NEBRASKA REAL ESTATE COMMISSIONSeptember 15-16, 2004
Fireside Room Days Hotel Carlisle Omaha, Nebraska
Chairperson Gale convened a meeting of the Nebraska Real Estate Commission at 9:05 a.m. on September 15, 2004, in the Fireside Room of the Days Hotel Carlisle, located at 10909 M Street in Omaha, 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 hearings, special appearance, proposed change to agency relationships statute, and compensation discussion.
Swearing-In Ceremony - Commissioner Wesley W. Grady
Chairperson Gale conducted a swearing-in ceremony for recently-appointed Commissioner Wesley W. Grady, presented him with his Commission pin, and welcomed him to the Commission.
Notice of Meeting (Adopt Agenda)
Director Tyrrell presented a public notice and proofs of publication thereof relating to this meeting, all of which are attached to and made a part of these minutes. 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 9 had been divided into two parts, and items 16 and 18a had been added, since the tentative agenda was mailed to the Commissioners.
After review of the final agenda, a motion was made by Poskochil and seconded by Moline to adopt the final agenda as presented. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
Minutes of August 17, 2004
The minutes of the Commission meeting held on August 17, 2004, were considered.
Commissioner Poskochil noted that the heading did not indicate that the meeting was held at the Staybridge Suites in Lincoln, but the text did. Director Tyrrell said the heading would be corrected in the final minutes.
After review, a motion was made by Moline and seconded by Johnson to approve the minutes as corrected. Motion carried with Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye, and with Grady abstaining, not having been on the Commission at the time.
Receipts and Expenditures Report
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 that there was nothing unusual to report in Receipts. In Expenditures Category 522200, Conference Registration Fee, the bill for registrations for the ARELLO meeting was paid a month earlier than scheduled; for Category 559100, Other Operating Expense, we did not receive a bill, so there was no expenditure; and in Category 572100, Commercial Transportation, the ARELLO meeting airfare hit early, so it was paid a month earlier than budgeted.
The cash fund balance as of August 31, 2004, was $721,700.84, which compared to a cash fund balance of $585,675.22 on August 31, 2003.
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 Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
Revisions to 2005-2007 Biennium Budget Request
Director Tyrrell noted the revisions that had been made to the 2005-2007 Biennium Budget Request. The revisions dealt with an annual anti-virus licensing fee and a new charge just instituted for internet access.
No action was necessary on this report.
There were no specialized registrations to be presented at the meeting.
Non-Resident Licenses and Resident Licenses Issued to Persons Holding Licenses in Other Jurisdictions 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 Poskochil to ratify issuance of the licenses as set forth in the report. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
Examination Report - August
Deputy Director Hoffman presented for ratification the August Examination Report, a copy of which is attached to and made a part of these minutes.
Commissioner Poskochil asked for an update on the examination site monitoring. Deputy Director Hoffman said that AMP (Applied Measurement Professionals) sends her quarterly reports of site surveys. At the AMP meeting on September 1, it was reported that the Lincoln examination site, which had been of concern, had no complaints regarding temperature or noise since insulation was installed, except for two days ago, when visitors to the office were noisy during the examination. AMP is currently addressing the matter. Appointments are currently available within 3 days, and the facilities are meeting the demand quite nicely. Deputy Director Hoffman said she will bring the next quarterly report to the Commission.
After review, a motion was made by Moline and seconded by Strand to ratify the August Examination Report for the purpose of issuing licenses. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
Real Estate Education Matters
Continuing Education Activity Approval
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.
Continuing Education Instructor Approval
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 Johnson to ratify the reports. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, and Gale voting aye, and with Strand not participating or voting, being absent and excused.
AMP Advisory Committee Meeting Report
Deputy Director Hoffman noted that she had attended the AMP (Applied Measurement Professionals) Advisory Committee Meeting in Kansas City on September 1, 2004.
Deputy Director Hoffman reported that it was AMP=s policy to hold an advisory committee meeting once per year. AMP used the meetings to give updates on the services they provide, and to bounce ideas off the participants. This year, all the states for whom AMP does examinations had representatives at the meeting except North Dakota. The current AMP president, Gary Smith, reported that the switchboard for scheduling appointments is now open Monday through Friday until 7 p.m., and Saturday 8-5. AMP also widened the bandwidth for online scheduling, because 40-45% of examinations were scheduled online. That should remedy the occasional complaints about scheduling, and none have been received during the 3 months this schedule has been in place. AMP also does medical testing nationwide, so they have examination sites in virtually all states. If a candidate needed to take the Nebraska examination in another state, the site could download and administer the examination. This year, AMP will be open for a couple of days between Christmas and New Year=s Day. AMP has also completed training and implemented a test for examination site coordinators. AMP announced implementation plans for an enhanced electronic monitoring system at all sites. Headquarters will monitor all testing sites, and each computer station, which will also help with security issues. The new measures, which include motion sensors, video streams, and audio surveillance, will not detract from the testing experience. AMP is also developing report writers, so clients can extract data themselves, without relying on AMP. They had always provided requested reports within a week or two, but this will give us access to meet our needs.
AMP is initiating the Job Analysis Survey process to maintain the integrity of their examination. The survey itemizes skills and tasks that may be performed by entry-level salespersons and brokers. A representative cross-section of licensees will rate the significance of specific skills and tasks. The results are outlined, and provide the basis for the knowledge tested on examinations. Surveys will go out by the end of the year. They will canvas the entire nation. The Midwest traditionally has the best response rate on surveys. On the one done 5 years ago, Nebraska had the greatest percentage response rate, so we have a lot of input. AMP has done a job analysis survey every 5 years.
Commissioner Moline asked if there was a place for licensees to put things that were not on the list. Deputy Director Hoffman said that, while the Advisory Board had done a preliminary review, a pilot test phase would begin at the end of the month. If any Commissioners wanted to critique the survey, they should let Deputy Director Hoffman know. Commissioner Moline said he would do that. Deputy Director Hoffman also asked for names of new or experienced licensees who could provide input. Commissioner Moline said he thought Rita Griess and Connie Hain would be good reviewers. Deputy Director Hoffman said that participation at this stage was invaluable.
Deputy Director Hoffman said AMP expected to have the surveys completed by spring, and have an outline for review before the spring ARELLO meeting. Item writing and testing would follow. The information gathered will also be utilized to develop a simulation examination option at the broker level. Commissioner Poskochil asked if Georgia was involved in the process. Deputy Director Hoffman said Georgia was using a simulation examination process for continuing education credits, and would be the first in line for the simulation broker examination. Commissioner Poskochil asked if AMP would bring that information to the ARELLO meeting. Deputy Director Hoffman said they had brought it to the Nevada meeting, and were willing to send someone to a Commission meeting or an instructor development workshop. She had related the Commission=s concerns regarding education preparation for simulation testing to AMP. The experience in Georgia was that the same education preparation was fine, because the examination covered the same concepts. Schools had, however, begun incorporating simulations in their assignments to make the format more familiar. Georgia had a very positive experience. AMP was happy to address the Commission=s concerns at any time.
No action was necessary on this report.
Pending Sworn Complaints and Investigative Matters
Report of Ad Hoc Committee
Commissioner Moline, member of the ad hoc committee on disciplinary action, presented the report of the subcommittee. A copy of said report is attached to and made a part of these minutes.
Commissioner Moline said the Commission had gotten investigative reports with recommendations and without. The most recent format was a synopsis of the situation. The Subcommittee came up with the following suggestion: a brief report, with a copy of the complaint and the answer, with all references to names and locations removed. With this system, the Subcommittee felt there would be no filtering of the complaint information. Staff would bring a separate sheet of paper listing their recommendations to Commission meetings, with an itemized list of the reasons why which referred to specific items in the report.
Director Tyrrell asked for clarification that the Subcommittee wanted the complaint and answer attached, without the exhibits. Commissioner Moline said that was correct.
Commissioner Shepard said he liked it. The Commissioners could see the information straight up, and make up their own minds. They could see the recommendation at the meeting, so staff could point out what maybe he did not see. Commissioner Moline said Commissioners would get more paper, but attorneys had said to him,AI go to all that work to prepare an answer, and you don=t see it?@ The Subcommittee thought the Commission could try it this way for a couple of months, and see if they liked it. If not, it could be changed again. Chairperson Gale said it was a nice, innovative way to proceed. The Commission could experiment with it and see how it worked.
Review of Reports
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:
Presentation of Stipulation and Consent Orders
There were no stipulation and consent orders to be presented at the meeting.
Complaint 2004-025, Commission vs. John Ritums
A hearing was held on September 15, at 9:30 a.m., in the matter of Complaint 2004-025, Commission vs. John Ritums. Abbie Widger, Special Assistant Attorney General and Counsel to the Commission, appeared for the Complainant. Respondent John Ritums was not present, but was represented by attorney Norman Denenberg of Omaha.
After opening statements, Counsel Widger offered 11 exhibits, most of which were received by Chairperson Gale, and called Director Tyrrell and Deputy Director for Enforcement Mayrose as witnesses.
Counsel Denenberg offered 9 exhibits, all which were received by Chairperson Gale. Counsel Denenberg called no witnesses.
At 10:51 a.m. on September 15, Chairperson Gale declared a brief recess, and reconvened the meeting at 11:04 a.m.
After closing arguments, Chairperson Gale declared the hearing concluded.
A motion was made by Moline and seconded by Strand that Mr. Ritums be found guilty of violating only Neb. Rev. Stat. Section 81-885.12(4), as alleged in the complaint.
Commissioner Moline said that, at time Mr. Ritums did this, he was 72 years old. Commissioner Moline was giving him the benefit of the doubt that maybe he did not have a clue that his license had been revoked. Regardless, Mr. Ritums had technically violated the law by filing a false application, and that was how the law worked.
Commissioner Poskochil said his only problem might be that even if he was moving to another state, he would follow up on it if he knew he had disciplinary action pending against his real estate license, especially if he intended to get a real estate license in his new location. Mr. Ritums took the Illinois real estate examination 14 days prior to the Nebraska hearing. If Commissioner Poskochil was a dishonest person, he would be trying to get a license as soon as he could. He would also have made sure he was represented at the disciplinary hearing, by counsel if he could not attend himself. Even if Mr. Ritums thought there was something pending, to come back to the state and not disclose that made Commissioner Poskochil a little hesitant. Commissioner Poskochil would like to include the other violation, of Neb. Rev. Stat. Section 81-885.24(29).
