Chairperson Gale convened a meeting of the Nebraska Real Estate Commission at 9:07 a.m. on January 12, 2005, in the Staybridge Room of the Staybridge Suites, located at 2701 Fletcher Avenue in Lincoln, Nebraska. All of the members of the Real Estate Commission were present, with the exception of Commissioner Strand, who was absent and excused. Also present were Director Les Tyrrell, Deputy Director for Education Teresa Hoffman, Deputy Director for Enforcement Terry Mayrose, and Administrative Assistant Heidi Burklund. Abbie Widger, Special Assistant Attorney General and Counsel to the Commission, was present for the stipulation and consent orders and the discussion item. Rob Kinsey, Special Assistant Attorney General and Counsel to the Commission, was present for the hearing.

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 5a had been added, and 17 had been updated, since the tentative agenda was mailed to the Commissioners. Director Tyrrell requested that item 17d be added as an emergency item. LB 315, sponsored by Senator Howard and others, required that seller provide a notice regarding obtaining information on registered sex offenders. Director Tyrrell needed the Commission’s direction, because it appeared the notice would be added to the Seller Property Condition Disclosure statute for sellers to disclose.

A motion was made by Poskochil and seconded by Johnson to add emergency item 17d to the final agenda. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

After review of the final agenda, a motion was made by Johnson and seconded by Moline to adopt the final agenda as amended. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

The minutes of the Commission meeting held on November 18, 2004, were considered.

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

Director Tyrrell presented the Receipts and Expenditures Reports for November and December. Copies of said reports are attached to and made a part of these minutes.

Regarding the November report, Director Tyrrell noted that the only unusual item to report in Receipts was Category 484500, Reimbursement Non-Government Source, which was payment for the Ritums hearing costs. Expenditures Category 541500, Legal Services, was over for the month but still under for the year, due to the Zitek and Voss hearings; Category 571100, Board and Lodging, was over for the month due to trust account examiner travel; and Category 572100, Commercial Transportation, was over for the month due to ARELLO meeting travel.

The cash fund balance as of November 30, 2004, was $952,790.65, which compared to a cash fund balance of $737,270.80 on November 30, 2003.

Regarding the December report, Director Tyrrell noted that the only unusual item to report in Receipts was Category 484500, Reimbursement Non-Government Source, which was payment for the Zitek and Voss hearing costs. Expenditures Category 527100, Repair and Maintenance of Office Equipment, was for the maintenance contract on the 4 remaining typewriters; Category 541500, Legal Services, was over for the month but still under for the year, due to hearings and an ongoing time-share investigation; Category 541700, Legal-Related Expenditures, was for the Stovall and Voss hearings; and Category 547100, Educational Services, was over because of the high number of applicants.

The cash fund balance as of December 31, 2004, was $1,080,618.36, which compared to a cash fund balance of $991,160.88 on December 31, 2003.

Chairperson Gale asked why Receipts Category 485910, Other Fines, was so far over for the month and year. Director Tyrrell noted there was some confusion this year with errors and omissions insurance. Rice Insurance Services Company sent a solicitation at the same time that renewals were mailed. A number of people enrolled with Rice, then checked on their renewal form that they had enrolled in the Commission-offered plan, because they thought that was what they had done, since Rice had the contract last year. When the download was received from Williams Underwriting Group, who actually had the contract for the state-offered plan this year, staff discovered the large number of licensees who were not actually insured with the state-offered plan. They were charged a late penalty fee because they had not provided proof of equivalent coverage by November 30. Apparently Rice had indicated to licensees that they would notify the Commission, and provide a certification of coverage to the person or to the Commission. In some cases, Rice faxed certifications directly to us, which were input whether or not the renewal had been received. Some certifications were mailed directly to licensees, with a note instructing the licensee to get the certification to the Commission if they had already submitted their renewal, or to send it in with their renewal. The licensees who owed late fees were the ones for whom we did not receive certifications, as required by law. Staff did not know what happened at the Rice end, or why some certifications were sent to us and some to licensees. Rice had sent a letter ro the Commission regarding this matter, to which staff responded. Staff have not heard back from them. Director Tyrrell can provide the Commissioners with copies of the correspondence if needed. Some licensees were upset about the late fee, but there was no way to waive it under state law. Director Tyrrell did not know if Rice was paying the fee for them, because the staff did not get involved in that. Director Tyrrell had estimated the budgeted amount for the usual number of late renewal fees, but this situation had increased the amount.

Commissioner Poskochil asked if there had been any problems with the Commission-offered plan. Deputy Director Hoffman said it went very smoothly. There were a few download hitches, but they were minor and had all been addressed.

Director Tyrrell noted that this had never been a problem in the past, because there had never been a direct solicitation. Next year, staff will run a report at intervals during the receipt of renewals to confirm whether a person really had enrolled in the Commission plan. The report will tell staff which licensees had indicated that they had the Commission-offered plan, but were not actually enrolled.

Chairperson Gale noted that some licensees must have wanted to enroll with Rice, and some thought Rice was the Commission-offered plan. Director Tyrrell said the Rice solicitation stated that they were not the Commission-offered plan, but it was apparently somewhat confusing to some licensees. The renewal packets and Rice solicitations arrived at the same time, and licensees may have stuck it all together. Licensees knew Rice was the carrier last year, so they may have gotten confused that they were not the carrier this year. Staff did not anticipate the problem, but could run reports to avoid it next year. Usually there were approximately 200 licensees on the errors and omissions insurance problem list, but this year there were 450.

Chairperson Gale asked if the fine was mandatory. Director Tyrrell said yes, and neither staff nor the Commission could not waive it, because it was a statutory requirement.

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

Director Tyrrell presented a renewal report, which showed renewals as of January 11, 2005. A copy of said report is attached to and made a part of these minutes.

Director Tyrrell noted that renewed licenses were about the same as last year. There would be very few renewals for the rest of the year, so the Commission would probably not see another renewal report until after the June 30 deadline.

No action was necessary on this report.

Director Tyrrell presented a Time-Share Registration Amendment for Fairfield Orlando at Bonnet Creek. A copy of said report is attached to and made a part of these minutes.

After discussion, a motion was made by Moline and seconded by Grady to approve the registration amendment as presented. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

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 Grady to ratify issuance of the licenses as set forth in the report. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

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

Chairperson Gale asked if trends could be identified in different areas of the state. Deputy Director Hoffman said she had not analyzed the data that way. Some applicants came to Lincoln or Omaha for classes and took the test there, while the material was fresh in their memory. She did not recommend relying entirely on the test site results for area trends.

After review, a motion was made by Moline and seconded by Poskochil to ratify the November and December Examination Reports for the purpose of issuing licenses. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

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

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

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

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

Director Tyrrell presented a summary report of the pending complaints, which included a list of licensees presently under disciplinary action or on appeal. A copy of said report is attached to and made a part of these minutes.

Commissioner Poskochil asked about the Sharon Martin disciplinary action. Director Tyrrell noted the Commission took disciplinary action last year, which was a censure and 3 hours of additional continuing education in agency, to be completed by November 25, 2004. Ms. Martin did not complete the continuing education. She also did not renew her license, therefore the Commission lost jurisdiction over her. A show-cause hearing was pending when the license lapsed, so if she submits a renewal or a new application in the future, it will be stopped and she will be scheduled for an appearance before the Commission. It would be the same process as used for other non-renewed persons with matters pending.

Director Tyrrell reported that he had received word that Mr. Voss had appealed. Counsel Widger said Mr. Voss’s attorney was arguing that nullification of Mr. Voss’s conviction should have removed him from the sex offender registry, which had been one of the main reasons the Commission denied his license.

No action was necessary on this report.

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

Counsel Widger presented a stipulation and consent order in the matter of Complaint #2003-038, Commission vs. Mark Lester Stecker. A copy of said order is attached to and made a part of these minutes. Mr. Stecker was not present.

Counsel Widger reviewed the circumstances involved and noted the provisions of the order, which had been signed by Mr. Stecker. The order specified a two-year suspension of Mr. Stecker’s broker license, effective January 13, 2005, plus six hours of additional continuing education, consisting of 3 hours in farm brokerage and 3 in farm management, to be completed within the suspension period.

