SB 122-REAL ESTATE TRANSFER FEES/TITLE PLANTS  1:41:45 PM CHAIR EGAN announced SB 122 to be up for consideration. 1:41:56 PM DANA OWEN, staff to the Senate Labor and Commerce Committee, said they received a committee substitute (CS) for SB 122 from the Community and Regional Affairs Committee, which contains only the second section of the original bill. So, he wanted to explain what that was about. He explained that currently in Alaska law it is possible to have a transfer fee covenant when a title is exchanged on a piece of land. These kinds of covenants have been outlawed in 41 other states. Interestingly the first instance he could find of that being prohibited is in New York where the courts outlawed it and termed it "a vestige of feudalism." MR. OWEN said a real estate transfer fee covenant is a covenant attached to a deed that mandates a fee be paid back to that first owner who put the requirement into the title every time the title changes hands. It seems like good public policy to outlaw them, and that's what this bill would do. He said the title community in Alaska is deeply divided over the provisions in the first section of the bill, and he is still searching for the answer. Linda Hall, the Division of Insurance director had been in conversations with them and himself to try and find some kind of accommodation, but they were not ready for that today. SENATOR GIESSEL asked if they are dealing with version B and had referenced the original bill as well. MR. OWEN answered yes. 1:44:53 PM SENATOR MENARD joined the committee. 1:45:00 PM At ease from 1:45:00 to 1:45:44 p.m. 1:45:44 PM SENATOR GIESSEL moved to adopt CSSB 122(CRA), version 27- LS0789\B. CHAIR EGAN objected for discussion purposes. SENATOR DAVIS asked Ms. Hall to explain the bill to her. 1:47:30 PM MR. OWEN clarified that the bill before the committee is the Senate Community and Regional Affairs (CRA) version that took out the first section of the original bill. The reason he brought it up is that changes would be forthcoming, but he didn't know what they would be. LINDA HALL, Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), explained that the CS, version B, is identical to section 2 in version A. That made a difference in the length of time title records have to be kept. There is some discussion going on about what an appropriate amount of time is, so section 1 was removed leaving only section 2 at this point. She thought section 2 was good public policy, because it does away with what would be an additional cost for certain consumers every time a property changes hands. MS. HALL said she supported this version of the bill, but if it changes again she would have to reconsider. CHAIR EGAN, on behalf of the entire Labor and Commerce Committee, thanked Ms. Hall for all her years of service to the State of Alaska and said they really hate to see her announce her retirement. MS. HALL thanked him for the compliment. 1:50:53 PM CRYSTAL PELTOLA, Vice President and General Manager, Alaska USA Title Agency, Anchorage, said they started the company four years ago and have five branches throughout the state. She supported CSSB 122 (CRA) as written. She said prohibiting the transfer fee tax is good for consumers. SENATOR GIESSEL asked if she was revoking her letter of January 24 that expressed concerns and opposition to SB 122, the first version. MS. PELTOLA replied yes, and added if section 1 is reinserted she would still oppose it. 1:52:51 PM RAYMOND DAVIS, Vice President, Old Republic National Title Insurance Company, Seattle, Washington, supported CSSB 122(CRA). He said Old Republic is licensed to do business in Alaska and works with Title agencies such as Alaska USA Title Agency and others. He agreed with Ms. Peltola that prohibiting transfer fees is good public policy, and a bill like this has been adopted in most states in the last couple of years. He explained that for lack of a better phrase, it was kind of a "scheme" created several years ago by an organization back East that put packages together for real estate developers who developed some properties and sold the lots; in fine print the deed said any time that property was sold in the future they would get anywhere from .5 percent to 1 percent of the sales price back. It was "sneaky and unfair." MR. DAVIS said the current title licensing laws "work just fine now." Their concern was that any industry proponents of the legislation were seeking to restrict competition and potentially put current companies out of business. He said they support open markets, and licensing should be restricted to issues that protect the public and not to protect the guys in business against other people that want to come in. CHAIR EGAN asked, "So, you're not opposed to us eliminating section 1 out of the bill?" MR. DAVIS replied no, section 1 should be eliminated. 1:57:18 PM SENATOR DAVIS said people who testified are in agreement and asked if anyone opposed this legislation. CHAIR EGAN replied there was no opposition right now; but the committee normally holds a bill after hearing it the first time and he was going to hold SB 122 for now.