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NEBRASKA REAL ESTATE COMMISSION May 31, 2000Ramada Inn
Airport
Apollo
Room
Lincoln, NE Opening Acting Chairperson Hansen convened a Meeting of the Nebraska Real Estate Commission at 9:05 a.m. on May 31, 2000, in the Apollo Room of the Ramada Inn (Airport), located at 1101 West Bond Street in Lincoln, Nebraska. All of the members of the Real Estate Commission were present except for Chairperson Scott Moore and Commissioner Paul Landow, who were absent and excused. 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 discussion on the Attorney Exemption to the Real Estate License Act, the proposed changes to the Seller Disclosure and Agency Statutes, and the Attorney General Opinion on Seller Disclosure. 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. Acting Chairperson Hansen reported that all Commissioners had been notified of the Meeting simultaneously, in writing, and that a proposed Tentative Agenda accompanied the notification. Acting Chairperson Hansen 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. Acting Chairperson Hansen asked that guests sign the guest list.Director Tyrrell noted that the only changes were the addition of the April website statistics, the notation that no Hearings were scheduled, and that a one-day Meeting was indicated. After review of the Final Agenda, a motion was made by Fletcher
and seconded by Moline to adopt the Final Agenda as presented. Motion carried
with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and
Moore not participating or voting, being absent and excused. The Minutes of the Commission Meeting held on April 17, 2000, were considered. Commissioner Moline requested that one sentence from the Hearing discussion on agency disclosure be deleted from the Minutes. After review, a motion was made by Nigro and seconded by Wiebusch to approve the Minutes as amended. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. Receipts and Expenditures Report for April Director Tyrrell presented the Receipts and Expenditures Report for April 2000. A copy of said Report is attached to and made a part of these Minutes. Director Tyrrell noted that there was nothing unusual to report in Receipts except that total receipts were up approximately $70,000.00, primarily due to Promotional Land Registrations. In Expenditures: Category 4145, Unemployment Compensation, reflected payments to a terminated employee; Category 4222, Conference Registration Fees, showed a registration for a Real Estate Education Association conference; Category 4311, Office Supplies, included expenses for legal reference books; Category 4421, Other Contract Services, included two months of ARELLO Disciplinary Databank searches; and in Category 4731, State-Owned Transportation, the April costs will show in the May Report. The Cash Fund Balance as of April 30, 2000, was $537,071.37, which compared to a Cash Fund Balance of $418,227.95 on April 30, 1999. Following discussion, a motion was made by Fletcher and seconded by Nigro to file the April Receipts and Expenditures Report for audit. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. Specialized Registrations Director Tyrrell presented the Specialized Registrations Report, which listed one Time Share Registration for Westgate Lakes III. 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 Wiebusch to approve the Westgate Lakes III registration as presented. Motion
carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with
Landow and Moore not participating or voting, being absent and excused. 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 Moline and seconded by Wiebusch to ratify issuance of the licenses as set forth in the Report. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. Examination Report - April Deputy Director Hoffman presented a Report relating to the Real Estate Examinations administered during April 2000. A copy of said Report is attached to and made a part of these Minutes. Deputy Director Hoffman noted that the Bellevue examination site is now in use, which provides applicants with easier access, more parking, and generally a better facility. After review, a motion was made by Fletcher and seconded by Moline to ratify the April Report for the purpose of issuing licenses. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. Real Estate Education Matters Pre-License Instructor Approval Deputy Director Hoffman presented for ratification the Pre-License Instructor Approval Report, which listed approval 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 Nigro and seconded by Wiebusch to ratify the Report. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. Continuing Education Activity Approval Deputy Director Hoffman presented for ratification the Continuing Education Activity Approval Report, which listed approval for one continuing education activity. A copy of said Report is attached to and made a part of these Minutes. After discussion, a motion was made by Wiebusch and seconded by
Fletcher to ratify the Report. Motion carried with Fletcher, Moline, Nigro,
Wiebusch, and Hansen voting aye, with Landow and Moore not participating or
voting, being absent and excused. Continuing Education Instructor Approval Deputy Director Hoffman presented for ratification the Continuing Education Instructor Approval Report, which listed approvals for four continuing education instructors. A copy of said Report is attached to and made a part of these Minutes. After discussion, a motion was made by Moline and seconded by
Nigro to ratify the Report. Motion carried with Fletcher, Moline, Nigro,
Wiebusch, and Hansen voting aye, with Landow and Moore not participating or
voting, being absent and excused. Continuing Education Evaluations Follow-Up Discussion Deputy Director Hoffman presented information on the evaluations given to continuing education activities at the Realtors State Convention. There was a high response rate, and generally the evaluations were very positive. Attendees appreciated the quality of education received. No action was necessary on this Report. 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. The following Sworn Complaints and Investigative Matters were presented to the Commission:
Hearings No Hearings were scheduled for this Meeting. Informal Special Appearances May 31, 1:30 p.m. - Dale Giles, Potential Salesperson Applicant At 2:09 p.m., Director Tyrrell presented an Exhibit which included a letter regarding Mr. Giles = Special Appearance, and letters and documentation regarding Mr. Giles= criminal history. A copy of said Exhibit is attached to and made a part of these Minutes. Director Tyrrell also told the Commission of information received via a May 30 telephone call with Mr. Giles= parole officer, who informed Deputy Director for Enforcement Mayrose that Mr. Giles had been cited on May 20 for obstruction of a police officer and for possession of marijuana, less than one ounce.Mr. Giles said he had always been interested in real estate, and that he started studying real estate and business management while he was incarcerated. He said he felt it was unfair that he might not be allowed to sit for the examination due to his criminal record. Mr. Giles said that sometimes people change, and sometimes they do not. Environment had a lot to do with whether people could turn their lives around. Mr. Giles said that he intends to continue with his education. Mr. Giles stated that he was first incarcerated at age 17 or 18. In 1994, he was indicted for conspiracy possession with intent to distribute crack cocaine. He did 3 2-4 years for that conviction, and is now on supervised release. On May 20, he was at a barbeque when a car pulled up and everyone ran away. Mr. Giles was ticketed for obstructing a police officer, and for possession of marijuana. He notified his parole officer of the situation. Mr. Giles said he has not had any additional felonies.Commissioner Nigro asked when the pending charges would be resolved. Mr. Giles said his hearing was set for June 12. Commissioner Nigro asked about the circumstances which resulted in the obstruction ticket. Mr. Giles said that apparently if you walk away from a police officer, you are interfering with or obstructing that officer. Mr. Giles emphasized that he needed to get into real estate. Mr. Giles said that he is married, he has two kids, a third child is on the way, and he is going to school. Acting Chairperson Hansen asked what the Commission had done in the past with individuals who were still on probation. Director Tyrrell said that the Commission used to tell people to come back after they were off probation and had their civil rights restored. In the past 2-4 years, the Commission has allowed people on probation to sit for the examination and become licensed, with the condition of notifying any employing broker of their circumstances. Commissioner Nigro asked if Mr. Giles had talked to any potential employers. Mr. Giles said he had talked to a broker who had given Mr. Giles a packet from Randall School of Real Estate, and said he would help Mr. Giles study for the examination. Mr. Giles had not pursued employment any further. Commissioner Fletcher asked when Mr. Giles would be off probation. Mr. Giles said it would be January 12, 2002. Acting Chairperson Hansen asked if Mr. Giles was currently employed. Mr. Giles said yes, he was working construction, but is currently on sick leave due to a car accident on April 11. Acting Chairperson Hansen asked what outcome Mr. Giles expected from the June 12 hearing. Mr. Giles said that, if he was convicted on the marijuana possession, his probation may be revoked. He said it would probably end up as just a fine, or a lesser charge. Acting Chairperson Hansen asked about the conversation with the parole officer. Deputy Director for Enforcement Mayrose said he talked with the parole officer on May 30, and Director Tyrrell had presented the information obtained. Commissioner Nigro asked if the Commission could hold off licensing Mr. Giles until after June 12. Mr. Giles noted that he was not done studying for the examination, and that he was still taking classes. He needed to complete approximately 35 more hours for his business management degree. Director Tyrrell said that the Commission could allow Mr. Giles to take the examination after his June 12 hearing, if his parole was not revoked. Commissioner Nigro asked if Mr. Giles was planning to take the examination prior to June 12. Mr. Giles said no. Acting Chairperson Hansen asked about Mr. Giles = car-related violations, and noted that Mr. Giles would be responsible for the passengers in his car. Mr. Giles said he was aware of that, and was prepared for the responsibility. Acting Chairperson Hansen also noted that Mr. Giles would be handling other people=s money, and representing them in what was probably the largest purchase in their lives. Acting Chairperson Hansen said people needed to be able to completely trust Mr. Giles. Acting Chairperson Hansen noted that some licensees get their license, then get into trouble, and then have to appear before the Commission.Commissioner Moline asked for clarification on the pending charges. Director Tyrrell said the citations were issued on May 20, 2000, for obstructing a police officer and for possession of marijuana, less than one ounce. Commissioner Wiebusch asked if they were two separate charges. Director Tyrrell said yes. Acting Chairperson Hansen said that if Mr. Giles was convicted, his probation would probably be revoked. Mr. Giles said his pending hearing was on the obstruction charge, but that both charges would be handled on June 12. Mr. Giles did not want the marijuana charge on his criminal history, and hoped that would be the outcome at the hearing. Mr. Giles said the charges could be resolved at any time prior to June 12, if they were dropped. Commissioner Moline asked if Mr. Giles had been in possession of marijuana. Mr. Giles said no. Commissioner Nigro said she admired Mr. Giles = attempt to turn his life around. Mr. Giles said he could communicate with anyone. He did not want his kids to do the same things he had done. Mr. Giles noted that he was an active father, and was the head of his house. This was a chance to turn his life around, and he wanted to make the best of it. Mr. Giles felt he could be a good example for other convicts, that if he could do it, they could do it.A motion was made by Fletcher and seconded by Nigro that Mr. Giles be allowed to sit for the examination; that if Mr. Giles passes the examination, he could be licensed if his probation is