Commissioner Moline said the Commission did not have the records from the revocation proceeding, and did not know for sure that Mr. Ritums was notified of the revocation. Commissioner Poskochil said he would have been. Commissioner Moline said the Commission did not know for sure if Mr. Ritums knew about it. Commissioner Strand noted that the return receipt was signed for the notice of hearing. Chairperson Gale said that was his impression as well. The record from the minutes was not the best, but it was all the Commission had. Mr. Ritums had notice of the hearing, and did not respond or have anyone represent him. There was not a record that he was notified of the revocation. Chairperson Gale said the Commission was unable to have all of the evidence. The revocation was in 1981. If there were 17 cases pending against Mr. Ritums, that would have been pretty dramatic, considerable, and significant. It would be gross failure to not disclose 17 lawsuits. That was the basis for the revocation, and the revocation stands, but the conflicting information presented about the number of cases called some question into his mind of the value of that evidence. Nevertheless, Mr. Ritums had knowledge of the proceeding, and defaulting did not allow a person to avoid the consequences. Now Mr. Ritums has decided to come back. Chairperson Gale agreed with Counsel Denenberg that it did not make sense that Mr. Ritums had been caught in a failure to disclose, which had cost him his license, then failed to disclose again. Chairperson Gale said that Mr. Ritums= memory had probably just failed, time had passed, and Mr. Ritums did not give it enough time or research when completing his application. Mr. Ritums also failed to disclose that he ever had a license in Nebraska, which he should have certainly remembered and disclosed. Mr. Ritums was accountable, because he did have a license in Nebraska and was responsible for what happened to it.
A vote was taken on the pending motion. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
A motion was made by Poskochil that Mr. Ritums be found guilty of violating Neb. Rev. Stat. Section 81-885.24(29). The motion died for lack of a second.
Chairperson Gale then opened the disciplinary envelope. It was noted that Mr. Ritums= broker license was revoked in 1981 for a gross misrepresentation on his renewal application.
A motion was made by Moline and seconded by Shepard to censure Mr. Ritums= license due to the violation found, with no additional continuing education required.
Commissioner Moline said Mr. Ritums was 76 years old and living with his daughter in Florida. Commissioner Moline did not see what good it would do to revoke his license or require additional continuing education.
Commissioner Strand said he was not sure that was more than just a slap on the wrist. The Commission issued Mr. Ritums a license in 2000, based on incorrect information he supplied. The Commission did not know why he wanted the license. He should not have gotten it in the first place. The penalty needed to be more severe than a censure, so Commissioner Strand was going to vote against the motion.
Commissioner Poskochil said he was voting against it also. If a license was revoked, that meant the Commission felt the person should not have a license. Chairperson Gale asked if Commissioner Poskochil was asserting that if anyone ever had a license revoked, the Commission should never let the person have one again. Commissioner Poskochil said no, but Mr. Ritums had not disclosed it on his application. Chairperson Gale said that if it had been disclosed and considered at that time, that would be different. To be licensed based on misrepresentation compounded Mr. Ritums= problems in Nebraska.
Commissioner Moline said that Mr. Ritums had been licensed since 1956 and practiced his whole life without anyone ever filing a complaint against him. That was why he was giving Mr. Ritums the benefit of the doubt. Chairperson Gale said he tended to agree. Mr. Ritums= first complaint was in 1981, and there was no record of discipline from other states, so it appeared he had a decent record except for the 1981 issues. Chairperson Gale also thought Mr. Ritums= age should be considered.
Commissioner Grady said information was presented that Mr. Ritums had a daughter here and one in Florida, and asked for clarification if Mr. Ritums was living here or there. Commissioner Moline said the Commission was told he was living in Florida. Commissioner Grady said that was what he thought, but with a daughter in Omaha, he thought maybe Mr. Ritums was coming back here. Chairperson Gale said the Commission could consider that information as admissions against interest by counsel. The Commission could accept as probable fact that Mr. Ritums had daughters in Florida and in Omaha. Mr. Ritums has had a license in Nebraska. Commissioner Johnson said that, in his opinion, he did not believe Mr. Ritums was doing any business in Nebraska.
Commissioner Poskochil asked Director Tyrrell what would have been the procedure if Mr. Ritums had made application and noted the revocation. Chairperson Gale said that was asking for testimony, and the Commission could not do that. Commissioner Strand said the Commission would have at least discussed the reasons for the revocation, assuming there would have been something on the record for the Commission to discuss whether to allow him to be licensed. Chairperson Gale said the Commission must rely on its own best judgment. Asking Director Tyrrell for testimony might poison the whole process.
Commissioner Grady asked if Mr. Ritums would have been allowed a license if he had filed a correct application. Chairperson Gale said he was speculating, but a clean record for 25 years in other states would have weighed in his favor. There was not a clear-cut, absolute rule that if a license was revoked in Nebraska, a person could not have a license again. Commissioner Moline said it would have come before the Commission, and the Commission would have weighed the evidence.
A vote was taken on the pending motion. Motion failed with Moline, Shepard, and Gale voting aye, and with Grady, Johnson, Poskochil, and Strand voting nay.
A motion was made by Strand and seconded by Poskochil to revoke Mr. Ritums= broker license. Motion carried with Grady, Johnson, Poskochil, and Strand voting aye, and with Moline, Shepard, and Gale voting nay.
Chairperson Gale notified the Respondent that the costs incurred for the court reporter and any witness fees would be billed to the Respondent, as provided for in 305 NAC Chapter 4, and that the Respondent would have thirty days from the date of the order to reimburse the Commission for said costs.
With the consent of the Respondent, Chairperson Gale directed Counsel Widger to prepare the order.
Chairperson Gale announced that all exhibits related to this hearing would be retained in the Commission office.
The hearing was adjourned at 12:30 p.m.
Complaint 2004-028, Commission vs. Lori Ann Reed
A hearing was held on September 16, at 9:33 a.m., in the matter of Complaint 2004-028, Commission vs. Lori Ann Reed. Abbie Widger, Special Assistant Attorney General and Counsel to the Commission, appeared for the Complainant. Respondent Lori Ann Reed was present and represented herself.
After opening statements, Counsel Widger offered 6 exhibits, most of which were received by Chairperson Gale, and called Director Tyrrell and Deputy Director for Enforcement Mayrose as witnesses.
Ms. Reed presented no exhibits and called no witnesses.
At 10:18 a.m., Chairperson Gale declared a brief recess, and reconvened the meeting at 10:30 a.m.
After closing arguments had been presented, Chairperson Gale declared the hearing concluded.
A motion was made by Moline and seconded by Johnson that Ms. Reed be found guilty of the violation alleged in the complaint.
Commissioner Moline said that, as a CPA, he had run into folks who had misdirected dollars. As a real estate licensee, a person cannot even be tempted. People do things they should not when under stress. People are always very apologetic, and say they have changed, but Commissioner Moline has found those are only words with no evidence of actions. This situation happened in 1999 but it did not come to light until later. The Insurance Department acted in February, so it has not been that long. In one sense, Ms. Reed said she had changed, but she neither admitted nor denied the accusations made by the Insurance Department.
Chairperson Gale said he had not made up his mind. Ms. Reed had made the point that she has been in no trouble in five years with her real estate license. There were no other criminal records at all, and this was the only thing on her record which would impact her as a licensee. It had been 5 years since the incident. Ms. Reed=s argument of mitigating circumstances went to the penalty, not whether there was a violation. Commissioner Moline noted that the Commission was taking her word for that, and did not know if any of that was true. Chairperson Gale said that was true, it was just her testimony under oath.
Commissioner Strand said she had a 6-month suspension on her record, from a governing body not unlike this one. They had taken a look and decided the offense rose to the level of a 6-month suspension, which was now completed. Commissioner Strand questioned whether the Commission disciplinary action constituted double jeopardy. Commissioner Moline said this was about the public trust the Commission was always talking about. The Insurance Department violation involved her dealing with money and people. Ms. Reed violated that trust. In Commissioner Moline=s experience, if someone committed a violation like that, they were likely to recommit the same thing.
Commissioner Poskochil said that, if an applicant appeared before the Commission with the same situation, with a money issue prior to receiving a real estate license, he thought he would have a real problem since the person mishandled funds and violated the public trust. Licensees dealt with consumers= money. Commissioner Poskochil had a hard time letting her continue without some kind of penalty, because dishonesty was not how we do business in any licensed activity. Ms. Reed denied it, then admitted that she stumbled. The Commission had an obligation to the public to be on top of the situation.
Chairperson Gale said that was an interesting way to look at it, regarding a new applicant and a violation 5 years ago. He also said it was not double jeopardy, because it was a separate license, not a second punishment. Commissioner Poskochil said the public would question why the Commission would issue a license, based on her past history, if she were an applicant.
Chairperson Gale noted that the violation reflected in the action taken by the Department of Insurance was sufficient to justify a motion to find Ms. Reed negligent or unworthy.
A vote was taken on the pending motion. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
Chairperson Gale then opened the disciplinary envelope. No prior disciplinary actions were on file.
A motion was made by Moline and seconded by Grady to revoke Ms. Reed=s license.
Chairperson Gale said that the Department of Insurance had the full record before them, and their action was a 6-month suspension. It could be argued that was some mitigation as to the facts they found, but it was not determinative of what action the Commission took. It was important to have some discussion on the record, to show the basis for what the Commission did.
Commissioner Poskochil said the Commission did not have all the facts of the Insurance Department=s proceeding, and did not know if they had been more in favor of a suspension for a length of time, with continuing education. It was their violation, and she got a 6-month suspension. Commissioner Poskochil did not know if it warranted revocation.
Commissioner Grady said he seconded the motion because Ms. Reed did not deny or confirm that she did it, and he did not see any evidence of restitution. It seemed there was a further possibility of wrongdoing. If he had to decide on an applicant who had stolen that amount of money, he would not want to license the applicant.
Commissioner Moline said that was why he made the motion. He would not allow an applicant to sit with that on the record, and that said to him that Ms. Reed should not have a license.
Commissioner Poskochil clarified that he would ask for more evidence, or more time between the disciplinary action and the application, if it were an applicant. Commissioner Poskochil was not saying he would approve or disapprove, he would just need more evidence on an applicant. He did not believe that what Ms. Reed did was right, he just did not know if he was to the point of revoking her license. He was not sure how strict they were on insurance licensing.
Chairperson Gale said it was of interest to him that there was no evidence of criminal charges initiated by the Insurance Department to pursue this further than the disciplinary action. If felony charges were filed, there would be no question in his mind of what he would do. The Department of Insurance had jurisdiction on the license that was violated and gave a 6-month suspension, with no indication of additional continuing education. His assumption that she had no criminal violations was based on Ms. Reed=s testimony, but there was no evidence presented to the contrary, and no real estate complaints had been filed against her.
Chairperson Gale was thinking like Commissioner Poskochil that he would probably take a very hard look at an applicant, but the Commission had allowed applicants with disciplinary action to sit for the examination. Chairperson Gale did not know if this would preclude an applicant from getting a license, and if the Commission revoked her license and she came back in 6 months, that would not preclude her automatically from getting another license. Chairperson Gale was more inclined to suspend the license.
Commissioner Shepard said he thought that was exactly right. With the magnitude of dollars, Ms. Reed was in felony territory. In real estate and handling the public=s money, the responsibility was even greater, although she would be working with smaller amounts of dollars. Commissioner Shepard was in favor of the motion.
Commissioner Johnson said he was on the fence. He tended to agree with Commissioner Poskochil that a significant suspension might be more appropriate. Commissioner Poskochil said he was considering a 2-year suspension.
Commissioner Grady said the Commission was not here to pass judgment on how the Insurance Department or the employer handled the situation. He was in total disbelief that neither took action beyond the 6-month suspension. Commissioner Grady told Ms. Reed that she must have done an OK job of convincing them that she was an OK person, and salesperson. His intent was not to ruin her chance at an insurance license, but real estate was a temptation perhaps too great, based on her recent experience.
