Chairperson Gale convened a meeting of the Nebraska Real Estate Commission at 9:02 a.m. on January 24, 2008, 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 Commissioners Bohrer and Leisey, who were absent and excused from both days of the meeting and Chairperson Gale who was absent and excused on the second day of the meeting. Also present were Director Les Tyrrell, Deputy Director for Education and Licensing Teresa Hoffman, Deputy Director for Enforcement Terry Mayrose, and Administrative Assistant Monica Rut. Greg Barton, Special Assistant Attorney General and Counsel to the Commission was present for the Mark Allen Boyer and Timothy William Young Hearing.

Director Tyrrell presented a public notice and proofs of publication thereof relating to this meeting, all of which are attached to and made a part of these minutes. Chairperson Gale reported that all Commissioners had been notified of the meeting simultaneously, in writing, and that a proposed tentative agenda accompanied the notification.

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

The minutes of the Commission meeting held on December 20, 2007, were considered.

Director Tyrrell presented the Receipts and Expenditures Report for December. A copy of said report is attached to and made a part of these minutes. Director Tyrrell noted that an explanation page was included on the report.

The cash fund balance as of December 31, 2007, was $821,973.45, which compared to a cash fund balance of $971,554.23 on December 31, 2006.

Chairperson Gale noted that more revenue had been received for Promotional Land Fees than the prior year. Director Tyrrell indicated that the renewals for promotional lands are due at the end of each year and may be coming in at a different rate than last year. He also indicated it could be attributed to an increase in new registrations during this year.

Commissioner Dover noted that the year-to-date Postage Expense was thirty-percent lower than last year. Director Tyrrell indicated that updates to the license manual and trust account manual had been mailed out the previous year.

Director Tyrrell presented the Renewal Report. A copy of said report is attached to and made a part of these minutes. (Note: It was discovered at the meeting that the Exhibit for this Agenda Item was incorrect. The date of the 2007 comparison was set forth as A 1/12/06" when, in fact, the date should have been A 1/17/07". The Exhibit was corrected for attachment to these minutes.)

No action was necessary on this report.

Specialized Registrations

There were no specialized registrations to be presented at the meeting.

Deputy Director Hoffman presented for ratification the December Examination 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.

Commissioner Poskochil noticed that at certain times of the year, more courses were submitted than others and inquired as to the reason for such fluctuation. Deputy Director Hoffman indicated that at the end of the year more courses were offered than created to meet licensee renewal deadlines. There were increased numbers of course applications in the months of February and March, when providers were planning ahead for conventions and other education venues.

Commissioner Poskochil asked if the education courses had to be renewed by the providers. Deputy Director Hoffman explained that the courses had to be renewed every three years. This year= s report would be presented to the Commission at the March meeting. Commissioner Poskochil asked if Deputy Director Hoffman offered course content recommendations to continuing education providers. Deputy Director Hoffman indicated that when the providers renew the continuing education courses they were required to send a current course outline at which time the topics were reviewed. Deputy Director Hoffman also indicated that the providers contact the Commission office seeking suggested subject matter which generates some courses and that she engages in ongoing dialogue with providers on topics of interest.

Commissioner Grady asked if other jurisdictions were requesting continuing education on the topic of short sales. Deputy Director Hoffman indicated that she had not received information on that issue through ARELLO, but the fact that national education providers were developing programs on this topic, indicated multi-jurisdictional interest.

After review, a motion was made by Poskochil and seconded by Griess to ratify the two reports. Motion carried with Dover, Grady, Griess, Poskochil and Gale voting aye, with Bohrer and Leisey not participating or voting, being absent and excused.

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

No action was necessary on this report.

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

Deputy Director Mayrose presented a Stipulation and Consent Order in the matter of Complaint 2007-034, Geri Tanderup vs. Marlene K. Jussel. A copy of said Order is attached to and made a part of these minutes.

Deputy Director Mayrose reviewed the circumstances involved and noted the provisions of the Order, which had been signed by Ms. Jussel. The Order specified a censure for Ms. Jussel plus six hours of additional continuing education, with three hours being in the area of agency, and three hours in the area of contracts, to be completed within 180 days of the date of the Order.

Commissioner Griess requested an article be published in the Commission Comment newsletter regarding this issue. Deputy Director Hoffman noted her request.

Deputy Director Mayrose presented a Stipulation and Consent Order in the matter of Complaint 2008-002, Commission vs. Carolyn Van Horne. A copy of said Order is attached to and made a part of these minutes.

Deputy Director Mayrose reviewed the circumstances involved and noted the provisions of the Order, which had been signed by Ms. Van Horne. The Order specified a suspension for a two-year period with the entire two-year period served on probation plus six hours of additional continuing education, with three hours being in the area of license law, and three hours in the area of trust accounts, to be completed within 180 days of the date of the Order.

A Hearing was held on January 24, at 9:31 a.m., in the matter of Complaint 2007-005, Charles E. and Janet S. Petersen vs. Mark Allen Boyer and Timothy William Young. Greg Barton, Special Assistant Attorney General and Counsel to the Commission, appeared for the Complainants. Respondents Mark Allen Boyer and Timothy William Young were present and represented by Counsel Richard P. Jeffries of Omaha.

