visa versa.  It certainly isn't a total effort for auctioneers            
 to enter into real estate with the caveat that a broker be present,           
 which he thinks is a strong recommendation in the legislation and             
 it serves the purpose that the realtors are objecting to.                     
                                                                               
 REPRESENTATIVE ELTON said he would like to point out that not only            
 does a real estate broker or an associate broker have to be                   
 present, they have to be supervising.  The bill allows a broker to            
 contract with an auctioneer to move a piece of property.  He said             
 he sees the bill as something that enhances the realtor and gives             
 the realtor another option.                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said he thinks he heard testimony that                
 there has been real estate auctions in Alaska that were probably              
 carried out without the auctioneer being a licensed broker.  There            
 has been clear breaches of this existing statute previously.  The             
 reason there probably hasn't been problems is that there is no                
 enforcement.  The Real Estate Commission has one executive director           
 and one or two investigators in which to police their entire                  
 industry of 2,200 people.  He asked Chairman Kott if he could tell            
 him how many enforcement people the Department of Commerce has to             
 enforce their licensing.  They've got very little.  He said he is             
 looking at the (indisc.).  The bill would allow someone to conduct            
 a real estate auction because they say there is nothing forbidding            
 it.  They could say, "Well, we're under the supervision of a                  
 broker."  Right now, the only enforcement procedure to police this            
 is to have it done under the Department of Commerce, the Real                 
 Estate Commission and the executive director and investigators.  By           
 passing this bill, it would be taken out from underneath them.                
                                                                               
 REPRESENTATIVE PORTER said if there are or aren't enough resources            
 to do inspections, there are aren't enough resources to do                    
 inspections under this bill or under the existing situation.  He              
 said he would submit whoever is supposed to be doing those things,            
 all they have to do is get a copy of the newspapers to find out               
 where the auctions are and who is doing them.  It is not that tough           
 of a deal.  Representative Porter said he sees HB 502 as                      
 eliminating perhaps several of those sales that aren't occurring              
 under the correct supervision, enhancing realtors positions to do             
 more and perhaps taking a little work away from three people, which           
 isn't a big deal when you're balancing the betterment for the most.           
 He said he would submit that the committee move HB 502.                       
                                                                               
 Number 2103                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG withdrew his objection.                               
                                                                               
 CHAIRMAN KOTT said there is a motion to move HB 502 from committee            
 with individual recommendations and the accompanying zero fiscal              
 note.  He asked if there was an objection.  Hearing none, HB 502              
 moved from the House Labor and Commerce Committee.