Commissioner Strand said he was thinking suspension, but having heard the discussion on the length of the suspension, it might be more rational to revoke. That put the individual in a position of challenging the Commission to allow her to sit for examination, at whatever time period she wanted to ask the Commission to review her situation. Oddly, it seemed a lesser penalty than a 2-year suspension. Commissioner Strand did not know the Insurance Department citations or how to weigh that record, since just a couple of paragraphs of findings were allowed before the Commission. It had involved a lot of money, and was a wanton act of beating her employer out of some bucks. If the Commission had that information, and had to decide whether to let her sit, he would probably have voted no. His thoughts echoed Commissioner Moline=s.
Chairperson Gale said he was also struggling because the action taken by the Department of Insurance was the equivalent of a misdemeanor, with a 6-month suspension. That indicated to him there was no felony. In his mind, a 2-year suspension with a special appearance required before resuming her license would work. He did not want reinstatement without a Commission appearance and discussion. That would give more conformity to the Insurance Department penalty, and did not give a revocation mark on her record, but would probably preclude any real estate license in the future. It was a serious, serious offense, but no one had filed criminal charges against her.
Commissioner Johnson said the Commission had, from time to time, suspended a license for 2 years, then given them the opportunity after 6 months to be on probation.
Commissioner Moline called the question. The motion failed with Grady, Moline, and Shepard voting aye, and with Johnson, Poskochil, Strand, and Gale voting nay.
A motion was made by Johnson that Ms. Reed=s salesperson license be suspended for 2 years, with the last 18 months served on probation, and that she be required to complete 6 hours of additional continuing education within six months, in ethics and contracts. Commissioner Strand asked for clarification that Ms. Reed could operate on probation after 6 months, and that if anything happened during the 2 years, the Commission could revoke her license then. Chairperson Gale said that, if it came back to the Commission while she was under disciplinary penalty, she would be looking at revocation. Commissioner Strand then seconded the motion.
Commissioner Poskochil said he did not think 6 months was appropriate, and that the suspension should be longer. The penalty had just gone from revocation to six months= suspension, which was not sufficient for mishandling funds. Commissioner Poskochil offered a friendly amendment to make it one year actual suspension and one year on probation, with staff to determine which 6 additional hours of continuing education would be required. The friendly amendment was accepted by the mover and the seconder.
A vote was taken on the amended motion. Motion carried with Johnson, Poskochil, Strand, and Gale voting aye, and with Grady, Moline, and Shepard voting nay.
Chairperson Gale notified the Respondent that the costs incurred for the court reporter and any witness fees would be billed to the Respondent, as provided for in 305 NAC Chapter 4, and that the Respondent would have thirty days from the date of the order to reimburse the Commission for said costs.
With the consent of the Respondent, Chairperson Gale directed Counsel Widger to prepare the order.
Chairperson Gale announced that all exhibits related to this hearing would be retained in the Commission office.
The hearing was adjourned at 11:06 a.m.
Complaint 2004-005, Commission vs. Buree Stovall
The hearing on Complaint 2004-005, Commission vs. Buree Stovall, was continued.
Informal Special Appearances
Thomas Patrick Jacobs, Reciprocal Salesperson Applicant
Director Tyrrell presented an exhibit which included correspondence regarding Mr. Jacobs= special appearance, Mr. Jacobs= salesperson application, information regarding Mr. Jacobs= criminal history, and information regarding the complaint filed against Mr. Jacobs. Deputy Director Mayrose distributed a copy of the previous month=s investigative report. Copies of said exhibits are attached to and made a part of these minutes. Mr. Jacobs was present.
Chairperson Gale reviewed the procedure for informal special appearances.
Mr. Jacobs said he was originally from Illinois, and graduated from Rock Island High School. He got a bachelor=s degree from Saint Ambrose. He moved to Des Moines in 2001 to be a research analyst for Grubb & Ellis/Pacific Realty Commercial, LLC. He had been the director of research for the Omaha office for the past two years, and was transitioning into a broker role. Chairperson Gale asked what kind of research Mr. Jacobs did. Mr. Jacobs said he did research for trend reports, site selection, and demographic information analysis, as well as rental rates in different markets. His was done locally, and the company also had it done at the national level.
Mr. Jacobs said he was put into this situation as he was gearing into his transitioning role. He was training a new research director and moving into a broker capacity when this incident took place. Mr. Jacobs is still in the midst of transitioning. His initial contact with Mr. O=Connor was on July 7, from a call transferred to him within the office. Mr. O=Connor wanted to talk to the leasing agent, Mr. Zoob, who was unavailable. Mr. Jacobs was the only person to talk to at that time, and told Mr. O=Connor that the information he sought would be in the data sheet, which could be sent to him. Mr. O=Connor was very insistent on moving things forward, and wanted to get the information in person, not by fax. Mr. O=Connor wanted to meet at the property. Mr. Jacobs ended up meeting Mr. O=Connor at the property by himself, because the leasing agent was unavailable for a meeting the next morning. Mr. O=Connor wanted to look at the property, so he walked in. The property was a retail business that was open. Mr. Jacobs was not unlocking doors for him to view the property. Mr. Jacobs thought he was just delivering information to Mr. O=Connor, and told him he would need to talk to Mr. Zoob about the property.
Chairperson Gale asked if Mr. Jacobs= broker knew what Mr. Jacobs was doing. Mr. Jacobs told Mr. Heider that he was delivering information because Mr. Zoob was not available. Mr. Jacobs was just trying to keep the contact going. Mr. O=Connor wanted to meet the next morning, which was during the company=s corporate golf outing, with which all employees had to help. It was an all-day event, and it was hard for anyone to get away. Mr. Jacobs told Mr. O=Connor that he could relay information to Mr. Zoob, but could not do a whole lot for Mr. O=Connor. Mr. O=Connor wanted to move forward and write an offer, but the golf schedule made Mr. Zoob unavailable. Mr. O=Connor told Mr. Jacobs to tell Mr. Zoob that he was definitely interested, and he wanted to move forward. Mr. Jacobs hoped Mr. Zoob would be available that afternoon, but Mr. Zoob was not. Mr. O=Connor agreed that the next morning was OK. Mr. Jacobs told Mr. O=Connor the next morning that Mr. Jacobs could not move forward with negotiations. Mr. O=Connor was upset, because he thought he would be able to conduct business the next day. The following Monday, Mr. Zoob and the owner discussed Mr. O=Connor=s offer. Mr. Jacobs was in touch with Mr. O=Connor after that, delivering documents. On July 8-9, Mr. Jacobs questioned whether he should have even met Mr. O=Connor at the property.
Commissioner Poskochil asked if Mr. Jacobs was working for Mr. Zoob. Mr. Jacobs said he was working with him, making copies and being a runner. Commissioner Poskochil asked if Mr. Jacobs was a personal assistant for just Mr. Zoob. Mr. Jacobs said no, he was still working research on the side. Commissioner Poskochil asked if Mr. Jacobs was paid by Mr. Zoob or the company. Mr. Jacobs said the company was paying him a salary. Commissioner Poskochil asked about the origination of the call, and why it was transferred to Mr. Jacobs. Mr. Jacobs said the call came from the receptionist, possibly because she knew Mr. Jacobs was working with Mr. Zoob on projects. Mr. Jacobs did not know why, he just received the phone call.
Commissioner Poskochil asked if there were two showings. Mr. Jacobs said yes. Commissioner Poskochil asked if the first one was by himself with Mr. O=Connor, and the second was with Mr. O=Connor and his friend. Mr. Jacobs said yes. Commissioner Poskochil asked if Mr. Jacobs met with Mr. O=Connor a third time, at Mr. O=Connor=s office. Mr. Jacobs said yes, when he apologized for the timing and explained the golf outing. Commissioner Poskochil asked if Mr. Jacobs met with Mr. O=Connor a fourth time. Mr. Jacobs said yes, in the parking lot of the restaurant. Commissioner Poskochil asked if Mr. Jacobs informed Mr. O=Connor at any time that he was not a licensed agent. Mr. Jacobs said no, he did not.
Commissioner Moline asked who was Mr. Jacobs= direct supervisor. Mr. Jacobs said it was his employing broker, Mr. Heider. Commissioner Moline asked if Mr. Heider had explained Mr. Jacobs= duties as a non-licensed person. Mr. Jacobs said yes. It was a situation where he just crossed the line. Commissioner Moline asked if Mr. Jacobs helped other agents. Mr. Jacobs said yes, with running loop net searches and other general information. This was first time he ever showed property.
Commissioner Grady noted that Mr. O=Connor seemed to have a pretty aggressive personality, and was making demands on Mr. Jacobs. Commissioner Grady asked if Mr. Jacobs ever called a time out, and said he could not do what Mr. O=Connor requested. Mr. Jacobs said the first time, when he was just dropping off information and within that 24-hour time frame, he did not think he was stepping out of line. Now Mr. Jacobs knew he would back off, and tell the person he was sorry, but he would have to wait until Monday or Tuesday. Commissioner Grady asked what Mr. Jacobs had to say about the complaint that was filed against him. Mr. Jacobs said he disagreed with the allegation that he had a pompous attitude on Saturday. Mr. Jacobs was just trying to provide customer service, and told Mr. O=Connor to wait for when Mr. Zoob had time for him. Mr. O=Connor was very insistent on moving forward. When Mr. Jacobs thought about what happened, he now knew he was working as a licensed employee.
Chairperson Gale noted that Mr. Jacobs was working for Mr. Zoob, and asked if he was keeping him apprised of every step, or doing this on his own as an unsupervised employee. Mr. Jacobs said he was giving his broker a brief heads up on what he was doing Thursday and Friday. Chairperson Gale asked if he was acting in good conscience, and was trying to get the licensee involved to handle Mr. O=Connor. Mr. Jacobs said yes. He was trying to bring the two together, and it got a little confusing. Mr. Jacobs ended up trying to reassure Mr. O=Connor that Mr. Zoob would have time to meet with Mr. O=Connor. Mr. O=Connor would not take it that he could not talk to Mr. Zoob on Friday. That put Mr. Jacobs in a situation he should not have been in, which he realized after the fact.
Chairperson Gale asked if Mr. Jacobs knew he would receive no commission, no matter what happened. Mr. Jacobs said yes, he was just trying to make sure Mr. O=Connor was being taken care of, to keep the communication lines open for a couple of days. Chairperson Gale asked if Mr. Jacobs walk through the property and explained the building to Mr. O=Connor. Mr. Jacobs said he explained the information from the data sheet. He went through and walked the property, but he did not know a lot about it. Chairperson Gale asked if there was more reference to the data sheet than to Mr. Jacobs. Mr. Jacobs said yes. Mr. O=Connor was very informed of the area, and told Mr. Jacobs more than Mr. Jacobs told him. Chairperson Gale asked if Mr. Jacobs told Mr. O=Connor that he was not licensed. Mr. Jacobs said he did not.