Counsel Jeffries motioned for a directed verdict of dismissal. Chairperson Gale took the motion under advisement.

After opening statements, Counsels Barton and Jeffries jointly offered 23 Exhibits, all of which were received by Chairperson Gale.

Counsel Barton called Charles E. Petersen, Janet S. Petersen, Mark A. Boyer and Timothy W. Young as witnesses.

At 11:12 a.m., Chairperson Gale declared a brief recess, and reconvened the Hearing at 11:26 a.m.

Counsel Jeffries again motioned for a directed verdict of dismissal. Chairperson Gale took the motion under advisement.

Counsel Jeffries called Todd Gaver, Timothy W. Young and Mark A. Boyer as witnesses. Counsel Aimee Bataillon was present to represent Mr. Gaver.

At 12:33 p.m., Chairperson Gale declared a recess of the Hearing to break for lunch. The Hearing reconvened at 1:30 p.m.

At 3:02 a.m., Chairperson Gale declared a brief recess, and reconvened the Hearing at 3:15 p.m.

Prior to his closing argument, Counsel Jeffries again motioned for a directed verdict of dismissal. Chairperson Gale denied this motion and the previous motion to dismiss and explained his reasoning therefore.

Counsel Jeffries then requested a standing motion for a directed verdict of dismissal. Chairperson Gale overruled the requested motion.

After closing arguments had been presented, Chairperson Gale declared the Hearing concluded and gathered the original exhibits.

Prior to any motion the following occurred:

Chairperson Gale felt that both Mr. Boyer and Mr. Young were involved with the Petersens= case, and even though neither Exhibit #2 or #8 directly referenced Lot 85, the documents referenced Phase 1 which included Lot 85. Chairperson Gale felt the Commissioners needed to focus only on Lot 85 and whether or not the licensees had knowledge of adverse material facts which were not disclosed.

Commissioner Poskochil felt that Mr. Boyer and Mr. Young tried hiring reliable people to assist them. He also felt their testimonies were clear and honest, but they had a duty to disclose the adverse facts which had been omitted. He did not feel that this had been a normal real estate transaction and the information regarding the Petersens= lot had been available and they could have had other testing completed if they so desired. He also felt that Mr. Boyer and Mr. Young could not make that decision for another owner and any information obtained regarding the lot should have been passed onto the purchaser so they could further investigate if they wanted to. He also did not feel that Mr. Boyer and Mr. Young were negligent or that they were trying to deceive the Petersens but that the information should have been provided to the Petersens.

Commissioner Griess concurred with Commissioner Poskochil and felt the issue to be discussed was the adverse material facts. The issue was not whether they knew the information was available but that the information be disclosed so that the purchaser could decide whether to build or not. She felt that the fact that Mr. Boyer purchased the lot next to the Petersens and had gone through the same problems was important with regard to intent and honesty and believed that the Respondents made an innocent mistake.

Commissioner Grady felt the Petersens were never brought to understand that the house was to be built upon rocks and dirt. He indicated that the fact Mr. Boyer built a home next to the Petersens had been an additional incentive since there was a lot to be gained by building on the A street of dreams@ and that the principals of the subdivision were building there and had a vested interest in the subdivision. He also felt that with as many transactions as Mr. Boyer and Mr. Young had conducted, they should have known that the ground was not stable and the reports should have been highlighted and handed to the purchasers. He also agreed that there had been adverse material facts which should have been disclosed.

Commissioner Dover felt that Mr. Boyer and Mr. Young had done everything correct with the development of the land but since the real estate site had unstable soil, they should have told the buyers so they could have made the decision whether or not to build.

Chairperson Gale felt that the project had been conducted very professionally and thoughtfully. He indicated after reviewing Exhibit #2, based on the Respondents= knowledge, they should have realized there could be problems. He also felt that parts of the land in Phase 1 were in some risk and in Exhibit #11 there had been a Site Improvement Plan which was over and beyond the covenants which addressed Phase 1. He noted that the plan had been developed to address the issues in Phase 1 and have Geotechnical Services, Inc. (GSI) conduct soil testing before the basements were built at which point the buyer was to be informed. However, it was not clear that the Petersens knew anything about the plan or when GSI did the soil testing and they did not seem to have knowledge, clear knowledge, of either Exhibit #8 or Exhibit #14. He indicated that receiving these documents would have been critical to the decision making process, but the purchaser did not receive that information. He indicated that some information went to the contractor but not the buyers. He also noted GSI rejected their own report.

Commissioner Poskochil felt that the Respondents did not pass the report on to the builder. He was unsure if anyone had been given any information.

Commissioner Grady was unsure of the time frame in which this all occurred, that is the lake being dug and when the fill had been placed on a hill. He felt that perhaps the Respondents acted too hastily and when they went to GSI, as a reputable company and experts, they thought GSI could fix the problems for everyone. He also felt the Respondents recognized that they had a problem which needed to get fixed. Commissioner Griess did not get the same impression as Commissioner Grady.

