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NEBRASKA REAL ESTATE COMMISSION November 15-16, 2000Staybridge Suites Staybridge Room Lincoln, NE Opening Chairperson Moore convened a Meeting of the Nebraska Real Estate Commission at 9:03 a.m. on November 15, 2000, in the Staybridge Room of the Staybridge Suites by Holiday Inn, located at 2701 Fletcher Avenue in Lincoln, Nebraska. All of the members of the Real Estate Commission were present. Also present were Director Les Tyrrell, Deputy Director Teresa Hoffman, Deputy Director for Enforcement Terry Mayrose, and Administrative Assistant Heidi Burklund. Abbie Widger, Special Assistant Attorney General and Counsel to the Commission, was present for the Hearing, an Investigative Matter, and discussion on the proposed changes to the Seller Property Condition Disclosure, Agency Relationships, and License Law statutes. Jim Titus, Special Assistant Attorney General and Counsel to the Commission, was present for discussion of the proposed changes to the Time-Share Act and the Pacific Springs Village matter. Notice of Meeting (Adopt Agenda) Director Tyrrell presented a Public Notice and Proofs of Publication thereof relating to this Meeting, all of which are attached to and made a part of these Minutes. Chairperson Moore reported that all Commissioners had been notified of the Meeting simultaneously, in writing, and that a proposed Tentative Agenda accompanied the notification. Chairperson Moore pointed out to those in attendance that a APublic Copy@ of the materials being used during the Meeting was available to the public on the Counsel table in the Meeting Room, and that the procedures followed were in accordance with the Open Meetings Law. Chairperson Moore asked that guests sign the guest list.Director Tyrrell noted that Item 18 had been added since the Tentative Agenda was mailed to the Commissioners. After review of the Final Agenda, a motion was made by Nigro and seconded by Fletcher to adopt the Final Agenda as presented. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Minutes of August 23-24 and October 2, 2000 The Minutes of the Commission Meeting held on August 23-24, 2000, were considered. Action on the August Minutes had been postponed until the November Meeting, because all four Commissioners who were in attendance at that Meeting were needed to vote on approval of the Minutes. After review, a motion was made by Moline and seconded by Fletcher to approve the Minutes as presented. Motion carried with Fletcher, Moline, Nigro, and Wiebusch voting aye, and with Johnson, Landow, and Moore not voting, not having been present at the Meeting. The Minutes of the Commission Meeting held on October 2, 2000, were considered. After review, a motion was made by Nigro and seconded by Johnson to approve the Minutes as presented. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, and Moore voting aye, and with Wiebusch not voting, not having been present at the Meeting. Receipts and Expenditures Reports for September and October Director Tyrrell presented the Receipts and Expenditures Report for September 2000. A copy of said Report is attached to and made a part of these Minutes. With regard to the September Report, Director Tyrrell noted the following: there was nothing unusual to report in Receipts. In Expenditures Category 4215, Publications and Printing, the increase was due to printing renewal forms; in Category 4253, Data Processing Software Licensing, the previously miscoded $200.00 was corrected and debited to Category 4419, Data Processing Contract Services; in Category 4411, Legal Related Expenditures, the overage was caused by the White Hearing exhibit books; in Category 4451, Legal Services Expense, approximately $9000.00 was for the White Hearing; and in Category 4856, Hardware-Data Processing, a $10 rebate was received on computer keyboards. The Cash Fund Balance as of September 30, 2000, was $325,410.96, which compared to a Cash Fund Balance of $215,507.51 on September 30, 1999. After discussion, a motion was made by Fletcher and seconded by Wiebusch to file the September Receipts and Expenditures Report for audit. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Director Tyrrell presented the Receipts and Expenditures Report for October 2000. A copy of said Report is attached to and made a part of these Minutes. With regard to the October Report, Director Tyrrell noted the following: there was nothing unusual to report in Receipts. In Expenditure Category 4211, Postage Expense, DAS had not yet billed the Commission, and that bill will include renewal mailing costs; in Category 4242, Rent-Buildings, and 4251, Rent-Office Equipment, costs included expenditures for the Risk Management seminars; in Category 4419, Data Processing Contract Services, $4640.00 was included for database enhancements and website data extraction; and in Category 4711, Board and Lodging, costs were included for the ARELLO Meeting and Director Tyrrell =s expenses for the Risk Management seminars. The Cash Fund Balance as of October 31, 2000, was $379,961.14, which compared to a Cash Fund Balance of $225,978.42 on October 31, 1999.After discussion, a motion was made by Fletcher and seconded by Nigro to file the October Receipts and Expenditures Report for audit. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Renewal Report Director Tyrrell presented a Renewal Report, which showed renewals as of November 13, 2000. A copy of said Report is attached to and made a part of these Minutes. Director Tyrrell noted that renewals appeared to be coming in earlier than in the past two years. No action was necessary on this Report. Specialized Registrations The Fairways at Palm-Aire Director Tyrrell presented the Specialized Registrations Report, which listed one time-share registration for The Fairways at Palm-Aire. A copy of said Report is attached to and made a part of these Minutes. Following discussion, a motion was made by Moline and seconded by Nigro to approve The Fairways at Palm-Aire time-share registration as presented. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Pacific Springs Village Prior to discussion of the Pacific Springs Village matter, Commissioner Nigro recused herself, thereby nullifying any potential conflict of interest. Counsel Titus presented a summary of the Complaint against Pacific Springs Village. Counsel Titus noted that this was an informal discussion of the Complaint, not a formal hearing. Counsel Titus recommended that a letter of reprimand be sent to the management of Pacific Springs Village. Counsel Titus found their advertising to be a misrepresentation of what was currently available and what was planned, and that it contained no warning of the risk to consumers that their deposits may be forfeited. Richard Anderson, attorney for Pacific Springs Village, and Jonathan Erickson, Director of Pacific Springs Village, were in attendance. Counsel Anderson noted that Mr. Erickson had been the Director for only two days, and that the project had been under new management for 60 days. Counsel Anderson reviewed the company =s response to the allegations. Counsel Anderson said that, in 1996, the buyers had signed for receipt of the brochure and the public offering statement, which specified that some services would be delayed and stated the risk of loss. In 1996, the buyers had put down a deposit, then had it refunded, and said they got rid of all the paperwork after deciding against it. The buyers then signed up again in 1998, and the brochure was not attached at that time. Counsel Anderson said the residency agreement had contingencies in two places regarding further developments, that the buyers had received the public offering statement at one time, and that the contingencies were noted in the residency agreement. The buyers had plenty of time to consider whether they wanted to participate.Counsel Titus said that dismissal was not recommended because of inconsistencies in the advertising and in the updated public offering statement, and because there was no indication of a new public offering statement being given to the buyers when they signed up again in 1998. The advertising indicated several amenities that were planned but have not been built. On-site health care was never offered, and is not included in the current public offering statement. In the 1996 documents, it was advertised that 24-hour care would be available. There are some indications of problems in the current information, but the advertising and public offering statement are not clear as to what will be available when, or that some items are no longer being planned. The Commission needed to send a strong warning to the company that full disclosure must be made to consumers. Pacific Springs Village needs to have advertising consistent with the current public offering statement, and needs to clearly specify when and if amenities will be built, and what contingencies will affect future development. Counsel Anderson noted that the company had filed a public offering statement in 1995, and refiled in 1996. Phase One had been completed, and 38 of the 46 patio homes are currently occupied. Approximately half of the apartments are occupied in first building. The retirement village completed annual filings. The buyers had spent lots of time looking at property and exploring their options. All extras will be built when the complex is fully occupied, and it was made clear that it would take time. 75-80% of the development was completed in the first phase. The Complaint was based on the public offering statement. The buyers = residency agreement gave a backout period. A year later, after having lived there and added extra features to their apartment, the buyers decided not to stay. The company had followed all laws and requirements. Counsel Anderson felt that the Complaint should be dismissed. The advertising and public offering statement were on file, and the brochures said developments will occur in the future. It takes time to develop a project, some aspects are still on the drawing board, and none had been decided against. The company had to work out the timing on amending the public offering statement. The new management is working with Commission staff to draft a new public offering statement. Management had drafted a very conservative public offering statement, but the staff said more should be added about what amenities will be there soon. Management felt that was a slippery slope. Developments are completed in stages, and the infrastructure is in place. Counsel Anderson did not think a reprimand was appropriate.Chairperson Moore noted that the last page in the Exhibit appeared to be an advertisement from a magazine, and it spoke of the amenities in present tense, as if they were already in place. Commissioner Landow said the term Aslippery slope@ was appropriate regarding amenities not yet in place, and said it was a concern. Commissioner Landow