Sectional Analysis for CSHB 33 (L&C)

Sectional Analysis for CSHB 33 (FIN) am

Real Estate Licensees

Date: March 3, 1998

Title: An Act relating to real estate licensees and to the real estate surety fund; relating to the Real Estate Commission; and providing for an effective date.

Section 1: Registration of mobile home dealers: Exempts a real estate licensee who buys or sells mobile homes from licensing as a mobile home dealer.

Section 2: Commission meetings and officers. Amends to provides that the Real Estate Commission ("Commission") is to elect officers at the first meeting of each fiscal year.

Section 3. Assistants. Amends to permit the Commission to assign certain duties to assitants. New duties include: issuing licenses, administering examinations, certifying educational courses, approving instructors of educational courses, and negotiating terms and payment of fines and other money due.

Note: AS 08.01.050, referenced in first line, concerns administrative duties of the Department.

Section 4. Duties of the Commission. Sets out the specific duties of the Commission. Adds duties to include: issuing temporary permits to personal representative of estate of deceased real estate broker or legally incompetent real estate broker, revising the form of a seller’s property disclosure statement, levying civil fines, revoking license of broker or associate broker convicted of forgery, theft, extortion, conspiracy to defraud creditors, or a felony involving moral turpitude committed while licensed.

Section 5. Education of applicants and licensees. Amends to provide Commission may not prohibit completion of educational requirement within a two-day period.

Section 6. Education of applicants and licensees. Amends so that, with certain exceptions in Section 7, in order to be an approved course for education under this chapter, the course must have been approved prior to the time the course was conducted. A course outline or instructor will be considered approved if the commission does not disapprove same within 45 days after the date of receipt of a complete application.

Section 7. Education of applicants and licensees. New. Commission is to establish core curricula for licenses issued. Courses to be allowed include courses developed by national organizations who specialize in real estate, technology courses related to real estate practie, courses offered at accredited college or university as part of real estate curriculum. Sets forth the areas for which Commission should establish continuing education: real estate sales, property management, community association management, commercial sales. A licensee shall complete at least one of the four core curricula during each biennial licensing period.

Section 8. License required. Sets forth when a real estate license is required. Major additions are in subsections (4) through (6) concerning property management and community association management.

Section 9. Civil penalty for unlicensed or unauthorized practice. New section. Civil penalty for such activities may not exceed $5,000 or the amount of gain realized plus $5,000, whichever is greater. Before entering fine, commission must send written notice of the proposed order to licensee and grant 30-day time period in which licensee may request hearing. Commission may issue subpoenas to compel attendance and testimony of witnesses and disclosure of evidence. Person aggrieved by levy of civil penalty may file an appeal with superior court. If person does not pay fine within 30 days after entry of order or within 10 days after court enters final judgement, Commission may initiate other action to recover amount of the penalty.

Section 10. Entitlement to license.

Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing examination, and has at least 24 months of active and continuous experience as licensed real estate salesperson within 36 months immediately preceding application, and is owner of real estate business or employed as a real estate broker by a foreign or domestic corporation, partnership, limited partnership, or limited liability company.
Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing brokers examination and has at least 24 months of active and continuous experience as a licensed real estate salesperson within 36 months immediately preceding application. Adds a foreign or domestic corporation, partnership, limited partnership, or limited liability company as additional forms of business entities that can employ an associate broker as a broker.
Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing salesperson examination.

Section 11. Entitlement to license. New section concerning community association management. Sets forth qualifications for limited license to practice community association management: applies by January 1, 1999; pays required fees; demonstrates to Commission that has been engaged in practice of community association management for at least 24 months before January 1, 1999; and meets other requirements established by the Commission. Person issued a limited community association management license may not use the term "broker", "associate broker", or "salesperson" for any business purpose unless person licensed appropriately under other provisions of this chapter.

If employed by broker, will be issued associate broker license. If qualifies for broker license and is owner of community association management business or employed as a community association manager by a foreign or domestic corporation, partnership, limited partnership, or limited liability company will be issued broker license. After initial licensing, a person is subject to same requirements existing for other brokers and associate brokers; however, person may practice only community association management and does not qualify as a broker or associate broker for the purpose of engaging in other types of real estate transactions.

