HOUSE LABOR AND COMMERCE STANDING COMMITTEE October 13, 1997 1:21 p.m. Anchorage, Alaska MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative John Cowdery, Vice Chairman Representative Jerry Sanders Representative Joe Ryan MEMBERS ABSENT Representative Bill Hudson Representative Tom Brice Representative Gene Kubina OTHER MEMBERS PRESENT Representative Mark Hodgins (via teleconference) COMMITTEE CALENDAR HOUSE BILL NO. 33 "An Act relating to real estate licensing and the real estate surety fund; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 33 SHORT TITLE: REAL ESTATE LICENSING SPONSOR(S): REPRESENTATIVE(S) ROKEBERG BY REQUEST JRN-DATE JRN-PG ACTION 01/13/97 36 (H) PREFILE RELEASED 1/3/97 01/13/97 36 (H) READ THE FIRST TIME - REFERRAL(S) 01/13/97 36 (H) LABOR & COMMERCE, FINANCE 03/14/97 (H) L&C AT 3:15 PM CAPITOL 17 03/14/97 (H) MINUTE(L&C) 03/17/97 (H) L&C AT 3:15 PM CAPITOL 17 03/17/97 (H) MINUTE(L&C) 03/24/97 (H) L&C AT 3:15 PM CAPITOL 17 03/24/97 (H) MINUTE(L&C) 10/13/97 (H) L&C AT 1:00 PM ANCHORAGE LIO WITNESS REGISTER RON JOHNSON, Broker Kenai Board of Realtors 610 Attla Way, Suite 6 Kenai, Alaska 99611 Telephone: Not provided POSITION STATEMENT: Testified on HB 33. SCOTT CONNELLY, President Kachemak Board of Realtors 331 East Pioneer Avenue Homer, Alaska 99603-0437 Telephone: (907) 235-6183 POSITION STATEMENT: Testified on HB 33. BILL McNall, Esq. 921 West Sixth Street Anchorage, Alaska 99501 Telephone: (907) 276-2535 POSITION STATEMENT: Testified on HB 33. SHIRLEY ARMSTRONG, Legislative Assistant to Representative Rokeberg Alaska State Legislature 716 West Forth Avenue, Suite 640 Anchorage, Alaska 99501 Telephone: (907) 258-8191 POSITION STATEMENT: Made comments regarding HB 33. ACTION NARRATIVE TAPE 97-59, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee to order at 1:21 p.m. Members present at the call to order were Representatives Rokeberg and Sanders. Representative Cowdery arrived at 1:30 and Representative Ryan arrived at 1:36 p.m. Chairman Rokeberg announced a quorum was not present at the call to order and, under state statute, the meeting would act as a work session. HB 33 - REAL ESTATE LICENSING Number 0058 CHAIRMAN ROKEBERG indicated the committee would address HB 33 "An Act relating to real estate licensing and the real estate surety fund; and providing for an effective date." He stated he would like to declare a potential conflict of interest as he is licensed real estate broker in the state of Alaska and has his own real estate brokerage. Chairman Rokeberg noted the last hearing on the legislation was on March 24, 1997. He noted he has participated in numerous work sessions and meetings with real estate groups across the state. CHAIRMAN ROKEBERG said, "Today's hearing will be on House Bill 33, which is real estate licensing. For the purposes of discussion, we cannot formally adopt a new version, but were we able to do that, I'd like to have the consent of the committee to take up Version H of House Bill 33 as the working document for our working session. This supersedes Version F. I would indicate, for the record, that Version H was put together by the committee this summer to give us a working document that is based on the testimony we've taken to that point of approximately to the first part of August -- and the way Version H came out, it came out as two separate bills, one including what was called a surety fund section. And so we split the bill in two sections in Version H. However, most of you have a memorandum written by myself on September 11. It goes to show certain things about Version H, but it also helps clarify some of the issues that are before the committee and need to be considered. The reason we did split the bill was there was discussion at the time, particularly within the real estate community, about the surety fund, the fees being charged for that and there was a good deal of discontent. That has not gone away. This committee and the chairman has asked Legislative Budget and Audit (LB&A) Committee to review the surety fund and the activities of the Real Estate Commission for their biannual fees. As a result, I believe that most of the changes in the surety fund -- well I felt that if there was a need to do this, we would have vehicle by separating it. But I think we -- it's my judgement of the chair that we need to put that back into the bill. The next version of the bill will have that surety area back into the bill because I believe the Real Estate Commission has, in a large part, at least addressed some of the issues brought up in the real estate community. They have lowered the amount of the fees to the real estate agents. They've come up with I believe $365. They've drawn that back to $270. They've also issued a reduction in the surety fund premium from $125 to $100. I believe this has been promulgated by the regulations." Number 0821 CHAIRMAN ROKEBERG indicated he would review Version H for the committee members and his memorandum of September 11, 1997, as there is a comparison between the two versions. Chairman Rokeberg said he would like to point out that in the areas where there is controversy, he hopes it will be resolved before the legislature convenes in January. CHAIRMAN ROKEBERG stated there is a quorum present as Representative Cowdery and Ryan had arrived. CHAIRMAN ROKEBERG said, "The chair would entertain a motion to adopt, in so far as we can statutorily, Version H of House Bill 33." Number 1012 REPRESENTATIVE COWDERY made a motion to adopt Version H of HB 33, for the purpose of discussion. CHAIRMAN ROKEBERG asked if there was an objection. Hearing none, Version H was before the committee. Number 1054 CHAIRMAN ROKEBERG referred to item three of his memorandum and explained that Version H entirely deletes the concept of endorsement. The original version of the bill came from a task force established by the Real Estate Commission. The task force came up with an endorsement concept for sales licensees, property managers and community association managers. CHAIRMAN ROKEBERG said, "Because of subsequent meetings I've had, particularly with the Anchorage Board of Realtors legislative committee, including about 20 some brokers here, that's chaired by Mr. Eric Dyruo and Bill Brady, I believe, of Remax -- that particular meeting there was a -- in my other work sessions that I've attended, it's the concerned opinion of the chairman that the endorsement concept, which I endorsed, does not have the endorsement or approval of the vast majority of real estate practitioners in the state. Therefore, we have opted to do what I call a `light bill,' which is the bill before you, in part, to cut down and diminish some of this controversy. I think the controversy generated, in a large part, because of the concept of change within any kind of business and the idea of endorsements of having to go in and take specific classes for specific things and then the feeling that a number of people would have to take classes for all three endorsements, as well as the... The prior bill, if you recall, had a commercial endorsement in it and it was the consensus of the chair that also be removed because of the controversial nature of that particular endorsement. So the endorsement concept, which would require a real estate licensee, which now there is a universal test for prelicensing and postlicensing type education requirements as well as continued education requirements, has been scrapped. And what's been left in its place, at this particular juncture, is a requirement for the Real Estate Commission, however, to come up with curriculum, both for continuing education for four different areas of specialty. Now this is just -- it's not prelicensing or getting a license, this is merely for continuing education in the areas of sales, property management, community association and commercial activities. The bill - this version of the bill mandates that those areas have classes peculiar to their areas of expertise because now -- that was one of the biggest problems with the prior bill, you had different endorsements. The classes can be - could cross fertilize. In other words, you could use some core classes which are 8 hours, and now there's 12 hours of elective hours, presently. There is nothing in this legislation or this bill that wouldn't allow that same type of