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 reviewed the changes made to the work draft, 0-LS0197\R, Lauterbach, 2/14/98. Co-Chair Therriault clarified that a realtor could still take less of a commission in the new language. Representative Rokeberg agreed and noted that if there should be mitigation inside a transaction, the commission amount could be reduced and the market place would then again have free range. Representative Martin MOVED that version 0-LS0197\R, Lauterback, 2/14/98, be the version before the Committee. There begin NO OBJECTION, it was adopted. Representative Rokeberg spoke to Amendment #1, which would address a miscalculation made by the drafters in the original legislation. [Copy on File]. Co-Chair Therriault MOVED to adopt Amendment #1. There being NO OBJECTION, it was adopted. Co-Chair Therriault MOVED to adopt Amendment #2. [Copy on File]. Representative Rokeberg explained the intent of Amendment #2, which would clarify the meaning of "by employment" or the act of employment for an independent contractor. Many licensees are independent contractors and not employees. This language would help them. There being NO OBJECTION, Amendment #2 was adopted. Representative Mulder disclosed a conflict of interest as he holds a real estate license. Co-Chair Therriault MOVED to adopt Amendment #3. [Copy on File]. Representative Rokeberg spoke to the amendment, which redrafts the entire section on "conflict of interest". He suggested that the new language would minimize litigation, although, would not restrict the types of claims resulting from cause of action that could be brought forward. Co-Chair Therriault supported the inclusion of the language, which stipulates that the private person still has the right to sue if there is misrepresentation. Representative Martin voiced concern regarding an audit, which involved the Alaska Housing Finance Corporation (AHFC). Representative Rokeberg replied that recommendations in the audit indicated that the Real Estate Commission should address the issue. The recommendations of the audit are fully addressed through the proposed language. Representative Mulder referenced the conflict of interest language in addressing who is a "relative". He asked the problem in representing a niece or nephew. Representative Rokeberg replied that relative had been clearly defined in the exception section. The exception was intended to cover a relative managing property without licensure. He added that language resulted from concerns by AHFC who felt that integrity of the Real Estate Commission could come into question. There being NO OBJECTION, Amendment #3 was adopted. Representative Grussendorf questioned Section #22 and language regarding disclosure of a sex offender. Representative Rokeberg explained that the laws as they apply to real estate licensees have changed dramatically over the past few years. He mentioned case law around the U.S. dealing with disclosure of everything from ghosts to murders. The laws create duties, which are enforced. The duties to disclose can be cross-purposed. Co-Chair Hanley questioned if there was a requirement to disclose a ghost in a home. Representative Rokeberg stated there was not. Co-Chair Hanley asked if it was the "duty" of the agent to disclose sex offenders. Representative Rokeberg stated that a duty could arise between the agency relationship of the client and licensee. Co-Chair Hanley asked the type of situations, which are required to be disclosed. Representative Rokeberg replied that those disclosures generally have to do with the condition of the property. RUTH BLACKWELL, POWELL REAL ESTATE, JUNEAU, reported that in Juneau, everything known is disclosed. Co-Chair Hanley noted that with concern to a physical defect, the law will protect if it is unknown, whereas, some information such as a homicide occurrence would not legally have to be submitted. Discussion followed regarding the legality of types of information being disclosed. Co-Chair Hanley reiterated his concern resulting from suits of selling a property, which is located next door to a sex offender. He questioned why that liability would differ from other pertinent info. Co-Chair Therriault pointed out that anyone can access the database to find out where a sex offender lives. Ms. Blackwell added that federal law prohibits a real estate agent from disclosing who lives next door. Although, she pointed out that the agent should always recommend that the buyer go to the City/Borough to find information regarding the neighboring houses. Co-Chair Hanley pointed out that sexual offenders have an 85% chance of recidivism. He recommended that there should be information added, which clearly defines whose responsibility it is to disclose where sex offenders live. Representative Rokeberg noted that it is estimated that less than half of the sex offenders are registered. He asked how much can we statutorily mandate an agent to provide. (Tape Change HFC 98- 32, Side 2). Representative Mulder commented that there must be consistency established by the law. He recommended that "everything you know should be disclosed". The liability for a real estate agent is sky high. Representative Rokeberg pointed out that there is a disclosure statement provided with each property sale, and perhaps a new section should be added to the disclosure statement warning potential buyers to seek information regarding sex offenders in the neighborhood. Ms. Blackwell noted that the Real Estate Commission is currently working on such a disclosure statement. Co-Chair Hanley supported that action, pointing out that the general public is more concerned about sex offenders than most other neighborhood information. Representative Hanley MOVED to ADOPT a conceptual amendment with language, which indicates that, the buyer is responsible for becoming aware of the location of sex offenders. Co-Chair Therriault recommended that language be added which provides direction as to where a person can be directed to find out information on sex offender's residence. Ms. Blackwell understood that information should be included on the property disclosure statement. There being NO OBJECTION, the conceptual amendment was adopted. Representative Martin MOVED to report CS HB 33 (FIN) out of Committee with individual recommendations and the accompanying fiscal note. Representative Rokeberg asked if the conceptual amendment would create greater fiscal impact. Ms. Blackwell responded that the form was already being changed so that it should not create a greater fiscal impact. There being NO OBJECTION, CS HB 33 (FIN) was reported out of Committee with "no recommendation" and with a fiscal note by the Department of Commerce and Economic Development dated 1/30/98.