Commissioner Poskochil noted that on page 4, paragraph h, and page 5, in the continuing education paragraph, the word "hours" needed to be added after the words "continuing education."

Director Tyrrell informed the Commission that Mr. Stecker had not yet renewed. The two-year suspension would start when he renewed his license, or when a new license was issued. Mr. Stecker would have to make a special appearance before the Commission if he filed a renewal or a new application.

Chairperson Gale asked if criminal charges had been filed. Counsel Widger said no. Counsel Widger did not know if the Hall County Sheriff’s Department had investigated this situation, but she assumed that the original complainant had called law enforcement at some time. Chairperson Gale noted that it involved the diversion of funds. Counsel Widger said that part of the problem was that no one knew where the funds went. She did not think Mr. Stecker profited. The original complainant had hired a ranch manager. Counsel Widger thought the ranch manager’s cattle were on a ranch owned by the original complainant and managed for him by Mr. Stecker. Mr. Stecker did not demand an accurate count of the cattle, or accurate receipts. There was no evidence that Mr. Stecker took the money, but it appeared he was just not paying attention at all, was not counting the cattle, and was not paying attention to invoices submitted. Counsel Widger thought the ranch manager submitted invoices for his own cattle. The ranch manager was gone in the middle of the night with a trailer load of cattle. Counsel Widger did not see any criminal liability for Mr. Stecker, it was just that he was sloppy and neglectful.

After discussion, a motion was made by Moline and seconded by Johnson to enter into the order as presented. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

Counsel Widger noted that Complaint #2001-043 had been held in abeyance, pending the outcome of the Commission’s complaint, and she asked that it be dismissed. A motion was made by Moline and seconded by Shepard to dismiss Complaint #2001-043. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

Prior to discussion of this matter, Commissioner Moline recused himself, thereby nullifying any potential conflict of interest. Counsel Widger presented a stipulation and consent order in the matter of Complaint #2004-017, Woods Bros. Real Estate Group Inc. vs. Forrest J. Pollard. A copy of said order is attached to and made a part of these minutes. Mr. Pollard was not present.

Counsel Widger reviewed the circumstances involved and noted the provisions of the order, which had been signed by Mr. Pollard. The order specified a censure of Mr. Pollard’s broker license.

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

Deputy Director Mayrose presented a stipulation and consent order in the matter of Complaint #2004-061, Commission vs. Stuart B. Mills. A copy of said order is attached to and made a part of these minutes. Mr. Mills was not present.

Deputy Director Mayrose reviewed the circumstances involved and noted the provisions of the order, which had been signed by Mr. Mills. The order specified suspension of Mr. Mills’ broker license until December 6, 2005, when his attorney license suspension will be lifted.

Commissioner Poskochil said he would like to see a heavier sentence, which included additional continuing education. Commissioner Poskochil noted that the Commission could vote against entering into a stipulation and consent order if the Commission wanted different requirements made on the licensee. Director Tyrrell said that was always the Commission’s option, if they wanted staff to renegotiate the terms.

After discussion, a motion was made by Moline and seconded by Poskochil to not enter into the order as presented, and to instruct staff that the Commission would consider a stipulation and consent order for a revocation. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

The hearing scheduled for Complaint #2003-038, Commission vs. Mark Lester Stecker, was continued pending presentation of a stipulation and consent order.

The hearing scheduled for the Order to Show Cause for Sharon Martin was continued.

A hearing was held on January 13, at 10:00 a.m., in the matter of Complaint #2004-033, Guy Huddleston vs. Vicki K. Huddleston. Rob Kinsey, Special Assistant Attorney General and Counsel to the Commission, appeared for the Complainant. Respondent Vicki K. Huddleston was present and represented by counsel Michael Slattery of Plattsmouth.

After opening statements, Counsel Kinsey presented 6 exhibits, all of which were offered and received by Chairperson Gale, and called Vicki Huddleston as a witness.

Counsel Slattery presented no exhibits, and called Connie Vogle-Herting as a witness.

At 10:58 a.m., Chairperson Gale declared a brief recess, and reconvened the hearing at 11:05 a.m.

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

Chairperson Gale found it significant that the correspondence regarding Ms. Huddleston’s additional criminal history was incorporated into her application. The original application was vague and incomplete on Ms. Huddleston’s history of drunk driving charges, and had only referenced the charges in the 1980s. A more recent one, in the 1990s, was disclosed in the correspondence which was received on February 25 and incorporated into her application. That combination of documents seemed to cover a much more complete history than was originally divulged. It was a little unclear what had happened with the Iowa charges, but they were mentioned. The 1987 charge in Iowa was discussed in Exhibit 3. Her record in Iowa prior to that might have been expunged or pardoned. Ms. Huddleston remembered receiving a letter from the Governor of Iowa about those charges, and the Commission had no other evidence on it, so it was hearsay on what happened on those, but they had happened long ago. Regarding the Arizona charge, it seemed easy to Chairperson Gale that she might be confused about her status, if she was told completing a diversion program would get the charge dismissed. It appeared from her testimony that had happened in Arizona and in Nebraska. Those were not convictions if the charges were dropped upon completion of the diversion program.

Commissioner Poskochil concurred. It appeared to him that the original application disclosed the 1980s charges. After the additional information was requested by staff, Ms. Huddleston then provided information about her 1996 conviction. Commissioner Poskochil thought it could be hard or confusing to get information that was 25 years old. Ms. Huddleston had provided the 1996 information, and maybe did not disclose an early 1980s conviction in Iowa. She had disclosed that she had a significant problem with drunk driving. Her license was granted based on that information. Whether she knew the other charges were convictions or deferments, the Commission did not know. Commissioner Poskochil said he imagined that, if there had been another issue regarding license law violations, the Commission would have to dig into every conviction, and have to be more diligent in obtaining dates and convictions. Applicants might not take the time to find out every date of every conviction. There were no felony charges associated with any of the convictions in evidence. Commissioner Poskochil did not see where she had tried to falsify her past problem. Ms. Huddleston may not have included all her convictions, but she had disclosed her problems with alcohol and driving.

Commissioner Grady noted that Ms. Huddleston was also in the process of a messy divorce. This complaint was an attempt by her ex-husband to deal her some grief, and he threw everything he could think of into the complaint. Chairperson Gale noted that the complaint was not from a consumer or a fellow licensee, but from her ex-husband.

Chairperson Gale noted that, despite the 1980s charges, the 1987 charge was a misdemeanor first-time charge. It was not unusual to get a first offense charge due to plea bargaining, in spite of priors, but it might be further evidence of the earlier ones being expunged.

Commissioner Moline said he understood everyone’s points, but questioned at what point a licensee was held responsible to completely and accurately complete the application. At some point, the Commission had to hold to a fairly high standard that applicants fill the application out right.

Chairperson Gale noted that criminal history background checks were now required, since this application was received, so that the Commission was not just relying on self-disclosure by the applicant.

Commissioner Shepard said he agreed with what had been said. It was not the first time the Commission had seen confusion on this particular issue, whether charges were dismissed, whether the person had been convicted or not, and whether the record had been expunged. Commissioner Shepard said he did not know if the question needed to be reworded or made more clear, but staff may need to consider looking at it. Commissioner Shepard did not know if Ms. Huddleston’s situation rose to the level requiring discipline. She may have been unclear, but she was sincere in trying to give staff all the information. Commissioner Shepard did not know if it rose to the level of taking her license.

A motion was made by Poskochil and seconded by Shepard to dismiss the complaint. Motion carried with Grady, Poskochil, Shepard, and Gale voting aye, with Johnson and Moline voting nay, and with Strand not participating or voting, being absent and excused.

With the consent of the Respondent, Chairperson Gale directed Counsel Kinsey 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 11:30 a.m.

Director Tyrrell presented an exhibit which included correspondence regarding Mr. Martin’s special appearance and information regarding Mr. Martin’s criminal history. A copy of said exhibit is attached to and made a part of these minutes. Mr. Martin was present.

Chairperson Gale reviewed the procedure for informal special appearances.

