Chairperson Gale convened a meeting of the Nebraska Real Estate Commission at 9:03 a.m. on December 11, 2002, in the Staybridge Room of the Staybridge Suites, 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 for Education 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 stipulation and consent orders and the motion to dismiss.

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 Gale reported that all Commissioners had been notified of the Meeting simultaneously, in writing, and that a proposed Tentative Agenda accompanied the notification.

Director Tyrrell noted that Agenda Item 5a had been added since the Tentative Agenda was mailed to the Commissioners.

After review of the Final Agenda, a motion was made by Wiebusch and seconded by Strand to adopt the Final Agenda as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

The Minutes of the Commission Meeting held on October 23, 2002, were considered.

After review, a motion was made by Moline and seconded by Poskochil to approve the Minutes as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Director Tyrrell presented the Receipts and Expenditures Reports for October and November. A copy of said report is attached to and made a part of these Minutes.

Regarding the October report, Director Tyrrell noted that there was nothing unusual to report in Receipts or Expenditures. The Cash Fund Balance as of October 31, 2002, was $511,122.02, which compared to a Cash Fund Balance of $426,443.13 on October 31, 2001.

Regarding the November report, Director Tyrrell noted the following: in Receipts Category 7522, Promotional Lands, approximately $11,500 came from renewals submitted early by Fairfield Resorts. Expenditures Category 4211, Postage Expense, was approximately double the budgeted amount because of the trust account manual update mailing; Category 4215, Publication and Printing, included $9500 to print the license law manual update; Category 4311, Office Supplies Expense, reflected a credit for returned mailing labels; and Category 4414, Education Services, and Category 4731, State-Owned Transportation, showed no expenditures because the November billings were received late.

The Cash Fund Balance as of November 30, 2002, was $718,968.07, which compared to a Cash Fund Balance of $536,847.63 on November 30, 2001. The balance was higher because deposited renewal receipts were approximately $80,000.00 ahead of November 30, 2001.

After discussion, a motion was made by Moline and seconded by Strand to file the October and November Receipts and Expenditures Reports for audit. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Director Tyrrell presented a Renewal Report, which showed renewals as of December 10, 2002. A copy of said report is attached to and made a part of these Minutes.

Director Tyrrell noted that renewed licenses were approximately the same percentages as last year.

Commissioner Strand asked why the income was up so much on the November Receipts and Expenditures Reports when there was no change in renewals. Director Tyrrell said it was a matter of timing, because the renewals came in more quickly and were deposited earlier.

No action was necessary on this report.

Director Tyrrell presented a Retirement Community Registration for Pacific Springs Village. A copy of said registration is attached to and made a part of these Minutes.

Following discussion, a motion was made by Moline and seconded by Johnson to approve the registration as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Deputy Director Hoffman presented for ratification the Non-Resident Licenses and Resident Licenses Issued to Persons Holding Licenses in Other Jurisdictions Report, a copy of which is attached to and made a part of these Minutes.

After review, a motion was made by Moline and seconded by Shepard to ratify issuance of the licenses as set forth in the report. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Deputy Director Hoffman presented a copy of the proposed License Recognition Agreement with Washington. A copy of said agreement is attached to and made a part of these Minutes.

Deputy Director Hoffman noted that it was a typical agreement, which will allow active Nebraska licensees to obtain reciprocal Washington licenses after passing the Washington portion of the examination, and allow dual license holders to meet continuing education requirements in their resident jurisdiction only.

After discussion, a motion was made by Wiebusch and seconded by Moline to enter into the License Recognition Agreement with Washington. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Deputy Director Hoffman presented for ratification the Examination Reports for October and November, copies of which are attached to and made a part of these Minutes.

After review, a motion was made by Moline and seconded by Wiebusch to ratify the October and November Reports for the purpose of issuing licenses. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Deputy Director Hoffman presented for ratification the Pre-License Education Instructor Approval Report, a copy of which is attached to and made a part of these Minutes.

Deputy Director Hoffman presented for ratification the Continuing Education Activity Approval Report, a copy of which is attached to and made a part of these Minutes.

Deputy Director Hoffman presented for ratification the Continuing Education Instructor Approval Report, a copy of which is attached to and made a part of these Minutes.