thing to happen, but still at this particular juncture requires that there be 8 core hours in a specialty and 12 elective hours, for continuing education, every two years on a biannual license renewal." Number 1443 CHAIRMAN ROKEBERG pointed out that the state of Alaska has among the least number of hours required for continued education and is also probably right in the bottom of the barrel for the number of hours required for prelicensing. Number 1516 CHAIRMAN ROKEBERG referred to item four of the memorandum and said it is the requirement for community association managers to be licensed. It is contained in Section 9, pages 6 and 7, of the bill. He said this was one of the major reasons he started the entire rewrite of the statute, that ultimately culminated in HB 33, which would bring in community association managers under the statutory regime of the state to provide, in the form of the Real Estate Commission, a body which had regulatory control over the activities between the community association manages. He pointed out that a community association manager, who was a manager for 18 different community associations, embezzled $580,000 in the Anchorage are a few years back. Number 1614 CHAIRMAN ROKEBERG said, "Instead of having the endorsement concept now, this particular bill, the H Version, allows for the community managers coming in, but it also provides -- this was done at the suggestion of the Anchorage board, for additional bonding requirements. However, the additional bonding, which is in Section 20, page 14, of Version H, I believe now after review of the entire statutory regime should be deleted in its entirety. And the reason I say that is that this was suggested kind of as a last minute suggestion and adopted in this draft by the Anchorage board. I don't think - we didn't have enough time to really review it. The concept being that we felt, because the surety fund is only $250,000 in (indisc.) and then we had this one case of almost a half a million dollars. However, the existing statutory regime is such that an individual instance - in other words, if an individual broker creates a problem, they can only claim against one other let's say customer/consumer no more than $10,000, then the global universe of all incidents relaying from this one incident. In other words, multiple consumers is capped at $50,000. So the most any one individual could get from the surety fund is $10,000 and for one incident that would be generated by on (indisc.) type licensee, the maximum the fund could pay out to any number of consumers is $50,000." Number 1845 CHAIRMAN ROKEBERG said it is his recommendation that Section 20 be deleted which required a $1 million bond for community association managers. The original idea was that there was a feeling that the fund would be jeopardy if the community association managers would be able to tap into the surety fund by misfeasance. He said he believes that with the existing limitations of $10,000 and $50,000, there is adequate protection for the fund without the additional bonding. Chairman Rokeberg said some of the community association managers, who are being brought in under the law, are not entirely happy with the circumstances of how it is working out. He said in his discussions with community association people, they have indicated that they want to be covered, in a large part, by the real estate law. This is because if they were to set up a separate type of a group for community association managers alone, their biennial fees would be substantially higher than they would be as a realtor, plus they would have to have additional fiduciary surety bonding requirements added on to the biennial fees separately. Number 2031 CHAIRMAN ROKEBERG referred to item five of his memorandum and said it relates to errors and omissions insurance requirements. He explained it has generated a lot of negative response within the community, but he believes it is a matter of misinformation. One of the problems is that the provision in the bill allows the Real Estate Commission to go in the marketplace to investigate whether a $100 annual premium amount is obtainable from the underwriting insurance community. Chairman Rokeberg said what he has indicated to the Real Estate Commission, and they've agreed to informally, is that they will go ahead and endeavor to see if this is at all practical prior to the legislature convening in January. If there are no underwriters willing to come forward at the lower rates, it will be deleted from the bill. Chairman Rokeberg referred to the agency situation and said he had discussions with Mr. McNall about that where some portions need to be clarified. Section 32 does provide for explicit a dual agency which, by implication, is already in existing law. However, there is a problem in existing law where you have to disclose what your agency relationship is every time you show a house. It currently is not being done. He said, "In other words, whenever a real estate broker or agent has the clients out, statutorily, we put them in a box where they don't abide by the law because they do not, at every instance, have a form for each different house, if you will, which is the way this law is drafted now." He stated he would be discussing this with members of the real estate community and will bring recommendations back to the committee as soon as possible. Number 2314 CHAIRMAN ROKEBERG referred to item seven of the memorandum pertaining to Section 33, page 20 and 21, and said it was added at the request of the Real Estate Commission. He stated the section allows a real estate agent or an associate broker of a company, that hires an administrative assistant that is licensed, to absolve the broker from any responsibility for the payment of federal taxes on that person. Under existing law, the licensed broker is responsible for that assistant. This would clarify the responsibility between that licensee who hires the administrative assistant and not the broker. Number 2413 CHAIRMAN ROKEBERG referred to item eight regarding continuing education credits and said it is in Section 8, page 6. He explained that he believes the section needs to be tightened. The commission, as a result of action by the committee, has come up with some new regulations. He read from subsection (1), lines 8 through 10, "courses required to earn professional designations sponsored by the National Association of Realtors, the Building Owners and Managers Association, or other recognized national organizations;". He stated that wording is too broad. Chairman Rokeberg said he would prefer to come up with some language and get direction from the commission to help tighten the language up. His approach would be to be more specific in that it should be stipulated who the national organizations are. Number 2622 CHAIRMAN ROKEBERG referred to Section 7, page 5, and read from subsection (e), "In order for an educational course to be recognized for credit under this section, the course outline and the instructor of the course must have been approved by the commission or the commission's designee before the course was conducted." He pointed out that this is a problem for the national courses because currently the commission has established a $25 fee to get your course approved. We've created a cottage industry in the state of Alaska from a bunch of real estate course instructors. Part of the problem is that in the past, some of the national organizations have come to the commission at the request of the members, paid the $25 fee and put their courses in play, but that is a pain in the neck for them. Chairman Rokeberg said he wishes that they had language to exempt the specific organizations from the filing fee. In other words, the commission, because of their filing fee requirement, could overcome the statute to not allow the classes. He noted the classes can cost up to $1,000 a week and if you leave Alaska to take them, it can cost you $2,000 to $3,000. They are not receiving continuing education credits which is ridiculous. Number 2819 CHAIRMAN ROKEBERG informed the committee members the commission has also had some problems with the language that reads, "courses approved by commission for computer training that is specially designed to be useful for persons...." although they are basically going along with