Chairperson Gale convened a meeting of the Nebraska Real Estate Commission at 9:07 a.m. on January 29, 2003, 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. John Clark, Trust Account Examiner, was present for the discussion of the Trust Account Program. Ron Pierson, Trust Account Examiner, was present for the hearing. Abbie Widger, Special Assistant Attorney General and Counsel to the Commission, was present for the stipulation and consent orders and the hearing.

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.

Chairperson Gale pointed out to those in attendance that a Public Copy of the materials being used during the meeting was available to the public on the counsel table in the meeting room, and that the procedures followed were in accordance with the Open Meetings Law. Chairperson Gale asked that guests sign the guest list.

Director Tyrrell noted that information presented under Agenda Item 16 had been updated since the Tentative Agenda was mailed to the Commissioners.

After review of the Final Agenda, a motion was made by Wiebusch and seconded by Moline 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 December 11, 2002, were considered.

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

Director Tyrrell presented the Receipts and Expenditures Report for December. A copy of said report is attached to and made a part of these minutes.

The Cash Fund Balance as of December 31, 2002, was $891,916.77, which compared to a Cash Fund Balance of $750,358.50 on December 31, 2001.

Commissioner Poskochil asked why there was more activity than usual in Category 7532, Examination Fees. Director Tyrrell said there were more people taking the examination. Some of those were because the waiting period had been eliminated, but most of them were because of an increase in applications.

Commissioner Poskochil asked why there was an increase in health insurance expenses. Director Tyrrell said that staff had changed, and their insurance coverage elections affected the amount paid. Due to contract negotiation, the Commission will have a slight decrease in cost this year.

Commissioner Poskochil asked if the increase in year-to-date expense in Category 4215, Publication and Printing, when compared to last year, was due to printing the revised Seller Property Condition Disclosure Statement and the agency disclosure brochures. Director Tyrrell said yes, and it also reflected printing the License Law Manual for applicants, and updates to the License Law Manual and Trust Account Manual.

Commissioner Poskochil asked why Category 4711, Board and Lodging, had approximately half the expense from a year ago. Director Tyrrell said it depended on how many people traveled to ARELLO meetings, and where those meetings were held.

After discussion, a motion was made by Moline and seconded by Wiebusch to file the December Receipts and Expenditures Report 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 January 28, 2003. A copy of said report is attached to and made a part of these minutes.

Director Tyrrell noted that the percentage of renewed licenses was up slightly.

No action was necessary on this report.

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.

The Commissioners understood, and no further action was necessary.

Deputy Director Hoffman presented for ratification the December Examination 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 Wiebusch to ratify the December Examination 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 Wiebusch and seconded by Moline 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:

Item A Complaint #2002-034 - Roy & Billie Johnson Bazan vs. Janice Eve Sauer

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Poskochil and seconded by Wiebusch that the complaint be dismissed without prejudice. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

Item B Complaint #2002-036 - Harvey & Roxanne Dinsmore vs. Mark Stephen Wacker & Randy David Bauer

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Poskochil and seconded by Moline that the complaint be dismissed without prejudice. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

Item C Complaint #2002-037 - Richard & Debra McClung & Twyla McClung vs. Christi Kay Evans & Melanie Dawn Goodenberger

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Moline and seconded by Shepard that the complaint be dismissed without prejudice, that Director Tyrrell send a letter of admonishment regarding timely completion of dual agency forms, and that another article be placed in the Commission Comment regarding dual agency. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

Item D Complaint #2002-038 - Michael Riedmann vs. Lawrence M. Shepard II

Prior to discussion of this matter, Commissioners Johnson and Shepard recused themselves, thereby nullifying any potential conflict of interest. Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Moline and seconded by Poskochil that the complaint be dismissed without prejudice. Motion carried with Moline, Poskochil, Wiebusch, and Gale voting aye, with Johnson and Shepard not participating or voting, having recused themselves, thereby nullifying any potential conflict of interest, and with Strand not participating or voting, being temporarily absent and excused.

Item E Complaint #2002-048 - Ron Hasley vs. Gary A. Barnard

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Poskochil and seconded by Moline that the complaint be dismissed without prejudice. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

Item F Investigative Matter

Counsel Widger presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Moline and seconded by Poskochil that the Commission file a complaint on its own motion, on the potential violations contained in the report and the potential violation of 81-885.24(24). Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

Deputy Director Mayrose presented a stipulation and consent order in the matter of Complaint #2002-033, Earl and LeeAnn Stueve vs. Carolyn Van Horne. A copy of said order is attached to and made a part of these minutes. Ms. Van Horne was not present.

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.

