HB 29-REAL PROPERTY TRANSACTIONS/LICENSEES  CHAIR SEEKINS informed members that the working document before the committee was version C and that Senator French had a proposed amendment. SENATOR FRENCH moved to adopt Amendment 1, which reads as follows. 23-LS0189\C.1 Bannister A M E N D M E N T 1 OFFERED IN THE SENATE BY SENATOR FRENCH TO: SCS CSSSHB 29(L&C) Page 5, following line 18: Insert a new subsection to read: "(c) Notwithstanding (b)(2) of this section, before a buyer makes or accepts an offer in a real estate transaction, a real estate licensee who is handling the real estate transaction for the buyer shall disclose to the buyer that a murder or suicide occurred on the real property that is the subject of the real estate transaction if (1) the murder or suicide occurred within one year before the date that the licensee first showed the real estate to the buyer; and (2) the licensee is aware that the murder or suicide occurred on the real estate." SENATOR FRENCH then informed members that he wished to amend Amendment 1 by deleting the language on lines 4 and 5 that reads, "who is handling the real estate transaction for the buyer". CHAIR SEEKINS noted without objection, Amendment 1 was amended. SENATOR OGAN objected to the adoption of Amendment 1 as amended for the purpose of discussion. He then asked how much the disclosure of a murder or suicide could significantly devalue a property. MS. PEGGY ANN McCONNOCHIE, Alaska Association of Realtors, said that is in the eye of the beholder, which is why disclosure is necessary. She explained: We're not saying it has to be disclosed in a negative way but, for example, there are certain cultures whose culture prohibits them from buying a home in which there has been a murder or suicide. Other people will not care. They just want the house. They don't care if that happens. But the fact is it still needs to be disclosed and we thank Senator French for helping us with the wording because we believe that this wording makes it far more clear since those are the two problem areas that we feel are material facts and need to be disclosed if they're known by the licensee within the past 12 months. REPRESENTATIVE ROKEBERG, sponsor of HB 29, added that the reason this issue arose is because of case law and other actions throughout the country. These circumstances have given rise to lawsuits because of the psychological impact. Because this bill will specifically codify more of the duties of realtors, he believes it is necessary to clarify this matter. He thanked Senator French. CHAIR SEEKINS announced with no further objection, Amendment 1 as amended was adopted. SENATOR FRENCH noted he had a few questions and first asked for a clear example of a conflict of interest that a real estate licensee would have if this bill is enacted. REPRESENTATIVE ROKEBERG pointed out that Section 3, which pertains to conflicts of interest, is already part of the statute. He said the other subsections under AS 08.88.391 provide more detail and that it is the relationships that give rise to a conflict of interest. SENATOR FRENCH referred to "specific assistance" on page 3, line 10, and throughout the bill, and asked if a realtor can provide specific assistance to a person without representing that person. MS. McCONNOCHIE said the Alaska Realtors Association wanted to define at what point the services of a real estate licensee are being used, "And that's when specific assistance happens." She pointed to the definition of "specific assistance" at the end of the bill and repeated that realtors need to know when their services begin and when they do not. SENATOR FRENCH asked why hosting an open house is not included in that definition. MS. McCONNOCHIE replied, "Because typically when you're coming into a house and I am sitting there, intrinsically I'm representing the owner of the house. Consequently I'm not going to offer you specific assistance, which could be in fact, against my client's - the seller's - best interest." SENATOR FRENCH said he was thinking of it in opposite terms but realizes that realtor is already representing the seller. REPRESENTATIVE ROKEBERG indicated that the bill requires a written disclosure statement about the type of relationship between the licensee and a prospective buyer or seller. To provide specific assistance would require the host of an open house to have any prospective buyer jump up and sign a form before allowing the person to look around, which is not likely to happen. SENATOR FRENCH then referred to lines 23-25 on page 3 and asked for an explanation. MS. McCONNOCHIE said an example would be if she represented Senator French when selling his real estate. If, after the sale, Senator French did not intend to buy another piece of property but planed to rent, she could not represent him if she was representing the owner of a home that he wanted to rent. CHAIR SEEKINS asked if that would also apply to a home sale rather than a rental. MS. McCONNOCHIE explained that she could represent him to sell his home and buy another home, but she could not do that if she was also working for the owner of the property for sale or lease. SENATOR FRENCH asked about the duties of a neutral licensee [Sec. 08.88.645]. REPRESENTATIVE ROKEBERG said the former relationship that may have been created by dual agency is redefined in that section. He stated, "They are to cover similar situations. They are not - they may be analogous but they're not the same." SENATOR FRENCH said his question revolves around the language on page 9 in subsection (5), which talks about what a realtor can and cannot do when working as a neutral licensee with a buyer and seller on either side. He said he finds subsection (5)(b)(2) to be problematic because it almost allows the realtor to do what the realtor is prohibited from doing in (5)(A) and (B). He suggested changing the word "would" to "should" in (5)(b)(2). MS. McCONNOCHIE clarified that the relationship between the buyer, seller, and realtor would not be adversarial and the realtor would not be trying to advocate for either party. The realtor would, in effect, be working as a go-between for the two parties. If Senator French was buying a house through her, and she had prior written permission from both parties to be a neutral agent and he told her he would pay a certain price and that she could take that price to the seller, but the seller gave her permission to offer a lower price, she could inform Senator French of the lower price. CHAIR SEEKINS said he understands (5)(B) to say that with written consent, the neutral agent could "work both sides of the street." MS. McCONNOCHIE agreed and repeated that this relationship would not be adversarial and the realtor would be working to create a win-win situation for both parties, which this legislation will allow. She pointed out what is most often more important to both parties are the terms of the transaction rather than the price. REPRESENTATIVE ROKEBERG told members this bill is the result of a significant amount of effort that goes back eight years. He believes HB 29 is a major consumer protection bill and is an excellent example of the proper balance between protecting the consumer and allowing commerce to move forward. He added that in 1992 the fire agency provisions of law were adopted, but they are broken and the statute has been modified to make the system work better for all parties. He complimented the people in the industry for working on consumer protection. For example, realtors will have to provide a pamphlet to every client of the rights and obligations of the licensee. CHAIR SEEKINS asked if anything in the bill will make it difficult for a person to craft their own documents consistent with state law to sell or buy a home. REPRESENTATIVE ROKEBERG said nothing whatsoever. This legislation only applies to licensees regulated under Title 8, occupational licensing. CHAIR SEEKINS asked if HB 29 puts constraints on the licensee and not on the way a buyer wants to buy. REPRESENTATIVE ROKEBERG replied, "This regulates the conduct of a licensee." SENATOR FRENCH declared a conflict of interest with this legislation as his wife is a real estate agent. SENATOR OGAN moved SCS CSHB 29(JUD) from committee with individual recommendations and its zero fiscal note. The motion carried with Senators French, Ogan and Seekins in favor.