not revoked; and that Mr. Giles notify the Commission Office immediately when his pending charges are resolved. Mr. Giles noted that he could have just paid the fine for the marijuana ticket, but that he did not want it on his record. Mr. Giles also noted that no police report had been filed yet, but that he had notified his parole officer anyway. Motion failed with Fletcher, Nigro, and Hansen voting aye, with Moline and Wiebusch voting nay, and with Landow and Moore not participating or voting, being absent and excused. Commissioner Moline noted Mr. Giles = repeated interactions with the law, and that charges which included disturbing the peace and drugs were not compatible with a career in real estate. Mr. Giles said that business was business, and that he knows he can not smoke marijuana while on probation or have people in his car who smoke it. Mr. Giles said he can not place himself in that situation, and that he was told he had to think of himself as a superstar, and not allow people to do that around him. Mr. Giles said that his drug conviction was for conspiracy, not for hands-on possession, and that it was a situation of one person=s word against another. Mr. Giles noted that if someone uses another person=s phone to set up a drug deal, that person would be considered part of the conspiracy.Acting Chairperson Hansen asked how often Mr. Giles saw his probation officer. Mr. Giles said it was once a month. Acting Chairperson Hansen said he placed the emphasis on the probation officer =s letter, and that Mr. Giles had stayed pretty clean since his release. Commissioner Moline said he would have agreed, if it was not for the pending charges. Acting Chairperson Hansen said that a conviction on the marijuana charge would cause automatic revocation of Mr. Giles= probation. Mr. Giles said that if he thought his parole would be revoked, he would not be at this Meeting.Commissioner Moline suggested that the Commission extend the request to the next Meeting, and noted that Mr. Giles = pending charges would be resolved by then. If Mr. Giles= probation was not revoked, Commissioner Moline would be in favor of allowing Mr. Giles to sit for the examination. Commissioner Moline said it was possible that Mr. Giles was a complete victim of circumstances. Acting Chairperson Hansen asked what additional information Commissioner Moline would need to make a decision. Commissioner Moline said he would prefer that the pending charges be resolved, and noted it would be easier to not issue a license in the first place than to revoke it later. Director Tyrrell agreed that the procedures would be simpler, since revocation would require due process and a full hearing.Commissioner Moline reiterated that the Commission could wait until its next Meeting to decide whether to allow Mr. Giles to sit for the examination. Acting Chairperson Hansen said that the Commission could rely on staff to issue the license only if the pending issues were resolved satisfactorily. Commissioner Wiebusch asked if due process would be required if the Commission allowed Mr. Giles to sit for the examination, but then would not issue the license. Director Tyrrell said yes, there would have to be a hearing. Commissioner Wiebusch asked if the Commission could vote to issue the license if the issues were resolved satisfactorily, i.e. if Mr. Giles was found to not have been in possession of marijuana, and if Mr. Giles = probation was not revoked. Acting Chairperson Hansen noted that would depend on whether the marijuana charge resulted in conviction or dismissal.Commissioner Moline asked if the charges would be completely resolved after the June 12 hearing. Mr. Giles said yes, that the charges were not big enough to go to trial. Mr. Giles said the marijuana charge would just be a misdemeanor and he could have just paid the fine if he was not on probation, but he wanted the hearing to keep it off his record. Deputy Director Hoffman noted that the Commission requires issuance of a license within 30 days of passing the examination. It would be better to have a close time frame between passing the examination and issuing the license. Mr. Giles said that his baby =s due date is August 20, and that he is trying to start a business before then, so he would not be ready to take the examination until late August or September. Director Tyrrell said that, with that time frame, Mr. Giles could notify the Commission office when the issues were resolved, and then be allowed to sit for the examination, or the entire decision could be delayed until the July Commission Meeting. Mr. Giles said he was finished with the required courses, and did not know how much information the broker would have for him to study. Mr. Giles noted that he received his application packet in 1997 from a friend in the Omaha Housing Authority.A motion was made by Fletcher and seconded by Nigro to allow Mr. Giles to apply to sit for the examination, with license issuance conditional on Mr. Giles = probation not being revoked, and with the requirement that Mr. Giles notify all employers of his probation status. Mr. Giles noted that he had to notify all employers of his probation anyway. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused.Director Tyrrell said he would send Mr. Giles a letter regarding the Commission =s decision, with an application packet.Personnel Matters - Closed Session At 3:28 p.m., a motion was made by Fletcher and seconded by Moline to go into closed session for discussion of personnel matters. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. At 3:57 p.m., a motion was made by Moline and seconded by Fletcher to go into open session. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. A motion was made by Moline and seconded by Fletcher that the Director and Deputy Director for Education and Licensing receive a 2% pay increase effective July 1, 2000, and a 22% pay increase effective January 1, 2001. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. Discussion - Attorney Exemption to Real Estate License Act Counsel Widger presented information on disclosure regarding what is taught versus what is common practice in some areas of the state. Counsel Widger noted the statutory requirement to present the agency disclosure information if a party is not represented by a designated broker. Counsel Widger also noted the attorney exemption to the License Act. Counsel Widger said what is taught is that the agency disclosure information must be given to a potential seller or buyer if the person is not represented by a designated broker, as stated in the statute. If the person refuses to sign for receipt of the agency disclosure information, the licensee should note the refusal on the agency disclosure form and put it in the transaction file. There is no distinction made between exempt or non-exempt representatives, only if the person is not represented by a designated broker. The practice in some small pockets of the state is that if a property is for sale by owner, and the owner is represented by an attorney, the attorney instructs the owner to not sign anything presented by a licensee. As a result, licensees in these limited areas are intimidated by attorneys, and do not present the agency disclosure information. This happens only in isolated pockets of the state, primarily with one or two attorneys. In Counsel Widger=s opinion, the education is appropriate, because the law specifies representation by a designated broker. If a person refuses to sign, the licensee should make the notation on the agency form and put it in the transaction file. The licensee would be covered because the licensee tried to present the agency disclosure information. The instructors are teaching appropriately. Acting Chairperson Hansen said that practice was different than education in his area, particularly with owners represented by one particular attorney who is also a broker. Acting Chairperson Hansen said the signs placed by that attorney imply that the attorney is representing the owners as a broker. Counsel Widger noted that it was not clear to licensees in that situation that the attorney was acting as an attorney rather than as a broker, and that it was not fair to expect licensees to know that particular attorney=s business practices and role. That was why licensees need to attempt to make the disclosure, and note the attempt in the transaction file. Commissioner Wiebusch noted that the owners may not know how they are being represented, and that the attorney needed to make it clear to licensees and consumers. Counsel Widger said she had consulted with the Bar Association, and that specific issue had not presented itself in their deliberations. Director Tyrrell said that if the Commission wanted to change the law, it could do so. Usually, the Commission does not make policy changes based on one person. If a licensee was brought before the Commission for disciplinary action, any confusion over the attorney=s role would be a mitigating circumstance for the Commission to consider. It did not seem to be in the best interest of the Commission to change a long-standing interpretation based on one person=s practice. Licensees could protect themselves simply by noting the refusal to sign the disclosure form. Acting Chairperson Hansen was concerned that licensees might be interfering in the attorney/client relationship. Director Tyrrell said that a licensee would simply ask the owner to sign the disclosure form, the owner would refuse, the licensee would note the refusal, and the licensee would be covered. Commissioner Moline noted that Omaha was the largest market in the state, and that confusion had resulted there. Commissioner Moline also said he would have a hard time voting to discipline licensees if they felt an attorney was exempted from agency law. Director Tyrrell said, in that case, the Commission would be saying no disclosure was required if an attorney was involved. Director Tyrrell proposed that the Commission=s interpretation could be clarified in the Commission Comment. Counsel Widger said any confusion would be a mitigating circumstance. Commissioner Moline felt that clarification would be a good idea, and that the Commission=s interpretation should be published in the Commission Comment. Commissioner Moline asked if it was common practice for attorneys to put their names on for sale by owner signs, as was done by this one attorney. Counsel Widger said no. Commissioner Moline said it seemed to give the impression that the attorney was acting as a broker. Commissioner Nigro said that, in these instances where the owner refuses to sign documents presented by a licensee, the licensee may negotiate all aspects of the sale, then submit all the paperwork to the attorney. Commissioner Moline noted that the attorney was acting as a broker, but wanted to claim the attorney exemption. Counsel Widger indicated that the previous Commission decision was based on the circumstances of that case only. Counsel Widger noted that educators taught that only consumers represented by designated brokers were exempted from the agency statute. Acting Chairperson Hansen agreed that the previous decision was based on the specific circumstances of that case, and that disclosure was needed if an attorney was involved. Commissioner Nigro asked if the attorney had to give out agency disclosure information. Counsel Widger said no. Commissioner Moline said the attorney was walking on both sides of the street. Commissioner Wiebusch said the situation had to be confusing to consumers involved. Director Tyrrell said that the Commission had looked at the attorney=s dealings a couple of times, and each time had come to the conclusion that the attorney was acting as an attorney, not a broker. Acting Chairperson Hansen asked if the consumers involved were asked how the attorney was representing them, and maintained they probably did not know. Counsel Widger said that, from the information the attorney provided, he was acting as an attorney in those situations. Counsel Widger was not sure if the consumer would know that, because it would depend on the information given by the attorney. Commissioner Moline asked if the attorney had entered into a listing agreement in the previous cases. Counsel Widger said no, just a fee agreement. It was the consensus of the Commission that Director Tyrrell bring a draft Commission Comment article to the July Meeting for the Commission=s review. Acting Chairperson Hansen said the Omaha Board should also take a look at the situation. Counsel Widger noted that licensees outside of Omaha were making