Chairperson Gale convened a meeting of the Nebraska Real Estate Commission at 9:04 a.m. on December 10, 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, with the exception of Commissioner Strand, who was absent and excused. 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 policy discussion items.

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 agenda item 10a 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 Johnson to adopt the final agenda as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

The minutes of the Commission meeting held on November 12, 2003, were considered.

After review, a motion was made by Wiebusch and seconded by Moline to approve the minutes as presented. Motion carried with Johnson, Moline, Poskochil, Shepard, and Wiebusch voting aye, with Gale not participating or voting, not having been present at the meeting, and with Strand not participating or voting, being absent and excused.

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

The cash fund balance as of November 30, 2003, was $737,270.80, which compared to a cash fund balance of $718,968.07 on November 30, 2002.

After discussion, a motion was made by Moline and seconded by Wiebusch to file the November Receipts and Expenditures Report for audit. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

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

Director Tyrrell noted that this was the first renewal report of the year, due to the late mailing of renewals. The report was fairly comparable to last year at this time. There was nothing unusual in the report except that there were considerably more branch offices this year than last.

Chairperson Gale asked if the big dropoff in salesperson renewals was unusual. Director Tyrrell said no, about 85% is normal. Director Tyrrell noted that 360 more salesperson renewals were mailed this year than last, so salesperson renewals were actually 300 ahead of last year. Approximately 100 fewer broker renewals were mailed this year, which was about the same number as broker renewals were down.

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.

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

Deputy Director Hoffman presented for ratification the November 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 Poskochil to ratify the November Examination Report for the purpose of issuing licenses. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

Commissioner Poskochil asked about the additional AMP reports requested by the Commission. Deputy Director Hoffman said she was working with AMP to generate the reports as requested. AMP was not set up to do the reports right now. Deputy Director Hoffman did not know if a site breakout would be available, but AMP was looking at it now. Director Tyrrell said that, informally, staff could tell from where most of the complaints came. Deputy Director Hoffman said that, with the size of the room in Lincoln, she could investigate how often all the stations were utilized, and perhaps having fewer stations would give applicants more room. She would not want to cause a backlog of applicants waiting to take the examination.

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 review, a motion was made by Moline and seconded by Wiebusch to ratify both reports. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

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.

Counsel Widger noted that Commissioner Moline had asked about other costs which could be charged to respondents. The statute stated that only the costs of a formal hearing could be charged against a respondent. Informal hearings would include settlement agreements and stipulation and consent orders.

The following sworn complaints and investigative matters were presented to the Commission:

Deputy Director Mayrose presented a stipulation and consent order in the matter of Complaint #2003-058, Commission vs Suzanne Marie Morehead. A copy of said order is attached to and made a part of these minutes. Ms. Morehead was not present.

Deputy Director Mayrose reviewed the circumstances involved and noted the provisions of the order, which had been signed by Ms. Morehead. The order specified a censure plus six hours of additional continuing education, consisting of 3 hours in agency law and 3 in license law, to be completed within ninety days.

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, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

There were no hearings scheduled for this meeting.

There were no hearings scheduled for this meeting.

Director Tyrrell noted that the guidelines had been modified as discussed at the previous Commission meeting, and according to previous actions taken by the Commission under the guidelines.

Chairperson Gale liked that a pattern would let misdemeanors come before the Commission, if they were significant. Chairperson Gale asked if a pattern was considered two or more convictions. Director Tyrrell said it would also depend on what the conviction was. Commissioner Moline noted that staff still review all applications, and decide whether that person was going to the Commission, even with the guidelines. Commissioner Moline was interested in making it so that applicants like Johnny Rodgers, whose record had been exemplary since his conviction, did not have to appear.

Commissioner Poskochil said he did not like the 10-year provision. Commissioner Moline said it should be taken out.

Commissioner Wiebusch said that numerous licensees were telling her that felons should never get a license, and the Commission should raise its standards. The licensees did not know the full situations involved, but lots were saying that.

Commissioner Moline said it had to be a decision made by people, and that there had to be some forgiveness in this world. The same people would say to get rid of low producers, which was self-serving in most cases.