it. The computer course has to be specifically designed for the real estate agents taking the course. In other words, you can't take a course on how to run Windows 95, et cetera. Number 2902 CHAIRMAN ROKEBERG said, "With that subsection (1), under Section 8, the approval, the tightening of that up and the approval for the university courses and the national courses need to be tightened up." Number 2931 CHAIRMAN ROKEBERG referred to item nine of the memorandum, and said it pertains to Section 37, pages 22 to 25. He referred to subsection 19 and said he would like to have input from the committee members to resolve some of the language. Chairman Rokeberg said, "These are provisions that except those people from having to have a license. There is a number of these things that came down here. The first thing I'd like to bring to the attention of the committee is on page 23, line 18, subsection (9) -- I can't remember if this is new or not. This is a major change and I'm not sure we had this in our last go round. I know the current law. I'm talking about the last in section F -- Version F. Anyway, whether we did or not makes little difference because we have it now. And what we're doing here is clearly defining who can do real estate business and who can't. Previously, there was allowed -- the corporation, partnership, et cetera, they were performing acts that require a license, under the statute, in their regular course of business were exempt, but now we're changing that to incidental to their regular course of business. What we're doing here is clearly stating, for final after all these years, who can do real estate and who can't. And with these numerous exceptions that we have - some 19 here, this clearly will state that nobody can do these things unless they're an attorney or there -- as stipulated, that's one of the exceptions up here. And that there is 19 different categories you come into, but this will clarify a problem that I know has been in the business for a number of years about who needs to be licensed. It particularly comes into play when the people are managing property and own buildings - managing it and so forth, but it didn't work previously licensed. Now they have been under the more recent versions of the law and this I think clarifies very strongly that these people need to be licensed to do this. I do need to review this slightly further and I want to talk to the homebuilders about it - whether the sales of a homebuilder may be restricted with this type of language. We may have to put some other exemptions in here given this, but I just want to bring it to the committee's attention. This could be a very, very major controversial issue, although I hope it isn't, because it really goes a long way in clarifying who can do business in this state. And this is an important issue. There is another thing we can talk about later where it comes back into play on." Number 3340 CHAIRMAN ROKEBERG said the major thing is on page 24, subsection (19). This provision was a result of the drafting by legal counsel in Juneau. It is a generic request to meet the requirements that Representative Cowdery brought to the committee. It would allow relatives and so forth to act as managers of properties. He pointed out that on line 13, subsection (19), the words, "an attorney in fact..." He said, "I think it is important and I think a lot of the people in the real estate community have appreciated this where anybody who is going to act, as there is in the older law where you can have an attorney in fact, or have a power of attorney. If you had that, you were limited to two transactions. What we're doing here is expanding the number of people who can act for that property owner, but we are requiring them to have a power of attorney giving them that ability. But we're also limiting it to their relative. The question that I have and I want to ask the committee to consider is, `How far do we go?' Frankly, I think the way this is drafted now goes a little too far. We're talking about nephews and aunts and uncles and nieces, but also I think it does exclude step relationships, which I think is a problem in this day and age of multiple extended families, divorce and the like. In many instances, there are closer relationships between a stepchild, if you will, than there would be an aunt, uncle or niece." Number 3538 REPRESENTATIVE JOHN COWDERY said subsection (19) talks about authorizing the specific real estate transaction. He asked if that means whoever signs the document agrees to it or does it mean the person puts it together and the principal still signs for it. Representative Cowdery said his mother can still sign her documents, but he puts a package together for her approval. She goes to the title company and signs the title document. CHAIRMAN ROKEBERG said it could be limited in the power of attorney. He said he wants to leave wording in the bill so they have the ability for one party to act for another. He said you can limit the degree in which a power of attorney is drafted to the powers you're going to be granting the other party. For example, if a person would want to limit their stepchild to manage your property and limit him to the acceptance and collection of rent and the ongoing upkeep and maintenance of rental property, you could limit him to that. You could also exclude his ability to sell your property. Number 3750 CHAIRMAN ROKEBERG pointed out that on page 24, items (16) and (17) are specifically added for community association activities. He said (16) indicates that an owner of a unit of a self-managed community association, managing the community association without remuneration, would be an exemption. Chairman Rokeberg said if you were, for example, a condominium owner and wished to act on behalf of an association, which is allowed, it may be appropriate to reimburse you for your time. Number 3913 CHAIRMAN ROKEBERG referred to subsection (17) and said it provides that a developer retains control of at least 51 percent of the association which is consistent. He noted that he needs to double check on the Alaska Common Ownership Act regarding consistency. Number 3945 CHAIRMAN ROKEBERG referred the committee members the transitional provisions on page 26. He said the prior version of the bill allowed community association managers, if they had two years of experience, to become licensed community association managers with their endorsement. They could only conduct their activities and wouldn't have to take a licensing examination, but would take only the continuing education examinations. Chairman Rokeberg said he thinks Version H is drafted too stringent. It would allow the community association manager to petition the commission that they be granted a license. Now they're able to practice for a year after the effective date at which on or before that time, they would have to pass the real estate examination. Chairman Rokeberg said the implications are that after one year, if you didn't pass that examination, you'd be out of business if you were a community association business manager or broker. Previously, they were able to petition the commission and were then granted a license endorsement in which they could only practice in that particular profession. They were grandfathered in. Chairman Rokeberg said it is the committee's ultimate decision to decide whether or not these people should be required to pass an examination for the general sales of real estate because we no longer have endorsements. TAPE 97-59, SIDE B Number 0443 CHAIRMAN ROKEBERG indicated that Version H of HB 33 does not provide for grandfathering and, therefore, it mandates that these people become licensed within one year which will allow them to sell real estate. Chairman Rokeberg said, "There is another concept that I have discussed with a number of people and that is for the establishment of a provisional license to allow for the transition of these people with experience at those levels, a broker, an agent of community manager associations, to transition into it where their actions would be upon the effective date of the legislation. They would apply to the commission and receive a provisional license for only their activities as it relates to community management associations and not their ability to sell real estate." He asked