Section 12. Fidelity bond for community association managers. New section. Requires that if a broker exercises some control over community association funds that the broker must provide evidence of coverage by blanket fidelity insurance. Bond may be in name of broker with association as additional insured or may be in name of association with broker as an additional insured. Bond must cover maximum funds within control of community association manager. Commission may grant exemptions from this section.

Owners’ association is only entity allowed to file claim with surety fund against a community association manager. Surety fund will be in first position on these claims.

Limitations on community association managers. Community association managers may not exercise control over reserve or investment accounts and may only exercise control over operating accounts under a contract approved by the association’s board and duplicate statements must be sent by the licensee and the association.

Section 13. Content and purpose of examination. Amends language concerning real estate examinations to add additional topics to be covered

Section 14. Administration of examination. Amends to provide that examination fee payment shall be made by applicant directly to national testing service’s designated representative before exam taken.

Section 15. Reexamination. Minor language change to current law.

Section 16. Fees. Adds language covering fees or courses offered by the commission, reinstatement of lapsed license, changes to registered office, course certification and recertification, and instructor approval and renewal of approval.

Section 17. Reinstatement of lapsed license. Repeals and reenacts this section. If license has lapsed less than 24 months is eligible for reinstatement when person provides application, license fee and proof of continuing education. If license has lapsed more than 24 months, not eligible for reinstatement and must meet initial licensure requirements.

Section 18. Inactive license. Amends by providing that a licensee who wants to become inactive shall complete an inactivation form along with applicable fees. Inactive licensees may receive commissions or other payments for services performed while actively licensed.

Section 19. Real estate surety fund. Minor language change.

Section 20. Location. Amends. Broker must register with the commission a principal office and branch office(s) and include information as to which licensees practice where.

Section 21. Change of location. Amends. Before a broker changes principal office or branch office, broker must notify commission, and pay a fee.

Section 22. Branch offices. Allows an associate broker whose principal place of business is at the branch office to directly supervise that branch office and may only supervise one branch office. All branch offices shall be advertised only in the name of the principal office but indication may be made that it is a branch office.

Section 23. Possession and display of license certificates. Repealed and reenacted. Broker must display license at broker’s principal office. License of each licensee working in broker’s principal office must be displayed in principal office. Designated associate broker who is in charge of branch office and certificate of each licensee working in branch office must be displayed in branch office. Such display of license certificates must be in such a manner that they are available for public to view.

Section 24. Making of transactions. Amends to provide that an active sales person or associate broker may perform real estate activities only through broker who employs (which includes contracts) that licensee. All money or other proceeds must be turned over to broker or broker’s authorized representative.

Section 25. Listing or management contracts. Amends to provide all listings or management contracts must be in writing signed by broker or licensee of broker and client or authorized representative.

Section 26. Accounts; record of transaction. Amends to provide that a broker needs to keep a complete record, for three years, of all real estate transactions in which broker or employed licensee of broker engaged; provide upon request to any principal in a transaction an accounting for money or other property collected or held; keep a separate trust account in a bank into which broker will deposit all earnest money deposits, purchase money, security deposits, contingency funds, collected rental money, rental receipts, or other money collected in trust; if authorized by board of directors of a community association to collect, control, or disburse association funds, keep a separate account in a financial institution for the funds; make available to commission, on request, records under this section; ensure that records are kept for a minimum of three years even if delivered to another entity.

Section 27. Accounts; record of transaction. New. A real estate licensee shall keep, for a minimum of three years, complete record of all real estate transactions in which licensee was principal; if the licensee maintains records concerning management or sale of licensee’s own properties or client properties separate from the broker’s file, these shall also be retained for a minimum of three years; licensee shall make available to the commission these records as requested; licensee shall promptly deposit community association funds or proceeds; licensee may not commingle funds of community association with funds of another community association or with licensee’s funds.

Establishes the three-year requirement for records maintenance as beginning at the initiation of a transaction and continues until three years after the date a listing agreement ends, a sales transaction costs or otherwise ends, a management contract ends, or another contract or fiduciary obligation ends.