Commissioner Dover felt that the Respondents had hired the experts to determine if the lot sites were buildable or not. He felt the Respondents had been given a report by GSI which should have been passed on to the purchaser. Chairperson Gale felt that the Phase 1 area was of greatest risk and it was not as if the whole project had gone bad. Chairperson Gale indicated that the report had shown that most of Phase 1 had variable soils, which is information a buyer should know. Chairperson Gale felt that Mr. Young and Mr. Boyer made a good faith effort with the development of a Site Improvement Plan that would address the potential risk issues when building. He felt it was a huge misfortune and had been catastrophic for the Petersens and Mr. Boyer. He felt that the civil suit demonstrated how material this was. Commissioner Dover indicated that the decision should not be based on the cost of the house since the price does not matter. That should not play into the Commission= s decision.

A motion was made by Poskochil and seconded by Griess to find in Complaint 2007-005, that Mark A. Boyer and Timothy W. Young violated Neb. Rev. Stat. ' 76-2417(3)(a).

Commissioner Dover felt uncomfortable voting on a motion until he could be read that specific statute. Commissioner Poskochil asked Director Tyrrell to read to the Commissioners both Neb. Rev. Stat. ' 81-885.24(29) and 76-2417(3)(a). Director Tyrrell read both of the statutes as requested.

After further discussion, the motion was withdrawn. Commissioner Poskochil then asked Director Tyrrell to read Title 299 Chapter 5-003.20. Director Tyrrell read the rule as requested.

A motion was made by Poskochil and seconded by Griess to find in Complaint 2007-005, that Mark A. Boyer and Timothy W. Young violated Title 299, Chapter 5-003.20. Motion carried with Dover, Grady, Griess, Poskochil and Gale voting aye, with Bohrer and Leisey not participating or voting, being absent and excused.

Chairperson Gale asked that there be a motion to dismiss all other allegations.

A motion was made by Dover and seconded by Griess to dismiss all other allegations set forth in the complaint. Motion carried with Dover, Grady, Griess, Poskochil and Gale voting aye, with Bohrer and Leisey not participating or voting, being absent and excused.

Chairperson Gale opened the past disciplinary action envelope. It showed no prior disciplinary action against either Respondent.

The Commissioners then discussed the penalty to be assessed.

Chairperson Gale felt the Respondents got caught in an unusual circumstance. He did not feel that they displayed unprofessional conduct or that they were trying to defraud the purchasers but felt that information specific to Phase 1 had been known and there should have been some warning to the purchasers. He felt that the licensees should not receive a suspension of their license but perhaps a censure.

Commissioner Grady agreed that they should not receive a suspension but there needed to be some form of disciplinary action. He felt that the Respondents did not handle this issue properly or do their job correctly. He did not feel they should be put out-of-business but perhaps a censure or probation would be in order.

Chairperson Gale indicated that he did not feel that continuing education was appropriate for the Respondents. He felt they relied on professional help and had not been reckless, but just did not disclose the information properly. He felt that Mr. Boyer and Mr. Young were knowledgeable professionals. Commissioner Grady felt that Mr. Boyer and Mr. Young received seven hours of continuing education during this hearing. Commissioner Griess felt this had been a long ordeal and agreed with the continuing education received during their hearing and would lean toward a censure of their licenses. Commissioner Poskochil indicated that since Counsel Barton brought up suspension of their licenses in the closing statements he felt that suspension was a fair punishment but would rather consider probation. He felt the issue was serious and the Respondents should serve time on probation. He did not feel that it was acceptable to omit disclosing adverse material facts and felt that in addition the Respondents should receive education as deemed by staff.

Commissioner Dover asked if a letter of censure was considered a slap on the wrist. Chairperson Gale indicated that a censure goes on the licensee= s record but would be lighter than a suspension, probation or revocation. Chairperson Gale felt that a censure would get the point made and establish a bar. Chairperson Gale also explained that a letter of admonishment was less than a censure, but usually was given with a simpler issue which would not show up on the licensee= s record. Commissioner Poskochil felt that this issue should not be punished lightly, and if other issues arose or other consumers were harmed the Respondents would be on probation.

Commissioner Dover felt that the penalty assessed would send a message for the future about disclosures.

Chairperson Gale indicated that both of the Respondents had no other disciplinary action in the past and since guilt was found, that action accomplishes the standards set by the Commission and educates the licensees to meet the standards.

Commissioner Grady felt that this may not be an isolated case since there were several lots in the subdivision.

Chairperson Gale felt that each complaint would be unique. He also indicated that the Respondents were not criminals and would not have a probation officer, and if other complaints were filed, there would be a whole new hearing on the different case.

Commissioner Dover asked if another similar complaint was brought to the Commission and the Respondents were again found guilty while on probation would it be up to the Commission to determine additional punishment. Chairperson Gale indicated that if the Respondents were found guilty on a second case, the penalty on the second case would be different than the case currently being heard. Commissioner Dover asked if they violated probation, does that cause their license to become suspended. Chairperson Gale indicated that their license would not automatically be suspended.

A motion was made by Poskochil and seconded by Grady in Complaint 2007-005, that Mark Allen Boyer and Timothy William Young receive a one-year suspension all served on probation plus six hours of additional continuing education to be determined by Staff.

Commissioner Griess felt the Respondents understood the issue and that continuing education would not be appropriate. She also felt that a one-year suspension all served on probation was excessive.

