By Dave Somers
Somers & Assoc., Fairbanks
The Alaska Real Estate Commission met in Anchorage for their stated mission “To protect the public interest by licensing practitioners and enforcing the established standards, to promote professional excellence in the real estate industry, and to support and encourage licensees.” These regular meetings take place 4 times a year and are open to the public.
Staff reported that the recovery fund ended the fiscal year near the statutory cap of $500,000. This balance is expected to drop as staff salaries are reallocated and other projects such as “train the trainer” and a video on how to use the consumer pamphlet are undertaken. During different agenda discussions it was very apparent that the staff and commissioners were watching out that charges to the fund and reimbursements to the fund were being tracked and questioned carefully.
Most of the public comments dealt with the regulation project for the Consumer Pamphlet. There are still concerns over how clear the information is and how much the proposed change still makes the form appear to be a contract. The commissioners did not take action at this meeting to move this forward. In respect to the importance of the issue they decided to hold a special meeting dedicated to this topic prior to the regular December meeting.
Progress is being made on the payment of commissions to legal entities. There are two issues here that the AREC appears to have wisely separated, operating as a legal entity vs. receiving commissions as a legal entity. The first issue is a much broader one that will require a more in depth discussion. Payment of commissions to a licensee’s LLC or other legal entity is currently the more important issue to our members. The AREC is moving ahead with a regulation project that appears to take care of this and should go out to public comment after the December 2014 meeting. The proposed language is as follows, “a real estate broker licensed under this chapter may pay a fee and/or commission to an associate broker or salesperson doing business as a legal entity, organized and validly existing under the laws of the State of Alaska, provided the ownership of the legal entity is an associate broker or salesperson employed by such broker, and who holds a valid, active real estate license in the State of Alaska as required under AS 08.88.” Please keep in mind that the AREC is on the record stating that current law makes it illegal to pay commission to legal entities. If this regulation passes it will, at best, go into effect the end of the first quarter or into the second quarter of next year.
It has been 6 years since the Errors and Omissions bill HB 357 passed and we are finally at the point of finding out if there are insurance companies willing to issue policies under our guidelines. The AREC heard from the Attorney General’s Office who reported that rather than going out for an RFP (request for proposal), we would be doing an ITB or invitation to bid. This ITB should be out by early October. If there are companies out there willing to issue policies with the minimum standards met and at the cap of no more than $300.00 per policy then the law will go into effect. There is a distinct possibility that there will be no insurance companies interested. In this instance the law states that the requirement for a licensee to carry the policy is waived.
It was reported that the revisions to the Landlord Tenant Act went into effect September 15, 2014. Please remind all property managers to review the changes.
There were two regulation projects that went “stale” in the Department of Law. The AREC had to readopt these to move them ahead and will need to be re-noticed and sent out for public comment. Chairman Bates asked the all important question, “Who pays for this?”. At an average cost of $2,400 per regulation project I would hope that this cost goes against the appropriate budget and not added to the cost for license renewal. We already paid for this project and should not be penalized for the lack of follow through of another department.
The investigator who has done such a great job for the AREC is, unfortunately, moving on. Her replacement, Jay Paff, appears to be on the same page as Jennifer was and that is encouraging.
Elections were held and Anita Bates will continue to chair the AREC. With five commission seats expiring in March of 2015 the entire make up of the AREC could change. I witnessed the entire commission changing once many years ago and it was extremely disruptive. Let’s hope for some continuity.
The commissioners are discussing whether new regulations are needed to address the team approach that is so prevalent in today’s market. They have not moved any specific language or regulation projects yet, but we can expect to be seeing action on this at the next meeting. One area being looked at deals with advertising. We may see a law that mandates that all signs or other advertising’s most prevalent name be the name of the brokerage as registered with the real estate commission.
One more major, upcoming discussion item deals with a revision to eligibility requirements for a license and additional requirements in order to keep your license. One topic is expanding “barrier crimes” that would keep people from obtaining a license or possibly renewing a license. What would these barrier crimes be; shoplifting, DUI?? This will take close scrutiny and debate if they move forward. The AREC is also discussing adding professional ethics language to licensee requirements, possibly modeling them after the NAR Professional Standards. During the discussion on this, the topic in putting in a “moral turpitude” clause came up. This was heavily debated in years past as how to define moral turpitude and who will determine what it is and isn’t. Will the definition change with every change in the makeup of the AREC? This will also be one topic that needs to be closely monitored by Industry Issues.
It was reported that there are currently 2,430 licensees in the state. The AREC plans to meet again in December in Anchorage. There has also been discussion, once again, about moving the meetings around the state. This was the way it used to be done and it encouraged participation and gave the Commissioners a more balanced look at our industry. Let’s hope that they go back to this policy.