disclosures when attorneys were involved, and Director Tyrrell emphasized that there were very small pockets of noncompliance. Commissioner Moline asked that the article be very concise and specific. Preliminary Discussion - Proposed Revisions to Seller Disclosure and Agency Statutes Director Tyrrell presented an Exhibit which included proposed changes to the Seller Property and Agency statutes, and several suggestions from interested parties. A copy of said Exhibit is attached to and made a part of these Minutes. Director Tyrrell reviewed the suggestions received. Director Tyrrell then reviewed the proposed changes to the Seller Property Condition Disclosure statute. Commissioner Moline offered to provide examples of third-party relocation company purchase agreements to assist with the wording on page 5. Mike Gutschenritter of the Nebraska Realtors Association noted that third-party relocation companies usually allow 10 days for the buyer to get any inspections wanted. Commissioner Wiebusch said that, in some instances, a Seller Property Condition Disclosure form is completed prior to the third-party relocation company=s involvement. Commissioner Moline agreed, and said that some agents used them if they were in the file, even though they were no longer technically prepared by the seller. Commissioner Moline also noted that most third-party relocation companies changed listing companies. Commissioner Wiebusch asked if the form should be used in the resulting transaction. Acting Chairperson Hansen said no, because it was a whole new ball game when a third-party relocation company takes over. Director Tyrrell asked who would transfer the property. Commissioner Fletcher said that the third-party relocation company had the seller sign the deed, then kept it until the sale occurred. Counsel Widger said she could research the issue and re-word the passage. Jerry Ahlvers, representing CBSHOME and the Nebraska Realtors Association, said the third-party relocation company may get a copy or may not, depending on what was included in the packet of what the seller had obligated to the listing company. Commissioner Moline said that third-party relocation companies provide basic inspections, and allow more to be done. Commissioner Wiebusch said consumers may actually get more information when a third-party relocation company is involved. The consensus of the Commission was to exempt all third-party relocation company transactions. Commissioner Moline also noted that the reference at the bottom of the page to January 1, 1995, should also be struck. Commissioner Nigro felt that, on page 4, the requirement to update the Seller Property Condition Disclosure form Aas necessary@ was too vague. Counsel Widger said it could be changed to require updating if substantive changes had occurred. Commissioner Moline said he wanted to nail down the language very specifically. Director Tyrrell noted that this was a draft, and there would be revisions until consensus was reached. Commissioner Wiebusch questioned the passage on page 3, at letter I, where it stated that the Seller Property Condition Disclosure form was not intended to be included in any contract. Director Tyrrell said that state law does not require the form to be a part of any contract. Counsel Widger said that the parties could include it, if they so desired. The Seller Property Condition Disclosure form is only designed to assist the buyers in determining the price they are willing to pay. Fred Hoppe of Lincoln, representing himself, noted that the form gives buyers an independent cause of action, if they relied on it and something was misrepresented. Counsel Widger noted that all the language could be changed or repealed. Mr. Hoppe said that the Association will have additional comments during the next discussion. Director Tyrrell then reviewed the proposed agency law changes. Commissioner Moline asked if the language on page 7, Aincluding but not limited to,@ was too broad. Director Tyrrell said the language was recommended by counsel, and Counsel Widger said it allowed for future definition. Mr. Hoppe said that the Association will have comments during the next discussion. No action was necessary on this matter. Information Matters ARELLO Mid-Year Meeting - April 27-29, 2000 - Report of Attendees Director Tyrrell reported that the Meeting went well. Information on restructuring was sent to all ARELLO members. Major changes included committee structure and meeting scheduling. The proposed changes will be discussed at the District Meeting and at the Salt Lake City Meeting. Feedback should be sent to Craig Cheatham or Larry Lyngstadt. Director Tyrrell noted that Richard Strader of West Virginia was going to run for President-Elect this year, and Deputy Director Hoffman would run next year as originally planned. Director Tyrrell said that he had been asked about having a Board of Directors Meeting in Omaha, possibly in 2003 or 2004. Director Tyrrell thought the Embassy Suites in Omaha would be a good location, with easy access to the Old Market and restaurants. With the Commission=s permission, Director Tyrrell would suggest the Meeting be held in late April or early May. Commissioner Wiebusch asked how much staff time would be involved. Director Tyrrell said it would be very little, because Craig Cheatham would handle organization and reservations. There may be some minimal involvement in contacting sponsoring organizations, and one or two Commission staff may be needed to staff the registration desk during the Meeting. It was the consensus of the Commission to invite ARELLO to hold a Board of Directors Meeting in Nebraska. Director Tyrrell also noted that Janet Carder was running for Treasurer. Deputy Director Hoffman reported that the Distance Education Committee was still challenging, and that lots of educators want to be certified. Sessions at the next regulators meeting will address how to submit courses and how to change regulations to require ARELLO certification. Commissioner Nigro was very involved in the Fair Housing Committee. The Committee Chair applied for a grant which resulted in $5000 for printing manuals and setting up the new program. Several new instructors were trained, including Harding Collis of Omaha, which should reduce instructor travel costs for sessions