Chairperson Gale said that, if a conviction was more than 10 years ago, people could get a pardon with no fee and no problems. If the Commission set the limit at 10 years, but an armed robbery was committed 12 years ago or an assault 15 years ago, the public would want the Commission to look at the applicant. The Pardons Board had a thick file of the full record before them, and really knew what they were doing. The Commission did not have anything like that. Commissioner Moline said it could not be easy to put together a thick file. Chairperson Gale noted that the Pardons Board staff did that, not the applicant.

Commissioner Poskochil said that an applicant might wait 10 years to avoid dredging up their record, and he did not want to get into that. It was the consensus of the Commission to strike the language regarding the 10-year provision.

Commissioner Moline was absent and excused from 12:02 p.m. to 12:04 p.m.

Director Tyrrell clarified the wording change to eliminate the 10-year provision. The Commission agreed by consensus.

A motion was made by Wiebusch and seconded by Moline to adopt the guidelines as amended during discussion. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

Director Tyrrell presented an exhibit which summarized agency statutes as they pertain to agency relationships with builders prior to listing agreements and current advice given licensees. A copy of said exhibit is attached to and made a part of these minutes.

Doug Ruge, attorney for CBSHOME in Omaha, distributed an exhibit which included a memorandum on custom homes and a CBSHOME new construction agency agreement form. A copy of said exhibit is attached to and made a part of these minutes, denoted as exhibit 14a. Mr. Ruge maintained that the law did not address builders of custom homes. The memo was an effort to comply with the law. Mr. Ruge said they could work under the scheme Director Tyrrell had set out in his exhibit with no problem, but Mr. Ruge did not think it technically complied with the law. The issue of unrepresented buyers and sellers also needed to be addressed, but the main item he wanted to address was agency agreements with custom home builders.

Joe Valenti, broker for CBSHOME, asked how anyone would know that, and how it was communicated to brokers. Director Tyrrell said it was the advice given whenever someone telephoned with questions. Director Tyrrell assumed that if someone was having a problem with it, they would call the Commission office. Mr. Valenti said that if that interpretation of the law had been in place for eight years, he suggested that it be distributed as a communique or in the Commission Comment to let people know about it. Mr. Valenti said he represented a lot of builders, and someone had suggested to have a blank agency disclosure pamphlet with a builder. Director Tyrrell said the question had been asked in 1995, because brokers were calling to see if an agency acknowledgment page was needed on each property in a development. After checking with legal counsel, it was determined that licensees could have one acknowledgment page signed that applied to a development. If there was a gap in representation, the Commission would want another acknowledgment page signed. Otherwise, a copy of the original acknowledgment would be put in each transaction file. There had been several discussions at the time the law was implemented, including at the education sessions which were held statewide.

Chairperson Gale clarified that the exhibit did not rise to the level of a rule or guideline, but was the work product of a staff attorney. Mr. Valenti said that, for future reference, it would be good to distribute the information. He would have wanted to know the problem could have been solved another way. His agent was critical of CBSHOME, and questioned why Mr. Valenti did not tell him about this type of agreement. Mr. Valenti said he did not know it was available.

Mr. Valenti asked if item 7 on the CBSHOME new construction agency agreement was in compliance with agency law. Item 7 stated that compensation would be agreed upon at the listing agreement, which was drawn up at same time as the purchase agreement for a custom home. That was when compensation was determined.

Commissioner Moline noted that the statute said compensation had to be included in the agency agreement, and questioned whether item 7 met the statutory requirement. Counsel Widger said that compensation needed to be discussed. Terms of compensation had to be addressed, but the statute did not say it had to be a certain percentage.

Mr. Ruge said that the fact that the interpretation was being respected by Commission gave him comfort. His concern was that licensees did not lose their licenses. Mr. Ruge said he respectfully disagreed with that interpretation. If the statute says to specify terms of compensation, the agreement needed to specify those terms, not just the mechanism used to specify those terms. Mr. Ruge suspected a court would read the plain language of the statute, which did not say you could agree later to compensation.