asked what was the average age of the residents or Complainants. Counsel Titus said the Complainants were in their 70s. Commissioner Landow said that they should have been given all the information, and that the materials were pretty complicated, confusing stuff. He also said Counsel Anderson and Mr. Erickson were lucky that they were new to their jobs, so they could disassociate themselves from the previous management=s practices. He would take a dim view if the same sort of things continued under their capable stewardship. Commissioner Landow said this type of thing should not happen, especially due to the nature of the clientele. Counsel Anderson said the person signing them up did not know they threw everything away. The buyers had spent lots of time with the CEO when looking at the development, and took time to review the contracts and materials in advance. They were allowed to cancel the contract for some time after signing. Counsel Anderson said this was not a AGreen River@ type of situation, where people are pressured to sign a binding contract the same day they see the property. The buyers had plenty of time to deliberate. Counsel Anderson also said he was very cognizant of the Commissioners= comments.Counsel Titus said a current public offering statement was required to be given within 48 hours of signing a contract. Counsel Titus also noted his concern regarding when the amenities will be built, and what needs to be in place for them to get built. Commissioner Moline said that the life expectancy of these customers was limited, and that they need to have some idea of when things will be built, and whether it would be in their lifetime. In this situation, there had been too many years between receiving the public offering statement and signing the contract, and that it was not reasonable for the developers to assume that a small box checked on a lengthy form would meet disclosure requirements. Counsel Anderson noted that the documents on file were acceptable to the Commission in 1996, and that they remained true and unchanged since the buyers had signed them. The small box merely indicated receipt. There was no requirement for a receipt, but the company does them to let everybody in the transaction know what was received. Counsel Anderson also clarified that the requirement for providing a public offering statement was not within 48 hours of signing, but before 48 hours had elapsed since signing. Commissioner Wiebusch asked for further clarification regarding when a current public offering statement was required. Counsel Titus said that a current public offering statement must be delivered less than 48 hours after a contract is signed, and all amendments must be incorporated for the public offering statement to be considered current. Staff generally accept that the public offering statement is true and correct as filed. After a filing is completed, there is no review of subsequent advertising. Commissioner Moline noted conflicting information regarding the chapel, noted that the development was promoted as a Lutheran facility, and asked whether the chapel will be built after all. Counsel Anderson said he was not sure where the statement on the chapel came from, and said the management was looking at changes to the original development design. He said there is a set of drawings which does not currently include the chapel, but that the statement being referenced was not authorized for public release. Management is currently evaluating the development =s financial track record, and will use that information to update the public offering statement. Counsel Anderson said the lack of a chapel was not a significant failure.Commissioner Wiebusch asked if now was an appropriate time to update the public offering statement. Counsel Anderson said yes, because the development had finished its first phase, and with the financial track record to date, timing of future amenities can be determined. Commissioner Landow asked if Pacific Springs Village was part of the Lutheran Home Foundation. Counsel Anderson said that the Lutheran Home Foundation was a sponsor of the project, and had undertaken the original design and financial backing. Commissioner Landow asked if they were still involved. Counsel Anderson said that Lutheran Home Foundation was a separate entity from Pacific Springs Village, which is an independent nonprofit entity. Commissioner Landow noted that the brochure said Lutheran all over it, and that if he was a Lutheran considering signing a contract, it would be pretty important and pretty logical to assume that the chapel would be included. Counsel Titus noted that the Lutheran Home Foundation appoints two directors of the Pacific Springs Village, and that members get discounts. Counsel Anderson said that Pacific Springs Village had nothing to do with a particular religious community. Commissioner Johnson noted that the sign on 168th Street in Omaha says, AThis is a Lutheran community.@ Chairperson Moore noted that the Lutheran Home Foundation was a licensed health care facility, and that there may be some joint jurisdiction between the Real Estate Commission and Health and Human Services. Mr. Erickson said the two organizations had some joint board members, but were separate nonprofit entities.Commissioner Moline asked if a reprimand would be a public mark against Pacific Springs Village. Counsel Titus said it would be a letter to them, which would be placed in their file at the Commission office. It would not be publicized or affect their public offering statement. The staff goal was to bring them up to where their public offering statement matched their advertising. Commissioner Landow noted Counsel Anderson =s aversion to the word Areprimand,@ and proposed that the letter be considered informational rather than a letter of reprimand. Chairperson Moore said the letter could cite the more stringent remedies available to the Commission, such as revocation of the registration and institution of criminal proceedings for the Class I misdemeanor, which could result in a $10,000.00 fine. Commissioner Moline asked if the Commission could issue a cease and desist order on the misleading advertising. Counsel Titus said the Commission had no statutory authority to regulate their advertising. Mr. Erickson said the company had suspended advertising, and will review all advertising for accuracy and compliance with the public offering statement before beginning to advertise again. Mr. Erickson emphasized that this was a national company with over 80 retirement communities, and they wanted to be very careful to not misrepresent properties. Counsel Anderson noted that the advertisement was over a year old.Commissioner Landow said that he was OK with writing them a letter regarding the current problems, and not calling it a letter of reprimand. Chairperson Moore wanted to include that misleading advertising could lead to revocation of the registration. Counsel Titus agreed that it should be strongly worded to warn about the severe penalties provided in the statute. Chairperson Moore asked if the assisted living portion had to be registered with Health and Human Services. Mr. Erickson said he thought so. Director Tyrrell confirmed that there may be dual registration between Health and Human Services and the Real Estate Commission. Mr. Erickson said the Pacific Springs Village development was not represented as assisted living. Commissioner Wiebusch proposed that management be required to appear before the Commission with the current public offering statement and advertising, when that is established. Counsel Titus said he intended to require that. Staff have worked with management since October 11 on the proposed public offering statement, to identify deficiencies and make sure the public offering statement and the advertising match. Commissioner Wiebusch also proposed a definite deadline for a finalized public offering statement. Director Tyrrell noted that they had suspended advertising, and thought they had also suspended leasing. Counsel Anderson said they have shown property to interested parties, but have not signed anyone new since the review of the public offering statement began. Mr. Erickson said they had been working with their advertising company, and working with resident focus groups to identify problems. A motion was made by Landow and seconded by Moline to have staff draft and send a letter to Pacific Springs Village =s management which reflected the Commission=s concerns, and gave them a December 31, 2000 deadline for submitting a revised public offering statement, accurate advertising, and a plan of how management intended to remedy the deficiencies noted in the letter.Commissioner Wiebusch asked if proposed drafts of advertising and the revised public offering statement were to be presented to the Commission. Counsel Titus said yes. Commissioner Moline asked what direction was being given to them right now. Counsel Anderson said that management had recently developed a very conservative public offering statement, which did not mention future plans at all. Staff had recommended changes. Counsel Anderson asked what the Commission wanted. Counsel Titus noted that the conservative public offering statement was deficient, and therefore unacceptable, because it did not note that there were encumbrances and that deposits were at risk, among other things. Counsel Anderson said that Pacific Springs Village would not give out a public offering statement to consumers until a new one was developed. Mr. Erickson noted that they would not be able to lease any units until the new public offering statement was resolved. Commissioner Wiebusch emphasized that the Commission wanted a completed public offering statement by the end of the year, and that provision needed to be included in the letter. Counsel Anderson said meeting the deadline depended on Commission staff reviewing the materials promptly. Chairperson Moore said the review would be placed on the January Meeting Agenda. Commissioner Wiebusch noted that not being able to lease would be an additional incentive for management to get it done. Counsel Titus assured the Commission that it would also be a staff priority. Mr. Erickson reiterated that no new leases would be signed until a new public offering statement was completed. Director Tyrrell said that staff would not stop working with management until the revised public offering statement was done, and the Commission would be notified of any delays. Counsel Titus said that a deadline of December 31 would work for at least a first draft. Chairperson Moore emphasized that it should be done as expeditiously as possible. Director Tyrrell agreed. Commissioner Landow reiterated that no more leases were to be signed until the new public offering statement and accurate advertising were available to the public. Counsel Titus noted that the items to be addressed included expected improvements, details on timeframes and contingencies, identifying previously advertised items which are no longer planned, generally providing more thorough disclosure. Commissioner Fletcher asked if management had an obligation to go back to those who were already living there, to let them know about the changed plans. Counsel Titus said that could also be required in the letter. Counsel Anderson said that management is talking to the people who live there, and they will be notified. The vote was called on the pending motion. Motion carried with Fletcher, Johnson, Landow, Moline, Wiebusch, and Moore voting aye, and with Nigro not participating or voting, having recused herself, thereby nullifying any potential conflict of interest. Non-Resident Licenses and Resident Licenses Issued to Persons Holding Licenses in Other States This Report, a copy of which is attached to and made a part of these Minutes, was presented by Deputy Director Hoffman and reported to be in order. After review, a motion was made by Nigro and seconded by Moline to ratify issuance of the licenses as set forth in the Report. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Examination Report - September and October Deputy Director Hoffman presented Reports relating to the Real Estate Examinations administered during September and October 2000. A copy of said Reports are attached to and made a part of these Minutes. Commissioner Moline asked why the passing rate was below 50% for salespeople. Deputy Director Hoffman said that there are usually more people taking it, which usually increases the passing rate. There were fewer candidates in October because if people wait until November and December to take the examination, they can have their licenses issued effective January 1, 2001, and avoid paying $75 or $100 for 2000. After review, a motion was made by Fletcher and seconded by Moline to ratify the September and October Reports for the purpose of issuing licenses. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Real Estate Education Matters Pre-License Education Instructor Approval Deputy Director Hoffman presented for ratification the Pre-License Instructor Approval Report, which listed approvals for one pre-license instructor. A copy of said Report is attached to and made a part of these Minutes. After discussion, a motion was made by Fletcher and seconded by Moline to ratify the Report. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Continuing Education Activity Approval Deputy Director Hoffman presented for ratification the Continuing Education Activity Approval Report, which listed approvals for sixteen continuing education activities. A copy of said Report is attached to and made a part of these Minutes. Deputy Director Hoffman noted that more distance education activities were being offered via computer, and one via satellite. Commissioner Moline asked if Nebraska providers were pursuing distance education certification. Deputy Director Hoffman said that Randall School had achieved ARELLO certification on some courses, and another school was in the process of seeking certification for pre-license distance education. These two schools were the only major providers of distance education prior to the ARELLO Certification requirement, and were continuing to provide distance education. After discussion, a motion was made by Wiebusch and seconded by Nigro to ratify the Report. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Continuing Education Instructor Approval Deputy Director Hoffman presented for ratification the Continuing Education Instructor Approval Report, which listed approvals for seventeen continuing education instructors. A copy of said Report is attached to and made a part of these Minutes. Commissioner Nigro noted that one name was misspelled, and Deputy Director Hoffman said it would be corrected. After discussion, a motion was made by Moline and seconded by Fletcher to ratify the Report as corrected. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Continuing Education Activity Rejection Deputy Director Hoffman presented the Continuing Education Activity Rejection Report, which listed rejections for three continuing education activities. A copy of said Report is attached to and made a part of these Minutes. Deputy Director Hoffman noted that the America =s Best course was not congruent with Nebraska agency law. The Nebraska Realtors Association course was an orientation to that specific organization=s code of ethics, the denial was being appealed, and the Commission was scheduled to address it on November 16. Chairperson Moore asked about the appeal. Director Tyrrell noted that, in the request for the continuing education activity rejection appeal, the Nebraska Realtors Association had also requested written clarification of the applicable rule. It had been placed on the Meeting Agenda for the Commission to discuss and clarify its position.No action was necessary on this Report. Continuing Education Activity Rejection Appeal Deputy Director Hoffman presented materials regarding the previously rejected Continuing Education Activity. A copy of said materials are attached to and made a part of these Minutes. The course entitled AEthics Training,@ submitted by the Nebraska Realtors Association, was rejected under Title 299, Chapter 7, Section 003.05, which prohibits granting continuing education credit to Aorientation courses for licensees held by trade organizations.@ Historically, the Commission had considered studies of specific codes of ethics to fall into this category, and had rejected such activities. This rejection was consistent with past history.Deputy Director Hoffman reviewed the Exhibit, which showed that the course covered the REALTOR 7 Code of Ethics, Standards of Practice, and grievance processes of the Nebraska Realtors Association. Deputy Director Hoffman directed attention to the landscape-oriented page in the Exhibit, which outlined the course. The activity outline had limited application to licensees who are not members of the Nebraska Realtors Association. Deputy Director Hoffman noted that rejection of the course was not a rejection of the Code of Ethics or the Standards of Practice of the Nebraska Realtors Association, but rather that the Commission had consistently rejected such courses as not broad enough to apply to all licensees. There are approximately 7000 licensees, and only approximately 3700 of those are members of the Nebraska Realtors Association.Chairperson Moore asked for the full text of 7-003.05. Deputy Director Hoffman read it aloud. Deputy Director Hoffman also noted the page in the Exhibit which showed courses rejected in the past for the same reason. These rejections included appraiser courses on ethics and standards that dated back to when appraisers were licensed by the Nebraska Real Estate Commission. These courses were offered by various trade organizations, and should not be confused with the courses now offered by the Appraisal Foundation. Fred Hoppe, representing the Nebraska Realtors Association, noted his concerns regarding the denial. Mr. Hoppe noted that the proposed course material was the Code of Ethics of the National Association of Realtors. This Code is what defines the National Association. Those who wanted to be identified as ARealtors@ had to sign an agreement to follow the ethical practices of the Association. The Code was originally developed for consumer protection. Mr. Hoppe said the Code of Ethics had been embodied in the laws in all 50 states, and was cited in court cases as a standard for appropriate practices in real estate.Mr. Hoppe agreed that the portions on the grievance process may apply only to Association members, but said those portions only constituted about 20 minutes of a four-hour course. Mr. Hoppe asserted that this course should not be considered an orientation course, because the National Association had a separate orientation course. Mr. Hoppe maintained that this course was just an update on the Code of Ethics. Mr. Hoppe also noted that the Commission accepted courses approved by other jurisdictions, and that all the states around Nebraska have either approved or are reviewing this course content for continuing education credit. Mr. Hoppe said it seemed inappropriate that someone could take the course in Iowa and have it count, but that it would not count if the course was given in Nebraska. Mr. Hoppe cited Neb. Rev. Stat. '81-885(52), which indicated approval of those courses which would improve competency of licensees. Mr. Hoppe maintained that all but a few minutes of the course would improve competency of licensees, because it was an appropriate code of behavior, and parallels real estate law in Nebraska. Mr. Hoppe also cited Chapter 7-002.01, and maintained that the course met all five criteria listed. The only prohibition Mr. Hoppe saw was in 003.05, regarding orientation courses, and Mr. Hoppe thought this was clearly not an orientation course. Member-only information was de minimus, and was clearly noted in the course outline.Mr. Hoppe also noted that other ethics courses have been approved, as well as courses from other organizations. Mr. Hoppe distributed three Exhibits, copies of which are attached to and made a part of these Minutes, denoted as Exhibit 8f1, 8f2, and 8f3. Mr. Hoppe reviewed the Exhibits, and closed by requesting approval of the course as proposed. Chairperson Moore asked Deputy Director Hoffman to respond to Mr. Hoppe =s presentation. Deputy Director Hoffman said that outline items 2, 3, and 4, which appeared to be the first 40 minutes of the course, were of concern since they would only apply to members, but also noted that the entire course was specific to the organization. The Code did have parallels with license law, and could be the basis of a good discussion on how it applies and compares to the License Act. However, as the course was presented, there was no discussion of how it relates to the License Act, no discussion of the License Act at all. Deputy Director Hoffman noted that it was a concern that the License Act was the standard to which licensees were held by the Commission, and that this discussion was not part of this activity in any way. The course was entirely on the Association=s internal code and grievance process.Chairperson Moore asked why Mr. Hoppe maintained it was not an orientation course for the organization. Mr. Hoppe said the Association had a separate orientation course, and this was not it. Director Tyrrell clarified that, regarding past rejections, the Commission determined the courses were orientation to the organization. Director Tyrrell noted that the Commission definition of an orientation course may not match the Association =s definition of their specific orientation course. Director Tyrrell also pointed out that the successful course appeal cited by Mr. Hoppe contained the key words, Aafter testimony, additional course material