Mr. Martin said he had a felony charge 25 years ago, from a burglary in Wyoming. His explanation was stupidity on his part. He had been told an old ranch house was going to be flattened. He went out to look at it, and there was an old table on a porch which had seen better days. He took it, and thought he was rescuing it. It turned out that the report of the house being knocked down was false, so he basically turned himself in. The judge returned the property, fined him, and he put it behind him. He had returned the table in much better condition than he had taken it. Mr. Martin was on probation until the fine was paid off, and he was not sure how long it was. He certainly did not brag about it, but it had been an educational experience.

Chairperson Gale asked if Mr. Martin had considered asking for a pardon. Mr. Martin said he had started thinking about it. This Governor was entertaining those requests, where past ones had not. Mr. Martin was putting together a letter to the Governor. Chairperson Gale said that, if his situation had occurred in Nebraska, a pardon would almost be automatic. Chairperson Gale recommended that Mr. Martin pursue it.

Commissioner Moline asked if Mr. Martin had been in trouble with the law since then. Mr. Martin said no, only some speeding tickets.

Chairperson Gale asked about Mr. Martin’s employment. Mr. Martin said he was a computer programmer. For the past 10 years, he had been an independent contractor, and was currently subcontracted with Central Data Processing for the State of Nebraska. Mr. Martin said he worked on the In Focus program. Chairperson Gale asked why Mr. Martin wanted to change from that, because it sounded like a good career. Mr. Martin said it had been very good to him. He and his wife enjoyed buying and remodeling houses, then selling them. Real estate had always interested them. He would like to start doing something fun again. Working with real estate was very interesting. He had talked to licensees in Seward, then took classes. Real estate looked like a lifetime career, where mainframes were somewhat limited. He also wanted more independence and the ability to set his own hours. This career appealed to him very much.

After discussion, a motion was made by Moline and seconded by Poskochil to allow Mr. Martin to sit for the salesperson examination after making proper application, and to have a license issued upon passing. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

Director Tyrrell presented an exhibit which included correspondence regarding Mr. Anania’s current special appearance, information regarding his previous special appearance, information regarding Mr. Anania’s criminal history, and letters of recommendation. A copy of said exhibit is attached to and made a part of these minutes. Mr. Anania was present.

Chairperson Gale reviewed the procedure for informal special appearances.

Director Tyrrell said he had reviewed the recently-obtained criminal history information, and there was nothing new in the law enforcement reports.

Mr. Anania said that the three conditions the Commission had placed on him were an improved driving record, stable employment, and letters of recommendation. He had achieved all three of those.

Chairperson Gale said the exhibit indicated that 11 points were off Mr. Anania’s license, and asked who provided the Department of Motor Vehicles report. Director Tyrrell said that Mr. Anania had supplied one, and staff obtained one independently. Director Tyrrell had reviewed that information also, and compared it to the one from Mr. Anania’s previous special appearance.

Chairperson Gale asked if Mr. Anania had a current certificate of auto insurance. Mr. Anania said he had one in his car, and that he had provided a letter of recommendation from his current insurance agent. Mr. Anania offered to get the certificate from his car. Chairperson Gale said he would like to see it. Commissioner Moline asked if a condition of licensure could be that Mr. Anania show proof of valid insurance to staff on the day his license is issued. Chairperson Gale said yes, but he would like to know today if Mr. Anania had insurance, before the Commission voted.

At 9:45 a.m. on January 12, Chairperson Gale declared a brief recess, and reconvened the meeting at 9:50 a.m., after Mr. Anania retrieved the certificate of insurance from his car.

Chairperson Gale noted that Mr. Anania’s insurance was up for renewal in February. Mr. Anania said it was due the first of March.

Chairperson Gale referred to the requirement for a stable work history, and asked Mr. Anania if he worked for both hotels listed in the exhibit. Mr. Anania said he had started at the Sheraton, because he needed a job right away. He worked in banquets for a while, and he goes back as needed. Business had slowed, so he transferred to the Hilton, as a host. Mr. Anania had just accepted a Park Plaza storage facility management job.

Commissioner Johnson asked Mr. Anania where he planned to work. Mr. Anania said he appreciated the letters of recommendation from brokers, but he had not decided yet.

Commissioner Moline said he was inclined to give Mr. Anania a chance, but Mr. Anania’s driving record had to stay crystal clean, because he would have people in his car. He had to stay on the straight and narrow. Mr. Anania said absolutely.

Director Tyrrell presented an exhibit which included correspondence regarding Mr. Petersen’s special appearance, Mr. Petersen’s salesperson application, and information regarding Mr. Petersen’s criminal history. A copy of said exhibit is attached to and made a part of these minutes. Mr. Petersen was present.

Chairperson Gale reviewed the procedure for informal special appearances.

Mr. Petersen thanked the Commission for the opportunity to appear before them. Mr. Petersen said he was from a small town in south-central Nebraska. As a small town kid, he had worked hard and played hard. It was pretty obvious that his problem was with alcohol. It was an issue he had addressed. In 2002, Mr. Petersen got a DUI. He went through an extensive counseling and treatment program, through Valley Hope in Norton, Kansas. He continues to go to Alcoholics Anonymous, which is a day-by-day program. Alcohol is something he will struggle with for the rest of his life, when he wakes up, and when he goes to bed. Mr. Petersen said he does everything in his power to stay sober. Alcoholics Anonymous was a good program, and so far he has had success. It was pretty obvious that alcohol was involved in every case, and that the situations had happened late in the evening after he had been drinking. Director Tyrrell had expressed some concerns to him about his driving people around, as happened in real estate. Mr. Petersen said he was legal to drive, and had fulfilled all commitments as far as that was concerned. He was not trying to make excuses, but he wanted the Commission to know he never drank while working, or during a job. That had never been a problem previously. He only got in trouble after 12 at night, but that was not to say it could not happen at noon. He knew that was a major concern. Mr. Petersen said he worked hard all of his life, and had driven all of his life. His family was in the bulk and retail oil business, and he had driven a tank truck. He continued to help out with the family business, hauling diesel fuel. Mr. Petersen said he could not say much else, other than alcohol was a problem for him which he had addressed, recognized, and dealt with every day.

Chairperson Gale asked if Mr. Petersen had gotten a degree at UNO. Mr. Petersen said he had originally been an engineering major at UNL. He had returned home to work. He decided to finish his bachelor’s degree, and was slated to go to UNO in 2002. Two days after his last DUI, he was severely injured in an accident. After his recovery, he went to Beatrice Southeast and took classes outside the university. Mr. Petersen finished his degree while working as an electricity broker. Mr. Petersen completed a general study degree in business, consisting of real estate, psychology, and industrial engineering. If the Commission checked his transcripts, they would see he received excellent grades. Mr. Petersen thought students appreciated school more when they were older, and worked harder. In getting his degree, Mr. Petersen obtained information that he would use for the rest of his life, in this industry or any other. He had met very good contacts, including his professors at UNO. Now that Mr. Petersen had successfully completed his time there, he had a new line of focus.

Commissioner Johnson asked what Mr. Petersen’s goals were for real estate. Mr. Petersen said he was currently trying to obtain a sales position outside the real estate industry. Eventually, he would like to have a brokerage, after years of experience. He was interested in commercial more than residential. He would like to get a license now to be able to get referral fees, because he knew people in rural areas looking for farm ground, and knew people in the industry. Commissioner Johnson asked where Mr. Petersen would put his license. Mr. Petersen said he had several offers in residential sales, and several just on a referral basis. To

be real honest about it, Mr. Petersen did not want to align himself with a broker until he was certain of the license, and he had made no commitments.

Commissioner Shepard asked if Mr. Petersen had been alcohol-free for two years. Mr. Petersen said it was over two years.

Commissioner Grady asked if Mr. Petersen’s family was involved in real estate development. Mr. Petersen said they had done some development around Hebron.

Chairperson Gale asked if Mr. Petersen intended to apply for a Kansas license, since it was close to home, along the border. Mr. Petersen said yes, he intended to, because he as well as his family owned some real estate in northwest Kansas.

Chairperson Gale asked about the accident, and if it was related to the DUIs. Mr. Petersen said it was not. It happened when he was hauling propane to an irrigation well. Some fumes had leaked out, which caused a flash fire, and he was burned pretty severely. It took quite a bit of time to recover from the accident, which happened in August 2002. Chairperson Gale asked if his last DUI offense was at that same time. Mr. Petersen said it had happened two days before the accident. Chairperson Gale asked if it had been a life-changing event. Mr. Petersen said absolutely. Chairperson Gale asked if Mr. Petersen was still attending Alcoholics Anonymous, which was critical to maintaining sobriety. Mr. Petersen said yes, and it was absolutely critical.

