Chairperson Gale convened a Meeting of the Nebraska Real Estate Commission at 9:04 a.m. on September 25, 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 Informal Special Appearances, the motion to dismiss, and discussion of the proposed statutory language to require criminal background checks and the buyer advisory information from Arizona.

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 13 had been continued 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 August 21, 2002, were considered.

After review, a motion was made by Wiebusch and seconded by Johnson 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 Report for August. A copy of said Report is attached to and made a part of these Minutes.

Director Tyrrell noted the following: in Receipts, Category 7532, Examination Fees, and Category 7534, Application Fees, are running above normal, because approximately 100 salesperson examinations are being administered each month. In Expenditures, Category 4414, Education Services, was also up for first three months; Category 4211, Postage Expense, was a little over because of the trust account examination-by-mail program; Category 4212, Communication Expense, was up because it contained bills for two months; and Category 4741, Personal Vehicle Mileage, was up because it included the Rapid City trip.

The Cash Fund Balance as of August 31, 2002, was $504,784.97, which compared to a Cash Fund Balance of $380,300.72 on August 31, 2001.

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

There were no Specialized Registrations to report.

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 Strand 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 for ratification the Examination Report for August, a copy of which is attached to and made a part of these Minutes.

After review, a motion was made by Wiebusch and seconded by Moline to ratify the August Report 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 Moline 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:

Prior to discussion of this matter, Commissioner Johnson recused himself, thereby nullifying any potential conflict of interest. Deputy Director Mayrose presented a Stipulation and Consent Order in the matter of Complaint #2002-012, Phillip T. Jennings and Sandra L. Jennings vs. Victor J. Pelster. A copy of said Order is attached to and made a part of these Minutes. Mr. Pelster was not present.

After discussion, a motion was made by Moline and seconded by Wiebusch to enter into the Order as presented. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, having recused himself, thereby nullifying any potential conflict of interest.

The Hearing in Complaint #2002-009, Cynthia Machacek-Luciano & James C Luciano vs. Theodore (Ted) W. Vrana, was cancelled because Mr. Vrana surrendered his license.

The Hearing in Complaint #2002-012, Phillip T. & Sandra L. Jennings vs. Victor J. Pelster, was continued pending presentation of a stipulation and consent order.

Mr. Paulsen said he once had an active license and violated the rules, and that was why he was here. He said he admitted responsibility, it was clearly his mistake despite more than adequate notice from the Commission office, and he asked the Commission to allow him to reapply for a license and retake the test. In his mind at the time, it was a minor infraction considering his job duties. He had told his broker he would take care of it, but he did not purchase Errors and Omissions insurance until March.

Chairperson Gale said that he would abstain from voting, because he knew Mr. Paulsen and his family, and felt it would be inappropriate for him to vote. Chairperson Gale passed the gavel to Commissioner Wiebusch at 10:23 a.m.

Mr. Paulsen asked when would be an appropriate time to reapply. Director Tyrrell noted that this action was not a revocation, so it was not permanent. Director Tyrrell suggested that after Mr. Paulsen had resolved the financial situation and had shown responsibility and success, the Commission might reconsider, perhaps in six months or a year. Director Tyrrell noted that the Commission would be seeking some assurance that this situation would never happen again.

Commissioner Wiebusch passed the gavel back to Chairperson Gale at 10:28 a.m.

Mr. Williams said he had worked in construction, and knew real estate from that side. He said that a mistake he made when young should not be a handicap on bettering himself or moving forward. He did not mean for it to be overlooked, but understood and forgiven. He had paid his debt to society, and paid it every day continuously. While in prison, he used his time wisely to better himself and reform himself by taking courses. He obtained Microsoft Windows training while on pretrial release, and had been attending the Nebraska College of Business at the time of his arrest. He continued it and graduated two weeks before his incarceration.

Commissioner Moline asked if Mr. Williams was still on probation. Mr. Williams said yes, and that it would end in 2004. Chairperson Gale noted that it was a concern that Mr. Williams was still in the midst of his sentence, and that it was easier to process if the sentence was completed. Chairperson Gale asked Mr. Williams why he should be allowed to sit now, instead of waiting until his sentence was completed. Mr. Williams said his legal status should not be a hindrance, and that it was no problem to him, because he was not in trouble and was not breaking the law.

Mr. Brown said he wanted to make sure the Commission understood his situation, and that everything was out in the open. He was very honored that he was allowed to explain his unique situation, and very grateful. Mr. Brown was originally from Papillion, and now lives in Omaha. He is a happy newlywed with a baby boy. His life has changed in the past 4-5 months. Mr. Brown played football for UNL from 1994 to 1998, completed his undergraduate degree, and obtained a masters degree in Business Administration. He still does football camps for kids and other charity work. Mr. Brown wanted to do real estate because he entered a business right after college, and was hoping to rebound from that and start something that was in the back of his mind even in college. He is definitely a people person, and could not stand to sit in front of a computer all day, because he needs to be out meeting people.