Motion failed with Grady and Poskochil voting aye, with Griess, Dover and Gale voting nay and with Bohrer and Leisey not participating or voting, being absent and excused.

A motion was made by Griess and seconded by Gale in Complaint 2007-005, that Mark Allen Boyer and Timothy William Young should receive a censure.

Commissioner Grady felt there should be a happy medium. Commissioner Dover felt that with the Respondents= experience in land development they should have known to disclose this information.

Motion failed with Griess and Gale voting aye, with Dover, Grady and Poskochil voting nay and with Bohrer and Leisey not participating or voting, being absent and excused.

Chairperson Gale felt that perhaps a six-month suspension all served on probation with three hours of additional continuing education might be a happy medium.

A motion was made by Griess and seconded by Poskochil in Complaint 2007-005, that Mark Allen Boyer and Timothy William Young receive a six-month suspension all served on probation plus three hours of additional continuing education in the area of disclosures.

Motion carried with Dover, Grady, Griess, Poskochil and Gale voting aye, with Bohrer and Leisey not participating or voting, being absent and excused.

With the consent of the Respondents, Chairperson Gale directed Counsel Barton to prepare the Order.

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

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

The Hearing was adjourned at 5:24 p.m.

Director Tyrrell presented an exhibit which included: correspondence regarding Ms. Miller= s special appearance; a letter from Ms. Miller; a written explanation of circumstances from Ms. Miller; a letter from the State Probation Office regarding Ms. Miller; a copy of the Satisfaction of Judgement and Sentence Early Discharge document from the Douglas County District Court; a copy of the Order of Intensive Supervision Probation document from the Douglas County District Court; letters of reference for Ms. Miller; A copy of said exhibit is attached to and made a part of these minutes. Ms. Miller was present.

Acting Chairperson Poskochil reviewed the procedure for informal special appearances.

Ms. Miller explained that she had grown up in a Christian family and attended Christian schools. She indicated that she had a vehicle accident which had killed two individuals when she had been a minor. She also explained that for a minor under the influence of alcohol, the law had a zero tolerance policy. The families of the victims had not wanted to press charges against her. However, she spent two years in and out of court. She also indicated that she had not spent time in prison, but spent three days in the Douglas County jail. She served probation, attended meetings and made restitution to the families. She noted that she had not been in any trouble during probation and had been released a year early. She had already taken the required pre-license education courses to get a real estate license. She had also gone back to the court system to have the convictions A set aside@ . The court had rejected her request but indicated that after six months had passed since being on probation, if she remained out of trouble, she would be able to come back to get the convictions A set aside@ . She indicated that she had been a homeowner for the past three years and would be getting married in 2008. She had worked as a property manager for three years. She also noted that she had been a missionary in Haiti when she was 18 years old and had a good relationship with her parents whom she visits weekly with her daughter.

Acting Chairperson Poskochil asked if Ms. Miller had met her financial obligations through the court system. Ms. Miller indicated that the obligations were met the first year. Acting Chairperson Poskochil asked if she received a real estate license if she would continue to work for her current employer. Ms. Miller indicated that she had been exploring her options. Commissioner Grady noted that Ms. Miller appeared to be successful in property management.

Commissioner Grady asked if Ms. Miller planned on going to the Pardons Board to get the convictions off of her record or what other recommendations she had received. Ms. Miller indicated that they would not pardon her yet. However, she would be able to get the convictions A set aside@ . Ms. Miller indicated that after the required ten-year waiting period she intended to go to the Pardons Board.

Director Tyrrell indicated that Ms. Miller contacted him in June of 2007 regarding her desire to obtain a real estate license and had voluntarily waited for a period of time to lapse before appearing before the Commission. Commissioner Grady felt Ms. Miller had done an excellent job trying to straighten her life out and felt that when the District Judge agreed to A set aside@ her conviction, he would feel better about letting her sit for the examination. Commissioner Griess indicated that she felt inclined to allow Ms. Miller to sit for the real estate examination. Acting Chairperson Poskochil concurred, and indicated that Ms. Miller had no other violations.

Commissioner Dover asked Ms. Miller to describe the accident. Ms. Miller did so.

Deputy Director Mayrose presented a 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.

After discussion, a motion was made by Grady and seconded by Dover to approve the Procedures and Cycle for Trust Account Examinations as presented. After further discussion, motion carried with Dover, Grady, Griess and Poskochil voting aye, with Bohrer, Gale and Leisey not participating or voting, being absent and excused.

Director Tyrrell presented copies of articles published in the Commission Comment Newsletter regarding broker price opinions and comparative market analyses. A copy of said exhibit is attached to and made a part of these minutes.

Commissioner Grady indicated that he had been concerned with the requests received in his office and around town regarding broker price opinions and comparative market analyses. He explained that requests had been received from lenders and asset disposal companies requesting broker price opinions from a broker for approximately fifty dollars in order to avoid using an appraiser. He also indicated that in speaking with other brokers in the community, they had also received broker price opinion requests and felt it was too much paperwork for the fifty-dollar fee.

Director Tyrrell explained that, it was his understanding that Nebraska was one of very few jurisdictions that had such a provision in the statute.