Section 28. Signs. Amends. Provides that signs must be maintained at each registered real estate office. Signs must prominently show real estate business name as registered with Commission. If office located in premises with more restrictive sign requirements than those adopted by the Commission, the premise restrictions will control.

Section 29. Conflict of interest. Amends. Describes when a real estate licensee has conflict of interest. Provides that conflict must be disclosed at the time of initial substantive contact with principals or agents of the principals and confirm the conflict in writing to principals or agents of the principals as soon as possible after initial substantive contact.

Section 30. Conflict of interest. New subsections. New subsection (b) indicates that the failure of a licensee to disclose the conflict as required under this section does not give rise to a cause of action by private person. The Commission may impose a disciplinary sanction. A private person who has a cause under the surety fund for fraud, misrepresentation, or deceit may file against the surety fund. No common law remedies are prohibited by this subsection.

Subsection (c) describes "conflict of interest" as: having a present ownership or leasehold interest in property which is subject of transactions; being a whole or part owner of business interest in the subject property; representing a relative or person with whom licensee has financial relationship if the relative or person has a present financial interest in the property being marketed or considered for purchase or lease; receiving compensation from someone other than a party to the contract or another party having a financial interest in the transaction; or receiving compensation for community association management while simultaneously engaged as a property manager for a unit within the community association.

Section 31. Disclosure of agency to prospective buyers and sellers. Makes minor language changes (i.e., "person’s" to "licensee"). Adds reference to "dual agency".

Section 33. Prohibited conduct. Amended. Licensee may not falsely represent to be a member of a franchise or other business association in addition to current provisions. Associate broker or salesperson may accept fee or commission only from employing broker except when acting as a licensed assistant.

Section 34. Prohibited conduct. New subsections. Licensee may not knowingly pay any part of fee, commission, or other compensation: to a person not licensed under this chapter except under certain circumstances; to another licensee except through that licensee’s broker; or to another licensee knowing that the other licensee intends to pay all or portion of that fee or commission to an unlicensed person. This prohibition does not apply to payment by a licensee to a person licensed to perform real estate activities in another jurisdiction if that person has assisted in something for which a license is required under this act, or payment from a licensee to a principal as part of a resolution of dispute regarding terms of transaction or property transferred.

Person may not use or attempt to use a license issued under this chapter that was issued to another person, give false or forged evidence to the commission, impersonate an applicant, knowingly use or attempt to use expired or suspended or revoke or nonexistent license or falsely claim to be licensed.

Section 35. Real estate surety fund. Minor language changes (i.e., "brokers and salesmen" to "licensees").

Section 36. Payments by real estate licensee. Minor language changes.

Section 37. Claim for payment. Amended. Adds reference to community association manager. Adds "licensee" language. Adds requirement that claim for payment must be filed within two years after event. Adds reference to "or the conversion of community association accounts under the control of a community association manager". Adds the principal and any other licensee involved in the transaction to list of recipients of copy of the claim.

Section 38. Claim of payment. New subsection. Only owners’ associations are permitted to file claims with the surety funds for claims against a community association manager.

Section 39. Consideration of application. Minor language changes. Adds "or the conversion of community association accounts under the control of a community association manager". The word "trust" is added in reference to the type of funds in the "conversion" language.

Section 40. Consideration of application. Minor language changes.

Section 41. Consideration of application. Minor language changes including the "or the conversion of community association accounts under the control of a community association manager" language.

Section 42. Findings and payment. Amends with minor language changes. Same as Section 41.

Section 43. Hearing costs. Amends to provide that Commission may charge surety fund for costs of hearing on claim for reimbursement. Mandates that the Commission deposit into the surety fund any amounts recovered for these costs from the licensee.

Section 44. Payment of small claims judgment. Amends to provide that Commission shall make an award from the fund of any outstanding portion of a small claims judgment on receipt of a copy of the final judgment, an affidavit from the claimant stating that more than 30 days have elapsed since the judgment became final and that the responsible licensee has not yet satisfied the judgment.

Section 45. Maximum liability. Minor language changes.

Section 46. Right to subrogation. Minor language changes.