Counsel Widger presented a stipulation and consent order in the matter of Complaint #2002-015, Janelle A. Zeleny vs. Steven Lee Scherich. A copy of said order is attached to and made a part of these minutes. Mr. Scherich was present with his attorney, Douglas Ruge.

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

After opening statements, Counsel Widger presented a brief and 26 exhibits, all of which were offered and received by Chairperson Gale. Counsel Widger called three witnesses: Kristine Jones from US Bank, Director Tyrrell, and Deputy Director Mayrose.

At 12:00 p.m., Chairperson Gale declared a brief recess, and reconvened the meeting and hearing at 12:13 p.m.

At 1:21 p.m., Chairperson Gale declared a brief recess, and reconvened the meeting at 1:32 p.m. to address Item 10b.

At 1:39 p.m., Chairperson Gale reconvened the hearing.

Counsel Boecker presented 8 exhibits, which were offered and received by Chairperson Gale. Counsel Boecker did not call any witnesses.

After closing arguments had been presented, Chairperson Gale declared the hearing concluded.

At 2:13 p.m., Chairperson Gale declared a brief recess, and reconvened the meeting and hearing at 2:25 p.m.

Commissioner Strand was excused at 2:25 p.m. for the remainder of the meeting.

Commissioner Moline said his decision was not based on whether the trust account was interest-bearing in Iowa. He was voting for the motion, because Mr. Cutler had a lot of opportunities to get things done. He was held responsible for his employee not making the account interest-free, and he did not follow up as he should have.

Commissioner Johnson noted that Mr. Cutler had time to get his appeal in, and did not do it timely. The Commission allowed him latitude on that, and got to this hearing, to find out other rules were not followed either.

Commissioner Wiebusch noted that notifying the Commission of the current address was the responsibility of the licensee. Mr. Cutler knew the rules, and should have followed them.

Commissioner Moline called the question.

Chairperson Gale said there were more comments he would like to make. Counsel Boecker had done an admirable job, but this was a profession, and the Commission expected high standards of conduct, responsibility, and integrity. Mr. Cutler provided excuse after excuse after excuse why someone else did not take care of him, including his own employees, the bank employees, Commission staff who did not call him, and the doorman who accepted documents on his behalf. Chairperson Gale noted that a stranger would not accept certified mail with no authority to do so, but Mr. Cutler said he was not responsible for receipt. Mr. Cutler exhibited totally unprofessional behavior, was unwilling to accept the consequences of his actions, and showed a pattern of behavior of ignoring the rules and regulations of the Commission. Mr. Cutler had been a licensee for years and knew the rules, and knew he had to notify the Commission of his move to Florida.

Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

Chairperson Gale notified the petitioner that the costs incurred for the court reporter and any witness fees would be billed to the petitioner, as provided for in 305 NAC Chapter 4, and that the petitioner would have thirty days from the date of the order to reimburse the Commission for said costs.

Chairperson Gale announced that all exhibits related to this hearing would be retained in the Commission office.

The hearing was adjourned at 2:44 p.m.

The hearing scheduled for January 30, at 9:30 a.m., in the matter of Complaint #2002-015,

Janelle A. Zeleny vs. Steven Lee Scherich, was continued pending presentation of a stipulation and consent order.

There were no Informal Special Appearances scheduled for this meeting.

Deputy Director Hoffman presented an exhibit regarding the costs of sending Commissioners and staff to regularly-attended ARELLO meetings in 2003. A copy of said exhibit is attached to and made a part of these minutes.

After discussion, a motion was made by Moline and seconded by Wiebusch to approve the expenditures as presented for applicable Commissioners and staff to attend the meetings. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

Deputy Director Mayrose presented an exhibit which contained recommendations for the Trust Account Examination Program. A copy of said exhibit is attached to and made a part of these minutes.

Deputy Director Mayrose reviewed the trust account examination process, and what documents were reviewed during the examination. Trust account examiner John Clark noted that the recommendations were intended to shorten the examination cycle, so that each trust account was examined each year, and to emphasize broker education.

Discussion ensued regarding the level of supervision provided, and the value of the deficiency reports and percentages regarding paperwork currently provided to the broker vs. the more frequent review of the money handled. Director Tyrrell said that, over the years, the Commission had added the paperwork reviews by requiring brochures, notifications, and closing statements. Under the proposal, the examiners would continue the current level of review on a smaller number of files.

Chairperson Gale said that the threat of a complete audit created compliance. The current trend was toward more review, rather than less. If the broker did not review each file, standards would slip. Chairperson Gale was afraid the Commission would lose a lot to gain a little time.

Commissioner Moline disagreed. The examination would produce a report card, which was reviewed with the broker in the exit interview. Percentages did not matter. The sample size would be smaller, but the basic examination would still be the same.