Commissioner Strand said that, from the Lincoln newspapers, it appeared that Mr. Brown had a contrary approach to law enforcement and what they told him should not be going on. Mr. Brown seemed to have an in-your-face attitude to that kind of authority. Commissioner Strand was a little concerned that, if testing the limits of authority was what Mr. Brown was all about, should he have a real estate license. Mr. Brown said he wanted to be in the present now, not in the past, and not with the bar. His name was on the liquor license, so everything that happened with the bar was reflected onto him. If the managers got tickets when he was out of town, he would also get a ticket as the owner. They were approached by promoters to put on Ultimate Fight Nights, which was done in bars across the state. They were doing it at the Royal Grove in Lincoln, so they decided to do it too. The Lincoln Police Department (LPD) said they would need a license, but the head of the state athletic commission said they did not need a license for it, because it was not boxing or wrestling. They told the police that, who said go ahead, but you will receive a ticket for boxing without a license. The promoters also knew there was no license needed. The day he went to court, the tickets for boxing without a license were dropped, but every person who had received one (14 people, including judges and ring girls) was then charged with third degree assault. Mr. Brown did not participate in the fights. He was in the DJ booth announcing the fights and drink specials. He was fined $100 for each weekend. He did not fight to get it off his record, because he did not have the finances and he knew the bar was going out of business. He did not know that it would go on his personal record. The owners thought they were within their legal rights, and had gotten advice from the state athletic commissioner, who testified that they had that conversation. Mr. Brown said he could not go back and change how things were reported. He wanted to make the Commission understand, to put it completely behind him, to learn from his mistakes, and to earn a living for his family. Mr. Brown noted that other bars in Nebraska are still doing Ultimate Fighting. He was told that the Omaha Police Department did not worry about it, because it never caused problems. He was told in court it was a state ordinance, but he questioned how it was allowed across the state in other locations. He pled guilty because it was a minimal fine, and he thought it would be on the business record, not his personal record. Mr. Brown said he did not know what all was on his record until he received a copy from Director Tyrrell, and that was why he did not put it on his application .

Commissioner Strand asked if all the convictions were misdemeanors. Mr. Brown said yes, and that was why he did not appeal the assault conviction.

Chairperson Gale said he had also read the paper, as Commissioner Strand had. Chairperson Gale asked if Mr. Brown had taken any anger management classes. Mr. Brown said he had to get a psychological evaluation for alcohol and anger management. The counseling was not really an Alcoholics Anonymous class, because they talked about everything in there. He really got along with everyone there, and his counselor was really good with confidentiality. At the time, everything was being publicized, and Mr. Brown did not want to drag his wife and child into that.

Chairperson Gale asked for clarification that the third degree assault conviction was for ultimate fighting. Mr. Brown said he was just the DJ during the fights. The first weekend, the fighting was done by professionals for a demonstration, not a public fight. The next week there were 3-4 fights. Mr. Brown never got into the ring. He was charged because he was the owner of the establishment. He knew he would get a ticket for boxing without a license. He thought they had expert advice that it was OK. There was never a mention of third degree assault charges.

Commissioner Poskochil asked about the counseling sessions. Mr. Brown said he attended meetings with his counselor, who was located in Lincoln. He attended when he visited his parents, and his set time was every Tuesday at noon. If he could not make it, his counselor let him reschedule when it was convenient. His probation officer said that was only thing he needed to finish.

Commissioner Poskochil asked if the building lease and all business debts were paid. Mr. Brown said he had two outstanding debts. The equipment was auctioned off, and he did not know the dollar amount it brought, so he did not know how much was still owed. The building lease was under the corporation name, as was the equipment.

Commissioner Poskochil asked if Mr. Brown was the designated manager for the business. Mr. Brown said he was the manager, but four other managers were also involved. A manager always had to be at the bar, and always was. The owner did not need to be there at all times. Commissioner Poskochil asked if Mr. Brown was there when the violations occurred. Mr. Brown said he was there for some of them, but not all. He took full responsibility for the violations, pled guilty, and paid the fines. There were 500-600 people in the building at a time, and if one underage person snuck a beer, he had to pay the fine and take responsibility, because it was done under his license. Commissioner Poskochil asked about the after hours violations. Mr. Brown said that alcohol cannot be consumed in a bar after 1 a.m. The one incident was when he was drinking in the bar at 1:15 a.m. The other one was an employee who was having a beer while cleaning up.