Section 47. Exceptions: Amends and adds new exceptions in (a). Provisions of this chapter that require licensure do not apply to:

AMENDED: person may manage or make real estate transaction on with respect to real estate person owns or is seeking to own so long as the compensation the person receives does not include any portion of the commission or other compensation paid to a real estate licensee in the transaction.
attorney in fact under power of attorney may accomplish a specific real estate transaction; may not act as such for more than two transactions in a calendar year (current law);
Lawyer performing duties as lawyer (current);
Public official in conduct of official duties (current);
Person acting as receiver, trustee, administrator, executor, or guardian (current);
Person acting under court order (current);
Person acting under authority of a will or trust (current);
Person dealing in mineral rights transactions (current);
AMENDED: an employee of domestic or foreign corporation, general or limited partnership, or limited liability company, when performing duties incidental to regular course of business when act relates to the management, sale, or other disposition of real estate owned by listed entities; does not apply to person employed by these entities who performs either as a vocation or for compensation if the amount of such compensation is dependent upon or related to value of real estate.
AMENDED: person performing duties as a resident manager;
NEW: bookkeeper or accountant performing bookkeeping or accounting functions;
NEW: secretary or receptionist in real estate office accepting rent or association fees and providing written receipt for same;
NEW: tradesmen or vendors of services performing maintenance and repair functions;
NEW: employee of real estate firm or property owner delivering or accepting a real estate contract or application, or related amendment, to or from another person;
NEW: individual assisting in performance of real estate activities by carrying out administration, clerical, or maintenance tasks;
NEW: management of a total of four or fewer residential units by a natural person for other persons;
NEW: community association management for property organized under AS 34.07 or 34.08 by resident owner if owner is member of a self-managed community association for the property;
NEW: community association management by a developer of property organized under AS 34.07 or AS 34.08 while that developer owns at least 51 percent of association;
NEW: attorney in fact acting for a relative under a power of attorney. Relative means: spouse, great grandparent, grandparent, parent, uncle, aunt, sibling, child, nephew, niece, grandchild, or great grandchild by the whole or half blood or by marriage but does not include a relative who is only related through a step relationship such as a stepbrother or the child of a step brother but does include a stepchild;
NEW: mobile home dealer licensed under AS 08.67 performing within the scope of the dealer’s license; or
NEW: management by natural person of property for another person without a fee other than reimbursement of expenses.

Section 48. Exceptions. New subsection (b) indicating that while a person may be exempt from this chapter, AS 08.88.401(e)(1) [SEE: Section 34] prohibits a licensee from knowingly paying to that person any part of a fee, commission, or other compensation received by the licensee in buying, selling, exchanging, leasing, auctioning, or renting real estate.

Section 49. Application to independent contractors. New section. Provisions of this chapter that apply to employment relationships and employees also apply to contracting relationships and independent contractors.

Section 50. Definitions: Amends definition of "commission" to mean Real Estate Commission except where the context indicates that it refers to a fee paid for personal services.

Section 51. Definitions. Amends definition of "real estate" to state that such term does not include a unit in a hotel, motel, boarding house, rooming house, or other transient lodging facility, or a unit in a warehouse, mini-storage facility or other facility the function of which is limited to warehousing purposes.

Section 52. Definitions: Amends definition of "resident manager" to indicate that a resident manager resides on rented or leased real property or on contiguous property owned by the same owner, manages the property for the benefit of another person, and is either employed by the owner of the real estate or employed by, or under contract with, a real estate licensee.

Section 53. Definitions. Adds new definitions for:

"Community association management": activity undertaken for an owners’ association with regard to property organized under AS 34.07 or 34.08 under an agreement in exchange for a fee, commission or other valuable consideration.
"community association operating account": an account in a financial institution maintained in the name of a specific community association that contains money used for day-to-day operation and not for other uses;
"community association reserve account": an account in a financial institution maintained in name of specific community association that contains money reserved for expected replacement cost of improvements within the community association or for other future uses.
"Knowingly" means same as AS 11.81.900(a).
"Property management": activity undertaken for another with regard to real property under an agreement in exchange for a fee, commission or other valuable consideration.
"Real estate licensee": Person who holds license under this chapter; includes broker unless context clearly excludes brokers
"Real estate transaction:" (1) sales means transfer or attempted transfer of interest in real property, an act conducted as result of or in pursuit of a contract to transfer interest a unit of real property, or act conducted in attempt to obtain a contract to market real property.
(2) property manager: lease or rental of a unit of real property including collect of rent from a tenant of a unit of rented or leased property, attempt to rent or lease a unit of real property, an attempt to collect rent from tenant of rented or leased real property, or an act conducted as a result of or in pursuit of a contract to manage a unit of leased or rented real property.
management: collection or attempted collection of dues from unit owner or an activity conducted as a result of or in pursuit of a contract with a community association to manage the affairs of that association.