After discussion, a motion was made by Wiebusch and seconded by Poskochil to ratify the reports. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

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:

Counsel Widger presented a stipulation and consent order in the matter of Complaint #2002-022, Brett & Nancy Moore vs. Debra K. Carlson. A copy of said order is attached to and made a part of these Minutes. Ms. Carlson was present with her attorney, Ms. Steffi Swanson.

Ms. Swanson noted that Ms. Carlson was sorry for her actions, had learned from them, and agreed to the censure in order to put this matter behind her and move forward.

After discussion, a motion was made by Moline and seconded by Poskochil to enter into the order as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Deputy Director Mayrose presented a stipulation and consent order in the matter of Complaints #2002-024 and 2002-044, Allan Arp, Susan Arp, and Allan Arp as Agent in Fact for Virginia Wright vs. Richard Wardell. A copy of said order is attached to and made a part of these Minutes.

After discussion, a motion was made by Moline and seconded by Johnson to enter into the order as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

The Hearing in Complaint #2002-016, Commission vs. Steven Robert Evers, and Complaint
#2002-017, Commission vs. Nathan P. Dodge, Jr., was continued.

There were no Informal Special Appearances scheduled for this Meeting.

Chairperson Gale said that Counsel Boecker was making his final argument, and the Commission had not even seen the affidavit yet. Chairperson Gale said he would not receive it into evidence. Counsel Widger said she had no objection to the service part of the affidavit, but she did object to the affidavit as it addressed the merits of the case, i.e. the letter denying the renewal and the merits of the complaints against Mr. Cutler. Chairperson Gale asked Counsel Widger to mark the objected portions of the affidavit, and initial and date her notations. Counsel Boecker then reviewed the notated affidavit.

Chairperson Gale reiterated that arguments today would be limited to the issue of service.

Counsel Widger noted that service was done by certified mail. The applicable statute said that provided evidence of individuals receiving notice, and the date of delivery. The purpose of a summons was to notify an individual of the commencement of litigation, and the date the receipt was signed was the date of notice of litigation. Counsel Widger noted that Nebraska licensees signed an affidavit that they were subject to the laws of the State of Nebraska, and that the laws of Florida were not relevant. The parties were here to determine whether Mr. Cutler was timely served. The date of delivery was consistently held as the date when time commenced running for filing petitions and answers. Counsel Widger said the Commission could presume delivery. In the case of Heithoff vs. the Board of Education, it was held that certified mail signed by other than the individual started the timeline. The court had determined that the purpose of certified mail was to notify the individual of action, and the individual did receive it even though the receipt was signed by someone else, like this certified mail. The date of the receipt signature was used to calculate time frames.

Chairperson Gale asked for clarification that a third party had signed for certified mail, and delivered it to the teacher later, but the court still ruled that the date of the receipt started the clock. Counsel Widger said that was correct. The court stated, with regard to service of summons, that the postal receipt showed that the transmittal was addressed appropriately, was received by the office, and was signed by someone, and that was appropriate delivery of summons.

Chairperson Gale noted that the notification of refusal was sent by certified and regular mail. The issue of regular mail had not been addressed. Counsel Boecker said that both were in the box at the same time. Chairperson Gale asked if it was at an apartment building or a business office. Counsel Boecker said it was at a condominium building, and the condominiums were like large apartments. Mr. Olivos was analogous to a doorman.

Counsel Widger noted that the appropriate statute allowed service by certified mail, and that licensees subjected themselves to the State of Nebraska laws. The statute applied, and the statutes and regulations allowed for service by certified mail. There was no requirement that the receipt be signed personally by the addressee. The only way to know how to calculate timelines was by the date of delivery. Otherwise, the Commission was always hanging out there waiting without knowing.

Commissioner Moline said the rule stated that the timeline started on written receipt by the applicant. Counsel Widger noted that Subsection 2, prior to that sentence, applied. If the Director refused an application, the Commission had to give notice of that fact. If a response was filed by the applicant, it had to be within 30 days after receipt of such notice by the applicant. Commissioner Moline said he was trying to reconcile that the receipt card was signed by someone else. Counsel Widger said that general statutory and case law allowed receipt by anyone over 14 years of age who was mentally competent. The only way to know when the timeline started was by the green receipt card. Courts accepted that date all the time. People could request to file out of time, but the date of delivery was the day the clock started. Courts had consistently construed that date as the date of delivery.