Commissioner Johnson said it looked like Mr. Petersen was on the right track, and Commissioner Johnson had more confidence in him because he was still attending Alcoholics Anonymous. With applicants, recent DUIs were a concern, and August 2002 was pretty recent. Commissioner Johnson thought Mr. Petersen was on the right track, in his personal opinion, and he thought he would vote to allow Mr. Petersen to get licensed. Commissioner Johnson thought the other Commissioners might be concerned that it had only been a couple of years.

Mr. Petersen said he had not known what to expect during his special appearance. It was obvious alcohol had been a problem for him. Mr. Petersen offered to provide letters of recommendation, and said he would be happy to provide a laundry list of recommendation writers.

Commissioner Grady asked if Mr. Petersen had a family. Mr. Petersen said no.

Commissioner Poskochil asked where Mr. Petersen currently resided. Mr. Petersen said he lived in Omaha, but spent about half his time in Hebron. Commissioner Poskochil asked if Mr. Petersen attended meetings in Omaha. Mr. Petersen said yes, he attended meetings in Omaha. When he was in Hebron, he attended meetings in Nelson, which was 45 miles away. Commissioner Poskochil asked how many times Mr. Petersen attended per week, and if he had a sponsor. Mr. Petersen said he had a sponsor, and that it sounded like Commissioner Poskochil was familiar with the program. Commissioner Poskochil said he had a brother and a sister-in-law in the program. Mr. Petersen said he did what he could, and went when he could, and when he needed to. He was in the unfortunate situation of having to drive quite a distance if he was in Hebron. Mr. Petersen drove to Lincoln if he needed to, and attended church, which helped. There were a lot of tools he had picked up over the last two years that had worked out very well for him.

Chairperson Gale asked Mr. Petersen if he had any problems with the Commission allowing him to sit, subject to certain conditions - that Mr. Petersen must notify his initial employing broker of his criminal convictions, the circumstances of the convictions, and his addiction to alcohol; requiring the employing broker to confirm the notification in writing to the Commission; and that Mr. Petersen must immediately notify Commission staff of any criminal charge which could result in jail time for a period of time. Mr. Petersen said no, he would not have a problem with that.

Deputy Director Mayrose presented a reference copy of the Commission’s Approved Procedures and Cycle for Trust Account Examinations. A copy of said exhibit is attached to and made a part of these minutes.

Deputy Director for Enforcement Mayrose said the schedule was working well, and was operating on approximately an 11-month cycle.

Commissioner Grady asked if examiners focused on different enforcement issues at different times, or if different examiners had different approaches. Deputy Director Mayrose said no, that was not the practice. Commissioner Grady said it appeared that way.

After discussion, a motion was made by Moline and seconded by Grady to proceed under the current examination cycle. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

Deputy Director Hoffman presented an exhibit regarding the estimated costs of sending Commissioners and staff to regularly-attended ARELLO meetings in 2004. A copy of said exhibit is attached to and made a part of these minutes.

Chairperson Gale asked what was the cycle of speakers, committee meetings, and such at ARELLO meetings. Director Tyrrell said that now there are speakers at all meetings. The mid-year meetings were spread out more, with forums and concurrent sessions, and included committee meetings. The district meetings were larger, since our district held them with another district. There were more or less about two days of presentations, from outside speakers or speakers within ARELLO, like the mid-year meetings. There were no committee meetings at district meetings. At the annual meeting, the first couple of days were mostly committee meetings and general orientation. The rest consisted of speakers, mostly from outside. There were also roundtable discussion groups on current topics, and sometimes concurrent sessions.

They were not much longer than the other meetings, after the committee meetings were done. Deputy Director Hoffman noted that information was available on the ARELLO website.

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

Prior to discussion of this matter, Commissioner Moline recused himself, thereby nullifying any potential conflict of interest.

Commissioner Moline presented the Commissioners with a reference copy of the rule regarding brokers using trade names, and told the Commission that he had requested this item be placed on the agenda. HomeServices of Nebraska owns two companies, which are two separate corporations. Because HomeServices is owned up the line by a public utility, any changes in any of the corporations must be approved in Washington, DC. They would like to roll the two corporations into HomeServices, with two trade names. There would still be two businesses, run separately. Commissioner Moline was asking the Commission to clarify that a corporation could have more than one trade name.

Counsel Widger noted the wording in Title 299, Chapter 2, in the context of trade names. HomeServices wanted to use the trade names of Woods Brothers and Home. The regulation states "it" shall be recorded with Commission, and all references to trade names were singular. Staff had previously taken the position that a business entity could register more than one trade name, but that the additional name had to be related. The Internet was what had caused the issue to be brought to the attention of the Commission. When Commissioner Moline asked about registering two unrelated trade names, Counsel Widger looked at the statute again. The wording seemed to imply a singular trade name, and stated that the broker must advertise in the trade name as recorded with the Commission. Staff had always looked at it as singular, but now HomeServices was asking for two trade names, Woods Bros. and Home. With the changes in technology, perhaps the rule needed to be updated.

Commissioner Moline said he did not know when the rule was written, but at that time he was sure they did not contemplate the changes in how business was done. Now builders have 5-6 trade names. If this was allowed, the same responsibilities would be met, and the corporation would just have two trade names. The public would have same thing as today. The Commission could set the policy of accepting multiple trade names.

Commissioner Poskochil asked if it could create a problem. Counsel Widger said she did not know if there was a down side. The regulation seemed to imply a singular trade name, but staff have allowed more than one with very similar additional trade names. Commissioner Poskochil asked if a trade name had to tie to the corporation name. Counsel Widger said no, but additional names have always been related, so people could tell they were all the same company from the trade name similarities. Counsel Widger’s opinion was that, if the Commission moved from singular trade names, that would need to be clarified in the regulation. If the Commission decided to allow HomeServices to use two unrelated trade names, it was really getting to point where the Commission needed to amend the regulations. All references implied a singular trade name.

Commissioner Moline noted that companies could add any number of trade names through the Secretary of State’s office. Business was not necessarily singular anymore.

Commissioner Johnson asked if that would open the regulation to problems. Counsel Widger said it was not like opening a statute, and having the Legislature radically change something. The Commission could still have opposition at the public hearing. Director Tyrrell said it would not be much different, if allowed. If a broker could register five different trade names, s/he could have 5 businesses, with one broker. There was an opening up taking place, in allowing one broker to have multiple businesses under the same business entity. With HomeServices, each company could take a different name, with the same entity above it. What would come next would be brokers asking for multiple corporations. Commissioner Moline said a broker could currently have two corporations. Director Tyrrell said they could not have the same broker for both. This change would open it up for that to be the next issue, down the line.

Commissioner Moline said he did not know that allowing this would cause any situation where the public could be damaged. There would still be a responsible broker, who would just be selling under two different names. As it stood today, HomeServices had all the assets of both corporations. He was merely requesting to be able to fold Woods Bros. and Home into one corporation, and use trade names. Nothing would change as far as what happened and who was responsible, they just wanted to use two different names for one corporation.

At 12:55 p.m. on January 12, Commissioner Shepard was briefly excused from the meeting, and rejoined the meeting at 12:57 p.m.

Chairperson Gale wanted to get a recommendation from staff and Commission counsel, and maybe a subcommittee report. This was a fairly substantive issue, and there may be ramifications which would start a need for other changes. It had been a sound rule, and maybe it was time for a change, but he would like to have a better sense of the consequences of doing this. In the public’s mind, they thought they were dealing with the name on the wall. There was more clarity if they were given the whole business entity name, doing business as whatever trade name.

Commissioner Moline noted that staff had already bent the rule a little bit. Chairperson Gale said that did not commit the Commission to further change. The Commission could not accomplish what Commissioner Moline requested today, if a rule change was needed. Chairperson Gale said he was open to further discussion, and wanted the whole story and why it was being done. Commissioner Moline said that the designated broker for Home Real Estate was moving to Omaha. Because of that, the company will have to transfer all the affiliated licensees to somebody. If a rule change were eventually approved, they would have to go back and do it all again, to transfer the licensees to the one overall broker. There was paperwork and a $15 transfer fee for each licensee. If the Commission was going to move forward with a rule change, perhaps he could wait to change the broker until that was done. Chairperson Gale clarified that Commissioner Moline wanted an interpretation of the existing rule that would allow Commissioner Moline to do that, followed up with a formal rule change later. Commissioner Moline said that was correct.