what the fair way is to handle those people who have commitments. Chairman Rokeberg indicated he gave a presentation to the Anchorage Chapter of the Community Association Management Institute and noted there were about 30 people in attendance of which only about 35 percent were licensed realtors. Chairman Rokeberg noted he also has been involved in the development and activities of community associations because he has acted a community association president; he has taught property management at the University of Alaska and was involved with the establishment of the first specialized property management department in the Alaska real estate market. He stated the most important thing is that these people be able to be included under the licensing law and that it be done in a fair and reasonable manner. He asked if the grandfather provision should exist indefinitely or should people be required to become licensed after two years. Number 1001 CHAIRMAN ROKEBERG referred to item 11 and said the previous version of the bill allowed the Real Estate Commission to establish a separate state code of ethics by regulation. He said that has been taken out of the bill because there was opposition by the realtors in Anchorage. He noted the National Association of Realtors has a code of ethics. CHAIRMAN ROKEBERG referred to the committee to page 6, line 29, of Version H, and said currently, a license is required to collect rent for any real estate. He said, "As a practical matter, this has caused me some heartache because when receptionists or certain other staff people of brokerage houses are at the front desk and clients come in and want to pay their rent, they're not able to accept it. You have to actually be a licensee to be able to accept rents and I think that I would like to look at modifying that with language that would allow an employee of that licensee to accept that rent. They would be required to issue a written receipt if, in fact, if they -- if they can collect the rent if they issue a written receipt as evidence by that. Therefore, the broker would still be responsible because of the agent/principal relationship (indisc.) would exist between and employee and employer." Number 1216 CHAIRMAN ROKEBERG indicated the committee members have some information from Grayce Oakley which relates to some changes in the bill that revolved around the reimbursement or fee-sharing based on relocation companies. He noted it has to do with a defected regulation promulgated by the commission in the summer. He said he believes there needs to be some statutory changes. Chairman Rokeberg indicated he would address the issue later in the meeting. Number 1445 RON JOHNSON, Broker, Kenai Board of Realtors, testified via teleconference from Kenai. He referred to Version H, pages 6, 8, 9, 10, 12, 20, 21, 22, 26 and 27 and said "real estate services licensee" was dropped and the term "salesman" was included. He indicated he like to see it changed at least to "real estate licensee," but would prefer, "real estate services licensee." CHAIRMAN ROKEBERG noted that has been brought to his attention and he agrees. Number 1539 MR. JOHNSON referred to page 1, line 13, item (4), "certify courses required under this chapter;" and asked if it would be better to approve the courses as well as approving the instructors. He asked if the courses should be certified. Mr. Johnson asked if it wouldn't be better approve the instructors and approve the courses rather than certify one and approve the other. CHAIRMAN ROKEBERG said Section 2 allows the commission to designate or have an assistant do the functions. MR. JOHNSON said his thinking was to keep the language so that the assistant would approve everything rather than approve some things and certify some things. Number 1635 CHAIRMAN ROKEBERG asked if he is saying that if they are going to approve the courses, they should approve the instructors for those courses as a policy matter. MR. JOHNSON answered in the affirmative. Number 1644 MR. JOHNSON referred to page 3, line 18, and said the words, "Department of Law" were changed to "Department of Commerce and Economic Development." He asked if that will allow the commission to do their own policing. CHAIRMAN ROKEBERG responded that is the intention. He said the commission is having difficulty getting the Department of Law to provide the manpower to prosecute some of the cases. Chairman Rokeberg said the change was requested by the commission to try to bring the in-house ability to pursue cases, with their investigators, through the administrative hearing process and to be the moving party rather than having the Department of Law be the moving party. MR. JOHNSON questioned whether the Department of Commerce has any policing authority. CHAIRMAN ROKEBERG responded, "That's why we're trying to give it to them in statute." Number 1804 MR. JOHNSON referred to page 6, line 29, "(3) collect rent for the use of real estate;" and said if you pursue the collection of rent, it would be licensed, but to accept rent a license is not required. He pointed out that was the result of a discussion about seven years ago on whether the communication information could be given by an unlicensed person to a licensed person. At that time, it was determined by the commission that collecting rent was receiving rent and collecting rent meant you would actually be out pursuing the collection of the rent. Mr. Johnson said accepting rent is alright because someone would be sitting there and accepts rent as it comes through the door. It is like accepting the mail. To actually go out and pursue collection of rents required a license. Number 1914 CHAIRMAN ROKEBERG asked if there was an opinion from the commission. MR. JOHNSON said he believes it was in their policy manual, but suggested checking with Ms. Oakley. CHAIRMAN ROKEBERG said the law currently says, "the collection of rent." He said he thinks the wording needs to be modified. Number 2000 REPRESENTATIVE JOE RYAN said if a tenant hasn't paid their rent for several months and they are evicted, the landlord decides to turn the account over to a collection company, and the collection company very aggressively tries to collect the rent. He questioned whether the collection company has to licensed by the real estate commission to collect that debt. MR. JOHNSON said as he recalls, that particular situation was discussed and it was determined that past-due rents are debt rather than rents that are due. CHAIRMAN ROKEBERG said it is something that needs to be clarified. Number 2133 MR. JOHNSON suggested condominium associations or homeowner associations should have limited specific licenses so that they don't get into the sales picture. CHAIRMAN ROKEBERG pointed out that is basically what the endorsement concept is, but it also added property management. MR. JOHNSON explained he was and probably still is in favor the endorsement concept. The problem with it is that created a perceived headache in the eyes of some of the brokers. Rather than an endorsement, maybe there should be a specific license that is a condominium homeowners association license. CHAIRMAN ROKEBERG asked Mr. Johnson how he feels about making the transition provisional with limitations and then require them to get a real estate license after two years, or all new people who come aboard have to get a real estate license. MR. JOHNSON said if there was a specific limited real estate license, he could live with that. To require them to get a regular real estate license might be counter productive. CHAIRMAN ROKEBERG stated they would be required to pass the real estate exam. They would have gone through the requirements of meeting the license requirements. MR. JOHNSON suggested limiting it to the law portion of the exam. CHAIRMAN ROKEBERG said it would set up a de facto endorsement. He indicated this is something the committee needs to consider. Number 2613 CHAIRMAN ROKEBERG asked, "My comments about deleting the endorsements and the commercial endorsement, particularly, is that pleasing to the folks down in Kachemak Bay?" Number 2633 SCOTT CONNELLY, President, Kachemak Board of Realtors, responded via teleconference. He said he is sure that it will be pleasing. Number 2745 BILL McNALL, Esq., came before the committee to testify on behalf of himself. He noted he is an attorney of