Mr. Valenti said he knew the statute was a lot of work, and asked if it could be modified in a housecleaning effort. Director Tyrrell asked how he would like it modified. Mr. Valenti asked if the Commission could change the rule. Counsel Widger noted that this was a statute. Mr. Valenti said he wanted it to be consistent. Director Tyrrell noted that not defining terms of compensation had never been an issue in any complaint filed on agency. Mr. Valenti said that, in the recent complaint, it could have been. Director Tyrrell disagreed, and said that if agency disclosure had been made when the licensee had a significant conversation with the complainants, there would not have been a complaint.

Mr. Valenti asked, if a licensee was meeting with a variety of customers and clients, when the brochure was needed. Commissioner Poskochil said that, if a licensee was representing a builder for years, the licensee needed to go over the brochure and explain agency, and needed to have a written agency agreement. Mr. Valenti asked if that was a pseudo listing agreement. Commissioner Poskochil said the licensee had to go over the disclosure at the time, but an agency agreement could go on for years, if it was included in all files needed. Disclosure was different than a listing agreement.

Mr. Ruge said there was no provision under the law that a listing agreement was required. The agency agreement could contain the terms of compensation. Counsel Widger agreed. If the general terms of compensation were acceptable, just a listing or compensation agreement was needed for each property.

Mr. Ruge said he would submit that 76-2422(2) was a listing agreement. Director Tyrrell disagreed. Director Tyrrell said he attended the Agency Task Force meetings when the law was developed, and it was specifically not done as a listing agreement, because parties can enter into an agency agreement without a listing agreement. Mr. Ruge said that was fair enough, but it was not understood when reading the law.

Commissioner Moline said that builders would not sign blanket listing agreements, because they want to leave whenever they want. Commissioner Moline said he could see that a builder might agree on compensation. With a fixed date of expiration, an agency agreement might look like a listing agreement. Commissioner Moline thought there were a lot of licensees that might not know about this, and were operating differently. The Commission needed to educate people in the state. The Commission needed something signed that protected everyone.

Commissioner Johnson noted the agency disclosure exemption for commercial real estate, and asked if the Commission considered developers as sophisticated as commercial buyers. Commissioner Moline said he might. Director Tyrrell noted that the only thing exempted was completing the brochure, not written agency agreements. This problem was with agency agreements. The current interpretation has been used for 8+ years without a complaint. Director Tyrrell talked to an attorney who called regarding the agenda item, and asked if the Commission was going to change the interpretation, and cited it. The attorney did not want the Commission to change it, and said it was working well with builders. There had been one situation, where two people got censured not because of an agency agreement, but because of the way they did or did not disclose their agency, and two people got confused.

Commissioner Moline said that agents would want to know how they get paid, but most represented sellers with no clue how they would get paid, because a builder would not sign anything. Chairperson Gale asked if compensation was defined at the purchase agreement. Director Tyrrell said some used a separate compensation agreement for a property, signed by the builder and the licensee.

Mr. Valenti maintained there was not even an agency agreement in those cases. Director Tyrrell, said that, in talking to people, they did enter into some kind of agency agreement, because the builder did not want a listing agreement. Some did a listing agreement later, and some just did a compensation agreement on each property. Director Tyrrell could not speak to all situations, but of the ones who had asked for advice, that was what they did.

Mr. Valenti asked if there was a blessing on the CBSHOME agency agreement. He would agree totally with Mr. Ruge, not to be argumentative, but he would have interpreted a requirement for a listing agreement. Mr. Valenti said the Commission needed to have this agreement communicated.

Commissioner Poskochil asked if the statute would allow a range of compensation. Director Tyrrell said he would not want to put a range in statute. Commissioner Poskochil said no, he meant in the interpretation, if an agreement could give a range of compensation. Counsel Widger said she had no problem with that, and it could even say depending on the lot and type of house.

Chairperson Gale noted that item 7 did not define compensation. To have no range or anything meant nothing as to what the parties may agree. Chairperson Gale speculated that maybe the statute did not anticipate how the market developed.