Director Tyrrell asked if the designated broker could still have a supervisory position in Lincoln after he moved to Omaha, if the Commission did not make that interpretation today. Commissioner Moline said no.

Commissioner Poskochil asked when the broker was moving to Omaha. Commissioner Moline said he would start his new job on February 14 in Omaha.

Commissioner Shepard noted that the Commission had made interpretations before, and asked if the Commission could interpret the rule as requested, and also state that the Commission thought the verbiage needed to be changed. Counsel Widger said the Commission could do that. The Commission could state that Chapter 003.02 does not limit the number of trade names registered with the Secretary of State, so a broker could do business and advertise in any trade name registered with the Secretary of State, as long as it was also registered with the Commission. It could be interpreted to not limit the number of trade names, because of the Secretary of State registration and Commission registration. The argument would be that "a" did not limit to one, but limited to "a" trade name as registered with the Secretary of State, meaning any trade name registered with the Secretary of State. Other parts of Chapter 3 made staff believe it was singular, but if the Commission was only relying on that section, it could make that broader interpretation. Counsel Widger noted that, if the Commission made that interpretation, they should know that interpretation would apply to every broker in Nebraska. Commissioner Moline said his point was that he did not know of a down side, because there was always a broker who was responsible. Counsel Widger said she did not know if there was a down side either, she was just making the point that the change would apply to every broker, not just HomeServices.

Commissioner Poskochil asked if the designated broker could delay his departure. Commissioner Moline said no. Commissioner Poskochil asked how long it took to accomplish a rule change. Chairperson Gale noted that the Commission did not yet have a recommendation for language, and there was nothing written yet. There was no staff recommendation or analysis of unintended consequences. Chairperson Gale wanted to keep up with the times, and make changes as needed, but did not want to make changes for just one business. The Commission had a broader responsibility to do what was best for the whole state. Chairperson Gale asked Commissioner Moline if he had any legal opinions from the company’s attorneys regarding the proposed change. Commissioner Moline said he did not, and that he had not known it would be necessary. The Commission was looking at something that was already being allowed, with the example that another company had multiple trade names. His company was asking for that too, just with different names. He was struggling to see a down side. Commissioner Moline asked what it would matter if one broker ran two corporations, and noted that the Commission used to think brokers could not run two offices. Cell phones have made it easy, and times have changed. Commissioner Moline did not think changing this would have great consequences.

Commissioner Johnson asked if the Commission could make this interpretation, then change it again if it caused problems. Chairperson Gale said it was easier to change an interpretation than a rule. When a rule was adopted, total notice had to be provided to the public and the industry. If an interpretation fundamentally altered a rule, and no rule change was done, that would be outside the law, because it was not authorized by statute or rule. It was hard for him, as an attorney, to say let’s change it today. Chairperson Gale felt the Commission was making a leap.

Director Tyrrell noted that the Commission could change an interpretation at any time, as an agenda item. It probably took 5 months for a rule change to go through the system, with everything operating at an optimum. Without a written proposal, the Commission could do an interpretation today, or could wait for something in writing at the next meeting. If the Commission wanted a rule hearing, it would take much longer. Chairperson Gale asked Director Tyrrell if he recommended doing an interpretation today. Director Tyrrell said he had concerns about it. He understood Commissioner Moline’s needs, but Director Tyrrell needed to think about a broker running two separate companies, with different trade names. If a broker was supposedly supervising five companies, that was different than having branch offices with branch managers in charge. Director Tyrrell had some supervision concerns. He did not know if there would be a lot of problems with that, but it had not come up.

Chairperson Gale asked if the request for the change had been put in writing to Director Tyrrell. Commissioner Moline said no, but he had discussed it with Counsel Widger. Counsel Widger said she did not put a proposed policy in writing because she thought it was just a discussion item. Chairperson Gale said that, as an attorney, he wanted to have the facts in writing, on the record, and a written suggestion on how to accomplish that. That may just be him, he did not know if it was necessary for the other Commissioners. Director Tyrrell said he had not known the necessity for a decision today, and had not known the urgency of the situation. If he had known, a suggested interpretation would have been put in writing. He had thought this would just be a preliminary discussion.

Commissioner Grady said there were some singular/plural distinctions already made. It was an issue of the public’s knowledge of whether they were dealing with the same company or different companies. With his company, it was always emphatic that each Gateway office was a separate entity from any other Gateway office. If the Commission could do this today, legally and without hassle, he was in favor of doing it.

Chairperson Gale asked if there were currently two corporations. Commissioner Moline said yes, under HomeServices. Chairperson Gale asked if that would be changing, and if the company was eliminating one. Commissioner Moline said that, under the current interpretation of the rule, his company would have to transfer all the licensees of one corporation to a new designated broker, then transfer them all again when the corporate structure changed. Because of the master corporation, all changes in corporation structure had to be sent to DC. He was under the gun because a designated broker was leaving. It would save time and money if he could transfer all the licensees once instead of twice. Chairperson Gale asked if the change was to allow two corporations. Commissioner Moline said no, it would be so one corporation could operate under two trade names. Chairperson Gale said corporation changes would not happen overnight. Commissioner Moline said he thought it went pretty fast. Counsel Widger said she thought dissolving a corporation was faster than a corporate merger, but a trade name application was not difficult.

Chairperson Gale said he was not trying to cross-examine Commissioner Moline, he was just trying to get to what would solve the problem today. Corporate entities were the problem. Commissioner Moline said he did not know what the legal route was, but he thought it would be done by February 15. Commissioner Moline did not know if a few days would matter to the Commission, but 6 months was too long. Chairperson Gale noted that changing trade names would not address the issue of one broker heading two corporations. Director Tyrrell said that was correct. By that date, for this to be an issue, it would have to be to HomeServices of Nebraska, with two trade names under it. One of the trade names would be out of business if the rule change was not done by then.

Commissioner Shepard said he had no problem with Commissioner Moline making the request, but he was hearing that Director Tyrrell and Counsel Widger had questions about it. HomeServices was looking at an additional $1000 expense, versus addressing the concerns and holding a rule hearing.

Commissioner Moline asked that, in lieu of an interpretation today, that the Commission move forward with a rule change. The companies which were already using multiple trade names were in violation of the rule, as interpreted today. Commissioner Shepard said there were businesses looking at doing the same thing in Fremont, and he had questions about that. Commissioner Moline said he was fine with that, and asked staff to bring pros and cons and proposed language for the rule change to the next meeting.

Commissioner Moline noted that Woods Bros. Realty currently used different written-out names, such as Woods Brothers and Woods Bros., but he did not know if they were filed as trade names. Director Tyrrell noted that the only companies which filed additional trade names were coerced by their competitors to make the filings. Commission staff had not taken a position that "dot com" would be a trade name that would have to be registered. Commissioner Shepard asked if there were any other companies in the state with basically the same two trade names. Director Tyrrell said not to his knowledge, only those which had been coerced and threatened by their competitors. A competitor had been checking Secretary of State trade names, and found out that a company did not have "the" in their trade name, and said they would take action against them for false advertising. Director Tyrrell said he could imagine that there were numerous "dot coms", that were not registered with the Commission. For the two that were, the companies’ attorney probably took the position that they should register the name to avoid problems.

Chairperson Gale said the rule made it fairly clear that it referred to a singular trade name. If it was taken to court, the rule seemed to entitle companies to a corporate name and a trade name. Chairperson Gale did not know if HomeServices was advertising as HomeServices, or if HomeServices was a silent holding company, but using two distinct trade names did not seem to be covered. It seemed like kind of a new issue. Chairperson Gale said he felt bad that Commissioner Moline was caught in a bind, but he thought it was appropriate to consider a rule change. He felt uncomfortable about making an interpretation today, because he wanted a statement of facts, a recommendation from counsel, and proposed language in writing. A rule change would not stop his company from going forward, it would just take longer. Chairperson Gale said that, ultimately, Commissioner Moline needed to know whether his company could use two trade names. At this point, he would have to appoint a new designated broker and transfer the licensees to that broker, until he got the right to use two trade names.