real estate law in Anchorage and was on a task force of Community Association Institute. Mr. McNall informed the committee that a community association might be managed by funded or licensed compensated officers or directors who live in the association. He pointed out there was a recent article where there was a complaint about how self-managed associations couldn't have some discretion. Mr. McNall said, "One of the fundamental thoughts behind community associations is this is a neighborhood concept, you have neighborhood members serving on the board and doing it as volunteers." Mr. McNall pointed out that there have been national discussions on how to get bring in professional mangers, attorneys, realtors and people who are trained managers. He said they are asked to serve on the association boards as what is called a super board member. They have done that because boards get stuck, they don't know what to do. They're sometimes more directed by their own personal pocketbook and what the monthly/annual budget might mean than they are about what the legal obligation to the association might be. Mr. McNall said he has represented over 200 associations and he can say that issue is often the most common issue they have to deal with, or it knows what it has to do, but just doesn't want to do it because it is very unpopular. Mr. McNall said, "If you're going to allow them to build into the budget a salary for themselves as officers, or a salary for themselves as directors, my concern would be that they'll do what Congress has done to us which is to consistency see a need for budget cuts, but their own personal salaries go up. So it's an issue that I'm quite concerned about. The ultimate concern is that if you're going to allow these folks to be able to be paid for their services, you're going to have to probably take a look at the association's documents because this will be a major change -- And certainly build in the right for the association members to say `yes' to that by a majority or maybe super majority, as well as the association's lenders - people that hold the mortgages on these properties, who have that property as security for their loans, probably would be obligated under the Common Uses Ownership Act to say `yes' as well." Number 3049 MR. McNALL said, "My concern is that if you don't pay your bills, if you have some people serving at $5,000 or $10,000 a year in these positions and you have federal withholding, you have state tax bills that have to be paid and those are not paid, then what you'll have is a lien, not against the individual officer's home, but against every home in the subdivision - every house that's in that condominium or every unit in the condominium project. And I think it's one of those steps you have to look at very, very careful because I think that it's right for abuse, if you will." CHAIRMAN ROKEBERG asked if he recommends against allowing it. MR. McNALL said until we see some amendments to the Common Uses Ownership Act, the Uniform Act and some solution at the national level, he isn't sure that the state would want to jump into that. Number 3258 CHAIRMAN ROKEBERG said, "The issue that we talked about in terms of transition -- would you care to venture an opinion on that? And the fact that the endorsement concept I think is dead on arrival now in terms of it's ability to be passed in the legislation." MR. McNALL said he doesn't object to Mr. Johnson's approach as an endorsement concept as that is what we started out with. He said, "The goal that the committee had was to -- we didn't care necessarily what the mechanism was. What they got out of it was the mandatory educational requirements, so what you had was community association managers being educated as a community association managers, not as sales people. And so I think you've achieved that and I think that what you ought to put in - a one- year or two-year requirement doesn't make any difference to me whatsoever as long as what it's tied to is the achieving of the educational goal for that time period. So you got to do 20 hours a year. They want to get licensed at the end of two years, they better be able to show they got 20 hours in year one and 20 hours in year two because ultimately, that's exactly the issue (indisc.) have to do it and I have two specific examples if you'd care to listen." MR. McNALL said in Washington, D.C., the American Bar Association, Real Property Section, has a separate committee dealing with community association properties of which he is a member of. He said they are dealing with "Megan's Law," which is about the little girl that was seriously sexually abused by one of her neighbors. Mr. McNall said, "The question is in a state like Alaska where you have mandatory public registration of these folks and a manager -- all they have to do is dial the phone to find out where these abusers live and there is one in our condo project and they don't call, what's the liability of the association?" He said it is an issue that people have talked about, but nobody has looked at it and asked, "What is the responsibility for the association or the manager of that association?" He said you would only get to that issue if you're taking courses that will talk about those sort of issues. You won't get that in a sales/service course, you'll only get it in a specific educational program designed for these people. Number 3505 MR. McNALL explained he is very concerned about the issue of the association's liability, as an association, for acts of violence within the association where the association has some knowledge that there are violent people in the project. So there could be a spousal abuse problem, you have gangs in the association, et cetera. You may wind up, as an association, liable like a landlord. MR. McNALL said if there is a landlord that knows of a dangerous condition on their property, they really do have some obligations to tell the people that are on the property about the dangerous condition. They may have an obligation to disclose conditions they may not even know about because they have some duty to investigate their property. In the community association context or the community association manager context, you would probably agree that if there is obvious stuff, maybe there is some duty to disclose to the members or to the (indisc.) about this dangerous condition. TAPE 97-60, SIDE A Number 0154 MR. McNALL said, "If you got the right case, with the right abused child, with the right family and the right abuser, the amount of the judgement would have no end of zeros after it and that would be against the association for failing to warn. How in the world would you ever have enough insurance or how would those owners because the liability for that, after the insurance runs out, becomes a part of each and every owner's life. You, as an owner of a condo, wind up having to pay your pro rata share." Number 0247 CHAIRMAN ROKEBERG asked Mr. McNall if he has a personal opinion about the issue of the limited license versus the provisional license. MR. McNALL said they have provided for a specialized curriculum of education in a specialized area. CHAIRMAN ROKEBERG indicated that there is the transition issue and he would like to make it as painless as possible. He asked Mr. McNall if a limited license would work. MR. McNALL responded that a limited license would work, but it has to be tied to the educational program. He said at 40 hours of education over two years, that person should be able to become a full-blown licensee. Number 0420 MR. JOHNSON said he also thinks it would work, but added he doesn't see the necessity. He noted he sees Mr. McNall's side of the argument which makes sense. Number 0438 CHAIRMAN ROKEBERG said, "But the other situation about putting up a provisional license and then requiring after the two-year period, we're mandating a real estate examination or lose their business. Would that be too objectional to the community association membership now or...?" Number 0455 MR. McNALL said you would get into a philosophical discussion at that point that. "After two years and all the education, they can't pass the licensing exam, should they be in business?" That is a lot of work and a lot of day-to-day application of things. CHAIRMAN ROKEBERG asked how new entries would come into the business