Commissioner Griess indicated that the disclosure was difficult to use since the broker price opinions were not done in hard copy anymore. She also indicated that the language in the disclaimer offered by the out-of-state-companies was similar to that required in Nebraska, but the brokers would have to do an attachment in order to meet the requirement of the law. She explained that the broker would have to decide if they were willing to do the broker price opinion and, if so, they would need to comply with the law.

Commissioner Grady felt there had been frustration in his office whether the broker should be doing broker price opinions and if the broker could receive payment. He noted that some brokers conduct the broker price opinions and then get the listing. However, some broker price opinions were being requested after a house had been sold or when a payment had been missed. Director Tyrrell indicated that the articles published in the Commission Comment newsletter could be published more often. Director Tyrrell noted that the key wording in the law was that broker price opinions cannot be conducted for A lending purposes@ . Commissioner Griess indicated that it was confusing to know whether you are doing the broker price opinions for lending purposes or not. She explained that on a foreclosure, a loan company may request a broker price opinion for the basis of doing the loan and through dealing with the lender the broker gets the listing for sale. Commissioner Griess indicated that corporations that are foreclosing properties were not abiding by the rules of the individual jurisdictions.

Kristen Anderson with the Nebraska REALTORS7 Association indicated that broker price opinions and comparative market analyses had been an ongoing conversation. Ms. Anderson also explained that the concerns were not just in Nebraska regarding broker price opinions and comparative market analyses and charging for these services but that other jurisdictions were looking at this area. Commissioner Grady asked Ms. Anderson to keep the Commission informed of what was happening through the Association. Commissioner Grady also indicated that not everyone was guilty of wrongdoing but felt it needed to be monitored. Commissioner Poskochil indicated that the real estate broker set the fee to be collected for broker price opinions. Director Tyrrell agreed and noted that the money was also paid to the broker.

Director Tyrrell indicated similar notices to those in the Exhibit would be published more often in the A Commission Comment@ .

No action was necessary on this report.

Director Tyrrell presented an exhibit proposing to contract with a newly appointed Special Assistant Attorney General. A copy of said exhibit is attached to and made a part of these minutes.

Director Tyrrell requested authority to enter into a A Memorandum of Understanding@ with the proposed new appointee, Special Assistant Attorney General, Daniel R. Carnahan of Harding and Schultz PC, LLO. Director Tyrrell indicated that Mr. Carnahan would be assisting Counsel Barton with disciplinary action matters as well as other duties for the Commission as may be assigned from time to time.

Director Tyrrell indicated that after the discussion of the Commission= s objectives for 2007-2008, he decided to attempt to determine how current statute, rules and procedures affected the conduct of real estate transactions electronically. He asked some industry representatives for names of licensees who were conducting a considerable number of transactions electronically and then talked with these individuals. He also spoke to an independent attorney who had been involved in electronic real estate transactions. These individuals noted that few transactions were done exclusively electronically. Licensees who conduct electronic transactions or have heard of others conducting electronic transactions, found our law, rules and procedures to be conducive to conducting transactions electronically. One person who conducted electronic transactions indicated our laws were excellent compared to other jurisdictions and were A electronic-transaction-friendly@ . One suggestion made was to not include social security numbers on documents used in electronic transactions. There were also some concerns raised regarding people hacking into the e-mailed documents and suggested a disclosure be made to the consumer making them aware that documents may be electronically transferred and/or have a disclosure to get an authorization to transmit documents electronically. In talking to the attorney, the attorney did not feel these types of disclosures were necessary since most people knew when a document was being electronically transmitted and did not feel it was necessary to make changes to the law to require these types of disclosures.

Commissioner Griess indicated that the documents she used had an electronic transaction disclosure on them. Commissioner Poskochil asked if the forms could potentially be A hacked into@ . Director Tyrrell noted that the A hacker@ would need to be very sophisticated according to the people with whom he talked. Director Tyrrell explained that it appears the Commission was generally in good shape and he would keep the Commission informed on this issue.

Commissioner Griess was concerned that with foreclosure properties, the sellers have their own rules on what needed to be done, and only offered electronic forms. She indicated that their requirements did not always match the Nebraska requirements and they were not real flexible with the language in the forms. She explained that essentially the blanks are filled-in and although they had disclaimers which were similar, they were not Nebraska specific. Director Tyrrell understood that some of the forms were not in line with the Nebraska laws, and in those cases it was suggested that a licensee attach the required language and keep a copy so if something happens, that there would be proof showing the licensee attempted to comply with the law and the company refused to honor that. Commissioner Poskochil indicated that most companies accepted the required language and acknowledged receipt of it but would not sign it. Director Tyrrell indicated that if a complaint had been filed on this issue, a licensee would have proof that he/she had sent the required language and the Commission could take that into consideration when determining what action to take. Commissioner Poskochil indicated that relocation offices and banks conducted online transactions and did not have a contract that conforms to each state= s law.

Commissioner Dover was concerned about paperless transactions and how to legally receive a signature electronically. Commissioner Poskochil asked if the Commission was able to accept electronic signatures. Director Tyrrell indicated that the orange sheets sent out to licensees containing their user name and password were for the real estate commission= s website and serve as their electronic signature for the Real Estate Commission. He explained that by signing onto an online form using the username and password, the Commission knew that was the licensee and it was accepted as his/her electronic signature. Commissioner Dover asked if the State of Nebraska would be going paperless. Director Tyrrell indicated that he did not know of anyone that was paperless.