Chairperson Gale asked if Mr. Zoob knew that Mr. Jacobs was not licensed, and asked if he was someone Mr. Jacobs knew before. Mr. Jacobs said his license was in question. Mr. Jacobs had an Iowa license, and Mr. Zoob did not know that Mr. Jacobs did not have a Nebraska license. Mr. Zoob was under the impression Mr. Jacobs was OK to work. There was a question of when the license would be transferred. Mr. Zoob was not informed until it was too late. Chairperson Gale asked if Mr. Jacobs told Mr. O=Connor that he could not do this. Mr. Jacobs said no. Chairperson Gale asked when Mr. Jacobs realized he was over the line. Mr. Jacobs said that, in dealing with Mr. O=Connor and being the only person who dealt with him, Mr. Jacobs realized soon after that he did not know enough to do showings by himself.
Chairperson Gale noted that Mr. Jacobs was licensed in Iowa, and there was a lot of pressure in the real estate business, with demanding people. Chairperson Gale asked if he had been exposed to that already. Mr. Jacobs said yes. Chairperson Gale asked how Mr. Jacobs could explain caving in this time. Mr. Jacobs said this was his first time dealing with the general public. He had been in a research analyst position. Chairperson Gale noted he had been licensed for two years in Iowa, and asked if he had not dealt with the public. Mr. Jacobs said no, he had never conducted any real estate business. Chairperson Gale asked what Mr. Jacobs had learned about himself, and how to handle himself. Mr. Jacobs said he learned to not put himself in that position without somebody by his side. Chairperson Gale asked what Mr. Jacobs would do when other people wanted him to cross some other line, like telling Mr. Jacobs he had their permission to sign their name. Mr. Jacobs said this was an eye-opener for him, and what it really meant. The situation was unfortunate, but he learned a lot from it. It had been frustrating for him. Chairperson Gale asked if Mr. Jacobs was still in research. Mr. Jacobs said yes.
Commissioner Johnson asked if there was some reason Mr. Heider was not here to vouch for Mr. Jacobs. Mr. Jacobs said no, he did not know the procedure, and thought it was just for him. Mr. Jacobs talked to Mr. Heider, and thought Mr. Heider would have come if asked, but Mr. Jacobs thought this was just something he could do.
Commissioner Shepard said he appreciated that Mr. Jacobs admitted making a mistake, and that he was here to do something about it. Commissioner Shepard asked if Mr. Jacobs prepared or wrote the offer, because the documentation said he kind of did, and kind of didn=t. Mr. Jacobs said that Mr. Zoob=s office was next to his. Mr. Jacobs gave Mr. Zoob the offer Mr. O=Connor faxed in, and typed up the offer per Mr. Zoob, using the document from Mr. O=Connor.
Commissioner Strand said he was concerned about one piece of information. At a May meeting, the broker had announced that Mr. Jacobs would be transitioning. After this happened in July, Mr. Jacobs applied to Nebraska to have a license issued. Commissioner Strand asked what in Mr. Jacobs= Iowa training would make him think he did not need a Nebraska license. Mr. Jacobs said that the background check took 6-8 weeks. Director Tyrrell noted that the FBI check was requested on July 14, then the report arrived in the Commission office on July 16. Mr. Jacobs had filed his application in a timely manner after the report was received. Commissioner Strand asked when Mr. Jacobs started the application process. Mr. Jacobs said he submitted his fingerprints at the beginning of June. Commissioner Strand said that was not long after the May announcement.
Commissioner Poskochil asked if Mr. Jacobs= broker had explained his unlicensed duties, and that he could not show properties or prepare offers. Mr. Jacobs said yes. Commissioner Poskochil asked if Mr. Jacobs had a clear knowledge of his duties. Mr. Jacobs said yes.
Chairperson Gale asked if Mr. Jacobs failed to disclose his criminal history. Mr. Jacobs said yes. He had two misdemeanors. He had an OWI when he was a freshman in college. Chairperson Gale asked if he was an adult offender, not a juvenile. Mr. Jacobs said yes. Mr. Jacobs was under the impression that convictions relating to any financial duties needed to be reported. Chairperson Gale asked about the charge of interfering with an officer. Mr. Jacobs said he was at a party the night of a ball game. Chairperson Gale asked about the restitution, and if there was damage to property. Mr. Jacobs said he thought that was for a car accident when he hit a culvert. Car insurance paid for the damage to the car, and the restitution was for damage to the culvert. Chairperson Gale asked if the restitution had been paid. Mr. Jacobs said yes.
Chairperson Gale asked if the charges resulted from only one situation. Mr. Jacobs said one happened in October, and the other was a month and a half later, so the court rolled them into one. Chairperson Gale asked if resisting an officer was a separate incident. Mr. Jacobs said yes. Chairperson Gale asked if it happened 7 years ago. Mr. Jacobs said yes.
Chairperson Gale asked if the question on the license application asked for only financial matters or those regarding honesty and integrity. Director Tyrrell read the question from the exhibit, and noted that it asked for any criminal offense conviction and any charges now pending. Chairperson Gale asked Mr. Jacobs if his interpretation of the question was that, if it was not a financial charge or fraud or embezzlement, he did not have to answer it. Mr. Jacobs said yes. Iowa had a similar question, and Mr. Jacobs went back and forth on what it meant. Mr. Jacobs clarified that there were only two convictions, not three. Chairperson Gale said he was questioning why Mr. Jacobs failed to list the convictions. Mr. Jacobs said he had a cloud over his head, and would like to do whatever it took to remove it.
Commissioner Poskochil asked why Mr. Jacobs had to make a special appearance. Director Tyrrell said the Commission had requested that Mr. Jacobs come in for a special appearance to find out the circumstances of the complaint filed against him. The Commission had a range of options, like with any other potential applicant. Mr. Jacobs had an application on file. Commissioner Moline noted that it was a reciprocal application, so Mr. Jacobs would not have to take the examination. Director Tyrrell said that was correct.
Commissioner Moline asked if the Commission could come back and deal with the complaint against Mr. Jacobs= license, if the Commission voted to issue the license today. Counsel Widger said there was no jurisdiction for the complaint right now. After the license was granted, the Commission could process the complaint. Commissioner Poskochil questioned if the Commission could address the complaint, since Mr. Jacobs was not licensed at the time. Counsel Widger said the Commission only had jurisdiction over licensees. If Mr. Jacobs had no license, the Commission did not have jurisdiction to process a complaint alleging violations of license law. The Commission could refer it to the county attorney for acting without a real estate license. Director Tyrrell clarified the question of whether the Commission could issue the license, then go forward with a complaint on an incident that happened prior to his being licensed. Counsel Widger said she did not know the answer to that. She knew there were a couple of articles on that, but she needed to refresh her memory.
Commissioner Strand said he was struggling with finding a way to move forward, to let Mr. Jacobs get a license, but send a clear message that his mistake in judgment was serious stuff. Even for customer-service-oriented mistakes, unlicensed people could not cross the line.
Commissioner Poskochil said he thought Mr. Jacobs could be an attribute to the industry. He noted Mr. Jacobs did not deny anything, and said he did wrong.
Commissioner Moline said Mr. Jacobs lied on his application, plus conducted licensed activity without a Nebraska license. That was two violations. The Commission had revoked a license this morning because the person lied on the application. Commissioner Strand said he was not seeing that misdemeanors had to be disclosed. Commissioner Moline said that applicants had to put them on the application. That was the difference. Commissioner Strand said the Commission staff would not know if applicants did not put misdemeanors on the application. Director Tyrrell clarified that, in a normal situation, if an individual did not report a misdemeanor and it showed up on the criminal history background check, staff called them to ask why it was not reported, and got the details of the situation. In all those instances, staff were told AI forgot@ or AI didn=t think it applied.@ Director Tyrrell had not necessarily brought those applicants to the Commission as having filed a false application, under the process staff currently used.
Chairperson Gale said he understood that 3 misdemeanors that long ago were not enough to say no, unless violence was involved. But when they were not disclosed, it was the same kind of avoidance of responsibility as not disclosing to a customer that the person was not a licensed professional. Mr. Jacobs seemed to be a very bright fellow, and Chairperson Gale appreciated his contrition, but both issues were very fresh. Chairperson Gale said he would like to see six more months pass, so that Mr. Jacobs could have a clean application and get it right. Chairperson Gale was not so sure he wanted to condone that kind of behavior without some consequence. The Commission relied on a good-faith, self-disclosure system. Chairperson Gale questioned the point of the application, if the Commission did not care if people lied to them.
Commissioner Strand noted that Director Tyrrell said the Commission would not ordinarily see other cases like this. Chairperson Gale said the Commission=s policy was to require a special appearance if there was a felony or a pattern of misdemeanors. Commissioner Strand said that should not be held against him in fairness, and that this was an extraordinary circumstance because of Mr. Jacobs= unlicensed activity. Without that, the Commission would not have known about Mr. Jacobs= failure to report the misdemeanors.
A motion was made by Johnson and seconded by Strand that Mr. Jacobs come back in six months for another special appearance.
Commissioner Grady asked if there was any precedent to send a strongly-worded letter to the employing broker and the other licensee, because they were aware of his activity, and the blame should be laid there. They quasi-condoned what Mr. Jacobs should not have done. He had a lack of experience, and they set him on the path. Commissioner Poskochil said he did not get that from the testimony, but that it was over 3-4 days regarding one transaction.
Commissioner Moline said he had been asking questions to get the other Commissioners= thoughts, and to keep the punishment the same. The employing broker knew Mr. Jacobs did not have a license, and had written the investigative report. Commissioner Moline said he could support having Mr. Jacobs wait 6 months, or waive that if Mr. Jacobs completed 6 hours of additional continuing education, if the Commission could do that. Commissioner Moline said the broker should get a letter, because he should not have kept sending off an unlicensed person to do that.
Chairperson Gale asked if the Commission had to have a complaint to require continuing education. Director Tyrrell said the Commission could put conditions on licensing, before or after licensure. Commissioner Moline said he wanted the education required prior to licensure. Counsel Widger noted that Mr. Jacobs had to have an appeal process, so the motion should state that Mr. Jacobs could do this or the license will be denied. That would give him a statutory avenue to the appeal process.
Commissioner Moline offered a friendly amendment that Mr. Jacobs had the option to either come back for another special appearance in six months, or complete six hours of continuing education to be determined by staff. If Mr. Jacobs chose to do neither, the application for licensure would be denied. The friendly amendment was accepted by the mover and the seconder.
Commissioner Poskochil asked if the letter to the broker should be included in the motion. Commissioner Johnson said the Commission should do that separately.
A vote was taken on the amended motion. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
A motion was made by Grady and seconded by Poskochil that Director Tyrrell send a letter to the employing broker and the direct supervisor of the licensee, with strong language that the situation had been improperly handled. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
Proposed Change to Agency Relationships Statute
Doug Ruge, representing CBSHOME Real Estate Company, presented an exhibit which consisted of a proposed change to the agency relationships statute. A copy of said exhibit is attached to and made a part of these minutes.
Mr. Ruge noted the background of the proposal. He and Joe Valenti had come before the Commission in approximately January, to discuss concerns with sections of the agency statute. Section 76-2422 said the parties had to specify compensation in the agreement with the seller. The scenario they presented was with new construction in a development, when the purchase price of the home and the terms of compensation were not worked out until there was a listing agreement, which was nearly the same time as the contract. There had been a misunderstanding about when to enter into a contract. In January, there was some discussion with the Commission about the confusion, and the Commission told Abbie and him to develop language to bring back to the Commission. Counsel Widger, Director Tyrrell, and Mr. Ruge got together and worked out the language.