not previously submitted was shared,@ which could have been the basis for approving the course after the initial rejection. The course may have been changed between the rejection and the appeal. Director Tyrrell indicated that wording was normally used for that situation, but noted that the Commission did not have the applicable Exhibits before them to see if that was the case.Mr. Hoppe said that, in the past, the Commission had approved ethics courses. Director Tyrrell noted that the Commission currently has lots of approved ethics courses, but that the specific course content was at issue in this case. Commissioner Moline noted that 3700 of the 7000 licensees would be interested in the course, and asked if non-Realtors were allowed to attend. Commissioner Moline thought the rejection appeared to punish large groups. Deputy Director Hoffman said that, in the past, the Commission had required that all continuing education had to be applicable to all licensees, and had to be available to all licensees. Similar concerns would be raised if a company sponsored courses intended only for their affiliated licensees. Courses must be advertised and made available to the general licensee population, not just that company =s affiliated licensees.Commissioner Moline shared three thoughts on this issue: that the e-mail former Commissioner Dick Gdowski had sent to the Commissioners provided an interesting history, in that it said that the Commission had turned down similar courses in the past, but that a former Commissioner thought it was a good thing to approve now and was needed now; that Commissioner Moline thought of orientation courses as covering things like where the lockbox is located; and that Commissioner Moline thought this course might serve a greater good by providing a good dose of ethics training. Commissioner Moline supported approval of the course. Commissioner Wiebusch thought that there was three hours of ethics training in the course, even if the grievance material was not included. Commissioner Landow asked whose code of ethics the course addressed. Commissioner Moline said it was the National Association of Realtors. Chairperson Moore asked what changes Deputy Director Hoffman thought would make the course approvable. Deputy Director Hoffman said that if the course addressed parallels between the Code and license law, it would be a much stronger course with broader application, and would address how people should act. The Code of Ethics was narrower than license law. Commissioner Landow asked how other ethics courses differed from this course. Deputy Director Hoffman said they focused on ethical decision making, what to consider when making choices, and which resources are available to licensees. Deputy Director Hoffman noted that the course cited by Mr. Hoppe as a previous Aexception@ came in originally as a course only on the organization=s code of ethics, but was developed into a discussion of license law and ethical decision-making, which was then approved.Commissioner Landow asked for clarification regarding orientation to an organization. Deputy Director Hoffman said the whole course was specific to the organization =s internal policies, and was designed to acquaint its members to those policies, so it was considered an orientation course. If the Commission decided to change its longstanding policy, staff would follow the new approach.Commissioner Johnson said he could see both sides of the argument. The part that troubled him was that licensees could go to Iowa to take the course, and have it count for continuing education. He could also understand the points raised by Deputy Director Hoffman. Mr. Hoppe said that the courts recognized the Code of Ethics as an appropriate course of conduct when deciding liability issues, and that it was used in the industry as a standard of behavior. Mr. Hoppe felt that teaching the Code of Ethics was appropriate in its entirety, if violating the Code could lead to civil liability. Commissioner Landow said the same arguments could be applied to membership in the teachers union, and drew a parallel of all teachers having to be invited to take a course on how to be a good teacher. Mr. Hoppe said it would be more like what the union taught about being a good teacher set the standard for all teachers. Commissioner Landow said that may be true in someone =s opinion, but not in the opinion of non-members. Mr. Hoppe reiterated that the courts have said it sets the standard for acceptable behavior.A motion was made by Moline and seconded by Wiebusch to uphold the appeal, so the course could be approved for 3 hours of credit. Commissioner Wiebusch said she could support approval because it was not the only ethics course available, but was just another option for licensees. Commissioner Nigro asked Deputy Director Hoffman what should be added to make the course acceptable under current practice. Deputy Director Hoffman said that a good, Ameaty@ course would look at both the Code and the law. The Code is more narrow than the law, and it would seem most instructional to have a good discussion of the broadest application, which is the statute. An approvable course would make reference to the Code, and show how it applies to license law. That way, licensees would get a whole picture of their responsibilities, instead of just the part that applies to the National Association of Realtors.Director Tyrrell noted that this decision would affect decisions in the future. Course approval is decided on a precedent basis. If no precedent has been set, the Commission sets the first precedent. Director Tyrrell asked the Commissioners whether approval of this course meant the Commission intended to set a precedent for approving all organization-specific courses, or would the Commission want staff to bring each course to them. Chairperson Moore said he did not think this would set a precedent. Director Tyrrell said he needed guidance on whether the Commission would want automatic approval of the next organization =s code of ethics course.Mr. Hoppe said that, in the past, there had been a blanket denial if a course was presented by a trade association. Mr. Hoppe said there was clearly 3 hours and 10 minutes of approvable subject matter. Commissioner Moline noted that the Nebraska Realtors Association was currently reviewing all applicable statutes, and would also review the rules and regulations. Commissioner Moline said he did not think it would set a precedent. Commissioner Moline did not want to change any policies until the review was completed. Commissioner Landow said approving the course would certainly set a precedent. The next association would use this approval as a basis for approval of their own course. Commissioner Landow said the appropriate term for this situation was Astare decisis.@Chairperson Moore said he saw 3 hours of good stuff in the course outline, after eliminating the time devoted to the internal grievance process. He asked if this would remove the obstacles to approval. Deputy Director Hoffman noted that the remaining 3 hours were on one organization =s specific code of ethics. None of the material was generic. Unless the Commission=s interpretation changed, the obstacles remained.Commissioner Moline said that a lot of other states thought it was good material. Chairperson Moore said that argument did not hold much weight with him, since Nebraska is a public power and Unicameral state. Chairperson Moore said there was a reason for the regulation against organization orientation courses, but that he thought this course was not in that category. The vote was called on the pending motion. Motion carried with Fletcher, Johnson, Moline, Wiebusch, and Moore voting aye, and with Landow and Nigro voting nay. Director Tyrrell asked if the Nebraska Realtors Association still wanted a written interpretation of the regulation. After discussion, Mr. Avery withdrew the request for written clarification. Pending Sworn Complaints and Investigative Matters Director Tyrrell presented a Summary Report of the pending complaints, which included a list of licensees presently under disciplinary action or on appeal. A copy of said Report is attached to and made a part of these Minutes. No action was necessary on this Report. Deputy Director Mayrose noted that the original Complaint (#2000-012) against Mr. Stueck and Mr. Beau should be dismissed, since the Hearing resolved the issues raised. A motion was made by Fletcher and seconded by Wiebusch that the Complaint be dismissed. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. The following Sworn Complaints and Investigative Matters were presented to the Commission:
=Neill vs. Jaculyn J. Garey, Robert Lee Poppe, and Carla Charlene Burmester Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter. After being advised of the results of the investigation and discussion, a motion was made by Fletcher and seconded by Landow that the Complaint be dismissed. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Item L Investigative Matter - Michael & Rashelle Fenger vs. Robert Joseph Quartoroli Prior to discussion of this matter, Commissioner Nigro recused herself, thereby nullifying any potential conflict of interest. Counsel Widger presented the investigative report to the Commission and, when necessary, answered questions on this matter. Counsel Widger noted the Commission had been presented a similar Complaint regarding the same set of circumstances, which it had dismissed. This Complaint raised one additional issue, and contained new information not in the previous investigative report. The additional issue, mis-representation in advertising, meant that res judicata would not apply, since it had not previously been addressed. After being advised of the results of the investigation and discussion, a motion was made by Landow and seconded by Wiebusch that a Complaint be filed by the Commission and set for Hearing. Motion carried with Fletcher, Johnson, Landow, Moline, Wiebusch, and Moore voting aye, and with Nigro not participating or voting, having recused herself, thereby nullifying any potential conflict of interest. Item M Investigative Matter - Nullified Conviction Matter Director Tyrrell reported that a salesperson applicant had been convicted of a crime, and the conviction was set aside and nullified. Because the conviction was nullified, the Attorney General =s office had advised Director Tyrrell that the person should not have to appear before the Commission prior to licensure, and he was presenting this as an informational matter to the Commission.No action was necessary on this Report. Item N Investigative Matter - Non-Resident Salesperson Applicant Director Tyrrell presented the investigative report to the Commission and, when necessary, answered questions on this matter. =s professional license issued in another jurisdiction was suspended indefinitely, pending completion of additional continuing