No action was necessary on this report.

Director Tyrrell presented an exhibit which included: correspondence regarding Brandon Luetkenhaus of the Nebraska Credit Union League appearance; e-mail correspondence regarding proposed legislation and a copy of Legislative Bill 980. A copy of said exhibit is attached to and made a part of these minutes.

Brandon Luetkenhaus of the Nebraska Credit Union League, appeared to discuss Legislative Bill 980. Mr. Luetkenhaus handed out an exhibit which included: a Real Estate Broker Trust Accounts and Nebraska Credit Union Fact Sheet; a Share Draft Account definition; a letter from a legal counsel regarding interest on lawyers trust accounts; a letter from a legal counsel regarding establishing no-interest/dividend accounts for members lacking a taxpayer identification number; information on revokable trust accounts; an overview of laws of selected states that regulate real estate broker trust accounts; information regarding share insurance coverage; statute excerpts from Kansas, Iowa and Minnesota; and a page from the Credit Union Times publication. A copy of said exhibit is attached to and made a part of these minutes.

Mr. Luetkenhaus indicated that the bill had been introduced by Senator Carlson. He explained that a customer wanted to set up a broker trust account through a credit union and could not do so because of the law. He noted that the law stated that the trust accounts could only be set up at banks, savings banks, building and loan associations, or savings and loan associations, which are all federally insured. He explained that credit unions would like to provide this service for their members and LB980 would rectify that. The language in the bill would include credit unions by replacing the current language and indicating that a federally insured financial institution would be allowed to maintain real estate trust accounts. He asked for the Commission= s support on this bill. He also referred to the exhibit which provided the definition of a share draft account. He explained that credit union structure and terminology were different between banks and credit unions, but they both have non-interest bearing accounts and members could qualify for that. He also noted that the surrounding states are able to use credit unions. He further explained that in order to qualify for these services a person would have to be a member and their clients would have to be members.

Commissioner Griess indicated that this issue was perplexing since a real estate licensee sold homes to all sorts of people, and a lot of those people would not be members of the same credit union. Commissioner Griess asked if multiple trust accounts would have to be set up at different credit unions? Mr. Luetkenhaus indicated that a credit union served an area and a person would be eligible for membership if the credit union was community-based. Commissioner Griess indicated that if a broker was a member of a credit union with a trust account set up through a credit union, and when a house was sold and the earnest money was to be deposited, how would the credit union determine if the money deposited was appropriate? Scott Sullivan, President of the Nebraska Credit Union League, explained that a member would be bound by the membership requirements. He further explained that one in four Nebraskan= s were members of a credit union and if LB 980 passed only some credit unions in Nebraska would be affected. He noted that a member of a credit union would have a choice whether to set up a trust account at a credit union. He explained that the change in the law would be to change the requirement to a federally insured financial institution and gave a broker member the ability to utilize this service. He further explained that it would not be a money maker for the credit union since a trust account was a non-interest bearing account, it would actually cost the credit unions money to provide this service for their members.

Commissioner Grady asked Mr. Sullivan to define a credit union. Mr. Sullivan indicated that a credit union offered financial services to members. It was a not-for-profit organization and was structured differently than banks but offered the same services. Commissioner Grady asked whether or not he could walk into a credit union and become a member. Mr. Sullivan explained that a credit union was chartered by geographic location, occupation or association. A credit union was traditionally set up by an employer but had migrated to being geographically based.

Commissioner Grady asked what the insurance limit was for a credit union. Commissioner Grady explained that real estate licensees were occasionally involved in million dollar deals and asked if the money went through a credit union would there be an asset requirement or a dollar limit? Mr. Sullivan explained that they were insured the same as the FDIC insured banks, which was up to $100,000, which could be structured differently for profit and nonprofit insured funds.

Director Tyrrell asked if under a credit union insurance you could A buy-up@ the limit. Mr. Sullivan explained that there were ways to do it. Director Tyrrell asked what would happen if a broker had a trust account in a credit union. The broker was a member of the credit union as was the seller. An offer was made through a cooperating broker who was not a member by a buyer who was not a member. The earnest money check was received by the cooperating broker for the buyer, deposited into the broker= s trust account and a check from the broker was sent to the listing broker/member. Mr. Sullivan explained that the money would not be accepted. Director Tyrrell reiterated that in this normal type of real estate transaction the money would not be accepted. Mr. Sullivan said yes. Mr. Sullivan indicated that in some cases the money could be accepted. Director Tyrrell indicated that by law the money must be placed in the broker= s trust account and with the rules of the credit union the money could not be deposited. Mr. Sullivan indicated that in those cases the broker would need to set up a trust account at a bank. Director Tyrrell asked what if the broker only had a trust account at a credit union not a bank. Mr. Sullivan indicated that this process was working in twenty other states. Director Tyrrell indicated that he was not familiar with the laws in other jurisdictions.