Counsel Widger clarified that Mr. Ruge and Mr. Valenti wanted to make changes to the law. It was still the staff=s position that it was not necessary. The exhibit included the Spring 2004 Commission Comment article, which clarified the Commission=s interpretation on agency agreements. If Commission decided to go ahead with changing the statute, she and Director Tyrrell felt this language answered the concern that had been raised.
Mr. Ruge asserted that if the change was not made, people would be confused if they read the statute, and their agreement did not have a dollar amount or percentage specified. It was the Commission=s position that it was OK to say the compensation terms would be specified at a later date, but Mr. Ruge thought the statute was misleading.
Chairperson Gale asked if Mr. Ruge and Mr. Valenti were not necessarily proposing a legislative change, but asking for a rule. Commissioner Strand said no, they wanted a legislative change. Counsel Widger said they were asking if the Commission would oppose the legislative change. Director Tyrrell clarified that they also asking if the Commission wanted to introduce it, or would the Commission support it. Counsel Widger asked if the Commission wanted to wait until there was more to change in the statute.
Commissioner Moline asked if compensation was the issue to be addressed, to change the relationship with the builder. Mr. Ruge said they had initially asked for more changes, but this was paramount, so they focused their energy on this issue, which resolved some other issues.
Commissioner Moline asked if the Nebraska REALTORS7 Association had any comment on the proposed change. Perre Neilan, representing the Nebraska REALTORS7 Association, said the Association had not reviewed the proposed change.
Chairperson Gale asked if this applied only to single homes. Counsel Widger said it applied to compensation when a specific piece of property was under discussion. Mr. Ruge said the Commission had charged Counsel Widger and himself to propose language which addressed his concern. The Commission had not said what they would do with it when it was presented. Mr. Ruge thought the Commission was concerned enough to consider the changes. Chairperson Gale said he was trying to see how broad a change it was. Chairperson Gale said this would affect any new construction.
Commissioner Moline said his company was trying to do business as the language was now, and had been trying to do a document. Builders always said they did not want an agreement. Compensation ranged between 1% and 7%. The law required licensees to disclose who is working for whom, and the agreements tried to gloss over the compensation issue with ranges and maybes. Builders just did not want to understand this. Mr. Ruge said that did not solve the problem of having a signed agreement between the licensee and the builder which did not specify compensation terms. Chairperson Gale asked if the situation left licensees vulnerable to failure to disclose. Mr. Ruge said agency disclosure did not require compensation terms. Commissioner Moline said that, by statue, if there was not a written seller agency agreement, licensees were buyer=s agents. The conflict arose if a person walked into a show home.
Chairperson Gale noted that an agency agreement would protect the agent as a limited seller=s agent, when a builder wanted an agent to represent him regarding a property upon which, at some point, houses would be built. When a buyer wanted to buy a specific house, then a listing agreement could be made, before a contract was signed. Director Tyrrell said that, according to the proposed wording, the listing agreement could be signed on or before a builder=s acceptance of a contract to sell. The listing agreement could state the commission for that particular lot, before there was a buyer and a contract to sell. That was Director Tyrrell=s understanding as a lay person. Mr. Ruge said that was correct, and he thought the language brought that out.
Chairperson Gale noted that a licensee could be a limited seller=s agent, and represent a builder. While buyers considered different lots, a licensee was shielded from liability because of the agency agreement. Mr. Ruge said that was right. Chairperson Gale said that when a buyer wanted to make an offer, and the seller=s agent made disclosure, the buyer would want to know the terms of compensation. Commissioner Poskochil clarified that there were 3 potential possibilities. A licensee needed to ask the buyer(s) if they were represented by a buyer=s agent. If the buyer(s) were not represented, the licensee needed to disclose that the licensee is a seller=s agent. If the buyer(s) were represented, the licensee needed to get the buyer=s agent involved to represent them. If both parties agreed, the licensee could become a dual agent.
Chairperson Gale said he was just trying to think of the protection of the agent. Director Tyrrell said the seller=s agency agreement would indicate duties, a fixed date of expiration, and how compensation would be determined. That was decided on or before acceptance of a contract to sell on a specific new construction property. When a specific new construction property was close to a final deal, the seller=s agent and builder got together to determine compensation.
Mr. Ruge said a builder could refuse to sign a compensation agreement, in theory. It was driven by practice, which might vary a little bit. Chairperson Gale said he understood how the language worked, if no compensation was specified in the seller=s agency agreement and an agent worked on behalf of the builder, and the buyer(s) had their own agent. Chairperson Gale was afraid the seller=s agent would get cut out of the deal. Mr. Ruge said that did happen, but rarely. The agreement did not prevent the discussion of compensation, but it provided an avenue for dealing with builders who absolutely refused to discuss compensation.
Mr. Valenti said it was the broker=s job to protect the agent=s commission. Their concern was a slight disagreement on interpretation of the statute, for the licensee, that a compensation agreement must be reached prior to writing a contract. Mr. Valenti said they would enforce their own contracts. Mr. Ruge agreed.
A motion was made by Moline and seconded by Poskochil that the Commission adopt the language as stated in the exhibit; that the Commission find a senator to introduce the change; and that the Commission support the change.
Chairperson Gale asked if the Commission wanted to know if the Association was supportive or not, and whether they were involved at this point. Counsel Widger said the Association was not involved yet. She and Mr. Ruge had worked on it. Commissioner Moline said that, if the Association wanted to amend it, they could do it in the legislative process. Mr. Valenti said they would get involved at the legislative process.
Commissioner Johnson questioned the Aon or before@ provision. Counsel Widger said that Aon or before@ meant it would make it OK to do all the documents at the same time, rather than requiring a specific order of documents. If it only said Abefore,@ the documents would have to be signed in a very specific order. Commissioner Johnson said that, as a practical matter, it was better do it before. Counsel Widger said that one issue was whether the Commission would concern itself if a licensee did not have the compensation worked out. The Commission would need times written on documents, in addition to dates and signatures, and the examiners would have to review them for the proper time order. It was an enforcement issue. Staff had no problem if the Commission wanted to take out Aon or,@ but was concerned with enforcement if it just said Abefore.@ Mr. Ruge agreed with Counsel Widger that the language allowed all documents to be signed at the same time, and it was problematic to take out Aon or.@ Chairperson Gale said Commissioner Johnson was looking at protecting the licensee, like he was. That was not the Commission=s responsibility. Commissioner Poskochil said Aon or@ just said the Commission did not have to ensure in what order documents were signed. Agents would protect their interest. Chairperson Gale said agents will have to be careful and watchful.
A vote was taken on the pending motion. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, Strand, and Gale voting aye.
HearthStone Homes Compensation/Consideration Payment Issue
Director Tyrrell presented an exhibit regarding the HearthStone Homes Inc. compensation/ consideration payment issue. A copy of said exhibit is attached to and made a part of these minutes. Larry Jobeun and Kay Singles were in attendance to represent HearthStone Homes Inc.
Counsel Widger said Commission staff had received a one-page fax, and Director Tyrrell asked for more information from HearthStone. That information was provided in the exhibit. Director Tyrrell had invited HearthStone representatives for an informal appearance, because he felt the issue needed Commission input. It was the first time staff had seen this kind of program. Staff had concerns regarding payment of compensation. The program specified that licensees would be paid 2.4% of the lot price and the value of the home to be constructed, as a referral fee, when the deed was transferred. The applicable statute stated the compensation was earned when the transaction was consummated or terminated, not when the deed was transferred. Staff did not know whether a transfer of deed constituted consummation. The purchase agreement raised concerns, and did not indicate that the buyer had possession. The deed was passed, but HearthStone Homes Inc. retained a right to substitute, among other rights, after the deed was transferred. It seemed HearthStone was trying to prevent the seller from being on the property during building, so it seemed the transaction was not done yet. The purchasers got the title at the one-time close, but could not assign or transfer the title until the house was completed and they took possession. Staff had tried to work out language with Mr. Jobeun, but thought it would be better to bring it to the Commission for guidance.
Mr. Jobeun said the one-time close was a financing option. Purchasers got all the tax benefits right away, and still had HearthStone Homes Inc. construct the house. HearthStone kept pretty tight control in the development, and they were the only builder in the development. Title to the property was conveyed by deed, and construction rights were retained by HearthStone. The builder just retained the right to build the house. The purchase agreement became a building agreement. This was not mandatory, it was just a program for certain buyers. A national lender had said there was a lot of interest in this program, and asked if HearthStone was interested, which they were. It was more of a financing option, for the construction loan plus the permanent loan later. The buyer did the construction loan, and locked in on permanent financing also, all at one time. This was an advantage to the lender, the buyer, and HearthStone Homes Inc. HearthStone=s interest in maintaining tight controls was to prevent injuries during building, so it was clear the buyer could not occupy until it was done. It was a liability issue. There had been discussion of when possession occurred. The buyer was excluded from possession until the home was completed. If certain things did not happen, it reverted to the purchaser. HearthStone felt the transaction had been consummated. Mr. Jobeun did not know if anyone else in Nebraska was doing this, but it was being done across the country by First Horizon.
Director Tyrrell said the Commission has had the position that, if a lot was sold and there was a closing later on the house, the Commission did not mind if the compensation was paid on the lot. When permanent financing on the house was received, the licensee got the remainder of the compensation. As Director Tyrrell originally understood, with the one-time close, there was nothing else. The understanding was now that the one-time close was on a construction loan, then permanent financing kicked in later. Director Tyrrell did not see the difference between this program and the traditional method, since both involved permanent financing at a later date. It seemed like the same process, closing on the lot, then closing on the house later. Counsel Widger said the first impression was that the buyer did not have to close on permanent financing. Mr. Jobeun said it was a financing issue. HearthStone sold the lot, then the buyer got construction financing, then HearthStone constructed the house, then there was a second closing which only involved the buyer, not HearthStone.
Commissioner Grady asked if the buyer=s agent was out of the picture when the buyer signed the contract for the new construction. Ms. Singles said basically, yes. Communication was between HearthStone and the buyer. Lots of times, with regular transactions, HearthStone did not hear from the buyer=s agent after the contract was signed, and the buyer=s agent did not attend closings. Mr. Jobeun said that HearthStone had different programs. They have a choice center at Oak View Mall, where the buyer works directly with a HearthStone agent. The buyer=s agent did not help in those processes, and was out of the picture.
Commissioner Shepard said he read the exhibit many times. He kept coming back to the fact that lots of homes closed, but there was no possession for whatever reason, so the transaction was not consummated. Commissioner Shepard thought it would open a can of worms if the Commission made an interpretation on anything other than the contract. Mr. Jobeun said he agreed that many times there was no possession. His position was that the transaction was consummated at the transfer of the deed, and he thought the IRS would agree with respect to the real estate itself, not the house.