once the limited license is established. He suggested there be a grandfather provisional or limited license, but anybody that is a new entry into the business would have to take the real estate exam if they wanted to work in that type of business. MR. McNALL said, "I think that the managers that I recall testifying at the committee or coming to talk about their concerns were extremely concerned about having somebody killed in a car accident and not being able to get anybody to come in and do any work because they would have to go get a license first. And I think we talked about some sort of right to hire off the street and then get them registered with the Real Estate Commission and have them, over a period of time, take the classes and, of course, learn how to do this." CHAIRMAN ROKEBERG asked how new people would get into the business, after the transition is made, if we have a limited license. He said they would be setting up an endorsement. By deleting the endorsement concept, you would have to replace it with something. Chairman Rokeberg said he doesn't want to see one exclusive endorsement just for community association people. He stated he believes people who are duly experienced and are licensed realtors should be able to do community association work, which they currently can do. All they have to do is go out and hang their shingle up. MR. McNALL indicated that is correct. He said, "In my office I have looked at, again, for association to -- really can afford to push the issue -- the problems created by the very same people that you want to have out there or that are currently able to do that without having any education whatsoever. And I know they're managing today and I know that the stuff they're managing they're not doing right because they don't know, because they haven't taken the classes because they take advantage of associations - small corporations off the seat of their pants. That was the thrust of trying to come up with separate licensing and separate educational (indisc.)." Number 0811 CHAIRMAN ROKEBERG said he calls the limited license the de facto endorsement. He calls the provisional license the transition license that would require, at certain point, the new entries. He said a new entry would have to take the real estate examination to be licensed as a realtor. He referred to the provisional grandfathered person and asked if he would ever need to take the licensing exam. The other issue would be do you put a two-year hurdle out there and make sure the person takes the exam. MR. McNALL said he personally would like to see a two-year hurdle. CHAIRMAN ROKEBERG said they're going to take the generic exam. He said if there is the requirement that new people should be licensed, grandfathered people should be licensed too. MR. McNALL said, "I think in two years, as an owner of a business - - that I'm truly going into this business and am planning on doing a good job of making my living at it, and one of the things I have to wind up being is a licensed -- or passing the brokers license -- that I'll make sure that I get there. I'll take the proper classes, I'll get the proper experience because I really am looking at this as an area in which I can make a living. If I can't get there in two years, then maybe I shouldn't be doing this. And I know that you can't pass a law that makes everything for everybody, Norm, but I don't know that we need to. It seems to me that we just have some folks out there that may not make that hurdle, but that's why we have them there." Number 1001 CHAIRMAN ROKEBERG said he thinks it is a little unfortunate because it may push some of the people out of business that are in it now. He said he would agree with Mr. McNall that if they can't pass that exam, they shouldn't be in the business. MR. McNALL said he doesn't see the exam as being that difficult. You have to study for it, learn it and be able to apply it. It is not designed to keep people out. Number 1100 CHAIRMAN ROKEBERG said the homebuilders have recommended some changes in the Alaska Common Ownership Act. He provided Mr. McNall with information regarding the requested changes. Number 1128 MR. JOHNSON referred to the memorandum and information from Grayce Oakley of the Real Estate Commission and said on page 4, there is a suggestion for some changes regarding listings and management contracts. They want to take the personal service contract out and call them listings. He said this would suggest looking more towards putting some teeth in it. We have property management contracts. He asked why we can't have property marketing contracts. There would be more of a perception that it really is a contract rather than an agreement that could be taken lightly. Mr. Johnson said something he has a problem with is if the state does an involuntary corporate dissolution, that in effect puts the corporation out of business. However, the state will allow you to voluntarily undo the dissolution by bringing your dues current. He said he did one that was five years dissolved and the state let him reinstate it. He noted he just did it to see what would happen. If the corporation is dissolved, in fact, out of business then the broker is terminated because he is working for a corporation that is no longer in business. All the licensees working under that broker that are attempting to get their two-year time frame to be able to qualify for their associate broker, their time stops and they get a break in their term. Mr. Johnson referred to when a corporation decides to change the broker and the listings or market agreements are owned by the broker, does there have to be a new contract because the broker's name has changed. He asked, "Do we want to address the brokerage as being the property or the holder - - property owner of the listing agreements or marketing agreements?" Mr. Johnson pointed out that there was a lawsuit about two years ago as a cooperating broker was refusing to pay a commission based on the fact that the corporation that the broker was working for was in involuntary dissolution. CHAIRMAN ROKEBERG indicated that is something he hasn't addressed, but would check into it. Number 1440 MR. JOHNSON referred to page 16, line 15, and said the word "agent" is included. He suggested staying with the word "licensee." CHAIRMAN ROKEBERG agreed with the suggestion. Number 1528 REPRESENTATIVE COWDERY referred to page 3, line 20, Version H, which relates to the release for publication and asked if it would be appropriate to require that all the publications to be on the Internet. CHAIRMAN ROKEBERG said he didn't know if the Department of Commerce or the Real Estate Commission has a home page. AN UNIDENTIFIED speaker suggesting using "electronic media." SHIRLEY ARMSTRONG, Legislative Assistant to Representative Rokeberg, Alaska State Legislature, informed the committee members that "electronic media" can cover television, radio, Internet, et cetera. CHAIRMAN ROKEBERG said he didn't want to create a fiscal note. A radio ad would mean a fiscal note. MS. ARMSTRONG said the bill will have a fiscal note because of the addition of property managers to the bill. CHAIRMAN ROKEBERG said it should be a positive fiscal note. MS. ARMSTRONG indicated she would check into the issue. Number 1839 REPRESENTATIVE COWDERY referred to page 4, line 2, (8), and suggested including the wording "power of attorney." CHAIRMAN ROKEBERG pointed out that the section has to do with a legally incompetent person. He said, "There may an individual that would be the personal representative of that particular individual that may not be licensed properly or so forth." Number 1932 REPRESENTATIVE COWDERY referred to page 5, line 13, subsection 4, and asked if it should be compulsory. CHAIRMAN ROKEBERG responded, "That's probably a good point. They want to be able to charge, but there were certain instances where they should have to be able to charge because they're using like the surety fund for education. There is a `may.' Look up on line 4, `The commission also may recover all or a portion of the expenses incurred under this subsection...'" MS. ARMSTRONG indicated it makes it permissible and not mandatory. Number 2048 REPRESENTATIVE COWDERY referred to page 4, line 31, "...must have been approved by the commission or the commission's designee before the course