Director Tyrrell noted that Mr. Ruge could use any language he wanted in the agency agreement, because it was a CBSHOME document. Counsel Widger said that all the Commission had to decide was how licensees could meet the requirements of license law. The Commissioners could keep in the back of their minds whether a judge would find it enforceable, and what civil liability may be, but it had to decide what was sufficient for meeting the requirements of license law. The Commission needed a consensus on the interpretation of the statute so it worked with the industry, but kept people informed on representation.

Commissioner Moline said the Commission needed to look at it in terms of errors and omissions insurance. The Commission needed to keep an eye toward civil liability. Loopholes would be taken advantage of, and cost money.

Mr. Ruge said the final twist to this, from his law school days, was that if the statute applied to listing agreements, compensation could be any language we put in, if that was truly meant. When the property was identified and there was a listing agreement, they could put in 4-7% to be determined at closing, which would not sit well with the Commission. Under 76-2422, the Commission needed to be consistent in its interpretation. Counsel Widger said that Mr. Ruge was making the assumption that an agency agreement was a listing agreement. Commissioner Moline asked what was missing. Counsel Widger said an agency agreement did not need to include a specific property and specific terms of compensation. The Commission could redo the interpretation if desired. Director Tyrrell noted that the agreement could say it had to be a specified amount, if that was what Mr. Ruge was suggesting. Mr. Ruge said that was not what we were suggesting, he just wanted clarity. Commissioner Poskochil asked if compensation needed to be fixed at the time of the agency agreement. Mr. Ruge said that was how he interpreted it. He needed clarity in the statute, so it could be clearly interpreted. Specific language was needed for custom builders and agency agreements. Mr. Ruge said he could not do it under the law, and there was no practical way to comply with builders.

Mr. Ruge said he was not attacking Director Tyrrell, because he was trying to work with them. If a person just read the law, it was not so clear. Counsel Widger said the agent should make very clear who they are representing, to both parties.

Commissioner Poskochil agreed that disclosure was the real key, and that a document like the agency agreement would help keep people out of trouble.

Commissioner Johnson asked if Mr. Ruge had a proposal to change the statute. Mr. Ruge said the statute needed to be cleared up, and drafted in a way that accommodated new construction builders. Director Tyrrell asked if Mr. Ruge was willing to draft proposed language. Mr. Ruge said sure, then said he was willing to work with Counsel Widger on it.

Mr. Valenti thanked the Commission for discussing the issue with them.

Counsel Widger asked the Commissioners if they were comfortable with what staff had been telling people. It was the consensus of the Commission that they were. Counsel Widger said the article would be reworded based on exhibit 14. Deputy Director Hoffman said it would also be a resource for educators, and she would discuss the topic with school administrators.

Commissioner Moline was absent and excused from 10:43 a.m. to 10:44 a.m.

Director Tyrrell presented exhibits which were draft copies of the bills to be introduced into the legislature, regarding the errors and omissions insurance premium limit increase and the amendments to the Time-Share Act. Copies of said exhibits are attached to and made a part of these minutes.

No action was necessary on this report.

Director Tyrrell presented the Trust Account Examination Evaluation Report - Third Quarter 2003. 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.

No action was necessary on this report.

January 21-22, 2004 - Staybridge Suites, Lincoln

March 3-4, 2004 - Days Hotel Carlisle, Omaha

At 9:28 a.m., Chairperson Gale declared a brief recess, and reconvened the meeting at 9:39 a.m.

Commissioner Moline was absent and excused from 10:43 a.m. to 10:44 a.m.

At 10:47 a.m., Chairperson Gale declared a brief recess, and reconvened the meeting at 11:00 a.m.

Commissioner Moline was absent and excused from 12:02 p.m. to 12:04 p.m.

At 12:24 p.m. on December 10, there being no further business to come before the Commission, a motion was made by Moline and seconded by Wiebusch that the meeting adjourn. Motion carried with Johnson, Moline, Poskochil, Shepard, Wiebusch, and Gale voting aye, and with Strand 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 December 10, 2003, meeting of the Nebraska Real Estate Commission were available for inspection on December 19, 2003, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.

Respectfully submitted,
Les Tyrrell
Director