Commissioner Moline asked if this program was for the benefit of the consumer. Mr. Jobeun said yes. Commissioner Moline noted the ad was directed to licensees, and said it was a benefit to the licensee and the customer. It was really a client agency relationship. HearthStone was asking licensees to bring buyers to them, deposit them on HearthStone=s doorstep, collect their check, and be gone. Licensees had buyer=s agent responsibilities to be an intermediary between the builder and the client. Licensees were to protect the client from the builder, if needed. Commissioner Moline was not sure this protected the consumer. Also, if there was a complaint, it would involve the licensee. Mr. Jobeun thought Commissioner Moline would not worry if he saw HearthStone operations and how they do things. Commissioner Moline said once the dike was opened, that was over. Mr. Jobeun said HearthStone did not have a policy of discouraging agents from staying involved, and they could come to the choice center with the buyer. Ms. Singles said once a contract was done, there was nothing else to negotiate. Some agents stayed with the buyer, some did not. Commissioner Moline said some stayed until they got paid, and this would not require that.
Commissioner Poskochil asked if buyer=s agents could keep involved. Ms. Singles said they could, until the closing of the home. Buyers were obligated to that lot, and there was no turning back after the closing. Buyer=s agents could come to the closing. Mr. Jobeun said the lender had protections, too. Commissioner Moline asked if licensees could bring in other lenders. Ms. Singles said no. HearthStone set it up in the contract to do draws against the construction loan.
Commissioner Moline asked if the lender guaranteed to the buyer to arrange for a title company, lien releases, etc. Ms. Singles said there was a document from Horizon, which they may have to modify later. Mr. Jobeun said that HearthStone Homes Inc. agreed to deliver the home lien-free. Commissioner Moline asked if the lender would guarantee the financing if something happened to the builder. Ms. Singles said yes, the lender wanted final financing on the home, so buyers could not hang on to the construction loan. Commissioner Moline said buyers also could not sell their interest, and could not go on the property. Commissioner Poskochil said that could be done in any contract.
Chairperson Gale said that judges adamantly opposed any conditions subsequent. The buyer would have the deed, but the deed holder could not encumber, transfer, or access the property. There was not a completed transfer of title, so that the buyer would not be subject to vague conditions subsequent that could deprive the buyer of title. Also, the real estate agent=s job was to protect the client. With HearthStone telling the buyers they could not come onto the property, Chairperson Gale questioned who would tell the buyers that the house was inspected and whether it was done according to specifications. With discharging the buyer=s agent, no one was making walkthroughs, etc., for the buyer. The buyer=s agent=s job was not to just get a check, the job was to complete the transaction. Chairperson Gale did not see a consummated transaction.
Commissioner Poskochil asked if HearthStone had been using this program for quite a while. Ms. Singles said they were just starting. It was an awesome program, and buyers loved it. Mr. Jobeun said buyers got the interest deduction immediately. This program was usually used for larger homes, and gave buyers tax benefits.
Commissioner Moline asked what would be the loan amount if he closed today. Mr. Jobeun said it would be the purchase price of the lot, plus the construction loan. Commissioner Moline said buyers would begin paying interest immediately. Mr. Jobeun said yes. Commissioner Moline asked how that benefitted the buyer. Mr. Jobeun said it allowed the HearthStones of the world to do more customization, and provide better service. Commissioner Moline asked if buyers had to build with HearthStone if they bought a lot from them. Mr. Jobeun said yes, for a multitude of reasons. It was a community development.
Commissioner Poskochil asked when HearthStone was paid after closing with the buyer. Mr. Jobeun said they were paid in draws throughout. The first draw was for the lot, then percentages based on the percent of construction completed, to completion. Commissioner Poskochil asked if HearthStone had an incentive to complete the homes. Mr. Jobeun said oh, yes. The percentage of construction equaled the percentage of the draws. Ms. Singles said all their employees were salaried, and they paid a referral fee if there was a buyer=s agent.
Commissioner Moline asked if the builder requested the draws. Ms. Singles said yes. Commissioner Moline asked if only the bank and the builder had to agree to the draws. Ms. Singles said yes. This was a national lender, and they would not allow HearthStone to have money they had not earned. The lender went out to verify the construction, then draws were made.
Commissioner Poskochil said the Commission=s issue was paying the 2.4% referral fee. Director Tyrrell said if it was paid on the lot only, this issue would not be here today. Commissioner Poskochil asked how compensation was usually done. Director Tyrrell said the Commission position had always been that when a lot was sold, the licensee could get compensation on that; then when the house closed, the licensee got the rest of the compensation. HearthStone was changing it to the licensee getting all compensation when the lot closed, was how it looked to him. Counsel Widger said it also looked like that to her. It was a shift in philosophy.
Commissioner Poskochil said HearthStone could pay 2.4% when the house was constructed. It was not an issue of the form used. Director Tyrrell noted that would be prior to consummation or termination of the contract. Commissioner Poskochil said it was an issue of when licensees got paid.
Commissioner Strand asked about the lending practice involved. Counsel Widger said that was outside the purview of the Commission.
Commissioner Johnson said an Omaha builder did this years ago, then went broke. It had been tried in Omaha before. Ms. Singles said she thought there were still some others doing it.
Commissioner Johnson said a good agent would follow through. Even today, with most tract home builders, lots of agents forgot the buyers after depositing them at the builder=s door, until closing day. Commissioner Poskochil said lots of builders directed all communication to the buyers, which made it hard to stay involved, when the builder and buyer bypassed the licensee until there was a problem. Commissioner Strand said that if he were an agent, he would ask for the buyers= signatures that they were aware such a process limited his ability to act on their behalf. Mr. Jobeun said HearthStone did not discourage buyer=s agents.
A motion was made by Moline to reaffirm the Commission=s current policy, that consummation was when the house was done and the buyer could move in. Director Tyrrell asked for clarification that this program=s closing would not be considered consummation. Commissioner Moline said that was correct. Johnson seconded the motion for discussion.
Chairperson Gale said that, for buyers who acted without a realtor, caveat emptor. If people chose to act without a lawyer, it was their right. If a buyer brought in a professional licensee, whose job was to protect them until the key turned in the door, this program would not protect them. Chairperson Gale supported the motion because of that.
Commissioner Grady asked if HearthStone would consider modifying the program to meet the current criteria, yet take advantage of the one-time close. Chairperson Gale asked Director Tyrrell if a question could be asked during the discussion of the motion. Director Tyrrell said he thought so, since it was not a disciplinary hearing. Mr. Jobeun said HearthStone had given the program a lot of thought and background, and had been working on implementing the program for a year and a half. They would have to discuss it with their management, who negotiated the program with the lender.
Commissioner Moline said it would be simple to pay the compensation at the last draw. Director Tyrrell said licensees could get part of it on the lot. Commissioner Poskochil said that was just working around this thing. Chairperson Gale said there was even a question of consummation on the lot, with a transfer of title but the buyer could not be on the property. Director Tyrrell said that had been done on lots. He did not know how many other builders say the buyer can have no access to the lot. Builders had previously been able to pay compensation on the lot price, but an argument could be made that the lot was not consummated. Chairperson Gale said that, if the Commission was to enforce current policy, someone else had to make the decision on when the lot was consummated.
Mr. Jobeun said the whole idea was to get homebuyers to go in this direction. If an agent told buyers to not go this way, because the agent would get compensation up front if a house was already built, that might be a disservice to homebuyers if an agent dissuaded them based on getting compensation later. Ms. Singles said that, even when selling an existing home, the buyer usually could not have it for 6 months, with lease back options. Mr. Jobeun said the exclusion on possession was for liability. The buyer=s safety, security of possessions, and possible damage to premature landscaping were among the reasons for the restrictions. Commissioner Moline noted that the ad enticed agents to bring people in because the agents would get paid prior to possession.
Commissioner Shepard asked if a license was required to sell personal property. Counsel Widger said no, and noted that a couple of companies said a house was personal property until it was attached to the ground. Commissioner Shepard asked if the Commission would have jurisdiction if someone sold the buyer everything they needed to build a house, and got a commission for it. Counsel Widger said the Commission had no jurisdiction over personal property. Commissioner Shepard said he thought HearthStone could do this legally, and pay a commission on personal property.
Chairperson Gale said that, once building materials were attached to the property, they were subject to a real estate lien. A lien could not be imposed if the materials were not attached. Counsel Widger said that, if it was just lumber, it was not an improvement to the real estate, it was personal property. Chairperson Gale noted it was not owned by the buyer.
Commissioner Shepard said people could sell a kit to build a house, and get paid for selling it, without being responsible for the real estate. HearthStone could just change the contracts and circumvent the issue. That would not be a good thing, because people would not really be represented, and there would be no agency disclosure required. Commissioner Shepard did not want to render an opinion on the issue today.
Commissioner Grady asked if the discussion should be tabled. The issue was not one-size-fits-all. Some builders did not want the agent messing up communication with the buyer, and some wanted the agent to do it all. Some people would want this option, and others would want the realtor to tell them what to do and what not to do.
The motion was withdrawn by the mover and the seconder. A motion was made by Grady and seconded by Shepard that the Commission postpone the discussion to the next meeting, and have Counsel Widger determine if it fit within the Commission=s jurisdiction.
Mr. Jobeun said HearthStone could rethink the program, and come back with something else. Director Tyrrell suggested that Mr. Jobeun and Counsel Widger get together to see if there was somewhere to go with the program. Commissioner Grady said that was the general intent of his motion. Counsel Widger asked if the Commission wanted her to review the lender documents. Commissioner Moline said the lender was not under the Commission=s jurisdiction. His concern was that real estate agents followed dollars very quickly, and that was why the ad was there. If this was allowed, every other builder would do this, and there would be consequences when these things went bad. The real estate agent would say the transaction was consummated, so they had nothing else to do with it. If anything went wrong, it was always the agent=s fault. Attorneys and errors and omissions insurance companies would say that agents had responsibilities, and needed to be held to that.
Director Tyrrell said that, when it went bad, a defense attorney would work backwards and say that since the Real Estate Commission approved paying the commission at that time, the Commission said the transaction was consummated or terminated at that time, so it was terminated by the agreement of the parties. The Commission had approved the program, therefore there was a termination of the agency relationship. Commissioner Johnson said that was not the best for the consumer.
Commissioner Strand said he was troubled that a contract was in the Commission=s jurisdiction. Commissioner Moline said the Commission could only control when compensation was paid. Commissioner Strand said that, under Director Tyrrell=s scenario, the licensee kept the responsibility and liability if the licensee was not paid at consummation. Commissioner Strand understood the consumer concern, but did not know if it was fixable from the Commission=s jurisdiction.
Commissioner Shepard said there were a number of issues regarding possession. If a transaction was closed, but the seller maintained possession for 90 days under a contractual agreement but not a lease agreement, was a licensee in violation? How long was too long? If a transaction closed, a buyer needed insurance, even if the buyer was not in the house. The buyer was allowing the seller to occupy the house, but there was transfer of title. The buyer waived possession, but was assuming risk.
Chairperson Gale said the Commission could do nothing, and allow the market to decide. The Commission could wait and see how the tide rose. Maybe there would be a complaint against HearthStone, or maybe against the realtor. The Commission could take up complaints on a case-by-case basis. It was hard to anticipate all the horrible things that could happen. The Commission was not a legislative body, it was a hearing body. The Commission was not structured to do advisory opinions. That was not geared for the Commission=s procedures. Chairperson Gale was willing to continue the item to the next meeting.