Chairperson Gale asked if the petition for review was mailed from Nebraska or Florida. Counsel Widger said it was messengered from Omaha to Lincoln.

Commissioner Strand asked if the Commission had a history of granting extensions. Counsel Widger said there was no history of extensions, which was why it was brought to the Commission.

Chairperson Gale said that, as an attorney, he agreed with Counsel Widger that it would be a slippery slope of determining when an individual received a letter. Using the date of receipt had a lot of merit. On other hand, as an agency, the Commission had the authority to interpret the rule, and to grant leave to accept the petition late. Chairperson Gale thought accepting the petition one day late was acceptable under general rules of equity, but he would not want to start interpreting receipt as the date the individual actually received it, rather than the date on the card.

Commissioner Poskochil asked about certified mail procedures. Counsel Widger said the rejection was sent by certified mail, return receipt requested. Counsel Widger said that registered mail could only be signed for by the addressee, but that certified mail was provided for in the statute. Commissioner Poskochil asked about the card. Counsel Widger said the green card was attached to the letter by the sender, and after it was signed by the recipient, the recipient kept the letter, and the Post Office sent the green card back to the sender.

Chairperson Gale said that Commissioner Poskochil raised a good point. Chairperson Gale asserted that people usually had to pick up certified mail, and that the affidavit alleged that the certified mail was brought for delivery, and the mail carrier found someone to sign for it. Chairperson Gale said that was different than what he would consider normal practice.

Commissioner Poskochil asked what would happen if an individual was on a 30-day vacation. Counsel Widger said that if the letter was not signed for, it would come back to the Commission. Commissioner Poskochil said that apparently the person who signed for it had authority to accept mail. Commissioner Poskochil asked how the Commission would know when the addressee got it. Counsel Widger said the Commission had to go by the date of delivery on the green card. Commissioner Poskochil thought the Commission might want to use a different kind of service, where the addressee had to sign for it, so the Commission would know when they received it.

Chairperson Gale said there was a presumption of agency from putting a notice in the mailbox. Mr. Cutler had a history of repeatedly refusing to pick up certified mail in the past. Chairperson Gale asked if the doorman went to the Post Office, or somehow managed to sign for it on the spot. Counsel Boecker said the postal person delivered it to the building, and Mr. Olivos signed for it there. Counsel Boecker clarified that was his assumption, and that he did not know for sure, because he was not there. Counsel Boecker said he wanted to address the refusal of mail issue, which was one of the justifications for denial of the renewal application. Counsel Boecker said that Mr. Cutler denied that he refused to pick up certified mail, and that it was tendered to him at his old address. Counsel Widger noted that was the only address Mr. Cutler had given to the Commission.

Chairperson Gale thanked counsel for their arguments, and declared that part of the hearing closed. Chairperson Gale asked if the Commission wanted to offer a motion.

A motion was made by Moline and seconded by Strand to grant Mr. Cutler leave to file late, for missing the deadline by one day, and to allow a hearing on his petition for review.

Commissioner Moline said he was trying to just look at the issue of filing one day late, and decide what was the fair thing to do. Based on the principle of equity, he wanted to give Mr. Cutler a chance to present his case. Commissioner Moline said that Mr. Cutler was obviously serious, since he hired an attorney.

Commissioner Johnson said that, even if Mr. Cutler received the refusal on the 30th, he still had 27 days to get in his response. Commissioner Johnson thought that was plenty of time to get it in, and questioned why he waited until the last day. Commissioner Wiebusch agreed that Mr. Cutler had plenty of time, and that the date the receipt card was signed was the date the Commission had to go by. Commissioner Wiebusch said she would vote against the motion.

Commissioner Moline said that, at least with attorneys in Lincoln, their calendars were very busy. Attorneys tended to turn things in just before the deadline because they were busy. Commissioner Moline said it appeared counsel was working off of the date of receipt.

Counsel Boecker said he was working off a receipt date of the 30th, not the 26^th, because of a different assumption of service. Chairperson Gale noted that the discussion was closed to counsel input.