Commissioner Poskochil asked if the Commission should maybe hire another examiner, rather than limit examinations. Commissioner Moline said there were lots of places where 100% of the files were reviewed, and that a broker could not afford to have an audit done at that level if he hired someone to do it. Director Tyrrell noted that all the money handled was reviewed, whether or not a sample was used instead of all the files. If there was ever a problem with a broker, the Commission would get an investigative report, and decide whether to file a complaint.

Commissioner Poskochil said that licensees in his firm did not get paid until all the documents were in the file. Brokers were doing a great job to get compliance.

Commissioner Shepard said the Commission could try the new process, and change back if it did not work. Director Tyrrell noted that the Commission reviewed the program every year.

Mr. Clark noted that a list of files would be given to the broker, with the problems noted, rather than the report card with percentages of compliance. Discussion ensued regarding what would be given to the broker under the new system. Blatant problems would always be given to the broker.

Director Tyrrell asked for clarification that a trust account examination done tomorrow would be done exactly the same way as yesterday, except the sample size would be smaller. Mr. Clark said no, only exceptions would be documented, i.e. the things that were wrong. It would essentially be an exception report. It was the consensus of the Commission that would work.

Commissioner Moline noted that, if there were lots of problems, the examiner could still pull more files and do follow-up examinations. As now, the Commission would rely on the experience of the examiners to do the right thing.

Director Tyrrell noted that, if the money bypassed the trust account, examiners would make sure it was bypassed in a legal manner, with all authorizations and notifications delivered. The rest of the file would be reviewed for compliance also, and the broker would get an exception report.

Commissioner Moline asked that the Commission be given a report on the program after six months. Director Tyrrell said they would probably get a report in September which would reflect February through August experiences.

After discussion, a motion was made by Moline and seconded by Johnson to make the recommended changes as presented, and provide the Commission with an experience report in approximately six months. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

Director Tyrrell noted that the clarification had been made obsolete by the recent revisions to the Seller Property Condition Disclosure statutes, and should be rescinded.

Director Tyrrell reported that LB 60, which would require criminal history record checks, and LB 61, which would revise the Retirement Communities and Subdivisions statutes, were introduced in the Legislature by Senator Byars and assigned to the Banking, Commerce, and Insurance Committee. Hearings will be held February 3.

Director Tyrrell also reviewed other bills of interest to the Commission.

No further action was necessary on this report.

Deputy Director Hoffman said it was a rejuvenating meeting. The leaders of 11 out of 14 working groups planned strategies, and several committees met. The Information Services Council had discovered that the administrator of the ARELLO licensee database had told participants to only send disciplinary history data once a month. This was of concern because current data is always preferred. As a result of this discussion, data is now accepted daily, which is how often Nebraska provides it now. In addition to the working groups, a task force has been formed to develop procedures to authorize travel expenditures. As ARELLO seeks to expand its membership, travel expenses are increasing, necessitating this study.

No action was necessary on this report.

March 5-6, 2003 - Staybridge Suites, Lincoln

April 16-17, 2003 - Staybridge Suites, Lincoln

May 28-29, 2003 - Staybridge Suites, Lincoln

At 9:30 a.m. on December 11, Chairperson Gale declared a brief recess, and reconvened the meeting at 9:45 a.m.

At 12:00 p.m. on December 11, Chairperson Gale declared a brief recess, and reconvened the meeting and hearing at 12:13 p.m.

At 1:21 p.m. on December 11, Chairperson Gale declared a brief recess, and reconvened the meeting at 1:32 p.m. to address Item 10b.

At 1:39 p.m. on December 11, Chairperson Gale reconvened the hearing.

At 2:13 p.m. on December 11, Chairperson Gale declared a brief recess, and reconvened the meeting and hearing at 2:25 p.m.

Commissioner Strand was excused at 2:25 p.m. for the remainder of the meeting.

At 2:44 p.m. on December 11, Chairperson Gale declared a brief recess, and reconvened the meeting at 2:50 p.m.

Commissioner Johnson was briefly excused from the meeting at 4:17 p.m., and rejoined the meeting at 4:19 p.m.

Commissioner Moline was briefly excused from the meeting at 4:22 p.m., and rejoined the meeting at 4:23 p.m.

At 4:55 p.m. on January 29, there being no further business to come before the Commission, a motion was made by Moline and seconded by Shepard that the meeting adjourn. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being temporarily absent and excused.

I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing minutes of the January 29, 2003, meeting of the Nebraska Real Estate Commission were available for inspection on February 12, 2003, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.

Respectfully submitted,
Les Tyrrell
Director