was conducted", and asked if a grandfather clause is needed. CHAIRMAN ROKEBERG explained that the courses can change. He said it is a two-year biennial cycle and there are some that reoccur. REPRESENTATIVE COWDERY indicated that some people could have passed a course that is no longer in existence. CHAIRMAN ROKEBERG said the way the regulations currently are, every two years they have to go to the commission to get their courses approved. He indicated there is a course called, "Case Law," but if there has been some cases that changed after a two-year period, you can't use the same course outline. It should be updated. He referred to the wording, "commission's designee," and said they want the ability to be able to contract that out to somebody so they don't have to spend all their time going over it. Number 2250 CHAIRMAN ROKEBERG said, "One other thing that has been brought to my attention, there are some regulations that before they had the 30 days - got to be submitted 30 days prior - they increased it to 60 or 90 days which is causing some real heartburn because sometimes there may be a nationally recognized guest speaker coming up that they don't know about 90 days in advance, and they want to be able to have it approved by the Real Estate Commission." MS. ARMSTRONG said they don't want somebody going and taking a course and then it's approved after the fact. It wasn't approved before. She said some allowances are going to have to be made for some of the national organizations because they're not going to come to the Alaska Real Estate Commission. Ms. Armstrong said if you happen to be near Harvard University and you drop in and take a course on real estate, Harvard is not going to come to the Real Estate Commission and get approval. She said criteria is going to have to be established for the courses. CHAIRMAN ROKEBERG said the commission needs a little bit of flexibility. He said, "When you go out and take the course here for the twenty hours, you get an hour per hour. I mean you take a university course - it's a three-hour course - it's for a whole semester. I mean how many hours do you have in there? How long is a semester? It varies, three months say...." MS. ARMSTRONG pointed out it is about 36 hours. CHAIRMAN ROKEBERG said, "So you only get 36 hours for one college course, so the commission should be able to have the right to adjust that per hour." Number 2713 REPRESENTATIVE RYAN said the commission has gotten themselves in a position that a lot of people do who have altruistic ideas. They said, "Well, you know, continuing education would be a good idea and everybody else is doing it, so why don't we do it?' Well then when they got in there, well they had to qualify what would be continuing education so they had to take time from their schedule to look through all these curriculums, decide if this meets that and so forth. So the date from 30 days went to 60 days goes to 90 days. Now they're proposing in your legislation that they hire somebody else to do that because it's getting to be a lot of work. Where is the money going to come to pay those guys. Well, it comes out of the surety fund or fee increase from members that participate - the licensees. And it's another case where I really want to do the right thing, but I didn't realize it took this much time and so it's going to cost some more and well who is going to foot the bill? Well, I'm certainly not, I'll just pass it on to the next guy." Representative Ryan indicated that the bill is sort of the same kind of thing. He informed the committee that he feels when he has a problem with someone, it is always a good thing to first talk to them to try and establish some common ground. He said he tried to call the members of the Real Estate Commission, but wasn't able to get a hold of anybody and left messages for them to return the calls. He said since he never received any return calls, he figured that nobody on the Real Estate Commission wanted to talk to him. Representative Ryan said, "So necessarily I could take an adversarial position and feel fully justified because you guys didn't want to talk to me. Now if I don't go along with your programs or are very critical of you, I can be justified." He said it is his understanding that the instructor qualifying his program gets a contribution from the Real Estate Commission to help that instructor qualify their program and that money comes from the dues or surety fund for which he pays.... CHAIRMAN ROKEBERG asked what he means by the commission is paying the instructors. REPRESENTATIVE RYAN said money will be paid to the instructors to develop a course curriculum and course outline for a program the instructor wants to put on for which it would charge members (indisc.) a fee. CHAIRMAN ROKEBERG said he hasn't heard that the commission would pay the fee to the instructor. REPRESENTATIVE RYAN said that is what he was told. He said, "We pay these dues and we pay the surety fund deal, and the commission decides to use the money for that purpose -- and then the guy that's running the course comes back and whacks us for $240 or $250. It's a nice business, you know, when your development costs get paid, or a great portion of them, and then you turn around and other then renting a hall and providing a little coffee, it's a nice margin business." REPRESENTATIVE RYAN said then there are national organizations that are recognized throughout the industry as being the experts, who can come up and put on a course, but a person won't get any credit. They don't get credit because they didn't come 90 days in advance. He said he is really beginning to wonder whether the tail is really wagging the dog. The regulations are getting very critical on the disclosure. Mr. Ryan said in his opinion, the Real Estate Commission is acting like the state government does with his money. They're doing what they think is a good idea and sending him the bill. Representative Ryan indicated concern in that he tried to contact people on the commission to ask questions and didn't even receive a return phone call. Number 3241 CHAIRMAN ROKEBERG referred to the cost of the surety fund and asked Representative Ryan if he was in attendance when he suggested a LB&A audit. He said he would also like to look into it further. REPRESENTATIVE RYAN informed Chairman Rokeberg that a representative from the Board of Realtors told him earlier in the year that there was a $2,500 claim last year against the surety fund. REPRESENTATIVE RYAN explained he has been an airline transport pilot and was in navigation for 40 years, which has considerable risks, and he didn't have to go through anywhere near the kind of stuff he had to go through to get a real estate license. CHAIRMAN ROKEBERG said he would admit that they are regulating another aspect of the business on the part of consumer protection. He noted it is his goal to simplify some of the activities and make it more equitable by pursuing with the legislation. Number 3623 REPRESENTATIVE RYAN said, "If you look at the surety fund, basically what are being told - all the people that participate in this business are being asked to be responsible for the actions, whether they're civil or criminal actions of certain individuals, those individuals should be criminally or civilly held liable for their own actions and the rest of the people who are not engaging in that kind of activities shouldn't have to be financially responsible." Number 3651 REPRESENTATIVE COWDERY referred to wording on page 6, line 29, "(3) collect rent for the use of real estate;" and said he believes that is broad. He said he thinks that kids do it for their parents all the time and tellers at banks collect money for banks. He said he thinks that area should be tightened up. TAPE 97-60, SIDE B Number 0655 REPRESENTATIVE COWDERY referred to wording page 7, line 2, "assist in..." and questioned whether "assist" is too broad. He also referred to page 7, line 15, "attempt or offer to do..." and asked if that might be too broad also. REPRESENTATIVE COWDERY referred to page 7, line 20, "In addition to penalties prescribed by any other provision of law," and said he wonders if the penalties should be applied current licensees now. Number 0907 REPRESENTATIVE RYAN said, "Think about what this thing says. We are allowing the Real Estate Commission