Counsel Widger asked if the Commission wanted a memo regarding pros and cons to be brought to the February meeting, along with suggested language for the rule change. Director Tyrrell asked if they want interpretation language, or proposed rule change language, or both. Commissioner Grady said both. Director Tyrrell asked if the Commission would want two separate courses of actions to take. Commissioner Grady said yes.

Chairperson Gale said staff needed to put an interpretation in writing, along with proposed rule change language. He wanted two choices on February 15. The Commission may decide at that time to do an interpretation or a rule change. Commissioner Moline said he could not wait until February 15 for the decision. His company will make other arrangements. Commissioner Moline said he hoped the Commission would take a look at changing the rule.

Commissioner Poskochil asked if, based on the discussion, the Commission should just do a rule change, or also consider an interpretation. Commissioner Moline said it was up to the Commission. Commissioner Johnson said the Commission did not need to discuss an interpretation if it was going to do a rule change. Chairperson Gale said that his statements did not prevent the Commission from doing an interpretation today. The majority of the Commission should decide. Chairperson Gale asked if there was a motion to do an interpretation today. No motion was made. Chairperson Gale then asked if the Commission wanted to just have staff prepare the documents for a rule change, or just an interpretation, or both. Chairperson Gale noted that the Commission acted by vote. Commissioner Moline said he did not see a consensus to pass a motion for an interpretation, and it was OK to skip it in the interest of time.

A motion was made by Johnson and seconded by Grady to interpret the rule that it was OK for a business entity to operate with two non-related trade names. Chairperson Gale noted that the interpretation was entirely separate from whether the Commission did a rule change.

Commissioner Grady made a friendly amendment to make it OK for two or more trade names. The friendly amendment was accepted by Johnson.

Commissioner Shepard asked if the Commission needed to recommend by consensus to do a rule change. Director Tyrrell said no, staff would bring the proposed rule change language regardless of whether the interpretation was made.

Commissioner Poskochil said he did not think he could support the motion without a rule change. It looked like the Commission was bending a rule for a Commission member. An interpretation would leave that option open for anybody in a jam. If the Commission made a change, it should be made the right way, with a rule hearing, so anyone who was interested had the opportunity to provide input. He preferred to do it correctly, and thought there may be unforseen consequences.

A vote was taken on the pending motion. Motion failed with Grady and Johnson voting aye, with Poskochil, Shepard, and Gale voting nay, with Moline not participating or voting, having recused himself, thereby nullifying any potential conflict of interest, and with Strand not participating or voting, being absent and excused.

A motion was made by Poskochil and seconded by Shepard to begin the rule amendment process to allow multiple non-related trade names. Motion carried with Grady, Johnson, Poskochil, Shepard, and Gale voting aye, with Moline not participating or voting, having recused himself, thereby nullifying any potential conflict of interest, and with Strand not participating or voting, being absent and excused.

Commissioner Poskochil asked if there was any need to have staff develop language for an interpretation. The consensus of the Commission was no, staff just needed to develop potential rule change language.

Special Assistant Attorneys General - Contractual Matters

Director Tyrrell presented an exhibit regarding the law firm which Attorney General Jon Bruning assigned to the Commission. A copy of said exhibit is attached to and made a part of these minutes.

At 1:52 p.m. on January 12, a motion was made by Grady and seconded by Shepard to go into closed session. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

At 2:42 p.m. on January 12, a motion was made by Moline and seconded by Poskochil that the Commission go into open session. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

On January 13, Chairperson Gale noted that the Attorney General had decided to appoint the firm of Harding, Schultz, and Downs as the Commission’s counsel. Chairperson Gale noted that contract negotiations were proceeding between the firm and Director Tyrrell.

Chris Heinrich introduced himself and Tim Engler, and gave a brief overview of the firm’s structure and experience. Counsel Heinrich said that he would primarily be general counsel for issues before the Commission, and Counsel Engler would primarily handle hearings. Counsel Engler said they wanted to address any concerns or questions the Commission may have.

Chairperson Gale had the Commissioners introduce themselves.

Commissioner Moline said he had a concern, which might be a challenge for them to meet expectations. The Commission would be asking counsel questions, and counsel would need a great depth of knowledge of real estate law and the rules and regulations administered by the Commission in order to answer those questions. Staff and Commissioners might be trying to influence them. The Commission needed counsel to tell them exactly what the law said, without sugarcoating or bending it. Commissioner Moline’s concern in changing counsel was that a body of history and knowledge would be lost. In his experience, errors and omissions insurance companies hired lawyers who litigated, but who did not understand errors and omissions insurance, and lost cases because they were not familiar with that specific area of the law. The challenge was for the firm to thoroughly familiarize themselves with the specific laws and regulations administered by the Commission.

Counsel Heinrich said he had run into situations where he had no area of expertise, and he intended to become very familiar with transactions and license law, as he had for other agencies on a lot of different issues. He would become very familiar with the statutes the Commission used on a regular basis, and would develop an area of expertise. He was brutally honest in his opinions, and would represent the Commission, not individual Commissioners or staff. He would give straight, honest answers. Counsel Heinrich said he will be getting up to speed on the nuances of real estate law.

At 11:44 a.m. on January 13, Commissioner Shepard was briefly excused from the meeting, and rejoined the meeting at 11:45 a.m.

Chairperson Gale noted that counsel were in attendance during the previous proceeding, and saw how they were conducted. Counsel Heinrich said the Commission did a very good job. Chairperson Gale said that some hearings were all-day or two-day proceedings. As the chairperson, he got a script from staff regarding the administrative details. Chairperson Gale always want to meet the requirements of the administrative practices act and real estate law. He needed counsel to know that material, as well as be informed regarding recent decisions, because the Commission’s decisions were subject to appeal. Chairperson Gale also asked that counsel let him know if there were any gaps in the proceedings.

Counsel Heinrich said he thought the Commission did a very good job in the hearing. He had been involved in many administrative hearings, and everyone had their own style, but Chairperson Gale did a good job.

Chairperson Gale noted that the contract would come before the Commission for review once negotiations were completed. As chairman for the past 4 years, he had not ever really had extensive exposure to the rules and regulations, and did not know if any were outdated. Chairperson Gale noted that there was discussion yesterday of updating a rule. Counsel should check with Director Tyrrell about whether this was an appropriate time to do thorough vetting of all the Commission’s rules, regulations, and statutes, to see if they needed to be modernized, updated, or upgraded. Chairperson Gale did not know if the project might be far more significant than the Commission had the resources to pay for right now. Chairperson Gale said he wanted counsel to be familiar with the statutes, rules, and regulations of the Commission, and to also let the Commission know if any should be changed.

Counsel Engler said that due process had to be followed when dealing with disciplinary issues. The Commission was a neutral decision maker, and he could help with how to procedurally provide complainants and licensees with due process. He dealt with over 300 school boards, which also required due process. He could bring that experience to the Commission’s rules, to ensure due process. Appeals were usually on the grounds of whether due process had been provided.

Chairperson Gale noted that the Commissioners were given the opportunity during hearings to question witnesses and counsel. He did not know if that was unique to the Commission, but if it threatened due process, to let the Commission know. There was formality and informality to the proceedings. Counsel should let them know if a different process was needed. From their experience, if there were things that appeals courts did not abide, they should let the Commission know. Chairperson Gale thanked counsel for coming.

No action was necessary.

Director Tyrrell presented exhibits consisting of legislative bills introduced in the 2005 Legislature. Director Tyrrell reviewed legislation of interest to the Commission.

LB 49 - Director Tyrrell reported that this bill affected the Commission’s statutes only so far as a reference change, to refer to the "Nebraska Uniform Securities Act." This was a technical change only.

LB 88 - A hearing was scheduled for Tuesday, January 18. Commissioner Moline asked Perre Neilan, representing the Nebraska REALTORS® Association, if the Association would be at the hearing to support the bill. Mr. Neilan said yes. Director Tyrrell said the Homebuilders Association were supportive of the legislation.