Mr. Jobeun asked when the next meeting was scheduled, and noted that HearthStone had closings coming up. Mr. Jobeun asked if this would be handled on a case-by-case basis for now, because he wanted to close under the current program for now, if that was OK. Commissioner Moline said that was not OK with him. The law is the law, and HearthStone was at risk if it was not compliant with the law. Director Tyrrell noted that the next Commission meeting was October 18-19 in Lincoln. Chairperson Gale said HearthStone=s attorneys needed to decide if it was a big risk or a small risk to go forward with the current fee arrangement. It was HearthStone=s decision. Mr. Jobeun said thank you.
Criminal History Background Check Update
Deputy Director Hoffman presented an exhibit regarding criminal history background checks. A copy of said exhibit is attached to and made a part of these minutes.
Deputy Director Hoffman said this was a progress report on criminal history background process. Schools had made it past the learning curve, and the staff had incorporated it into the licensing process. Deputy Director Hoffman indicated the report had statistics on where we are today. Staff will continue to monitor these statistics. An area of persistent confusion was pointed out on page 3. This addressed the requirement that applicants keep the report timely to the application, which has to be filed within 90 days of the report. Deputy Director Hoffman was not sure where the misunderstanding was coming from, but some applicants thought they only had 90 days to pass the test and get licensed. Schools are being advised to help remedy such misunderstandings.
Chairperson Gale asked what was the period of time it took to get a report. Deputy Director Hoffman said that had been consistent for the last 6 months, and averaged 33 days. Health and Human Services had funded a position for a staff person to process their fingerprint reports, which will free up staff at the Nebraska State Patrol, which had moved into a larger facility. Patrol staff were still optimistic for a 2-week turnaround in about 3 months, when new staff would be trained and in place. Deputy Director Hoffman noted the State Patrol also had a learning curve.
Commissioner Strand asked if the schools understood the process and were helping people get the process started. Deputy Director Hoffman said that more people were contacting staff very early, before they started class. The schools and recruiters were emphasizing it more.
Director Tyrrell noted that he had discussed with Lt. Sheldon the possibility of the Commission funding a staff position, like Health and Human Services. Lt. Sheldon had talked to the Captain, and he did not want to do that at this time. It would only be funding for a part-time position, because the Commission only had about 100 applications a month. The Captain would keep the possibility open, but they were not willing to do it at this time. Commissioner Strand asked that staff keep watching, because statistics could be deceiving and priorities changed. Commissioner Strand said the Commission could fund a part-time position, to make our reports a priority. Director Tyrrell said reports are now done as they arrive, and are not prioritized. Deputy Director Hoffman clarified they were only prioritized if there was a danger of bodily harm. Deputy Director Hoffman said staff was keeping track of each report, in addition to watching the averages.
Deputy Director Hoffman asked if the Commission wanted the exhibit published, or something done with it. Commissioner Moline said he was taking his to share with his company=s sales managers. Director Tyrrell said this was one issue to discuss with the Nebraska REALTORS7 Association. Deputy Director Hoffman said she would make the document available.
Commissioner Grady said he knew of a young man who got his fingerprint report done, then his education got delayed, and the report expired. Deputy Director Hoffman said she would be happy to visit with the school he attended, to emphasize that the application merely needed to be submitted, which did not require that all education be done. Commissioner Grady said it was miscommunication. Deputy Director Hoffman said there were not many reports that expired, because staff just needed the application on file.
Director Tyrrell asked if the Commission wanted staff to update the statistics and run this as an article for the December Commission Comment. Director Tyrrell noted the Commission Comment was sent to all educators, brokers, and salespeople. Commissioner Moline said it was unlicensed people who were getting it wrong, but it was up to staff. Chairperson Gale said it might help everyone, because people asked friends who were in the business, and might be given the wrong information. Commissioner Johnson said it would help everyone, because all licensees did recruiting. Chairperson Gale said staff did a good job on the exhibit.
Commissioner Strand noted that the Commission had the opportunity to perceive a deceptive applicant yesterday, and was worried about the application question regarding criminal convictions. Commissioner Strand did not want to see more applicants who had simply forgotten, and was fine with Director Tyrrell=s discretion in that area, but thought maybe a little more instruction to applicants might be helpful. Perhaps the question could be put in a different light. Director Tyrrell noted that most of the time, regarding a minor in possession 15 years ago, people thought it was a juvenile record and was sealed. The situation yesterday was not. If the Commission would like people to come to explain all omissions, Director Tyrrell could do that. Director Tyrrell was trying to determine what the Commission wanted. If there was a felony, it would be brought to the Commission. Commissioner Moline said he supported Commissioner Strand=s suggestion to explain the question further, and to also tell managers at a management workshop to tell applicants to be sure to put down everything they have done. Director Tyrrell said staff could put something in the fingerprint instructions, as well as the general instructions. Commissioner Strand said some things were intuitive, but if an applicant had a couple of recent DWIs, he would want to have that person come before the Commission.
Commissioner Grady asked if the background search picked up all misdemeanors, as well as felonies. Director Tyrrell said yes.
Commissioner Poskochil asked if a law requiring background checks for truckers was coming soon. Director Tyrrell said that Lt. Sheldon felt that, with the current staff and situation, it should not affect the timeline. Lt. Sheldon was fairly sure that the delay would be down to about two weeks by the end of the year.
Chairperson Gale noted that additional security requirements were coming in from all directions, in every possible way. At the Capitol, they were converting the doors to require an ID card after hours and on the weekends. That had been resisted by the Legislature, but it was coming. Even voter registration records were being checked against conviction records. Staff should monitor the situation to see if a staffing problem developed with the State Patrol as more checks were required.
No action was necessary on the report.
Director Tyrrell presented an exhibit which consisted of the Commission=s 2004-2005 objectives. A copy of said exhibit is attached to and made a part of these minutes.
Commissioner Moline said he would like to see staff and educators foster a risk management emphasis to agents. In the long run, that would help all licensees. Director Tyrrell asked if Commissioner Moline had specific suggestions. Commissioner Moline wanted staff to develop a plan. He did not know what the best plan would be, because he was not an educator. Chairperson Gale asked if he was asking for a risk management emphasis in continuing education. Commissioner Moline said he wanted to get licensees thinking about what they were doing. That would lead to fewer lawsuits, and less money for errors and omissions insurance. Deputy Director Hoffman said she could put articles in the Commission Comment. Commissioner Moline said he did not want to put parameters on it. Commissioner Grady said the current classes were very well received, and that hearing it from somebody more than 50 miles from home seemed to help.
Commissioner Shepard asked if the Commission had ever done broker workshops over the years, to reach smaller brokers regarding risk management. Commissioner Shepard knew brokers could call Commission staff at any time, but wanted to know if workshops had ever been tried. Director Tyrrell said the Commission used to hold a license law workshop every year, prior to continuing education requirements. When continuing education requirements went into effect, staff continued the license law workshops for a year, and made it available for free continuing education credit. Across the state, registrations usually exceeded the facilities. There were almost double the registrations, or at least half again, for the seats available. Staff ran another set of workshops in the spring for those who had previously signed up but could not get in. Providers complained that they could not compete with the Commission offering free continuing education, so the Commission decided not to offer continuing education credit for the workshops. The Commission had also offered errors and omissions insurance workshops without continuing education credit. Staff also went to company meetings and local boards to speak throughout the year. Commissioner Shepard said he did not intend it as continuing education, just as general information, perhaps on the most common mistakes found during trust account examinations. His idea was so brokers could ask questions before problems arose, not when an examiner was in their face during an examination. Director Tyrrell said staff could try to do a trust account course offered a couple of times per year, and anyone who had been licensed since the last one would have to go to next one. The course would also be open to others who wanted to attend. Staff could look into making it a part of the licensing process. Commissioner Shepard said he just wanted to bring it up. He remembered one he had attended at the Cornhusker, which was poorly attended, but the questions were great. Commissioner Shepard thought people were intimidated to come. Director Tyrrell said the session was probably called AAsk the Commission,@ and done as part of the Nebraska REALTORS7 Association=s annual meeting. Those were done more consistently in the past, and were now done every couple of years. Director Tyrrell said he could bring a proposal to the Commission. Commissioner Shepard said he did not know what the other Commissioners thought, but he thought it was good, and maybe it should start with typical trust account problems. Commissioner Shepard said he would like to see it happen once, and see how it went.
Commissioner Strand said that item 2 on the list seemed like a fait accompli, the way it was worded. He would prefer it to say the Commission would review and research the contract, not just renew the contract. Commissioner Strand said he wanted to make sure the content of the examination related to the content of prelicense education, and that he was told some course work was irrelevant to the questions asked on the test. Deputy Director Hoffman said that was unfortunate wording on the exhibit. She explained that the contract gave the Commission options to renew. Staff will have a contract renewal proposal next month, and the Commission could then choose to renew the contract or send out a new request for proposals. Commissioner Strand was concerned that the test reflect the industry and the curriculum in the classroom. Deputy Director Hoffman offered reassurance that the tool used to do that was the job analysis, and the outline of the test came from that. She noted that the major examination companies followed the psychometric process, which relied on the job analysis to keep examinations germane to the industry. AMP analyzed the question bank to make sure it correlated to the outline. Commissioner Strand asked that pass/fail statistics from other states be reviewed. Since our rate was consistent at 50%, if others were at 65%, that may indicate their examinations were more geared to the industry.
Chairperson Gale said the objectives were not to be discussed with staff, unless Commissioners want staff input. The Commission needed to decide what it wanted as goals for next year. If Commissioner Strand wanted his item to be voted on by the board, he needed to pull it into precise language so it could be included in the objectives. Commissioner Strand said he just wanted more meat in the examination. If the wording on this exhibit meant renewing a multi-year contract, then the wording was OK as presented.
The agenda item was recessed for the Reed hearing.
When discussion resumed, Director Tyrrell noted the Commission could adopt the objectives conceptually at this meeting, or at the next meeting if they wanted to review the actual language.
A motion was made by Strand and seconded by Moline to adopt the 2004-2005 objectives as presented, with Commissioner Moline=s conceptual addition regarding risk management.
Chairperson Gale asked if the objectives needed to be submitted for the biennial budget. Director Tyrrell said no, it was a working document which included things that the Commission wanted to accomplish in the next year. For instance, with the Ritums case, staff discovered that what they thought was happening with revoked license files was not happening. Under the old system, if the file was destroyed, all records were gone. Now, notations remained in the computer file forever, and staff was now going to retain the revocation files forever. That required an adjustment to the retention schedule. These objectives were different than the narrative required through the budget process.
Commissioner Grady asked who handled Commission records. Director Tyrrell said they were stored by Records Management, which was under the Secretary of State=s office. Records were sent there for retention, according to the Commission=s record retention schedule, then destroyed. Certain general records, such as budget and expenses, were retained under the Division of Administrative Services and the Governor=s Office records management policy. The Commission=s schedule was for documents specific to our agency. Director Tyrrell will bring the revised retention schedule to the Commission during the next fiscal year.