held in this part of the country. There will also be a Fair Housing presentation at the District and Annual Meetings. Commissioner Wiebusch said the Technology Committee watched a demonstration of the Colorado website which included the transactions which can be completed on-line. The License Law Committee reported what the states were working on, including interjurisdictional issues and universal definitions of terms. Trust Account Examination Evaluation Report - First Quarter 2000 Director Tyrrell presented the Trust Account Examination Evaluation Report for First Quarter 2000. A copy of said Report is attached to and made a part of these Minutes. Director Tyrrell noted that the responses were again very positive. The few negative comments were discussed with the staff involved. No action was necessary on this Report. Service Satisfaction Survey - Spring Commission Comment Results Director Tyrrell presented the Service Satisfaction Survey Report from the form printed in the Spring 2000 Commission Comment. A copy of said Report is attached to and made a part of these Minutes. Director Tyrrell noted that 7557 were sent, and 35 were returned. One response was negative, but the other responses were again very positive. Commissioner Wiebusch asked if the negative response had been discussed with the staff member involved. Director Tyrrell said yes, but that specific comments were not made and the responder was not indicated, so getting the specifics was not possible. No action was necessary on this Report. Website Statistics for March and April 2000 Director Tyrrell presented Reports on website usage during March and April. A copy of said Reports are attached to and made a part of these Minutes. Director Tyrrell said that staff will investigate why no pre-license education hits were reported. No action was necessary on these Reports. Errors and Omissions Loss Information Report - 01/01/93 through 03/31/00 Director Tyrrell presented the Errors and Omissions Loss Information Report through First Quarter 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, and that all identifying information was deleted from the public copies of the Report. Director Tyrrell also said that Dick Williams of Williams Underwriting will attend the August Meeting for the policy renewal for 2001. No action was necessary on this Report. ARELLO Central District Meeting - July 9-11, 2000 - Lansing, Michigan Director Tyrrell reported that the ARELLO Central District Meeting is scheduled for July 9-11 in Lansing, Michigan. Commissioners should fax their preliminary registration form to the person indicated, then send it to the Commission Office for payment of the registration fees. No action was necessary on this report. Approve Attendance at ARELLO Advanced Investigator Workshop Director Tyrrell presented an Exhibit regarding the estimated costs of Deputy Director Mayrose=s attendance at the ARELLO Advanced Investigator Workshop in Raleigh, NC. A copy of said Exhibit is attached to and made a part of these Minutes. After discussion, a motion was made by Fletcher and seconded by Moline to approve travel costs for Deputy Director Mayrose to attend the Workshop. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. Proposed 2000 Agency Comprehensive Information Technology Plan Director Tyrrell presented the proposed Agency Comprehensive Information Technology Plan. A copy of said Exhibit is attached to and made a part of these Minutes. Director Tyrrell noted that this Plan replaced the Information Technology budget document. The Budget and Planning Subcommittee members had reviewed it, and recommended submitting it as presented. After discussion, a motion was made by Moline and seconded by Wiebusch to submit the Plan as presented. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. Seller Disclosure - Attorney General Opinion Counsel Widger presented the Attorney General Opinion on the Seller Property Condition Disclosure form. A copy of said Exhibit is attached to and made a part of these Minutes. Counsel Widger reviewed the Opinion, which confirmed that a licensee would need to know of an inaccuracy in order to be disciplined; that there is no obligation for the licensee to verify the seller=s representations; and that it is logical for the Commission to expect licensees to review the Seller Property Condition Disclosure forms. Commissioner Moline asked what the obligation would be if a neighbor said there was a problem, but it was not noted on the Seller Property Condition Disclosure form. Counsel Widger said that the licensee would never be required to verify the information provided by the seller, and could rely on the seller=s statement. Acting Chairperson Hansen asked if the Opinion required any change from current practice. Counsel Widger said no. Commissioner Wiebusch asked if the neighbor=s comment should be noted in the file, or discussed with the seller. Counsel Widger said licensees do not have to note it on the Seller Property Condition Disclosure form. The licensee may want to make a note of what the seller says about it, but it would not be required. Commissioner Moline said that, if there was no actual knowledge, there would be no discipline. Counsel Widger confirmed that statement. Commissioner Moline clarified that the licensee would not be required to find out, and Counsel Widger agreed. Acting Chairperson Hansen asked how a situation would be handled where a couple of boxes were not checked and a licensee missed them. Counsel Widger said each case would be evaluated individually, but there could be mitigating circumstances. Fred Hoppe of Lincoln, representing himself, said that there was no duty for the licensee to review the Seller Property Condition Disclosure form. Mr. Hoppe stated that the Opinion said the duty Amay be implied,@ but the duty was not in the statute. Licensees only have to take reasonable care for clients. Acting Chairperson Hansen noted that this was not an open discussion on the Opinion, and that the Commission was only discussing the Opinion in the context of current practice. Counsel Widger noted that, if a complaint was filed and the licensee had not reviewed the Seller Property Condition Disclosure form, the Commission could ask why it was not reviewed, and weigh the specific circumstances. Acting