CSHB 418(FIN)-REAL ESTATE COM'N/LICENSEE/HOME INSPECT  CHAIR CON BUNDE announced CSHB 418(FIN) to be up for consideration. He moved to adopt Amendment 1 and objected for discussion purposes and explained that Legislative Audit had suggested having mobile homes fall under real estate licenses, but that issue is currently under discussion by the Real Estate Board and doesn't need to be addressed now. 23-LS1548\I.3 A M E N D M E N T  OFFERED IN THE SENATE BY SENATOR BUNDE TO: CSHB 418(FIN) Page 3, following line 11: Insert a new bill section to read: "*Sec. 6. AS 08.88.470 is amended to read: Sec. 08.88.470. Findings and payment. At the conclusion of the commission's consideration of a claim made under AS 08.88.460, it shall make written findings and conclusions on the evidence. If the commission finds that the claimant has suffered a loss in a real estate transaction as a result of fraud, misrepresentation, deceit, or the conversion of trust funds or the conversion of community association accounts under the control of a community association manager on the part of a real estate licensee, the commission may award a claimant reimbursement from the real estate surety fund for the claimant's loss up to $20,000 [$10,000]. Not more than $20,000 [$10,000] may be paid for each transaction regardless of the number of persons injured or the number of parcels of real estate involved in the transaction." Renumber the following bill sections accordingly. SENATOR HOLLIS FRENCH arrived at 1:55 p.m. CHAIR BUNDE continued explaining that the other concern was raising the loss limit from $10,000 to $20,000. MS. JANET SEITZ, staff to Representative Rokeberg, sponsor, said that he did not support raising the limit because it could impact the licensing fees for the real estate agents and also he believes that anything above $10,000 should be taken to court. SENATOR RALPH SEEKINS asked how many past claims above $10,000 had been taken to court. MS. SEITZ said that the audit indicated that recent payments were all above $10,000 and more into the $20,000 range. CHAIR BUNDE showed the committee a list of states that administer a real estate recovery fund and Alaska at $10,000 is joined by four other states. The rest of the states are at $15,000 - $50,000. MS. PAT DAVIDSON, Division of Legislative Audit, explained that her audit found five disbursements out of the surety fund over the last four years. All the actual claims reported and substantiated by the hearing officers were in excess of $10,000 and one was in excess of $20,000, which is one of the main reasons she recommended changing the threshold. SENATOR SEEKINS asked what the size of the fund is now. MS. DAVIDSON answered that it was $467,000 at the end of FY03. It has a floor of $250,000 and was supposed to have a cap of $500,000 originally. Statute also provides a $125 cap that could be paid into the surety fund per licensee. Right now it is $60. In summary, the fund is close to its cap and licensees are making substantially less than the maximum contributions to the fund. SENATOR SEEKINS noted that there didn't seem to be any foreseeable shrinkage of the size of the fund based on the last four years history. MS. DAVIDSON responded that the funds appear to be adequate, but individual claims run differently and don't have a predictable nature. CHAIR BUNDE asked when the $10,000 cap was set. MS. DAVIDSON answered in 1974 when the fund was first established in statute. If one used the CPI for inflation, the cap would be over $30,000. CHAIR BUNDE asked how much real estate licenses would go up. MS. DAVIDSON replied that statutes were amended in 1998 limiting the fee to no more than $125. The current fee is set at $30 per licensee. SENATOR FRENCH noted a conflict of interest as his wife is a real estate professional. CHAIR BUNDE noted it and then removed his objection to Amendment 1. There were no other objections and Amendment 1 was adopted. SENATOR SEEKINS moved to pass SCS CSHB 418(L&C) from committee with individual recommendations and attached fiscal note. Senators Gary Stevens, Bettye Davis, Seekins and Chair Bunde voted yea and SCS CSHB 418(L&C) moved from committee.