LB 149 - Director Tyrrell said it appeared this change would affect the Seller Property Condition Disclosure statute. It required the seller to inform prospective buyers if methamphetamine had ever been produced on the property, whether there was a criminal conviction or not. If passed, Director Tyrrell said the text would be added verbatim to the Seller Property Condition Disclosure Statement, with yes/no answer blanks. Attached to the exhibit was an article from the Lincoln Journal Star, with a quote from Jim Harford. Director Tyrrell had clarified with staff at the Department of Environmental Quality that Mr. Harford’s statement was not DEQ’s position, but was only Mr. Harford’s opinion. Director Tyrrell said the Commission had the same options as any other group, and could support, oppose, remain neutral, or monitor the bill.

Commissioner Moline said it would be hard to say the Commission was against bills addressing the methamphetamine problem. Under this particular bill, even if the house was gutted and remodeled, the seller would still have to disclose that methamphetamine was once produced there. Commissioner Poskochil noted that there were really no clear-cut standards as to when a house was safe or considered cleaned up. This bill would affect property rights, with no standards. Commissioner Moline questioned how a real estate licensee would know if methamphetamine was cooked in a house. Director Tyrrell noted that the licensee was not required to make the disclosure, as it was an issue of seller knowledge.

Commissioner Poskochil asked Mr. Neilan for the Nebraska REALTORS® Association’s position on the bill. Mr. Neilan said he had received no formal answer yet. He knew that some states were setting minimum cleanup standards, and trying to develop appropriate regulations.

Chairperson Gale was briefly excused from the meeting at 11:40 a.m., and rejoined the meeting at 11:44 a.m.

Commissioner Moline said methamphetamine is bad, granted, but so are other household chemicals. He struggled with this bill. Commissioner Poskochil asked if other jurisdictions had passed regulations yet. Mr. Neilan said he had no word if methamphetamine was included on other states’ disclosure forms. Commissioner Poskochil said he thought Texas had addressed the issue at some point, and that was discussed at the Pittsburgh ARELLO meeting.

Commissioner Moline said that the sellers filled out the boxes on the Seller Property Condition Disclosure Statement, but if he knew something they had not disclosed, he had to add a page. Commissioner Moline questioned if there would be an issue of whether a licensee should have known. Counsel Widger said it depended on how publicized it was. There was precedent of licensee responsibility to know what was going on in a community in which they were selling real estate. Commissioner Moline said it was one thing for a licensee to notice big water stains on a ceiling, and another to know whether methamphetamine had ever been manufactured in a house. Counsel Widger noted that a methamphetamine arrest may not make the front page of the newspaper, just the police blotter. Commissioner Poskochil questioned whether a licensee would have an obligation if, after a listing, neighbors said they thought the prior occupants were cooking methamphetamine there.

Commissioner Moline said there were lots of compounds in a house that were dangerous to humans. Commissioner Moline questioned where it would stop, if potential chemical risks were to be identified one by one. Commissioner Shepard questioned how much protection the state had to do, and whether government was over-protective. Commissioner Shepard also questioned where it would stop. Government entities had to use some reasonableness.

Commissioner Grady noted there was a gruesome murder committed on a North Platte property. The owners had reconditioned the property, but still could not rent it, so they eventually demolished it. That was how stigmatized a property could be. If a problem was common knowledge, buyers should be informed. The liability was with the seller, not the licensee. The more information a licensee brought to a transaction, the better it was in the long run, even though it may cause some white knuckles in the process.

Commissioner Johnson said he thought the Commission should monitor the bill. If the Commission had Director Tyrrell testify against it, it would not look good.

Commissioner Moline said that, at one time, murder was on the Seller Property Condition Disclosure Statement, and the Commission took it off, along with ghosts. Director Tyrrell noted that the legislature deleted certain items during debate, which included human death by homicide or suicide, psychologically impaired properties, and paranormal phenomena. Based on testimony at a hearing, the Commission had determined that murder was an adverse material fact, and took action against a licensee for not disclosing it. The Commission added a section to the Seller Property Condition Disclosure Statement for human death by homicide or suicide, psychologically impaired properties, and paranormal phenomena. The Legislature made the decision that it would not be state policy to require sellers to disclose those items. The Legislature primarily discussed homicide, not the other provisions, but struck all those provisions. Based on the Legislature’s action, the Commission’s position was null and void, and those issues are currently considered a civil matter. Real estate companies should consult their attorneys, and have policies in place regarding whether to take a listing if a seller refuses to disclose the history of the property. Commissioner Poskochil asked what happened to the licensee. Director Tyrrell said the licensee’s suspension was over by then, so it was a moot point.

Commissioner Shepard asked if a seller would have grounds against a licensee if a licensee said there was a homicide on a property. Director Tyrrell said that would not be grounds for a Commission complaint, if it were true, but it could be a civil matter. The State had determined it was not an issue a seller is required to disclose. If it were not true, there may be grounds for substantial misrepresentation. Commissioner Shepard asked if that would only apply if a licensee was working for a seller. Counsel Widger said it would depend on the facts, how the case was pled, and whether a licensee knew it would be an adverse material fact to a particular buyer. Commissioner Grady noted that it bothered some people if someone died of old age in a property. It depended on the sensitivity of the buyer.

Commissioner Moline said that Commissioner Johnson had a point that the Commission could not come out against a bill like this. The Commission could support addressing the methamphetamine problem, but have concerns with this bill. Commissioner Moline reiterated the question of where does it stop, with many dangerous chemicals in most houses, and items like murder which had been added in the past. The Seller Property Condition Disclosure Statement was a book-long form in California.

Chairperson Gale noted that murder did not physically taint or damage a property. That depended on the buyer’s sensitivity. Another set of concerns, such as mold and radon, did contaminate a home, and could make it uninhabitable or dangerous for some individuals with certain sensitivities such as allergies. That did affect the property, and was an adverse material condition. To simply say a property had been used for methamphetamine production was very general. The occupants could have just possessed the ingredients for methamphetamine, which did not necessarily mean methamphetamine manufacturing had been done in that house, or that it was done more than once. Chairperson Gale questioned if there were ingredients and lab equipment in a property which could be used to produce methamphetamine, should the seller leap to the assumption that the property was tainted. If a court had not made a determination, it was subjective, and there were no standards to determine what level of contamination would impact kids living in the home. It put the sellers at a terrible disadvantage, based on whether methamphetamine was ever produced in a house. This bill would affect habitable properties for sale, and put sellers at a horrible disadvantage.

Commissioner Poskochil agreed, especially because there were no standards to determine contamination or habitability. Chairperson Gale said he felt the Commission should oppose the bill for lack of sound science, and lack of sound standards of when a house was uninhabitable or safe. Commissioner Poskochil said methamphetamine contamination could be just like mold, that once a property was remediated and that fact had to be disclosed forever, those houses sold for a whole lot less than they were worth. Commissioner Moline noted that the industry was now saying that the mold issue was a big hullabaloo about nothing. Commissioner Poskochil said that, if a house was repossessed or given back to the bank, everyone loses.

Director Tyrrell suggested that the Commission remain neutral, but use opposing language regarding the Commission’s concerns when providing testimony. Director Tyrrell thought there would be the same discussion at the committee hearing, and asked if Mr. Neilan agreed. Mr. Neilan said it would depend on the politics involved, and whether the Governor and others were behind the bill. Mr. Neilan said this bill was not the highest priority for them, and he did not think this discussion would happen unless the Commission and the Nebraska REALTORS® Association brought up these issues at the hearing.

Commissioner Moline noted that Chairperson Gale had made a good point about unproven science. Commissioner Moline reiterated that many common household chemicals that are bad for people, and questioned whether a seller would eventually have to disclose each of them.

Commissioner Poskochil noted that people had sensitivities to new carpet, building materials, carpet glue, and paint. Chairperson Gale said some were also sensitive to animals. Commissioner Moline noted that animal habitation was on the Seller Property Condition Disclosure Statement.

Commissioner Poskochil said he was not in support of this bill, so however the Commission wanted to go about raising concerns was fine. Chairperson Gale said the Commission should be dragging like an anchor, because of the lack of science and the lack of standards to determine when a house was inhabitable and when it was dangerous. There needed to be a reasonable basis for designation as a contaminated house.