Section 54. Form of disclosure statement. New language added that indicates the disclosure statement must include a provision that notifies transferees (1) that they are responsible for determining whether a convicted sex offender resides in the vicinity of the property that is the subject of the transferee’s potential real estate transaction; and (2) where information on convicted sex offenders may be obtained.

Section 55. Repeals AS 08.88.111 (Commission regulations with regard to examinations).

Section 56. Transitional provision. Person may practice community association management without a license under this chapter until January 1, 1999.

Section 57. Regulations. Permits Commission to adopt regulations before the effective date of Section 7.

Section 58. Revisor’s instruction: Wherever "salesman" appears, it shall be read as "salesperson".

Section 59. Effective date for 08.88.091(f) and (g). See section 7.

Section 60. Effective date for all other sections. Immediate.

Sectional Analysis for CSHB 33 (FIN)

Real Estate Licensees

By Representative Norman Rokeberg

Date: February 18, 1998

Title: An Act relating to real estate licensees and to the real estate surety fund; relating to the Real Estate Commission; and providing for an effective date.

Section 1: Registration of mobile home dealers: Exempts a real estate licensee who buys or sells mobile homes from licensing as a mobile home dealer.

Section 2: Commission meetings and officers. Amends to provides that the Real Estate Commission ("Commission") is to elect officers at the first meeting of each fiscal year.

Note: AS 08.01.050, referenced in first line, concerns administrative duties of the Department.

Section 5. Education of applicants and licensees. Amends to provide Commission may not prohibit completion of educational requirement within a two-day period.

Section 10. Entitlement to license.

Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing examination, and has at least 24 months of active and continuous experience as licensed real estate salesperson within 36 months immediately preceding application, and is owner of real estate business or employed as a real estate broker by a foreign or domestic corporation, partnership, limited partnership, or limited liability company.
Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing brokers examination and has at least 24 months of active and continuous experience as a licensed real estate salesperson within 36 months immediately preceding application. Adds a foreign or domestic corporation, partnership, limited partnership, or limited liability company as additional forms of business entities that can employ an associate broker as a broker.
Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing salesperson examination.

Owners’ association is only entity allowed to file claim with surety fund against a community association manager. Surety fund will be in first position on these claims.

Section 13. Content and purpose of examination. Amends language concerning real estate examinations to add additional topics to be covered

Section 14. Content and purpose of examination. Amends to provide that examination fee payment shall be made by applicant directly to national testing service’s designated representative before exam taken.

Section 15. Reexamination. Minor language change to current law.

Section 19. Real estate surety fund. Minor language change.

Section 20. Location. Amends. Broker must register with the commission a principal office and branch office(s) and include information as to which licensees practice where.

Section 21. Change of location. Amends. Before a broker changes principal office or branch office, broker must notify commission, and pay a fee.

Section 27. Record of transaction. New. A real estate licensee shall keep, for a minimum of three years, complete record of all real estate transactions in which licensee was principal; if the licensee maintains records concerning management or sale of licensee’s own properties or client properties separate from the broker’s file, these shall also be retained for a minimum of three years; licensee shall make available to the commission these records as requested; licensee shall promptly deposit community association funds or proceeds; licensee may not commingle funds of community association with funds of another community association or with licensee’s funds.

Section 28. When a commission or other fee is earned. Amends to provide that an obligation to pay a commission or fee to a broker is based upon the terms of a written contract. Licensee has no right under law to enforce collection of commission or other fee unless contract is in writing.