Chairperson Hansen speculated that it might depend on which boxes were unchecked, because some were more important than others. Commissioner Moline asked how current practice had been determined. Counsel Widger said it was based on past Commission decisions. Commissioner Moline noted that a licensee can attach a statement if the Seller Property Condition Disclosure form is not complete. No verification was required. Director Tyrrell noted that the two recent cases resulted in Stipulation and Consent Orders, and involved omissions. Counsel Widger noted that disciplinary action required knowledge, and it was the Commission=s burden of proof to prove the licensee had knowledge. Acting Chairperson Hansen clarified that the Commission can require licensees to review the Seller Property Condition Disclosure form, but that knowledge of an error, omission, or inaccuracy was required to discipline a licensee. Commissioner Fletcher noted that this was not a change from past practice. Director Tyrrell asked if the Commission=s position should be reiterated in the Commission Comment, to clarify that licensees need to review the Seller Property Condition Disclosure form, but not verify the information or inspect the property to determine its accuracy. Commissioners Wiebusch and Nigro recommended using specific sentences from the Opinion. Acting Chairperson Hansen asked that it be concise and clear for licensees. Director Tyrrell asked if a synopsis of the Bohm case should be added, with a recommendation to consult an attorney regarding potential civil liability. Commissioner Moline felt that would add to the confusion, and said that only the sentences specified by Commissioners Wiebusch and Nigro should be included. Commissioner Wiebusch asked that it be made clear that the Bohm case addressed only civil liability, if it was included in the article. Commissioner Moline asked that a copy of the article be reviewed by the Commissioners prior to publication. Mr. Hoppe asked for clarification on whether this was a public hearing. Acting Chairperson Hansen said no, but said that Mr. Hoppe could make a comment. Mr. Hoppe said that the Commission needed to look at the Legislature=s intent in drafting the statute. He said the Commission should not rush to take a position on it, but think out the obligations being placed on licensees. The Legislature looked at all issues when drafting it, and chose not to include a requirement for licensee review. There was no requirement for licensee review in the statute or in the opinion. The only duty to review could be inferred under the Areasonable skill and care@ required of licensees. The only time discipline could result was if the licensee actually knew of a problem. If the Commission wanted a rule, they should follow the process to make a rule. In cases where a considerable amount of time passes between completion of the Seller Property Condition Disclosure form and closing, Mr. Hoppe raised the question of what would be expected from each agent. A licensee=s duty was discharged if the Seller Property Condition Disclosure form was delivered. There was no benefit to the seller for the licensee to review the form, but that may be different for the buyer=s agent. Mr. Hoppe asked that the Commission not put an edict in the paper, but to let licensees comment during the public process. Mr. Hoppe said it was fairly clear in the Opinion that the only obligation to review might come from exercising Areasonable skill and care.@ If the Legislature chose not to include the requirement to review the form, then it was excluded. Mr. Hoppe contended that the purpose of the legislation was to limit licensee liability by just requiring them to pass along documents. Mr. Hoppe also contended that was why the real estate industry supported the legislation. Mr. Hoppe asked the Commissioners to think of the potential punitive liability for licensees, and said he was sure that if the Nebraska Realtors Association met on the issue, they would agree with him. Director Tyrrell noted that the Commission had asked the Attorney General=s office for the Opinion so that this question could be resolved. The Opinion supported the interpretation already in use by the Commission, that it was not unreasonable to expect licensees to read the documents when helping a customer. Director Tyrrell noted that there was no requirement for licensees to verify the accuracy of the form. Mr. Hoppe asked that, if the Commissioners wanted to make a rule on this, they go through the rulemaking process. He felt that the phrase Anot unreasonable@ could go either way. Mr. Hoppe also questioned when licensees were expected to review the form. Counsel Widger said it had always been very clear that it would be at the time the licensee received the form, and noted that was not an issue at this point. Counsel Widger also noted that the form was only good as of the date it was signed. Acting Chairperson Hansen noted that the Commission=s position was supported by the rules in place. Mr. Hoppe asked if a rule change was required, and noted that the Association had a task force on rule changes. Acting Chairperson Hansen asked if the task force was looking at this issue now. Mr. Hoppe said the task force was looking at all the statutes. Acting Chairperson Hansen asked if the Commission wanted to wait for the Association=s review, or decide whether another rule was needed. Director Tyrrell asked if it would be a rule or statutory change. Acting Chairperson Hansen said there was some ambiguity about that. Jerry Ahlvers, Chair of the Nebraska Realtor=s Association task force, asked that the Commission not vote any changes at today=s Meeting. He asked for time for the task force to review the Opinion and give input. Director Tyrrell agreed that there could be additional discussion on the topic, and asked if the Commission wanted an article which reiterated the current position. He also asked if complaints on the subject should be held until the issue was resolved. Commissioner Moline said that if there was a chance the Commission would modify its interpretation in the near future, he did not want to publish an article on the current position. He said the Commission should wait until the issues were resolved. Commissioner Wiebusch asked why the Commission