Commissioner Dover asked what the motivating factor was to introduce this new legislation. Mr. Sullivan indicated that they had been asked by a real estate broker to provide this service. Commissioner Dover asked why a broker would want to do that. Mr. Sullivan suggested that Commissioner Dover ask the broker. Commissioner Dover asked what the advantage was to have a trust account in a credit union rather than a bank. Mr. Sullivan indicated that some mortgages were made by credit unions and a person might want to put the money into that credit union. Commissioner Grady indicated that one of the reasons might be that there were benefits for credit union members. Commissioner Dover indicated that there would not be much benefit if the account was a non-interest bearing account. Commissioner Dover asked if the credit unions would require a certain amount of money be maintained in the trust accounts. Mr. Sullivan indicated that typically there were no minimum requirements for deposits or money maintained in these types of accounts. Mr. Sullivan also indicated that some fees were assessed for smaller deposits, but an agent account would not be assessed.

Commissioner Poskochil indicated there was a problem with the regulation of it. If a broker had no other trust accounts set up, then the money could not be deposited as required by law which would create the possibility of potential violations which would have to be policed by someone. He asked why the Commission would want to create potential problems. Mr. Sullivan indicated that the proposed legislation indicated that a trust account could be established in a federally insured financial institution, a broker would not have to open a trust account with a credit union. Mr. Sullivan indicated that if the broker did not want to change their current trust account they would not have to, the credit unions just wanted to be able to offer this service to their members. Commissioner Poskochil indicated that this legislation would leave a broker open for potential problems. Commissioner Poskochil explained that if a broker knew the earnest money needed to be deposited within seventy-two hours of receipt and he had no other trust account open besides the credit union, then the potential would be there to put it in a non-trust account and that would be a problem.

Director Tyrrell referred to the A Fact Sheet@ exhibit offered by the Nebraska Credit Union League which explained agent accounts. He indicated that the money could be from anyone of a number of parties to a transaction. As long as the money was that of a credit union member everything would be alright. Sometimes the A ownership@ or A interest in@ the money changed from one party to another while the money was being held. If the A ownership@ or A interest in@ changed to a non-member what happened to the coverage on the money. Mr. Sullivan indicated that there would be no problems if the A interest in@ the money was still with a member.

Commissioner Poskochil asked if funds were deposited from a non-member would those funds be federally insured. Mr. Sullivan indicated that non-member deposits would not be insured but that would not be a concern to the consumer unless the institution failed which was not seen very often. Commissioner Griess indicated that the scenarios which had been presented were practical applications in the real estate process. Commissioner Griess did not see how this would work with so many independent people that might not be a credit union member and the broker could be held responsible for holding funds in a non-insured trust account.

Commissioner Grady indicated that a credit union was a cooperative and it would be assumed that a credit union had some profits which were distributed to the members of the cooperative. Commissioner Grady indicated that the downside to this legislation was that a broker would have to maintain multiple accounts and felt that a legal opinion should be obtained. Commissioner Griess indicated that all she could see were problems with this legislation and would like to have a scenario of how it could work. Mr. Sullivan indicated that one scenario would be if a member of a credit union gave money to a broker who was also a member of a credit union, why should the money have to go somewhere else. Mr. Sullivan also pointed out that these accounts could work for some of the bigger credit unions with a large membership base but would not work for smaller credit unions with closed memberships. Mr. Sullivan also explained that they wanted to be able to serve the members of the credit unions the best they could and would be able to do so if the members could have a trust account in the credit union. Mr. Sullivan indicated that members would like to have their money in their credit union. Commissioner Dover asked how many states allowed for trust accounts in credit unions. Mr. Sullivan indicated that there were approximately 12, including some surrounding Nebraska.

Commissioner Grady asked if the Commissioners needed to take action on this issue or if the Commission could wait for legal counsel= s review. Director Tyrrell indicated action could be taken by vote or by consensus, before or after counsel= s review.

Mr. Sullivan indicated that the trust account would be set up as a non-interest bearing account which was not earning money and there would be no profit. Director Tyrrell indicated that a member could get a share of the credit union profit. Mr. Sullivan indicated that the member could not directly benefit from this account, but could benefit from being a member since a member of a credit union was also an owner and the money was spread out amongst owners. Mr. Sullivan explained that no dividend check would be issued to a member, but they could receive reduced interest rates as a benefit. Mr. Sullivan indicated that a real estate broker asked this of the credit union, not the other way around. He also indicated that the broker member said that the state law would not allow for this service and perhaps some broker members would not want this service. Commissioner Poskochil indicated that this would be hard to police. Mr. Luetkenhaus indicated that this would be a service that they could offer members. Commissioner Griess felt that brokers could get into trouble without realizing it if this bill was passed. Commissioner Grady felt that it was necessary to wait for legal advice.

Commissioner Dover suggested that the bill could insert credit union rather than use the blanket language as proposed. Jerry Stilmock with the Nebraska Bankers Association, indicated that banking is trying to put less words in the laws rather than more but the wording in the Bill could be changed. Mr. Sullivan indicated that that change would not be a problem with the League.

It was a consensus that no action be taken by the Commission at this time and that Director Tyrrell discuss this issue with legal counsel and then contact the Commissioners.

Director Tyrrell presented exhibits consisting of legislative bills introduced in the 2008 Legislature. A copy of said exhibits are attached to and made a part of these minutes.