Commissioner Shepard said he agreed with Commissioner Johnson and Commissioner Wiebusch, and questioned how the Commission could know Mr. Cutler received the notice on the 30th, rather than the 27th or 28th. Commissioner Shepard said he might have received it on the 26th, and agreed that he had plenty of time to do what he needed to do.

Commissioner Poskochil asked if the Commission wanted to consider a better method of delivery, with a better way to know when the document was received by the addressee. Commissioner Strand agreed with Commissioner Poskochil that even with the Nebraska statute on certified mail, he would not want to be held to the date on the receipt card if his 14-year-old signed for a letter and did not give it to him. Commissioner Strand preferred to give some latitude, because it was a pretty sloppy system otherwise.

A vote was taken on the pending motion. Motion carried with Moline, Poskochil, Strand, and Gale voting aye, and with Johnson, Shepard, and Wiebusch voting nay.

Deputy Director Hoffman presented an addendum to the contract with Applied Management Professionals, Inc. (AMP). A copy of said addendum is attached to and made a part of these Minutes.

Deputy Director Hoffman noted that the addendum would extend the term of the contract through June 30, 2005, and raise the fee to $67.00 per examination administered between July 1, 2003, and June 30, 2005.

Deputy Director Hoffman reviewed the Request for Proposal (RFP) process followed in awarding the original contract to AMP, and the contract renewal options. Director Tyrrell noted that the DAS Materiel Division and the State Risk Manager encouraged the Commission to do multiple-term contracts with renewal options, in the interests of more consistency and better price. Commissioner Poskochil noted that RFPs required a great deal of staff time and analysis. Director Tyrrell reviewed the timeline required to process RFPs for examinations.

After discussion, a motion was made by Johnson and seconded by Wiebusch to enter into the contract addendum with AMP. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Director Tyrrell asked if the Commission wanted to increase the applicant examination fee to cover the additional cost, or whether they wanted to absorb the increase without increasing the fee. The consensus of the Commission was to leave the fee at $115.00 per examination, unless budget circumstances changed.

Director Tyrrell presented an exhibit regarding adding specialized registrations to the database in the office and on-line. A copy of said exhibit is attached to and made a part of these Minutes.

Director Tyrrell noted that the price for the system upgrade would be $6,250.00, which was negotiated with staff, and which was available in the budget. Director Tyrrell recommended that the Commission make the change.

After discussion, a motion was made by Moline and seconded by Strand to approve the expenditure necessary to include specialized registrations to the database. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

After discussion, a motion was made by Wiebusch and seconded by Moline to have the draft introduced in the Legislature as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Director Tyrrell reported that Sen. Byars would introduce the legislation to require criminal history record checks for applicants.

Director Tyrrell noted that the process took much longer than initially thought, and that the Commission received final language approval from the FBI on December 4. Fingerprint cards would be mailed to each applicant, which would then be submitted to the Nebraska State Patrol regardless of resident jurisdiction. Applicants from outside Nebraska would not be required to have a criminal history check in their resident jurisdiction, but they would have to submit fingerprint cards to the Nebraska State Patrol.

Commissioner Moline asked if the Commission wanted to require a background check on licensees every 2-3 years, and maybe do checks on 1/3 of the licensees each year. Counsel Widger noted that renewals were required each year, which contained an affidavit regarding criminal convictions and lawsuits. Counsel Widger observed that the real estate industry was pretty small in Nebraska, and that staff heard about things that happened with licensees even if they were not reported on renewal forms.

Chairperson Gale noted that a lot of grandfathering went into new laws, and that would be very comfortable for legislators. He preferred to not require background checks for renewing licensees, unless that was the only choice at the time to get the legislation passed.

Commissioner Strand was briefly excused from the meeting at 12:06 p.m., and rejoined the meeting at 12:08 p.m.

Commissioner Johnson noted that Iowa had a two-year license renewal term, and asked if the Commission had considered that option. Director Tyrrell said that the Commission looked at it when the continuing education requirement began. Errors and Omissions insurance had caused, to some degree, a move away from multiple-year insurance policies. Most states go to a multiple-year term if their numbers are high, but that was not the case in Nebraska.