to levy a civil penalty which is basically what a court does." Representative Ryan pointed out that the Real Estate Commission is strictly a regulatory agency that has no judicial authority whatsoever. He asked why they would want to give that kind of power to them. Representative Ryan said, "With civil penalties you usually go to court. You get whacked with a civil and/or criminal penalty. Now we're going to let administrative or actually a regulatory agency whacking people with civil penalties. We already have a remedy under law." CHAIRMAN ROKEBERG stated there is a provision for an appeal to superior court. Number 1011 MS. ARMSTRONG pointed out that the section will add a big fiscal note to the bill. CHAIRMAN ROKEBERG said the rational for the enforcement provisions is that they can't get the Department of Law to do anything. Number 1049 REPRESENTATIVE COWDERY questioned the bonding requirement on page 14, lines 13 through 21. CHAIRMAN ROKEBERG indicated that section will be deleted. Number 1132 REPRESENTATIVE COWDERY referred the committee to the section titled, "Exceptions" on page 22, line 30. CHAIRMAN ROKEBERG interrupted by saying that Section 36 will also be deleted. REPRESENTATIVE COWDERY questioned whether under the "Exceptions" section, the provision, "a person who is not licensed under this chapter..." was pertinent. He questioned the meaning of the wording, "(4) a public official in the conduct of official duties;" on page 23, line 10. CHAIRMAN ROKEBERG said it means that you can auction off a foreclosed house. He said he assumes that is what the intent is. Number 1312 REPRESENTATIVE RYAN read from (9), subparagraph (A), on page 23, "as a vocation;". CHAIRMAN ROKEBERG said the exemption under this permit does not apply to a person who performs a vocation. He said it is sort of a double negative. Number 1512 CHAIRMAN ROKEBERG said, "What we should do is delete that one portion under 161, that front one on page 6 about collecting rent. Go back and look at collecting rent under what property management - how that's defined. And then put the exemption in there for the employee or the debt collector." MS. ARMSTRONG said it would be an employee of the licensee. CHAIRMAN ROKEBERG agreed and said, "and/or a..." REPRESENTATIVE RYAN said to collect somebody else's debt, you have to be licensed. Number 1607 REPRESENTATIVE COWDERY referred to wording page 24, line 12, "a resident manager", and asked if it is redundant with page 23, line 28. CHAIRMAN ROKEBERG said it looks like it to him. Number 1730 REPRESENTATIVE COWDERY referred to page 24, line 13, relating to discrimination against stepchildren. CHAIRMAN ROKEBERG interrupted and asked if the committee agrees it should be included. REPRESENTATIVE COWDERY asked how you can list all relatives. CHAIRMAN ROKEBERG said he thinks niece, nephew, aunts and uncle should be deleted and add stepchildren. REPRESENTATIVE COWDERY said it should be family related. CHAIRMAN ROKEBERG asked if aunts and uncles should be included. REPRESENTATIVE COWDERY asked if he could manage for his great granddaughter. CHAIRMAN ROKEBERG said Representative Cowdery could deed it to his great granddaughter and manage for her. He asked if nephews and nieces goes too far. AN UNIDENTIFIED SPEAKER suggested they be included. REPRESENTATIVE COWDERY agreed. Number 1206 REPRESENTATIVE RYAN suggested using the wording "extended family." CHAIRMAN ROKEBERG said Ms. Armstrong handed him a note and, for the record, that the committee did take out nieces, nephews, et cetera. REPRESENTATIVE RYAN suggested using "extended family to a second generation." MS. ARMSTRONG suggested using "and step relationships," which would cover the whole family. Number 2315 REPRESENTATIVE COWDERY referred to page 25, line 6, subsection (4), and said it talks about contiguous property owned by the same owner. He said, "Say I'm a resident manger for property on `B' street where I live, does this bar me from -- I think it does, also managing property for the same owner on `L' street." CHAIRMAN ROKEBERG said he wouldn't be a resident manager and would be barred from doing that. He said there should be another resident manager. Chairman Rokeberg said if there was a ten-plex on one side of the street and a ten-plex on the other side of the street, they wouldn't be contiguous. Chairman Rokeberg said the way the bill is drafted, he couldn't do it. Number 2532 MS. ARMSTRONG said, "A resident manager means a person who resides on rented or leased property or on contiguous property owned by the same owner, manages the property for their benefit and is either employed by the owner or contracts with him." CHAIRMAN ROKEBERG said there is a definition of "adjacent" under the state procurement code where you actually have a building across the street from another building. He informed the committee the definition of "resident manager" is being expanded. MS. ARMSTRONG said they are actually fine tuning it. It doesn't change anything. REPRESENTATIVE RYAN asked a question regarding community associations. [Note: The question was indiscernible as Representative Ryan was not close to the microphone.] Number 2742 CHAIRMAN ROKEBERG said a resident manager does not manage a community association. He noted "property management" is defined on page 25, line 21. "Community association management" is defined on page 25, line 12. He said "real estate transaction" is defined on page 25, line 28. Number 2847 MS. ARMSTRONG said property management is managing property - an off-site manager. A resident manager is a manager who is on-site. CHAIRMAN ROKEBERG said he can see a situation where there is one building on one side of the street and one building on the other side of the street and there would be one resident manager. MS. ARMSTRONG said if you have a complex that covers a whole area, the new definition allows the person to be able to manage the whole complex even though there is a street in between. Number 2933 CHAIRMAN ROKEBERG said he would either delete "contiguous property" or add "adjacent." MS. ARMSTRONG indicated she would have the drafter of the bill check into what it means. Number 3113 CHAIRMAN ROKEBERG referred to page 4 of the information from Ms. Oakley regarding listings and management contracts and said there was an agency task force that was trying to create a whole new scheme called, "personal service contracts." He said the term "personal service contracts" raised ire within the real estate community that they wanted to delete the term and insert "listings," which is already defined in statute. He said Mr. Johnson brought up the problem with the term "listing," but it is just wordsmithing. CHAIRMAN ROKEBERG said, "What a lot of this has to do with, very briefly, is a whole -- the state Real Estate Commission passed a regulation this summer about the disclosure of parties to compensation in a transaction. And I've looked into this deeply and concluded that the commission made a grievous error in the structure of that. However, what they were trying to accomplish is something needed and I think it's needed in statute -- and what that has to do with -- it has nothing to do with the refrigerator and making a deal or a deal between a broker and a broker or a broker and a seller or buyer -- what it has to do with is the relocation companies and the extortion there of and the requirement by relocation companies of real estate agents and brokers to pay substantial dollars which have gone from a low of 10 percent, historically, up to as much as 35 plus percent. And also what's called the affinity kickbacks and the referral fees paid to nonlicensed consumers which are members of affinity groups. This is a national phenomenon." Number 3620 REPRESENTATIVE RYAN referred to page 2, line 2, of the memorandum and said the word "salesman" has been deleted and "salesperson" was inserted. He said he had some business cards printed specifically to say "real estate salesman." He asked why he would have to become salesperson. CHAIRMAN ROKEBERG indicated he would like to change the word to "licensee." Number 3935 CHAIRMAN ROKEBERG thanked the committee members for their participation. He indicated the bill would be heard again at a later date. ADJOURNMENT Number 3940 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Committee meeting at 3:52 p.m.