News

Real Estate Commission Report23 Jul

SUBMITTED BY DAVID SOMERS

The AREC met in Anchorage on June 11. If you have an interest in attending future meetings the schedule is published on the AREC website. There are four regular meetings each year and usually occur in March, June, September and December. The meetings take place at the Atwood Building in Anchorage. The entire meeting is open to the public, but your input can only take place during public comment early in the agenda.

During this meeting’s public comment period the main two topics were payment of commissions to legal entities and how teams are handled by the AREC. One member of the public is pushing for a regulation project the states that all licensees can operate as legal entities. This approach broadens the discussion beyond the payment of commission to legal entities and still leaves open the payment of commissions to legal entities that are not solely made up of licensees, a position that AAR is opposed to.  While this topic is worthy of discussion, we asked that the AREC look at that as a separate discussion and move ahead with the easy fix for the vast majority of licensees by simply stating that brokers may pay a commission to a legal entity as long as the legal entity is made up solely of licensees. We believe that approach for a narrow regulation project complies with the intent of statutes and would survive legal review. A wider approach that allows licensees to operate as legal entities and for commissions to be paid to legal entities, regardless of how many unlicensed people are in the legal entity, would require a statute change. Statute currently states that only a natural person may have a real estate license and further mandates that a commission can only be paid to a licensee. We were disappointed that the AREC did not take action on this at the June meeting, but we are told that they will take action in the September meeting.

On how teams operate, it is becoming apparent that the AREC needs to either accept the fact that teams work differently from the rest of us and new regulations need to be addressed or they need to state very clearly that all licensees need to comply with current law regardless of how they prefer to operate. As teams desire to operate as a separate entity but do not want to open their own brokerage, perhaps making them open a branch office would work. Statute and regs are already in place to cover this approach.  This will also be on the AREC’s September meeting agenda with recommendations coming from Chairman Bates and Investigator Wiriwan. AAR has not taken a position on this issue but I am sure that Industry Issues will be taking this up after reviewing the AREC actions.

Some areas on this issue to watch for:

  • People are confused as to what brokerage the team members are under. It was suggested that Alaska adopt statutes that other states have that mandate that in any advertising the brokerage name as listed with the real estate commission be the most predominant on the sign, ad, etc. The area of forms used for listings, etc. would be covered here, also.
  • How are consumer pamphlets handled? Do all team members have to be on the form and have to be in the same relationship?
  • Is there sufficient broker oversight? It was reported that some licensees were unaware of who their actual broker was and were putting their team leader on license renewal forms as their broker.

The process has taken so long that many of you have probably forgotten about the mandatory Errors and Omissions Insurance. Earlier this year we were finally at the point for the AREC to go out for RFPs but then hit another snag. The new holdup is a concern within the division that the statute on E&O is not aligned with the state procurement code. They hoped to have a final opinion of this within a few weeks but at this writing it has been 4 weeks and no news. It’s only been 6 years or so, so what’s the hurry?

Sara Chambers, who took over for Dan Habeger as the Director of the Division, spoke at length. I was impressed with her apparent concern over fixing the budgetary issues and transparency issues that have plaguing both the Commission and the Division for years, now. Ms. Chambers testified recently at a Legislative Budget and Audit meeting on these issues and Industry Issues will be reviewing her testimony.

It was reported that the Recovery Fund is at or near the legislative cap of $500,000.00. Recent activity will certainly bring it down but it will stay at healthy levels.

In reviewing the minutes from the December 2013 meeting, I saw a report from Investigator Wirawan regarding the lack of the ability of the AREC to take action against an individual who violates an order of the Commission. This has been a long standing problem and I was glad to see her addressing the issue.

She gave the Commissioners a proposed change to AS 08.88.071 that would fix the problem. In the past AAR has taken on these projects that need to go through the legislative process, as we can handle it more efficiently. There are many cases, such as this, where our concerns are similar and we are able to help the Commission along with it’s goal of the protection of the public and get the job done faster. At the request of Commissioner Burke it was decided that it was not appropriate to work with AAR on these projects. I am sure that I can state on the behalf of Industry Issues Chair Errol Champion that AAR remains open to aiding in moving legislation that benefits AAR, AREC and the public. Sometimes it just makes sense to work together.

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