Director Tyrrell reviewed legislation of interest to the Commission.

LB 104 - Director Tyrrell reported that this bill, which would change the age of majority, was introduced in the last Legislative Session. It would change the License Act to allow persons to acquire a license at the age of 18 instead of 19.

LB 386 - Director Tyrrell reported this bill, which would allow attorneys or title companies to file satisfaction certifications if not done in a timely manner by the lender, was introduced in the last Legislative Session.

LB 622 - Director Tyrrell reported that this bill, which required training in the Public Records and Open Meetings Acts, was introduced in the last Legislative Session.

LB 715 - Director Tyrrell reported that this bill, which changes the three-hour nonresident course from post license to pre-license, had been put on general file as of January 23, 2008.

LB 785 - Director Tyrrell reported that this bill, which would require any seller, who had to complete a seller property condition disclosure statement, to give the purchaser a notice of where a list of registered sex offenders could be obtained.

Commissioner Poskochil indicated that it did not make sense why the burden would be put on the seller. Director Tyrrell also noted that a fiscal note had been received from the Legislature, and that he reported that there would be no fiscal impact. Director Tyrrell also noted that in the past the seller property condition disclosure statement had only contained information on the property condition. Director Tyrrell recommended that the Commission appear neutral and request the notice not be placed in the Seller Property Condition Disclosure Statement.

It was the consensus of the Commission to have Director Tyrrell to testify in that manner.

LB 960 - Director Tyrrell noted that this bill was the deficit appropriation bill which was submitted by the Governor= s office. Director Tyrrell indicated that the amounts for Fiscal Year 07-08 appeared to be adequate but he was unsure about the amounts indicated for Fiscal Year 08-09 since information regarding the salary increases or the insurance premiums for that Fiscal Year had not been received. If they were not adequate a deficit appropriation request could be made next year.

LB 980 - Director Tyrrell indicated that this bill had been discussed earlier in Agenda Item 17. Director Tyrrell indicated that he would review the information received from legal counsel and would contact each Commissioner for their comments.

Director Tyrrell presented two exhibits regarding the ARELLO Mid-Year Meeting, which will be held April 24-26 in Pasadena, California. A copy of said exhibits are attached to and made a part of these minutes.

Director Tyrrell noted that he would like to have the registration forms completed and submitted to the Commission office by March 21, 2008, in order for a warrant to be issued in a timely manner. Director Tyrrell indicated that if a guest would be attending the meeting, the registration forms for guests could also be submitted to the Commission office with payment. The forms will be held and submitted as one package. Director Tyrrell also asked who would be attending the meeting. Commissioners Dover, Grady, Griess and Poskochil all indicated that they would be attending the ARELLO Mid-Year Meeting. Director Tyrrell suggested the hotel reservations be made as soon as possible.

No action was necessary on this report.

March 6-7, 2008 - Staybridge Suites, Lincoln
April 3-4, 2008 - Staybridge Suites, Lincoln
May 5-6, 2008 - Settle Inn & Suites, Lincoln
June 26-27, 2008 - Settle Inn & Suites, Lincoln
August 28-29, 2008 - Staybridge Suites, Lincoln
September 26, 2008 - Staybridge Suites, Lincoln

At 9:24 a.m. on January 24, Chairperson Gale declared a brief recess to allow the parties to prepare for the Hearing, and reconvened the meeting at 9:31 a.m.

At 11:12 a.m. on January 24, Chairperson Gale declared a brief recess, and reconvened the meeting at 11:26 a.m.

At 12:33 p.m. on January 24, Chairperson Gale declared a recess for lunch, and reconvened the meeting at 1:30 p.m.

At 3:02 p.m. on January 24, Chairperson Gale declared a brief recess, and reconvened the meeting at 3:15 p.m.

At 5:24 p.m. on January 24, Chairperson Gale recessed the meeting until 9:00 a.m. on January 25.

At 9:03 a.m. on January 25, Acting Chairperson Poskochil reconvened the meeting for the second day.

At 9:36 a.m. on January 25, Acting Chairperson Poskochil declared a brief recess, and reconvened the meeting at 9:48 a.m.

At 11:06 a.m. on January 25, Acting Chairperson Poskochil declared a brief recess, and reconvened the meeting at 11:15 a.m.

I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing minutes of the January 24-25, 2008, meeting of the Nebraska Real Estate Commission were available for inspection on February 5, 2008, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.

Respectfully submitted,
Les Tyrrell
Director

Kristen Anderson, Nebraska REALTORS7 Association, Lincoln
Mark A. Boyer, Omaha
Tim Young, Omaha
Rick Jeffries, Omaha
JoAnn Grennan, CBSHOME Real Estate, Omaha
Beth Lube, RE/Max Real Estate Group, Omaha
Aimee Bataillon, Omaha
Todd Gaver, Omaha
Dixie Teneyck, RE/Max Real Estate Group, Lincoln
Charles E. Petersen, Ashland
Michelle Epstein, Omaha
Janet S. Petersen, Ashland
Lacy Miller, Omaha
Tiffany LeColst, Omaha
Scott Sullivan, Nebraska Credit Union League, Omaha
Jerry Stilmock, Nebraska Bankers Association, Syracuse