Chairperson Gale said that, from his experience in the Secretary of State=s licensing division, there was an increasing concerned with professionalism. With the HearthStone approach, it was a concern that realtors retain their professionalism in that situation. There were increasing concerns with notary professionalism, whether notarizations were lawful, correct, or competent. His office did 17 free seminars to help notaries learn about the new law, and to emphasize professionalism, that notaries needed to be competent and worthy because of the public trust placed in them. It was not just getting a ticket to earn a living; there was a high fiduciary duty for the people being served. Nobody had been communicating that to notaries for 30 years. A license was professional, not just a job ticket. Chairperson Gale said he did a lot of speeches, but he was seldom invited to gatherings of realtors to talk about the profession of realtors. Chairperson Gale said Commissioners had an obligation to make themselves available to do that.
Commissioner Strand asked if this discussion was germane to the agenda item. Chairperson Gale said yes, in terms of public relations, and in terms of the objectives. Chairperson Gale asked if the Commission had a frequently-asked questions section on the website for licensees or the public. Chairperson Gale said the Commission needed to be out addressing issues of professionalism, or decide whether to leave that to the Realtors Association.
At 11:18, Commissioner Strand was excused for the remainder of the meeting.
Commissioner Johnson said that if Chairperson Gale wanted to make it known that Commissioners were available for public speaking, the demand would be overwhelming. Chairperson Gale asked if Commissioners did that as a board. Commissioner Moline said he did not do it as a Commissioner, but as himself. He discussed it twice a week in sales meetings, and talked about it all the time. 78% of being a broker was doing that. It could be augmented by an emphasis on risk management. The discussion was happening, and needed to be encouraged.
Chairperson Gale said he raised it as an issue because it was an obvious issue in his office. The Bar Association emphasized it to local groups. Chairperson Gale did not know if staff already did it, or if Commissioners needed to do it.
Commissioner Poskochil said that ethics, fair housing, and professionalism were all addressed at the board level through the Nebraska REALTORS7 Association. The Commission may not see it directly, but it was provided through the boards. Commissioner Moline said the National Association of REALTORS7 required an ethics class every 4 years, and every Lincoln board member was required to take fair housing. The Nebraska REALTORS7 Association met with every board, and addressed a number of issues regarding professionalism. The statewide tour was scheduled to leave in the next 2 weeks. Chairperson Gale said the Bar Association did not have a mandatory course. It appeared the Realtors Association was taking care of the issue. Commissioner Moline said Commissioners could make themselves available to speak at conventions, to reach more people regarding professionalism.
Commissioner Johnson said that Commissioner Shepard brought up a point yesterday with which he tended to agree. There may be an element not getting what the Commission would like them to get, probably small brokers who were not members of the Nebraska REALTORS7 Association. Some small brokers were very professional, and some were not. There were some brokers who refused to cooperate with other brokers. The message might not reach that group of brokers, who were probably bankers or insurance people primarily. Real estate may be a secondary income, but could still cause problems from an occasional transaction. Commissioner Shepard said he thought brokers wanted to be professional. He thought they possibly did not look at the Commission as a resource for help, but as bad guys who would take their licenses away. Commissioner Moline said Commissioner Shepard hit it on the head. People who were outside the mainstream profession may not follow the issues closely. Chairperson Gale noted they were still subject to continuing education requirements. Commissioner Shepard said that brokers in smaller towns did not have experience with issues that arose in dealing with a high number of transactions.
Director Tyrrell said that staff were asked to attend board meeting lunches and specific companies= sales meetings to address certain issues. Through the trust account examination program, staff were sitting down with small brokers in their offices and doing training based on their trust account examination. Director Tyrrell consistently got compliments from small and large brokers regarding the examiners. To some degree, staff was seeing that smaller brokers were using the Commission staff as a positive resource, too. That did not mean that some brokers were not apprehensive when examiners or Director Tyrrell called. There was less fear of the Real Estate Commission today, and more thoughts that the Commission was here to help, than 20 years ago, or even 5 or 10. That was the input received from brokers across the state. Director Tyrrell had no problem coming back with a program to go out and answer questions, like the AAsk the Commission@ sessions. Scheduling would be spotty, based on the time of year, but staff could do it.
Commissioner Shepard clarified that he did not mean to say that the examiners were not helpful. Director Tyrrell said it was not taken that way. He just wanted to note that, in general, the Commission was getting some of that through the trust account examination process. The general attitude was great when the examiners walked through the door. Commissioner Grady noted that was only one-on-one contact. Perhaps the Commission should consider additional staff, so examiners were in every office every so often, even if the broker had no transactions. People looked forward to the examination now. Director Tyrrell noted that the trust account examination schedule was once per year with every broker, or twice per year for large firms with more than 500 transactions. Commissioner Johnson noted the examination process had been adjusted within the last year, and the Commission had changed the examiner workload so that they could get to each office every year. Commissioner Moline noted it had been less often in the past.
Chairperson Gale said the discussion had been very helpful to him. The major resources for the industry were mandatory continuing education, the Nebraska REALTORS7 Association=s ethics course requirement and emphasis on professionalism, interaction with trust account examiners, and active staff involvement. Chairperson Gale thought his concerns were pretty well covered.
Commissioner Poskochil noted that some consumer-oriented information was distributed at ARELLO meetings, and asked if anything needed to be done to enhance consumer help. Commissioner Johnson said he had a really minor point, that the Consumer Guide as printed from the website only printed down the center of the page, which wasted a lot of paper. Our Consumer Guide ranked right up there, and British Columbia=s was good too. Director Tyrrell asked if Commissioner Johnson wanted the website copy to print in an 82 x 11 format. Commissioner Johnson said that was exactly what he wanted.
Commissioner Grady said he did not know where the Commission was with prelicense education via the internet, but it seemed the potential was unlimited. The Commission should look at getting into the 21st century on that. Also, bilingual testing and education were on his radar too. He had discussed with Director Tyrrell that California required testing in several languages. With the increasing Hispanic population, it should be considered. He had noticed that a sign for a car lot advertised that they spoke Spanish. The Commission should be able to keep up with used car salesmen.
Commissioner Moline asked if ARELLO was addressing prelicense education over the internet. Deputy Director Hoffman noted that Nebraska prelicense education was different than in most states, as far as content. It was expensive to develop internet courses, and providers liked to mass market a single course to multiple jurisdictions. Providers would need to develop courses specifically for Nebraska, and have not done that so far. Two schools currently offered prelicense education through correspondence courses, and were exploring the internet option, so there was movement in that direction. Deputy Director Hoffman had also talked to the University of Nebraska, which was interested in pursuing prelicense education on the internet. Deputy Director Hoffman will continue to monitor the situation and encourage development.
Deputy Director Hoffman noted there were really good continuing education courses available about working with people of different ethnicities. One provider from Iowa included phrases in Spanish, and how to properly use interpreters. Deputy Director Hoffman had checked with licensing examination companies regarding administering tests in other languages. Only Kentucky offered a licensing examination in another language, in Spanish, and only by request. Psychometrics said that if a person got a license, it allowed the person to work with the general public, which was English- speaking. Laws and court documents were in English, so psychometrics said the licensing examination needed to be in English. For the most part, examination companies were not offering examinations in other languages, and the courts have not identified language as a necessary accommodation.
Chairperson Gale noted the flip side was to educate the public on its rights and obligations regarding real estate transactions. Voter guides were being prepared in Spanish and English, and will be available on the Secretary of State=s website. The Governor will soon hire a bilingual specialist for Hispanic issues in his office. Deputy Director Hoffman noted that agency brochures were available in Spanish and Vietnamese, and continuing education courses offered information on different ethnicities. Staff were seeing more varied ethnicities seeking licensure, especially from Eastern Europe. As various ethnic populations increased, so would the number of licensees from those ethnicities, and the Commission would see those communities better served. Staff were facilitating it as much as they could. If Commissioners had suggestions for education and additional resources, Deputy Director Hoffman would be happy to hear them.
A vote was taken on the pending motion. Motion carried with Grady, Johnson, Moline, Poskochil, Shepard, and Gale voting aye, and with Strand not participating or voting, being absent and excused.
Discussion Regarding Required Risk Management Activities
Commissioner Moline noted that HomeServices had a program of risk reduction through education. Since all licensees were in the same errors and omissions insurance pool in Nebraska, with a good history, it never hurt to promote risk reduction. Commissioner Moline asked if it was possible to require risk reduction continuing education in a particular cycle. If licensees took classes, hopefully there would be fewer claims, which would benefit all licensees in the long run. It would also help brokers understand what created or helped to avoid problems. Commissioner Moline knew Williams Underwriting representatives came once, but he was hoping for something more involved. Commissioner Johnson noted that Dick Williams had put on an excellent program, but just a few people were in attendance. Commissioner Moline said it behooved the Commission to encourage risk reduction education consistently.
Chairperson Gale asked if the education should be required of salespersons or brokers. Commissioner Moline said both.
Director Tyrrell said the Commission could make risk reduction an R course as an agenda item. It did not require a rule change. Risk reduction would be one of 9 subject matters designated as R courses. Deputy Director Hoffman said she would be more than happy to pursue instructors to come to Nebraska to address the topic. Commissioner Moline said he also asked the Nebraska REALTORS7 Association to think about it. Commissioner Moline asked Deputy Director Hoffman to consider the content, and give a report on course content and whether it should be an R course. Deputy Director Hoffman said she thought the Association had brought an excellent speaker on the subject to Nebraska about 4 years ago.
Chairperson Gale said the Commission had an excellent example today of a person edging toward the parameters, then was suddenly over the line. The broker had several opportunities for better supervision and communication, but suddenly someone was in trouble. That was an example of what could be avoided with risk reduction training.
2004-2005 ARELLO Working Group Sign-Up Form
Director Tyrrell noted that the ARELLO working group sign-up form should be completed and submitted as soon as possible, indicating committee preferences under the interest areas.
No action was necessary on this report.
Future Meeting Dates
October 18-19, 2004 - Ramada Limited South, Lincoln
November 18-19, 2004 - Days Hotel Carlisle, Omaha
January 12-13, 2005 - Staybridge Suites, Lincoln
February 15-16, 2005 - Staybridge Suites, Lincoln
Recesses and Adjournment
At 10:51 a.m. on September 15, Chairperson Gale declared a brief recess, and reconvened the meeting at 11:04 a.m.
At 12:30 p.m. on September 15, Chairperson Gale declared a recess for lunch, and reconvened the meeting at 1:40 p.m.
At 4:00 p.m. on September 15, Commissioner Strand was excused for the remainder of the day.
At 4:00 p.m. on September 15, Chairperson Gale declared a brief recess, and reconvened the meeting at 4:10 p.m.
At 4:56 p.m. on September 15, the meeting was recessed until 9:00 a.m. on September 16.
At 9:00 a.m. on September 16, Chairperson Gale reconvened the meeting.
At 10:18 a.m. on September 16, Chairperson Gale declared a brief recess, and reconvened the meeting at 10:30 a.m.
At 11:18 a.m. on September 16, Commissioner Strand was excused for the remainder of the meeting.
At 11:44 a.m. on September 16, there being no further business to come before the Commission, Chairperson Gale adjourned the meeting.
I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing minutes of the on September 15-16, 2004, meeting of the Nebraska Real Estate Commission were available for inspection on September 30, 2004, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.
Guests Signing the Guest List