Commissioner Poskochil said the question was whether Mr. Brown could follow rules, because the Commission had rules. Commissioner Poskochil asked about the mandatory class. Mr. Brown said that, once again, the information was a little misleading. A special class was set up for him and his 4 managers. Normally the classes were for 20 people and went until 4 p.m., but they got done at 2 because they had fewer people, and were let go. They were later told that they did not complete the class, and that they needed to attend or would get fined. Mr. Brown maintained that they did attend the class. Commissioner Poskochil noted that the Liquor Commission investigator said the managers attended, but not Mr. Brown. Mr. Brown said he attended, with 4 other managers.

Chairperson Gale noted that a lot of establishments did not have these troubles. Chairperson Gale said he understood the explanations on the individual items, but asked what was the overall problem. Mr. Brown said the media picking up on the problems was a huge detriment to them. Compared to other establishments, their number of violations were not out of line. Also, there was a lack of expertise in the management team. He was fresh out of college, and he had the money but not the expertise to run a liquor establishment. He ended up firing three of the initial four managers because of theft and fraud. Mr. Brown was very glad he was out of the business, and he did not want it to affect any future plans he had for his family. The situation had been very, very embarrassing for him and his family. He did not know if the media monster would go away. Mr. Brown hoped to learn from his experiences and get on with his life.

Commissioner Johnson said that real estate was a great business, but it was very hard to get started. Commissioner Johnson thought that Mr. Brown could have a terrific job in the business field, with his MBA, and asked why Mr. Brown wanted to do real estate. Mr. Brown said he took classes on real estate in college, and that he liked the thought of working harder for better rewards. The entrepreneurial nature and freedom appealed to him. He wanted time to spend with his young son, and thought real estate would provide flexibility. He had interviewed with a lot of different companies, which fueled the fire to get this done. Commissioner Johnson said he hoped the brokers did not overstate it for him. Mr. Brown said he would also have a broker looking over his shoulder, making sure he was abiding by all the rules.

Commissioner Shepard asked if Mr. Brown had provided a personal guarantee on Studio 14's debts. Mr. Brown said that, as CEO, he was the personal guarantor. The amount received from the auction would reduce the outstanding debt. He did not know how much was still owed, but he had a full intention of repaying the debt.

Commissioner Poskochil asked for clarification that Mr. Brown was still on probation. Mr. Brown said yes, for the DUI. Commissioner Poskochil asked how many sessions he had attended. Mr. Brown said the 10-week session was mandatory, then the counselor decided whether he needed 10 or 20 aftercare sessions. She recommended 10, and he had done 7 or 8 of those.

A motion was made by Johnson and seconded by Wiebusch that Mr. Brown reappear at the October meeting, so the Commission could consider whether his probation was completed.

Commissioner Poskochil asked what was the court date. Mr. Brown said it was Oct. 3, but he might be able to get it done sooner, because he could come in whenever he wanted.

Director Tyrrell suggested that the motion state that Mr. Brown would reappear after he completed probation, with proper documentation. The mover and the second both agreed to the change. Motion carried with Johnson, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Moline voting nay.

Director Tyrrell noted that the Motion to Dismiss had been continued.

Director Tyrrell presented an Exhibit which specified proposed statutory language to require criminal background checks. A copy of said Exhibit is attached to and made a part of these Minutes.

Director Tyrrell noted that the proposed language had been modified since the Exhibits were mailed to the Commissioners. Director Tyrrell reviewed the changes to the proposed language.

After discussion, a motion was made by Wiebusch and seconded by Moline to use the Exhibit language in requesting a statutory change, with any additional changes indicated by the FBI. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye.

Deputy Director Hoffman presented Exhibits which consisted of buyer advisory information from Arizona, the Consumer Guide to Buying and Selling Homes, and Title 302, Chapter 1. A copy of said Exhibits are attached to and made a part of these Minutes.

Chairperson Gale asked if lead contamination was discussed much. Deputy Director Hoffman noted that real estate schools in Omaha were interested in providing classes, and there were articles on it in the Commission Comment newsletter. Director Tyrrell noted that the Omaha Area Board of Realtors had added a specific reference to the Superfund area to the Seller Property Condition Disclosure Statement. Commissioner Johnson noted that some companies addressed it differently, also.

Commissioner Strand asked for the publication date on the Consumer Guide to Buying and Selling Homes. Deputy Director Hoffman said it was updated in 1995, and noted that it was about to be updated with the recent statute and rule changes. Reprinting was held until the Commission could have this discussion. Commissioner Wiebusch asked how long it had been available. Director Tyrrell noted that the Commission had it drafted in the mid-80s. Commissioner Wiebusch asked if the Commission office had many requests for it. Deputy Director Hoffman said yes, some licensees provided it to clients and customers. It was sometimes distributed at county fair booths, and excerpts were often used. It was also included in complaint packets mailed to the public. It had been publicized in the Commission Comment newsletter, and staff could promote it more.