asked for the Opinion, if they were going to ignore it. Commissioner Moline said he wanted to wait until it was determined exactly what the law required, and did not feel that was what the Opinion did. Commissioner Nigro noted that the Opinion did provide guidance, and hoped the task force would review it in the context of the other statutes mentioned in the Opinion. Commissioner Nigro also said she would hate to publish an interpretation, then change it. Director Tyrrell asked how the Commission wanted to handle calls and complaints in the interim. Mr. Hoppe said that the Commission=s current interpretation cannot be determined from the decisions published in the Commission Comment, because the facts in the cases were not set out. The only thing might be inferred is that it is the licensees= duty to look for omissions. Mr. Hoppe said that the Areasonable skill and care@ citation in the Opinion was a different violation than failure to note errors, omissions, or inaccuracies, and said the Opinion was not artfully drafted. Mr. Hoppe said that the Association=s comments could be submitted in time for the legislative session in January. Director Tyrrell reviewed the actual timeline involved in changing a rule or statute. The preliminary proposed changes to the Seller Property Condition Disclosure and Agency statutes were being presented today, for the Commissioners to consider. The Association=s task force is scheduled to meet July 8. At the July Meeting, the preliminary proposed changes to the License Act will be presented for the Commissioners= consideration. At the August Meeting, Director Tyrrell anticipated spending 2-3 hours on the proposed changes to the Seller Property Condition Disclosure and Agency statutes, which might be finalized or changed at that time. At the October Meeting, the same process would be followed for the proposed changes to the License Act. Then the draft changes would be ready to be presented to a sponsor for the 2001 Legislative Session. There would probably be more comments received than for a rule and regulation change. Once the statutory changes were done, September 2001 would probably be the soonest they could go into effect. A rule and regulation hearing could be held 30-60 days after the effective date, and then the Attorney General=s and Governor=s offices would each have 45 days to review the changes. When all factors are considered, the fastest the changes could be in full effect would be January of 2002. With this timeline in mind, Director Tyrrell was asking if the Commission wanted to clarify its position for the interim period, between now and 2002. A Commission Comment article could provide the Commission=s current interpretation, the sentences indicated from the Opinion, and a notation about the Bohm case if desired. Mr. Hoppe said it would be misleading for licensees if the same article addressed the Bohm case. Counsel Widger said it could be made clear that it was a civil case that did not go to trial. Counsel Widger said the attorneys who represent licensees would need to know that the court decided a complainant had a long way to go to sue a licensee over a Seller Property Condition Disclosure form. Director Tyrrell indicated the article would state that if a licensee sees a problem, it should be pointed out to the seller. If the seller refuses to note the problem on the form, the licensee should attach a separate sheet of paper to the Seller Property Condition Disclosure form which discloses the problem. Commissioner Moline emphasized that there had to be actual knowledge of an error, inaccuracy, or omission. Director Tyrrell said that the three specific sentences from the Opinion would be used, and that the article would emphasize that the Opinion supported current practice. Mr. Hoppe noted that if a licensee does not know of an omission, there would be no disciplinary action. Mr. Hoppe then said that if the form was not read, or if an omission was missed, there should be no disciplinary action. Mr. Hoppe maintained that if the licensee did not read the form, there would be no liability. Counsel Widger said the Commission had the authority to require licensees to review the form under current law, and that it was up to the Commission to decide how to enforce the statutes. Mr. Hoppe asked that the article state if the licensees are required to review the forms, and to make it clear if it was a policy change. After discussion, a motion was made by Wiebusch and seconded by Nigro to put an article about the Opinion in the Commission Comment, with a statement clarifying the current interpretation. Motion carried with Fletcher, Nigro, Wiebusch, and Hansen voting aye, with Moline voting nay, and with Landow and Moore not participating or voting, being absent and excused. Future Meeting Dates The following dates are scheduled: July 25-26, 2000 - Ramada Inn Airport, Lincoln At 9:30 a.m. on May 31, Acting Chairperson Hansen declared a brief recess, and reconvened the Meeting at 9:40 a.m. At 10:57 a.m. on May 31, Acting Chairperson Hansen declared a brief recess, and reconvened the Meeting at 11:13 a.m. At 11:50 a.m. on May 31, Acting Chairperson Hansen declared a recess for lunch. At 1:10 p.m. on May 31, Acting Chairperson Hansen reconvened the Meeting. At 2:00 p.m. on May 31, Acting Chairperson Hansen declared a brief recess, and reconvened the Meeting at 2:09 p.m. At 3:15 p.m. on May 31, Acting Chairperson Hansen declared a brief recess, and reconvened the Meeting at 3:28 p.m. At 3:28 p.m., the Commission voted to go into closed session to discuss personnel matters. At 3:57 p.m. on May 31, the Commission voted to go into open session. At 4:05 p.m. on May 31, there being no further business to come before the Commission, a motion was made by Fletcher and seconded by Nigro that the Meeting adjourn. Motion carried with Fletcher, Moline, Nigro, Wiebusch, and Hansen voting aye, with Landow and Moore not participating or voting, being absent and excused. I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing Minutes of the May 31, 2000, Meeting of the Nebraska Real Estate Commission were available for inspection on June 13, 2000, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska. Respectfully submitted, Guests Signing the Guest List Harding Collis, NP Dodge, Omaha |