education for a disciplinary matter. The applicant had been found guilty of selling a rental coffin as a new coffin, so the applicant=s mortuary license had been suspended. Since then, the applicant decided to pursue real estate, and had not sought reinstatement of the mortuary license. The Real Estate Commission in the other jurisdiction issued a resident salesperson license to the applicant despite the disciplinary action, and the applicant subsequently applied for a non-resident Nebraska license. Director Tyrrell asked the Commission whether the applicant needed to make a Special Appearance before the Commission. It was the consensus of the Commission to give the applicant a choice of making a Special Appearance, or, in lieu of making a Special Appearance, writing a letter to explain the situation and how the applicant has addressed it. Presentation of Stipulation and Consent Orders Complaint #2000-010, Ken and Diane Weber vs. Jillian Ann Currie Counsel Widger presented a Stipulation and Consent Order in the matter of Complaint #2000-010, Ken and Diane Weber vs. Jillian Ann Currie. A copy of said Order is attached to and made a part of these Minutes. Counsel Widger reviewed the circumstances involved and noted the provisions of the Order, which had been signed by Ms. Currie. After discussion, a motion was made by Nigro and seconded by Fletcher to reject the Order as presented. Commissioner Nigro noted that the licensee had a prior violation, which was serious enough to result in license suspension and additional continuing education requirements. Commissioner Nigro said there needed to be more of a penalty, perhaps involving suspension and additional continuing education. The vote was called on the pending motion. Motion carried with Fletcher, Landow, Moline, Nigro, Wiebusch, and Moore voting aye, and with Johnson voting nay. Hearings Joint Hearing on Complaint #2000-023, Commission vs. Steven W. Stueck, and Complaint #2000-024, Commission vs. Louis P. BeauA Hearing was held on November 15 at 9:30 a.m., in the matter of Complaint #2000-023 and Complaint #2000-024. Abbie Widger, Special Assistant Attorney General and Counsel to the Commission, appeared for the Complainant. Respondents Steven W. Stueck and Louis P. Beau were present and represented by Counsel Nancy Loftis of Lincoln. Counsel Widger presented a timeline of contacts between the Respondents and the buyers, who were also the Complainants. According to available records, an agency brochure was not completed until an offer to purchase was made. The Seller Property Condition Disclosure form was not completed prior to the purchase agreement being accepted by the seller. The buyers were told they could back out of the offer if the information on the Seller Property Condition Disclosure form was unacceptable, but there was no clause to that effect included in the purchase agreement. Counsel Loftis agreed with the timeline of contacts set out by Counsel Widger, and said this case resulted from a difference in recollection of events that occurred two years ago. The Respondents thought they had made the proper agency disclosures, and that they were acting in their clients = best interest. The transaction involved buyers and a seller who were out of town. The Respondents thought the purchase agreement was not binding until all items were completed, including receipt of the Seller Property Condition Disclosure form. The Respondents were holding the buyers= offer in trust until the seller got back into town.After Opening Statements, Counsel Widger presented a total of eight Exhibits, which included a Joint Stipulation of Facts. All Exhibits were offered and received by Chairperson Moore. Counsel Widger called two witnesses, Renae and Brian Shea, who were the buyers in the transaction. Counsel Loftis presented no Exhibits. Counsel Loftis called four witnesses, which included the Respondents, Steven W. Stueck and Louis P. Beau, and also James R. Buckwalter and Ronald Brester. At 10:35 a.m., Chairperson Moore declared a brief recess, and reconvened the Hearing at 10:48 a.m. At 12:03 p.m., Chairperson Moore declared a brief recess, and reconvened the Hearing at 12:15 p.m. After closing arguments had been presented, Chairperson Moore declared the Hearing concluded. Chairperson Moore clarified the counts presented in the Complaint, and reminded the Commissioners that their conclusions could only be based on evidence presented during the Hearing. A motion was made by Nigro and seconded by Fletcher that Respondent Steven W. Stueck be found guilty of the violations alleged in the Complaint. Commissioner Nigro said the agency brochure was to be completed at the earliest practicable opportunity. Commissioner Nigro noted that there were several contacts with the buyers, but the agency brochure was not signed until after an offer was made, which was negligent. Commissioner Fletcher concurred. The vote was called on the pending motion. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Chairperson Moore then opened the disciplinary envelope. No prior disciplinary actions were on file. A motion was made by Fletcher and seconded by Nigro that Mr. Stueck be disciplined with a thirty-day license suspension served on probation, and be required to take an additional three hours of continuing education on agency within the next six months. Commissioner Landow asked how that would affect Mr. Stueck =s ability to conduct business. Commissioner Fletcher said Mr. Stueck would still be able to operate while on probation. Chairperson Moore said it would be more than a censure, but not limit Mr. Stueck=s business. Commissioner Nigro said she supported it because the Respondents made it clear this situation would not happen again.The vote was called on the pending motion. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Chairperson Moore said that concluded the proceedings on Complaint #2000-023, and asked for a motion on Complaint #2000-024. A motion was made by Fletcher and seconded by Johnson that Respondent Louis P. Beau be found guilty of the violations alleged in the Complaint. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Chairperson Moore then opened the disciplinary envelope. No prior disciplinary actions were on file. A motion was made by Landow and seconded by Wiebusch that Mr. Beau be disciplined with a thirty-day license suspension served on probation, and be required to take an additional six hours of continuing education, three on agency and three on disclosure, within the next six months. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Chairperson Moore said that concluded the proceedings on Complaint #2000-024. Chairperson Moore notified the Respondents that the costs incurred for the court reporter and any witness fees would be billed to the Respondents, as provided for in 305 NAC Chapter 4, and that the Respondents would have thirty days from the date of the Orders to reimburse the Commission for said costs. With the consent of the Respondents, Chairperson Moore directed Counsel Widger to prepare the Orders. Chairperson Moore announced that all Exhibits related to this Hearing would be retained in the Commission Office. The Hearing was adjourned at 12:37 p.m. Informal Special Appearances No Informal Special Appearances were scheduled for this Meeting. Discussion - Amendments to Seller Property Condition Disclosure, Agency Relationships, and Real Estate License Acts Director Tyrrell presented Exhibits which included a memorandum from Chairperson Moore and proposed changes to the Seller Property Condition Disclosure, Agency Relationships, and License Law statutes. A copy of said Exhibits are attached to and made a part of these Minutes, denoted as 13, 13a, 13b, and 13c respectively. Chairperson Moore said that, as he considered the proposed changes, he had hearkened back to the purpose of the Commission. He felt the Commission should enforce the policy set by the Legislature, not set policy. Chairperson Moore felt the Commission was getting into areas they should not, when they were proposing legislative changes regarding liability issues. Chairperson Moore met with Mr. Hoppe regarding the changes, then asked staff to prepare a draft which contained only technical cleanup changes rather than policy changes regarding liability issues. Chairperson Moore said that, if nothing was done, the law would stay the same, and status quo would continue regarding disclosure. In his opinion, liability issues were somebody else =s fight. It would take a motion and an affirmative vote to adopt the changes as presented today.Counsel Widger reviewed the proposed changes in each statute, and noted areas for further discussion, which included additional disclosure exceptions, transfer fees, and restrictions on branch managers. Director Tyrrell noted an error on page 28 of the License Act, where the word Aor@ should not have been deleted at the top of the page.Mr. Hoppe said that, except for the areas noted for further discussion, the proposed changes were not objectionable to the Nebraska Realtors Association. There were some issues they would have liked to be added, but Mr. Hoppe agreed with Chairperson Moore that policy should be set by the Legislature, which was the more appropriate place for the Nebraska Realtors Association to take up the proposed changes. Discussion ensued on the wording for the additional disclosure exceptions on page 15 of the Agency Relationships Exhibit. It was noted that the intent was to include residential and agricultural property in disclosure requirements. Exceptions could be defined either by specifying what was excluded, or specifying that everything except the specific inclusions was excluded. Zoning laws vary within Nebraska, so the wording had to be specific. Director Tyrrell said he would prefer to specify what was excluded. Mr. Hoppe =s preference was to specify what was included, and that everything else was excluded. Mr. Hoppe thought the intent was to protect less sophisticated buyers, which would be residential and agricultural transactions. Mr. Hoppe maintained that commercial buyers are very sophisticated. Commissioner Wiebusch noted that there were unsophisticated consumers in every type of transaction, and that commercial could include Amom and pop@ businesses. Commissioner Moline noted that he was not necessarily in favor of adding exclusions.A motion was made by Landow and seconded by Wiebusch to accept the proposed changes as presented, with the areas for further discussion to be worked out later. Those specific items were on page 15 of the Agency Relationships Exhibit and pages 20 and 21 of the License Act Exhibit, and included additional disclosure exceptions, requirements for branch managers, and transfer fees. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Commissioner Wiebusch said that only a commercial leasing exemption made sense, because those specific consumers were generally sophisticated. She opposed any other exemptions. Commissioner Moline noted that, in banking, consumer lending had more disclosures than corporate lending. Business owners should be held to a higher standard, and could be expected to be more sophisticated consumers than residential buyers. Too many exceptions would make the statute difficult to enforce. Counsel Widger proposed a very narrow exception, that disclosure laws not apply to transactions involving commercial leasing. Commissioner Moline asked what the difference would be in buying or renting the World Trade Center. Commissioner Wiebusch asked if the Commission could expect these consumers to study Nebraska state law regarding agency, and asked what was meant by sophisticated. Mr. Hoppe said that out-of-state corporate agents come to Nebraska and ask why they are being given agency brochures. Commercial brokers, especially in Omaha and Lincoln, have a difficult time getting the forms completed and being in compliance. The forms are viewed negatively, and are an impediment to business. Commissioner Wiebusch noted that licensees can just write Arefused to sign@ on the brochure and be in compliance. Director Tyrrell said that, in a meeting with commercial leasing brokers, he told them to just write Arefused to sign@ on the brochure. Their answer was that the corporation=s attorney is the person refusing to sign, not the actual tenant. Licensees may not ever meet the actual tenant or lessor.Mr. Hoppe noted that this concern could be addressed by exempting the type of lessor, by stating that business entities are exempted rather than individuals. Commissioner Wiebusch said the assumption was that these transactions only involved big corporations, and that was not always the case. Mr. Hoppe said that commercial activities should be at more of a Abuyer beware@ level than consumer activities. Director Tyrrell proposed wording along the lines of Aperson or entity leasing/selling real property with five or more units,@ or limiting it to leasing only.Commissioner Landow asked if a huge percentage of commercial leases were done by business entities. Mr. Hoppe said yes, and that individuals would only be leasing for tax benefits. Commissioner Landow noted that small Amom and pop@ owners would still be included in the exemption, and used the example of a bar with apartments upstairs. Commissioner Wiebusch said that most people have no problem signing the agency brochure. Mr. Hoppe said that numerous commercial brokers brought this issue forward.A motion was made by Moline to exempt commercial and industrial transactions from the disclosure brochure requirement, with language to be determined by Counsel Widger. The motion died for lack of a second. Discussion ensued on the specific provisions the Commission wanted. After discussion, a motion was made by Landow and seconded by Moline to exempt corporate entities required to register with the Secretary of State =s office, such as LLCs, in transactions involving commercial and industrial property, with specific language to be determined by Counsel Widger. Motion carried with Fletcher, Johnson, Landow, Moline, and Moore voting aye, and with Nigro and Wiebusch voting nay. Consensus was to have staff draft the language, and present it at the December 13 Commission Meeting.Discussion ensued on the requirements for branch managers on page 20 of the License Act Exhibit. Director Tyrrell noted that the Commission had requested information on how other states regulated branch managers. Director Tyrrell reported that Colorado was the only state that did not license branches, and that North Dakota allowed salespeople to be branch managers. The language proposed in the Exhibit would mean that an associate broker would be allowed to manage any number of branch offices, and the employing broker would be held ultimately responsible. It was the consensus of the Commission to adopt the language as presented in the Exhibit. Discussion ensued on the transfer fee language on page 21 of the License Act Exhibit. Counsel Widger reported that the Attorney General =s office did not want the Commission to change the fee structure via regulation, but it could be changed statutorily. A tiered fee structure would give big companies a break that small companies would not receive, and that would also be a problem for the Attorney General=s office.Commissioner Moline asked about the impact of leaving the language alone, and lowering the fee to $10 for each transfer. Director Tyrrell reported that in Fiscal Year 1998-1999, transfer expenses totaled approximately $24,500, and receipts totaled approximately$30,000. In Fiscal Year 1999-2000, transfer expenses totaled approximately $22,000, and receipts totaled approximately $24,000. Director Tyrrell noted that expenses included rent, copies, postage, and similar expenses. Chairperson Moore said the fee should be cheaper for on-line transactions. Director Tyrrell said on-line transactions were still a couple of months away. Counsel Widger said it might be possible to have a different fee for paper and on-line transactions, as long as there was a legitimate business reason not based on the size of the company. Chairperson Moore proposed leaving the statute as is, to provide flexibility. Director Tyrrell noted that the Commission had the authority to change the transfer fee as an Agenda Item at a Meeting, but that this section did not give the Commission the authority to set different fees for the same transaction. Director Tyrrell would want an opinion from the Attorney General =s office regarding different fees for paper vs. on-line transactions. Counsel Widger agreed that a singular fee was easiest to change, and noted there was some case law supporting different fees for transactions handled differently. Chairperson Moore said it had been done in the records board statutes. Counsel Widger said the Commission may want to consider making the fee statute match the language in the records board statutes.Director Tyrrell noted that, for philosophical reasons, the Commission may not want to begin a political battle to establish different fees for different sizes of companies. It was the consensus of the Commission to not establish a tiered fee structure; to leave the language unchanged for now; and to discuss either setting the fee at a lower rate, or setting different fees for on-line and paper transactions. Director Tyrrell said that he would check with Greg Lemon from the Secretary of State =s office regarding different fees. Counsel Widger said she would check the other applicable statutes. Director Tyrrell said the changes discussed today would be presented at the December 13 Meeting for the Commission=s review. Director Tyrrell summed up that there were no changes to the Seller Property Condition Disclosure Act; that disclosure exception language was to be developed for the Agency Relationships Act; that no change was needed in the branch manager section of the License Act; and that if different fees were allowed, proposed language on paper vs. on-line transfer fees would be developed.Commissioner Moline asked if the Commission would stay neutral if the Nebraska Realtors Association proposed changes during the Legislative Session. Chairperson Moore said that a majority of the Commission was needed to take a position on legislation, and that the Commission should probably remain neutral because it is a regulatory body. Director Tyrrell noted that, in the past, the Commission had not taken a position until they had reviewed the exact proposed language. After review, the Commission could decide whether to take a position, to remain neutral, to support the bill without testimony, or to take whatever course of action they chose. Commissioner Moline agreed with Chairperson Moore that the Commission was not a policy-making body. Mr. Hoppe said that if the Association amended the Commission =s bill, there would be public hearings. Mr. Hoppe also hoped it would be an Agenda Item for the Commission, and said they would want the opportunity to visit with the Commission about it. Director Tyrrell said that if the amendment was drafted and brought by the Association prior to a public hearing at the Legislature, the Commission could decide whether to support the amendment before the public hearing.Commissioner Moline said he thought the point of today =s discussion was to get the non-controversial changes passed, separate from a bill presented by the Nebraska Realtors Association. Mr. Hoppe said the Association had the option to either put in its own bill with the changes they want, or to promote amendments to the Commission=s bill. Chairperson Moore said it would be tough to do by amendment at the Legislature. Commissioner Landow said it would sure be nice to know if the Association was going to start whacking up the Commission=s bill. Mr. Hoppe said the Commission would eventually see the proposed amendments. Commissioner Landow said it still would be nice to know. Director Tyrrell said that with these three non-controversial bills, the Commission could get these changes through. If there were controversial amendments, that would put the non-controversial changes at risk. A separate bill from the Nebraska Realtors Association was preferred.Director Tyrrell asked if the Commission wanted him to start the process of bill submittal with the revisor of statutes. It was the consensus of the Commission to have him proceed. Director Tyrrell said he thought the Seller Property Condition Disclosure Act would go through the Judiciary Committee since it addressed civil liability, and the Agency Relationships and License Acts would go through Banking because they were regulatory in nature. Approval of On-Line Transactions Director Tyrrell presented an Exhibit which specified fees for on-line transactions completed through Nebrask@ On-Line (NOL), and the credit card fees for in-office transactions. A copy of said Exhibit is attached to and made a part of these Minutes. Director Tyrrell noted that this item had been presented at previous Meetings, and that agreement had finally been reached on the terms. Director Tyrrell reviewed the terms for on-line and in-office transactions, and asked if the Commission wanted to enter the agreement. Director Tyrrell also noted that he would need authority to change the existing interagency agreement and the budget request. Chairperson Moore noted that the NOL fee was originally going to be 5%, which was based on recovering the cost of designing the system. The Records Board decided instead to pay the development cost up front, so 2% is the current estimate for ongoing costs. The Nebraska Real Estate Commission website was one of the pilot programs. Commissioner Moline asked if the State Treasurer had gotten bids on the credit card fee. Director Tyrrell said yes, and the fee was established at a percentage, plus transaction costs and a monthly fee. After discussion, a motion was made by Moline and seconded by Wiebusch to approve expenditures for Nebrask@ On-Line services and credit card usage as outlined in the Exhibit, and to give Director Tyrrell authority to change the interagency agreement and the budget request. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Director Tyrrell also reported that staff planned to enclose user IDs and passwords in the pocket card mailing, to allow licensees access to their specific information in the website database. As new licenses are issued, passwords will be generated and sent. Commissioner Moline asked if licensees could change their password. Director Tyrrell said no, and that new passwords would be generated by Nebrask@ On-Line only. Legislative Matters Introduction of Time-Share Amendments Director Tyrrell presented an Exhibit showing the proposed Time-Share Act Amendments. A copy of said Exhibit is attached to and made a part of these Minutes. Director Tyrrell noted that the Exhibit would be the basis for introduction of legislation in the 2001 Legislative Session. The proposed changes were the same as those proposed last year, with the addition of allowing electronic maintenance and dissemination of required owner rosters. Senator Bruning was willing to introduce the legislation if he was still in the Legislature in January, but he was one of the candidates for Chairperson Moore =s position. Director Tyrrell asked the Commissioners for names of other senators in case Senator Bruning became Secretary of State.Counsel Titus noted that allowing electronic maintenance and dissemination of rosters would make compliance easier for multi-location time-shares and time-share estates, and was more in line with the Corporate Business Act. After discussion, a motion was made by Fletcher and seconded by Wiebusch to proceed with legislation as outlined in the Exhibit. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Introduction of Amendments to Seller Property Condition
Disclosure Statement, After the discussion of Agenda Item 13, Director Tyrrell noted that Exhibits 13a, b, and c would be the basis for introduction of legislation in the 2001 Legislative Session, with the changes to be addressed at the December 13 Meeting. Information Matters Web Server Statistics for September and October 2000 Director Tyrrell presented Exhibits regarding website usage during September and October. Copies of said Exhibits are attached to and made a part of these Minutes. Commissioner Moline asked how often this information needed to be presented. It was the consensus of the Commission to make it an annual report. No action was necessary on this Report. Trust Account Examinations Quarterly Progress Report Deputy Director for Enforcement Mayrose presented the Trust Account Examinations Quarterly Progress Report. A copy of said Report is attached to and made a part of these Minutes. Commissioner Moline asked if a sentence on the report as to whether or not examinations were on schedule could replace the map. The consensus of the Commission was to not have a printed report, just a verbal report when asked. No action was necessary on this Report. Trust Account Examination Evaluation - Third Quarter 2000 Director Tyrrell presented the Trust Account Examination Evaluation - Third Quarter 2000 Report. A copy of said Report is attached to and made a part of these Minutes. Director Tyrrell reported that comments were again very positive. He reviewed some of the comments received, and how the situations were handled. Commissioner Landow asked whether it was the same examiner drawing all the negative comments. Director Tyrrell said no, each examiner drew his share of negative comments. Commissioner Moline asked about the comment, Awe want it like you want it.@ Director Tyrrell clarified that the broker was not under the impression that a certain file order was required. Director Tyrrell sent the broker a copy of the Commission Comment article on the subject, which also emphasized that a particular order was not mandatory.No action was necessary on this Report. Service Satisfaction Survey - September Results Director Tyrrell presented an Exhibit regarding the September Service Satisfaction Survey. A copy of said Exhibit is attached to and made a part of these Minutes. Surveys were included in approximately every fourth piece of mail during September (excluding renewals). 104 were mailed, and 21 were returned. The response rate was 20%, and all comments received were positive. Commissioner Moline said that the examinations at his business always went well, and that the Commission =s office staff was always very helpful. He said he had dropped in several times and received excellent service, and the staff did not always know he was a Commissioner, so he did not receive special treatment. Director Tyrrell said the current staff was the best group of support staff overall, and that he had never gotten a complaint on the manner in which they handled persons contacting the Commission office. If a phone call with an upset person escalates, the call is transferred immediately to Director Tyrrell or Deputy Director Hoffman.No action was necessary on this Report. Errors and Omissions Insurance Loss Report through September 30, 2000 Director Tyrrell presented the Errors and Omissions Insurance Loss Report through September 30, 2000. A copy of said Report is attached to and made a part of these Minutes. Director Tyrrell noted that there was nothing unusual in the Report. Commissioner Wiebusch said the Risk Management seminars were extremely well done, but suffered from low attendance. She recommended working with the Nebraska Realtors Association to have a discussion at an annual meeting. Director Tyrrell said it was his understanding that the Nebraska Realtors Association had already scheduled Mr. Williams to speak at their Spring Meeting. Commissioner Moline said he had asked the Association for that. Director Tyrrell also said Mr. Williams will make sure the session goes for three hours, so the session can count for continuing education credit. No action was necessary on this Report. ARELLO Annual Meeting - Report of Attendees Director Tyrrell reported that the Central District lost two members of the Board of Directors since the Annual Meeting in October. Since Commissioner Nigro was elected as an alternate, she is now a full-fledged member of the Board of Directors. Also, Commissioner Nigro was appointed Chair of the Fair Housing Training Board. President Lassiter said he was genuinely pleased to appoint a person as committed to fair housing as Commissioner Nigro to be the first chair of the Fair Housing Training Board. Mr. Lassiter said Commissioner Nigro is the type of member ARELLO needs. Director Tyrrell also reported on upcoming conference locations and dates. The reorganization documents are nearly finalized. The ARELLO/NAR licensee database is on hold for now. The Salt Lake City sessions were very good and well-organized. Director Tyrrell reviewed a list of current office holders. Commissioner Nigro thanked Director Tyrrell for the news on her appointments. The Fair Housing game show was very well done, and received outstanding evaluations. The former Chair of the Fair Housing Committee will be missed. This was the most organized conference Commissioner Nigro ever attended. Attendees also got to see the Olympics preparations in Salt Lake City. Commissioner Wiebusch said the conference was excellent. In the database subcommittee, the ownership issue was the major problem, and may not get resolved. She felt the database would be very helpful for both organizations. The conference sessions were fabulous. Information from the National Association of Realtors legal counsel regarding errors and omissions claims was very interesting. Commissioner Wiebusch noted that South Dakota regulates auctioneers. Director Tyrrell said it is a separate license. Director Tyrrell said the auctioneers association in Nebraska had tried for separate licensing, but the organization, at least in the past, was divided on the issue. Commissioner Wiebusch also said technology-oriented continuing education courses were needed, but should be reviewed closely for content. Deputy Director Hoffman said that they are reviewed closely, and that some courses which are not software-specific have good content and have been approved for continuing education. Commissioner Johnson attended the first-timers breakfast. He found the organization of other jurisdictions = commissions interesting. The sessions had excellent speakers, including a very good presentation on high dollar payouts from errors and omissions insurance.Deputy Director Hoffman agreed with the other attendees that the sessions were excellent, with well-qualified speakers. No action was necessary on this Report. Review and Approval of Request for Proposals - Errors and Omissions Insurance Program, beginning with Calendar Year 2002 Director Tyrrell presented an Exhibit which consisted of the Request for Proposals (RFP) regarding the Errors and Omissions Insurance Contract. A copy of said Exhibit is attached to and made a part of these Minutes. The last renewal on the existing contract was for Calendar Year 2001, so the Commission needed to send out a new RFP. Director Tyrrell and Deputy Director Hoffman met with the State =s Risk Manager, who said the Commission could use the same process it used in 1995. Director Tyrrell reviewed the packet, and noted that some of the forms may be updated, but that this was the basic package used for the last RFP. Director Tyrrell requested the Commission=s approval of the process and format of documents. The RFP will be sent out near the end of January, interested parties will be given a couple of months to respond, and then staff will schedule the RFP opening. The Commission=s Budget and Finance Subcommittee will review the proposals with Director Tyrrell and Deputy Director Hoffman, and then will present their recommendation to the full Commission. The State=s Broker of Record is currently doing a survey of other insurance providers, and the RFP will be sent to all those providers plus all providers who have contacted the Commission office over the past five years. Williams Underwriting Group, Frontier Insurance, and several smaller companies are always interested in submitting a proposal.Chairperson Moore asked about the current contract. Director Tyrrell noted that the State =s Risk Manager had recommended including the annual option to renew, so there was no reason to go out for bid every three years. Chairperson Moore asked why the contract was for each calendar year. Director Tyrrell said the insurance companies had to file that way with the Department of Insurance. Chairperson Moore said that, for most contracts, the initial contract is usually for 3 or 4 years, with annual renewals afterward. Chairperson Moore asked if the RFP contained any special provisions that would make it impossible for any other company to get the bid. Director Tyrrell said no. Chairperson Moore clarified that today=s action was setting the process in motion, approving the format and documents, and that the Commission will approve specifics after the exact timeline is established.After discussion, a motion was made by Landow and seconded by Fletcher to proceed with the RFP in the format as outlined in the Exhibit. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. Request for Clarification on Advertising - Ed Nicholls, November 16, 10:30 a.m. Prior to discussion of this matter, Commissioner Nigro recused herself, thereby nullifying any potential conflict of interest. Director Tyrrell presented an Exhibit which included a letter from Ed Nicholls, and a sample of advertising materials published by Mr. Nicholls. Mr. Nicholls requested clarification on advertising requirements, and a determination of whether his advertising was in compliance with real estate law. Mr. Nicholls said that he had been producing neighborhood newsletters on sales in the area for the past 14 years. No one had ever questioned whether the advertising violated real estate law until recently, when another licensee challenged it. Mr. Nicholls said that all the information he published regarding properties was available from the Multiple Listing Service (MLS), and most were available on the Internet and in newspapers. The information was published as a list, and clearly showed which listings were with his company. The information was similar to information commonly handed out at open houses and by duty desk agents. Mr. Nicholls said he did not think he was violating real estate law. Director Tyrrell said he had looked at the materials, and did not think there was a violation of 24(7). Perhaps it could be construed as offering real estate for which he does not have consent under 24(12). Director Tyrrell noted that Mr. Nicholls = company=s listings were indicated in the lists.Commissioner Moline asked if Mr. Nicholls had samples of an entire newsletter for the Commission to review. Mr. Nicholls provided two samples. Commissioner Moline noted that the newsletters included recipes and articles on national trends. Mr. Nicholls noted that the list of properties is a small part of the overall publication. The purpose was to keep homeowners abreast of changes in valuation in the neighborhood, with the hope that if they have questions, they would call the newsletter =s sponsor. Mr. Nicholls emphasized that his company=s listings are identified, and equated the list with a certified market analysis of a home, which would show the trend in the neighborhood.Commissioner Landow asked if the intent was to get homeowners to do business. Mr. Nicholls reiterated that it showed trends in the neighborhood, and asked people to call if they have any questions. Commissioner Landow asked if publishing a list of available real estate implied that the homeowners may want to buy a house. Mr. Nicholls said it was not likely they would want to buy a home in the same neighborhood, and that the newsletter just helps homeowners track values. Commissioner Moline said it looked like a farming tool. Mr. Nicholls agreed that it was. Commissioner Moline noted that it contained properties listed with other companies. Mr. Nicholls said the information was readily available on the Internet and the MLS. Commissioner Moline noted that the list did not include the name of the listing agent or company. Mr. Nicholls noted that, with the MLS, any agent can sell the property. If a property was not in the MLS, Mr. Nicholls did not include it. Commissioner Moline said that, when MLS listings are provided, it is usually to one customer in particular. Commissioner Moline said that mass distribution made it advertising. Mr. Nicholls said the MLS allows licensees to print information on listings without including the listing agents = names, which can be sent to as many people as the licensee wants. Mr. Nicholls did not see a difference, but Commissioner Moline did.Commissioner Wiebusch said that her company publishes a weekly list of available properties, but identifies the listing company on each property. Commissioner Wiebusch asked if it would be a problem to identify companies on the list. Mr. Nicholls said it would be no problem. Director Tyrrell noted that if Mr. Nicholls put another company =s name on the list, he would have to add language to the effect that he was not representing the other broker. Otherwise, it would look like he was working for the other broker or company. Mr. Nicholls said that adding names would be advertising for another person, which crosses another line.Commissioner Moline said that broker reciprocity was coming soon. On web sites, it was generally noted that this property is listed with that person. The newsletter list looked like Mr. Nicholls was trying to advertise as if he had a lot more listings in the neighborhood. Mr. Nicholls said the list clearly stated that they were not all his listings, and that only those marked were his company =s listings. Mr. Nicholls noted that the newsletters had been published quarterly for 14 years, with no complaints. Copies went to all the brokers involved. Mr. Nicholls was here seeking the Commission=s guidance. He did not want himself or other agents to be put in the position of looking like they were doing something wrong. Director Tyrrell noted that he was not contacted by the other licensee, just by Mr. Nicholls.Commissioner Moline asked if this was a grey area. Mr. Nicholls said he knew it was his right under the Constitution to say what he wanted. Commissioner Moline asked for staff =s opinion.Director Tyrrell said it could be considered a problem under 24(12), but since the information was available from the MLS, it may not be a problem. Commissioner Johnson noted that the MLS was a listing agreement among agents. Commissioner Wiebusch asked if both the statistics and the property list were based on information from the MLS. Mr. Nicholls said yes, the property list was straight from the MLS. Commissioner Wiebusch asked if the disclosure should say information instead of statistics. Mr. Nicholls said he calculates the percentage of the market for each company; edits addresses entered incorrectly from the MLS to make it specific to the neighborhood; and alters pending status as needed to make it accurate, because old pendings are listed incorrectly in the MLS. Chairperson Moore asked for the Commission =s conclusions.Commissioner Moline said he felt it was very close, but that Mr. Nicholls had not crossed over the line. Commissioner Moline thought it almost looked like Mr. Nicholls was listing all the property. Commissioner Landow felt that, under a strict reading of 24(12), with the address printed and a statement that the property was available, it was hard to claim Mr. Nicholls was not offering the property for sale. Commissioner Landow said it was obviously a marketing tool, and a good one. Mr. Nicholls said it was clear the property was offered for sale, but not by the agent publishing the newsletter. Mr. Nicholls pointed out that the agent could just represent the buyer, and did not have to be the listing agent to participate in the transaction. Director Tyrrell noted that if the list was done on a blank piece of paper and contained information pulled from the MLS, it could be handed to numerous people. Director Tyrrell also reminded the Commission that any decision made regarding Mr. Nicholls would affect any similar document produced by any licensee. Commissioner Johnson said there was some controversy about including other companies = listings on websites. Some licensees just want a property sold, and some say their listing should not be on someone else=s website.Mr. Nicholls said there was also a risk in exclusion of certain MLS listings. Commissioner Moline said the listing broker should make the decision on how listings are presented. Mr. Nicholls said he had offered to exclude the other licensee =s listings, and to note that the newsletter includes all listings but that company=s, but the other licensee did not want him to.A motion was made by Landow and seconded by Johnson to have staff research similar marketing tools and bring the results to the Commissioners at the December 13 Meeting for action, and to allow Mr. Nicholls to continue with the publications in the meantime. Motion carried with Fletcher, Johnson, Landow, Moline, Wiebusch, and Moore voting aye, and with Nigro not participating or voting, having recused herself, thereby nullifying any potential conflict of interest. Future Meeting Dates December 13, 2000 January 23-24, 2000 - Staybridge Suites, Lincoln February 20-22, 2000 - TBA March 27-28, 2000 - Staybridge Suites, Lincoln April 24-25, 2000 - TBA May 22-23, 2000 - Staybridge Suites, Lincoln Commissioner Fletcher said that, as the senior member of the Commission, he wanted to thank Chairperson Moore for his service on the Commission. Commissioner Fletcher wished Chairperson Moore the best of luck with Union Pacific, and said he would be sorely missed. Recesses and Adjournment At 9:20 a.m. on November 15, Chairperson Moore declared a brief recess, and reconvened the Meeting at 9:32 a.m. At 10:35 a.m. on November 15, Chairperson Moore declared a brief recess, and reconvened the Meeting at 10:48 a.m. At 12:03 p.m. on November 15, Chairperson Moore declared a brief recess, and reconvened the Meeting at 12:15 p.m. At 12:37 p.m. on November 15, Chairperson Moore declared a recess for lunch. At 2:03 p.m. on November 15, Chairperson Moore reconvened the Meeting. At 3:45 p.m. on November 15, Chairperson Moore declared a brief recess, and reconvened the Meeting at 3:55 p.m. At 4:25 p.m. on November 15, Chairperson Moore was temporarily excused from the Meeting, and Commissioner Fletcher assumed the duties of Acting Chairperson. Chairperson Moore rejoined the Meeting at 4:30 p.m. At 5:01 p.m. on November 15, the Meeting was recessed until 9:00 a.m. on November 16. At 9:11 a.m. on November 16, Chairperson Moore reconvened the Meeting. At 10:40 a.m. on November 16, Chairperson Moore declared a brief recess, and reconvened the Meeting at 10:55 a.m. At 11:57 a.m. on November 16, Chairperson Moore declared a brief recess, and reconvened the Meeting at 12:07 a.m. At 1:23 p.m. on November 16, a motion was made by Fletcher and seconded by Landow that the Meeting adjourn. Motion carried with Fletcher, Johnson, Landow, Moline, Nigro, Wiebusch, and Moore voting aye. I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing Minutes of the November 15-16, 2000, Meeting of the Nebraska Real Estate Commission were available for inspection on December 1, 2000, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska. Respectfully submitted, Les Tyrrell Director
Guests Signing the Guest List November 15 November 16
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