Commissioner Wiebusch asked Mr. Neilan how many residential closings were reported to the Association last year. Mr. Neilan said 9722 were reported through the local MLS. Commissioner Moline noted that if it was provided to every buyer and seller, there would be 40,000 distributed each year. Director Tyrrell said current usage was nothing near that.

Commissioner Poskochil noted that the Consumer Guide to Buying and Selling Homes addressed more issues more specifically.

Chairperson Gale asked if staff was in the process of revising the brochure to reprint, and was waiting to see if the Commission wanted to make additions. Deputy Director Hoffman said that was correct, and noted that the office was very low on supplies, so staff requested that the Commission address it soon. Staff knew the rule and statute changes would happen this fall, so the supply was allowed to run low. Deputy Director Hoffman proposed that staff could put a reference to our website in the guide, and have links on our website to other sources, since it would be easier to keep current.

It was the consensus of the Commission that suggestions should be forwarded to Director Tyrrell. Staff will bring the suggested changes to Consumer Guide to Buying and Selling Homes to the October meeting for the Commission to consider. After the guide is revised and reprinted, staff will publicize its availability.

A motion was made by Moline and seconded by Strand to adopt the objectives as presented.

Chairperson Gale said that the objectives struck him as bread-and-butter items. They were not policy objectives, but housekeeping objectives. He was trying to look at broader, longer-term objectives, and think out of the box. Chairperson Gale noted that there were many aspects of real estate transactions that impacted other industries, such as title insurance, home inspections, etc. Chairperson Gale said he was truly and profoundly concerned about home inspectors, on whose expertise consumers rely, but who are not licensed, are not liable except for the amount paid for the inspection, and who are not required to carry Errors and Omissions insurance. Chairperson Gale also wondered if the Commission wanted to make a distinction between commercial vs. residential vs. management brokers, and noted that the Appraiser Board had to go through that.

Director Tyrrell suggested that the Commission would want to be very careful, as one government agency, not to interfere in the jurisdiction of another government agency. Chairperson Gale noted that his office was revising notary law, and the Commission could support that. Director Tyrrell agreed that would be fine, but if changes in another agency were needed, the suggestion might be more appropriate coming from the affected industry.

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

Director Tyrrell presented an Exhibit which consisted of a letter from Williams Underwriting Group, Inc. regarding the Errors and Omissions insurance contract renewal. A copy of said Exhibit is attached to and made a part of these Minutes.

Director Tyrrell noted that the contract renewal offered the same policy provisions, but the 2003 premium was $88.00. The insurance carrier would be Fire and Casualty Insurance Company of Connecticut, a member company of Royal and Sun Alliance Group.

After discussion, a motion was made by Moline and seconded by Wiebusch to renew the Errors and Omissions insurance contract with Williams Underwriting Group, Inc.

Commissioner Moline said he had some concerns. Every time the Commission changed carriers, the insured had to deal with new counsel. That counsel was hired to defend the insurance company, and usually had no clue about real estate law. Brokers wanted attorneys with real estate backgrounds to defend their people. He had tried to tell Williams Underwriting Group, Inc. about his concerns, but had been unable to talk to the right person there. Director Tyrrell said he would have the right person call him.

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

Director Tyrrell presented an Exhibit which showed the Errors and Omissions insurance policy losses through 6-30-02.

Director Tyrrell noted a few minor changes to the report. The program was running as anticipated. The rate was due entirely to the quality of the licensee population, because they were not getting into major claims.

No action was necessary on this Report.

Director Tyrrell reported that the rule changes approved in January and modified at the May Meeting were approved at all levels of review, and were effective September 3, 2002.

No action was necessary on this Report.

Director Tyrrell reported that the rule changes approved in June were approved at all levels of review, and were effective September 16, 2002. The changes will be operative January 1, 2003.

No action was necessary on this Report.

Director Tyrrell presented the Trust Account Examination Evaluation - Second 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.

No action was necessary on this Report.

Future Meeting Dates
October 23-25, 2002 - Staybridge Suites, Lincoln
December 11-12, 2002 - Staybridge Suites, Lincoln
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 10:23 a.m. on September 25, Chairperson Gale passed the gavel to Acting Chairperson Wiebusch. At 10:28 a.m., Acting Chairperson Wiebusch passed the gavel back to Chairperson Gale.

At 10:28 a.m. on September 25, Chairperson Gale declared a brief recess, and reconvened the Meeting at 10:38 a.m.

At 12:11 p.m. on September 25, Chairperson Gale declared a brief recess, and reconvened the Meeting at 12:24 p.m.

At 1:36 p.m. on September 25, there being no further business to come before the Commission, a motion was made by Wiebusch and seconded by Moline 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 September 25, 2002, Meeting of the Nebraska Real Estate Commission were available for inspection on October 9, 2002, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.

Respectfully submitted,
Les Tyrrell
Director