Section 29. Signs. Amends. Provides that signs must be maintained at each registered real estate office. Signs must prominently show real estate business name as registered with Commission. If office located in premises with more restrictive sign requirements than those adopted by the Commission, the premise restrictions will control.

Section 30. Conflict of interest. Amends. Describes when a real estate licensee has conflict of interest. Provides that conflict must be disclosed at the time of initial substantive contact with principals or agents of the principals and confirm the conflict in writing to principals or agents of the principals as soon as possible after initial substantive contact.

Section 31. Conflict of interest. New subsections. New subsection (b) indicates that the failure of a licensee to disclose the conflict as required under this section does not give rise to a cause of action by private person. The Commission may impose a disciplinary sanction. A private person who has a cause under the surety fund for fraud, misrepresentation, or deceit may file against the surety fund. No common law remedies are prohibited by this subsection.

Section 32. Disclosure of agency to prospective buyers and sellers. Makes minor language changes (i.e., "person’s" to "licensee"). Adds reference to "dual agency".

Section 33. No duty to disclose nearby sex offenders. New section. Licensee does not have a duty to notify a client that a person convicted of a sex offense resides in vicinity of property that is subject of potential transaction.

(NOTE: See also provisions of Section 55 of this legislation.)

Licensed assistants. New section. Permits a salesperson or associate broker to act as a licensed assistant to a real estate licensee other than the broker who employs that licensee, and allows direct compensation by employment contract.

Section 34. Prohibited conduct. Amended. Licensee may not falsely represent to be a member of a franchise or other business association in addition to current provisions. Associate broker or salesperson may accept fee or commission only from employing broker except when acting as a licensed assistant.

Section 35. Prohibited conduct. New subsections. Licensee may not knowingly pay any part of fee, commission, or other compensation: to a person not licensed under this chapter except under certain circumstances; to another licensee except through that licensee’s broker; or to another licensee knowing that the other licensee intends to pay all or portion of that fee or commission to an unlicensed person. This prohibition does not apply to payment by a licensee to a person licensed to perform real estate activities in another jurisdiction if that person has assisted in something for which a license is required under this act, or payment from a licensee to a principal as part of a resolution of dispute regarding terms of transaction or property transferred.

Section 36. Real estate surety fund. Minor language changes (i.e., "brokers and salesmen" to "licensees").

Section 37. Payments by real estate licensee. Minor language changes.

Section 38. Claim for payment. Amended. Adds reference to community association manager. Adds "licensee" language. Adds requirement that claim for payment must be filed within two years after event. Adds reference to "or the conversion of community association accounts under the control of a community association manager". Adds the principal and any other licensee involved in the transaction to list of recipients of copy of the claim.

Section 39. Claim of payment. New subsection. Only owners’ associations are permitted to file claims with the surety funds for claims against a community association manager.

Section 40. Consideration of application. Minor language changes. Adds "or the conversion of community association accounts under the control of a community association manager". The word "trust" is added in reference to the type of funds in the "conversion" language.

Section 41. Consideration of application. Minor language changes.

Section 42. Consideration of application. Minor language changes including the "or the conversion of community association accounts under the control of a community association manager" language.

Section 43. Findings and payment. Amends with minor language changes. Same as Section 41.

Section 44. Hearing costs. Amends to provide that Commission may charge surety fund for costs of hearing on claim for reimbursement. Mandates that the Commission deposit into the surety fund any amounts recovered for these costs from the licensee.

Section 45. Payment of small claims judgment. Amends to provide that Commission shall make an award from the fund of any outstanding portion of a small claims judgment on receipt of a copy of the final judgment, an affidavit from the claimant stating that more than 30 days have elapsed since the judgment became final and that the responsible licensee has not yet satisfied the judgment.

Section 46. Maximum liability. Minor language changes.

Section 47. Right to subrogation. Minor language.