Commissioner Poskochil asked who would do the fingerprinting. Director Tyrrell said there was a place on the form for the signature of the law enforcement agent who fingerprinted the applicant.

Director Tyrrell noted that clarifying language was added at the top of page 3 regarding broker and salesperson examinations.

A motion was made by Moline and seconded by Strand to have the draft introduced in the Legislature as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Commissioner Wiebusch asked if there were 50 ASHI members, or 50 total inspectors statewide. Commissioner Johnson said he thought it was probably ASHI members. Director Tyrrell said he was not sure.

Chairperson Gale said he did not want a home inspection to be a false reassurance to a buyer if the inspector was not qualified to examine a house, and noted that not all home inspectors were equally qualified. A lot of buyers relied on the home inspection report, and did not read the terms. Chairperson Gale did not know if they needed to be regulated, but felt that there would be more questions raised on this.

Commissioner Poskochil said that home inspectors needed to sit down with the buyer and disclose what the inspector does and does not do, such as that they do not look inside a wall or crawl space, and clarify that the inspection was based on visual inspection only. Consumers needed to understand what they were paying for. Commissioner Poskochil thought the situation was getting to be a big problem.

Commissioner Moline was briefly excused from the meeting at 12:23 p.m., and rejoined the meeting at 12:24 p.m.

Chairperson Gale stated that regulation brought standardization to the process, with similar forms and techniques. Commissioner Poskochil noted that some home inspectors did not want to use the same forms because, according to them, it hindered competition and the provision of better service.

Chairperson Gale said this was a philosophical question, whether to get ahead of the curve or try to resolve a crisis after it happened.

Commissioner Shepard asked what percentage of buyers used home inspectors. Commissioner Poskochil said that, on the offers he wrote, it was probably 95%. Commissioner Johnson said his were probably 80-90%. Commissioner Poskochil said that, for the cost involved, there could be savings if the inspections were done well.

Chairperson Gale was briefly excused from the meeting at 12:27 p.m., and rejoined the meeting at 12:29 p.m.

It was the consensus of the Commission to include a cautionary bulletin in the next Commission Comment regarding the buyer agent duty with regard to inspectors. Chairperson Gale said he would continue a dialogue with the industry, and report back to the Commission.

No action was necessary on this report.

Director Tyrrell presented the Errors and Omissions Insurance Loss Report - Third Quarter 2002 from Williams Underwriting Group, Inc. (WUG). A copy of said report is attached to and made a part of these Minutes.

No action was necessary on this report.

Director Tyrrell presented the Trust Account Examination Evaluation - Third Quarter 2002 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. Director Tyrrell noted that he encouraged brokers to call if questions arose during exit interviews, so that clarification was made immediately for both the broker and the examiner.

No action was necessary on this report.

January 29-30, 2003 - Staybridge Suites, Lincoln

March 5-6, 2003 - Staybridge Suites, Lincoln

April 16-17, 2003 - Staybridge Suites, Lincoln

May 28-29, 2003 - Staybridge Suites, Lincoln

At 10:18 a.m. on December 11, Chairperson Gale declared a brief recess, and reconvened the meeting at 10:35 a.m.

At 11:34 a.m. on December 11, Chairperson Gale declared a brief recess, and reconvened the meeting at 11:40 a.m.

Commissioner Strand was briefly excused from the meeting at 12:06 p.m., and rejoined the meeting at 12:08 p.m.

Commissioner Moline was briefly excused from the meeting at 12:23 p.m., and rejoined the meeting at 12:24 p.m.

Chairperson Gale was briefly excused from the meeting at 12:27 p.m., and rejoined the meeting at 12:29 p.m.

At 12:43 p.m. on December 11, there being no further business to come before the Commission, a motion was made by Wiebusch and seconded by Johnson that the meeting adjourn. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing Minutes of the December 11, 2002, meeting of the Nebraska Real Estate Commission were available for inspection on December 24, 2002, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.

Respectfully submitted,
Les Tyrrell
Director

Harding Collis, NP Dodge, Omaha

Mark Leaders, CBSHOME, Omaha

Debra Carlson, Boyer Young Real Estate, Papillion

Steffi Swanson, Deb Carlson, Bellevue