HOUSE BILL NO. 205 An Act relating to real estate broker and real estate salesperson licensing; and providing for an effective date. ELEANOR WOLFE, STAFF, REPRESENTATIVE KURT OLSON, testified that HB 205 would clarify and strengthen a number of items in current statute and increase consumer protection in the buying and selling process of homes. The Association of Alaska Realtors (AAR) strongly supports the bill. She noted that the committee substitute contains the changes recommended by the Division of Occupational Licensing, Department of Commerce, Community & Economic Development. 2:31:03 PM Representative Gara referenced Page 3, which provides the Association the judgment to not suspend a license if they are convicted of a crime of "dishonesty", which affects their ability to practice. 2:32:13 PM DAVE FEEKEN, (TESTIFIED VIA TELECONFERENCE), ALASKA ASSOCIATION OF REALTORS, ANCHORAGE, stated that HB 205 is the modernization of existing statutes related to real estate brokerage, addressing issues of education of real estate licensees and the supervision relationship between brokers and licensees. Sections 1, 4, 5, & 6: Realtors proposes clarifying the issuing a license to persons convicted of felonies. Current law is unclear as to time elapses since the completion of a sentence for those crimes. HB 205 clarifies and standardizes the 7 years as is required with the broker and the associate broker license with the language needed to protect the public from people convicted of felonies. Additionally, it standardizes language for all license, broker, associate broker, or sales associate, when a licensee is convicted of a felony or other crime committed while licensed under statute, in the judgment of the real estate commission, if the crime or felony affects the ability of that person to practice competently and safely, the commission may revoke it for a period of 7 years. Section 2: The current requirement for 20 hours of pre- licensing education is 20 years old, when brokers controlled the information, however, with the world wide web, nearly 80% of current buyers use the web for their property search, no home inspections, a couple of loan programs available from Alaska Housing Finance Corporation (AHFC) have been replaced by hundreds from all over the country, with no concerns about wetlands maps, required disclosure of property condition, predatory lending issues, and that no one knew that mold endangered mental capacity; the list goes on. Mr. Feeken stated that the Real Estate Commission has continued to increase the required course material for pre- licensing education, but the number of hours has not increased. HB 205 would increase the required education hours from 20 to 40 in order to take the exam. Even at 40 hours, Alaska is the lowest in the country. Section 3: Additionally, the required topics of Post Licensing education should be increased from 20 to 30 hours to adequately teach the required course material. He pointed out that the Alaska Association supports an increase in hours verses a reduction in course content, in order to meet the publics need for competent real estate practitioners. Section 7: Multiple Business Operations: The issue of a single broker owning, operating, or being employed by multiple corporations or partnerships is further clarified to require all organizations to share a single physical address. Many brokerage firms are multiple companies for insurance and other reasons. Section 8: Statutes have always stated that brokers are responsible for the actions of their licensees, until the Alaska Supreme Court ruled in the 80's that the broker is not responsible for conduct they had no knowledge of, which requires the broker to have a written policy and procedure addressing issues: 1. Require real estate licensees to comply with all real estate laws 2. Require real estate licensees to act fairly and honestly in all dealings 3. Require real estate licensees to notify the broker or a broker designee of any legal dispute or allegation of wrong-doing from a seller, buyer, lesser, or lessee 4. Require real estate licensees to maintain regular communication with the broker or a broker designee Mr. Feeken concluded, in order to implement the education hour changes, the Association requests an effective date of Feb 1, 2008, the renewal date for all licensing. 2:37:46 PM Representative Gara pointed out sections in the bill where the crimes for which one could loose their license was changed and asked if that was for the public's best. Mr. Feeken responded that in the original draft, they only addressed the sales associate license & was language that had been added by the Department of Law, wanting to eliminate specific crimes, while providing the Commission latitude. 2:39:21 PM Representative Gara countered that the Department most likely wanted to give the Commission the discretion to revoke the license for any felony. He asked if the Association would object to leaving the language the way it is, noting that if the felony is already on the books, it be left there. Mr. Feeken explained that the intent was not to limit it to five; the Commission needs the authority to regulate people with a license and those wanting to obtain the license should not have a felony record. Representative Gara requested leaving the new language as is, but adding the inclusion of old language, which provides the Commission discretion to take away the felons license. 2:41:50 PM Representative Hawker addressed Section 7 and questioned why the principal office must share a physical address. Mr. Feeken explained that there was a problem with a broker that owned separate businesses at separate locations. The intention was to make the licensure for a single business. Representative Hawker suggested that there could be occasions when successful businesses could have legitimate occasion to have separate offices. Mr. Feeken replied, in one Anchorage case, a broker reported to be under the supervision of a broker in Denver. He voiced support maintaining the language. 2:45:25 PM Co-Chair Chenault questioned how many real estate agents had lost their licenses due to felonies in the last five years. Mr. Feeken did not respond, but emphasized that it is an issue of moral turpitude. He noted that the current Commission denies licenses for Driving While Intoxicated (DWI's). The intent is to expand the net. In response to a question by Co-Chair Chenault, Mr. Feeken observed that the Commission denied a license to a broker with a multiple DWI record. Co-Chair Chenault said he would be concerned if a license were denied based on minor offenses. 2:48:46 PM Representative Hawker expressed concern with the broadness of the "moral turpitude" language, since that is indefinable and objective. Representative Gara agreed with concerns regarding definable terms. HB 205 was HELD in Committee for further consideration. 2:51:25 PM