A motion was made by Moline and seconded by Grady to direct Director Tyrrell to testify as neutral, with concerns as mentioned in the discussion. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

LB 315 - Director Tyrrell said this bill had just appeared on the Legislature’s website last night, and that was why he had requested that it be added as an emergency agenda item. Director Tyrrell noted that the bill required sellers to provide notice of where information was available regarding sex offenders. It appeared the intent was to add this notice to the Seller Property Condition Disclosure Statement. Commissioner Moline asked if it could be added as a line on the purchase contract. Director Tyrrell said he did not think so, but it could be added to the Seller Property Condition Disclosure Statement, prior to the signature line, if the Commission wanted to be cooperative. Otherwise, the Commission could just make it available on the website, so sellers could get the notice to give to people. Director Tyrrell thought it would be added to the Seller Property Condition Disclosure statute, after the bill drafter’s office was done with it. Director Tyrrell reiterated that it was just a notice, and seemed fairly innocuous. Chairperson Gale said he was not so sure it would not be in the purchase agreement, since it only applied to purchase and sale agreements of residential real estate. Director Tyrrell said the problem with that was the purchase agreement was not in state law. The Seller Property Condition Disclosure Statement was.

Mr. Neilan reiterated that this bill just came up last night. He had asked a couple of people about it. They preferred that the notice be in the Seller Property Condition Disclosure Statement, because different forms were used for purchase agreements. Mr. Neilan said the legislature committee will want to know at the hearing if the notice should go on the Seller Property Condition Disclosure Statement. Director Tyrrell said he did not know if there was a reason to oppose that, and he was seeking Commission direction. Commissioner Moline said it was just one more thing, like the methamphetamine notice, which made the Seller Property Condition Disclosure Statement longer. Chairperson Gale said this had much less potency than the methamphetamine issue. This was just a notice of where to get the information.

Director Tyrrell said he had not considered testifying, but could do it if the Commission so desired. Commissioner Moline said he would like to have Director Tyrrell testify that the responsibility was only that it be included on the seller’s description of property. Director Tyrrell said he could testify that the Commission anticipated that the committee would want it in the Seller Property Condition Disclosure Statement, and that the Commission had no problem with that. Chairperson Gale noted that, as said, the notice could be on any form used. Director Tyrrell said he could say that the Commission recommended that it be on the Seller Property Condition Disclosure Statement.

Counsel Widger said that an Attorney General’s opinion stated that disclosures regarding sex offender issues were neighborhood issues. Under the agency statute, licensees did not have to make those disclosures. The Commission would want to make sure it was on the Seller Property Condition Disclosure Statement only, to be disclosed by the seller only, and as a notice only, to keep it separate from other issues.

Commissioner Poskochil asked if the notice would apply to relocation companies and other entities who were exempt from the Seller Property Condition Disclosure Statement requirement. Director Tyrrell said the legislation stated that it applied to sellers of residential real property required to provide a disclosure statement. Anyone who was exempt from the Seller Property Condition Disclosure Statement requirement would not have to provide the notice. Counsel Widger said that was also how she would read it, rightly or wrongly.

It was the consensus of the Commission that Director Tyrrell would testify that the notice requirement should be added to the Seller Property Condition Disclosure Statement.

On January 13, Chairperson Gale reopened discussion on Legislative Items, and requested that Perre Neilan, representing the Nebraska REALTORS® Association, address legislative issues with the Commission.

At 9:25 a.m. on January 13, Commissioner Grady was briefly excused from the meeting, and rejoined the meeting at 9:27 a.m.

Mr. Neilan said he would check with the Nebraska REALTORS® Association regarding the methamphetamine production notification requirement and the sex offender notification requirement. The limited discussion so far was that the sex offender notification should go on the Seller Property Condition Disclosure Statement. The Association shared the same concerns regarding the methamphetamine production notification requirement, in that there could be an infinite number of similar items that sellers may have to disclose indefinitely, and the extent of the duty on the part of licensees to disclose.

Chairperson Gale noted that the home inspector bill had been redrafted, but his staff had not yet found a senator to introduce the bill. Senator Bourne had done it a couple of times, and it had gone nowhere, so he was no longer interested. Chairperson Gale wanted the Commissioners to know the bill was drafted, and he hoped to find someone to sponsor it.

Commissioner Poskochil asked to receive a copy of the bill. Chairperson Gale said he would provide it.

Commissioner Moline asked if the home inspectors had agreed to it yet. Chairperson Gale said he would have to check, but the bill was basically the same as the last one to which they had agreed. There were a few differences to resolve. Mr. Neilan noted that Chairperson Gale’s deputy had shared the draft with the Association, and they were glad to see the changes incorporated. The only remaining snag was the statute of limitations.

Commissioner Johnson said that he had learned from ARELLO that New York had just finished a licensing bill for home inspectors. Chairperson Gale said similar legislation will be coming in every state, and he hoped it will be on the agenda for the Legislature.

Commissioner Johnson said that an ARELLO attendee from the Illinois area told him that methane gas was going to be next hot issue, because subdivisions were moving out to the country, where the cattle were. Commissioner Grady said there had already been an issue with a feed yard owner who dumped waste into a field which adjoined a subdivision for spite, and the flies and odor created problems for the subdivision owner. Discussion ensued on similar disclosure issues that may arise in the future.

No action was necessary on this report.

Director Tyrrell announced that Commissioners Gale, Moline, and Shepard had been appointed by Chairperson Gale to the Budget and Planning Subcommittee Members through August 2005.

No action was necessary on this report.

Director Tyrrell announced that the April Commission meeting was canceled due to scheduling conflicts.

No action was necessary on this report.

February 15-16, 2005 - Staybridge Suites, Lincoln

March 17-18, 2005 - Ramada Limited South, Lincoln

May 16-17, 2005 - Staybridge Suites, Lincoln

June 13-14, 2005 - Ramada Limited South, Lincoln

August 24-25, 2005 - Staybridge Suites, Lincoln

September 22-23, 2005 - Staybridge Suites, Lincoln

At 9:45 a.m. on January 12, Chairperson Gale declared a brief recess, and reconvened the meeting at 9:50 a.m.

At 10:05 a.m. on January 12, Chairperson Gale declared a brief recess, and reconvened the meeting at 10:16 a.m.

At 12:22 p.m. on January 12, Chairperson Gale declared a brief recess, and reconvened the meeting at 12:36 p.m.

At 11:40 a.m. on January 12, Chairperson Gale was briefly excused from the meeting, and rejoined the meeting at 11:44 a.m.

At 12:55 p.m. on January 12, Commissioner Shepard was briefly excused from the meeting, and rejoined the meeting at 12:57 p.m.

At 1:52 p.m. on January 12, a motion was made by Grady and seconded by Shepard to go into closed session. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

At 2:42 p.m. on January 12, a motion was made by Moline and seconded by Poskochil to go into open session. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

At 2:43 p.m. on January 12, Chairperson Gale recessed the meeting.

At 9:10 a.m. on January 13, Chairperson Gale reconvened the meeting.

At 9:25 a.m. on January 13, Commissioner Grady was briefly excused from the meeting, and rejoined the meeting at 9:27 a.m.

At 9:45 a.m. on January 13, Chairperson Gale declared a brief recess, and reconvened the meeting at 9:55 a.m.

At 10:58 a.m. on January 13, Chairperson Gale declared a brief recess, and reconvened the hearing at 11:05 a.m.

At 11:44 a.m. on January 13, Commissioner Shepard was briefly excused from the meeting, and rejoined the meeting at 11:45 a.m.

At 11:50 p.m. on January 13, there being no further business to come before the Commission, a motion was made by Moline and seconded by Grady that the meeting adjourn. Motion carried with Grady, Johnson, Poskochil, Shepard, Moline, and Gale voting aye, and with Strand not participating or voting, being absent and excused.

I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing minutes of the January 12-13, 2005, meeting of the Nebraska Real Estate Commission were available for inspection on January 28, 2005, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.

Respectfully submitted,
Les Tyrrell
Director

Perre Neilan, Nebraska REALTORS® Association, Lincoln

Janet Palmtag, JJ Palmtag, Nebraska City

Chris Heinrich, Harding, Schultz, & Downs, Lincoln

Tim Engler, Harding, Schultz, & Downs, Lincoln