Section 48. Exceptions: Amends and adds new exceptions in (a). Provisions of this chapter that require licensure do not apply to:

AMENDED: person may manage or make real estate transaction on with respect to real estate person owns or is seeking to own so long as the compensation the person receives does not include any portion of the commission or other compensation paid to a real estate licensee in the transaction.
attorney in fact under power of attorney may accomplish a specific real estate transaction; may not act as such for more than two transactions in a calendar year (current law);
Lawyer performing duties as lawyer (current);
Public official in conduct of official duties (current);
Person acting as receiver, trustee, administrator, executor, or guardian (current);
Person acting under court order (current);
Person acting under authority of a will or trust (current);
Person dealing in mineral rights transactions (current);
AMENDED: an employee of domestic or foreign corporation, general or limited partnership, or limited liability company, when performing duties incidental to regular course of business when act relates to the management, sale, or other disposition of real estate owned by listed entities; does not apply to person employed by these entities who performs either as a vocation or for compensation if the amount of such compensation is dependent upon or related to value of real estate.
AMENDED: person performing duties as a resident manager;
NEW: bookkeeper or accountant performing bookkeeping or accounting functions;
NEW: secretary or receptionist in real estate office accepting rent or association fees and providing written receipt for same;
NEW: tradesmen or vendors of services performing maintenance and repair functions;
NEW: employee of real estate firm or property owner delivering or accepting a real estate contract or application, or related amendment, to or from another person;
NEW: individual assisting in performance of real estate activities by carrying out administration, clerical, or maintenance tasks;
NEW: management of a total of four or fewer residential units by a natural person for other persons;
NEW: community association management for property organized under AS 34.07 or 34.08 by resident owner if owner is member of a self-managed community association for the property;
NEW: community association management by a developer of property organized under AS 34.07 or AS 34.08 while that developer owns at least 51 percent of association;
NEW: attorney in fact acting for a relative under a power of attorney. Relative means: spouse, great grandparent, grandparent, parent, uncle, aunt, sibling, child, nephew, niece, grandchild, or great grandchild by the whole or half blood or by marriage but does not include a relative who is only related through a step relationship such as a stepbrother or the child of a step brother but does include a stepchild;
NEW: mobile home dealer licensed under AS 08.67 performing within the scope of the dealer’s license; or
NEW: management by natural person of property for another person without a fee other than reimbursement of expenses.

Section 49. Definitions. New subsection (b) indicating that while a person may be exempt from this chapter, AS 08.88.401(e)(1) [SEE: Section 34] prohibits a licensee from knowingly paying to that person any part of a fee, commission, or other compensation received by the licensee in buying, selling, exchanging, leasing, auctioning, or renting real estate.

Section 50. Application to independent contractors. New section. Provisions of this chapter that apply to employment relationships and employees also apply to contracting relationships and independent contractors.

Section 51. Definitions: Amends definition of "commission" to mean Real Estate Commission except where the context indicates that it refers to a fee paid for personal services.

Section 52. Definitions. Amends definition of "real estate" to state that such term does not include a unit in a hotel, motel, boarding house, rooming house, or other transient lodging facility, or a unit in a warehouse, mini-storage facility or other facility the function of which is limited to warehousing purposes.

Section 53. Definitions: Amends definition of "resident manager" to indicate that a resident manager resides on rented or leased real property or on contiguous property owned by the same owner, manages the property for the benefit of another person, and is either employed by the owner of the real estate or employed by, or under contract with, a real estate licensee.

Section 54. Definitions. Adds new definitions for:

"Community association management": activity undertaken for an owners’ association with regard to property organized under AS 34.07 or 34.08 under an agreement in exchange for a fee, commission or other valuable consideration.
"community association operating account": an account in a financial institution maintained in the name of a specific community association that contains money used for day-to-day operation and not for other uses;
"community association reserve account": an account in a financial institution maintained in name of specific community association that contains money reserved for expected replacement cost of improvements within the community association or for other future uses.
"Knowingly" means same as AS 11.81.900(a).
"Property management": activity undertaken for another with regard to real property under an agreement in exchange for a fee, commission or other valuable consideration.
"Real estate licensee": Person who holds license under this chapter; includes broker unless context clearly excludes brokers
"Real estate transaction:"
(1) sales means transfer or attempted transfer of interest in real property, an act conducted as result of or in pursuit of a contract to transfer interest a unit of real property, or act conducted in attempt to obtain a contract to market real property.

(2) property manager: lease or rental of a unit of real property including collect of rent from a tenant of a unit of rented or leased property, attempt to rent or lease a unit of real property, an attempt to collect rent from tenant of rented or leased real property, or an act conducted as a result of or in pursuit of a contract to manage a unit of leased or rented real property.
association management: collection or attempted collection of dues from unit owner or an activity conducted as a result of or in pursuit of a contract with a community association to manage the affairs of that association.

Section 55. Form of disclosure statement. New language added that indicates the disclosure statement must include a provision that notifies transferees (1) that they are responsible for determining whether a convicted sex offender resides in the vicinity of the property that is the subject of the transferee’s potential real estate transaction; and (2) where information on convicted sex offenders may be obtained. (NOTE: See also section 33.)

Section 56. Repeals AS 08.88.111 (Commission regulations with regard to examinations).

Section 57. Transitional provision. Person may practice community association management without a license under this chapter until January 1, 1999.

Section 58. Regulations. Permits Commission to adopt regulations before the effective date of Section 7.

Section 59. Revisor’s instruction: Wherever "salesman" appears, it shall be read as "salesperson".

Section 60. Effective date for 08.88.091(f) and (g). See section 7.

Section 61. Effective date for all other sections. Immediate.

Sectional Analysis for CSHB 33 (L&C)

Real Estate Licensees

By Representative Norman Rokeberg

Date: February 7, 1998

Title: An Act relating to real estate licensees and to the real estate surety fund; and providing for an effective date.

Section 1: Registration of mobile home dealers: Exempts a real estate licensee who buys or sells mobile homes from licensing as a mobile home dealer.

Section 2: Commission meetings and officers. Amends to provides that the Real Estate Commission ("Commission") is to elect officers at the first meeting of each fiscal year.

Note: AS 08.01.050, referenced in first line, concerns administrative duties of the Department.

Section 5. Education of applicants and licensees. Amends to provide Commission may not prohibit completion of educational requirement within a two-day period.

Section 6. Education of applicants and licensees. Amends so that, with certain exceptions in Section 7, in order to be an approved course for education under this chapter, the course must have been approved prior to the time the course was conducted. A course outline or instructor will be considered approved if the commission does not disapprove same within 30 days after the date of receipt of a complete application.

Section 7. Education of applicants and licensees. New. Commission is to establish courses for licenses issued. Courses to be allowed include courses developed by national organizations who specialize in real estate, technology courses related to real estate practie, courses offered at accredited college or university as part of real estate curriculum; and courses offered at national conventions for real estate licensees if host state’s licensing board has approved same. Sets forth the areas for which Commission should establish continuing education: real estate sales, property management, community association management, commercial sales. A licensee shall complete at least one of the four core curricula during each biennial licensing period.

Section 10. Entitlement to license.

Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing examination, and has at least 24 months of active and continuous experience as licensed real estate salesperson within 36 months immediately preceding application, and is owner of real estate business or employed as a real estate broker by a foreign or domestic corporation, partnership, limited partnership, or limited liability company.
Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing brokers examination and has at least 24 months of active and continuous experience as a licensed real estate salesperson within 36 months immediately preceding application. Adds a foreign or domestic corporation, partnership, limited partnership, or limited liability company as additional forms of business entities that can employ an associate broker as a broker.
Amended to provide that a natural person, only, not a business entity, can be licensed. The person applies within six months after passing salesperson examination.

Owners’ association is only entity allowed to file claim with surety fund against a community association manager. Surety fund will be in first position on these claims.

Community association managers may not exercise control over reserve or investment accounts and may only exercise control over operating accounts under a contract approved by the association’s board and duplicate statements must be sent by the licensee and the association.

Section 13. Content and purpose of examination. Amends language concerning real estate examinations to add additional topics to be covered

Section 15. Reexamination. Minor language change to current law.

Section 19. Real estate surety fund. Minor language change.

Section 20. Location. Amends. Broker must register with the commission a principal office and branch office(s) and include information as to which licensees practice where.

Section 21. Change of location. Amends. Before a broker changes principal office or branch office, broker must notify commission, and pay a fee.

Section 25. Listing and management contracts. Amends to provide all listings and management contracts must be in writing signed by broker or licensee of broker and client or authorized representative.

Section 26. Record of transaction. Amends to provide that a broker needs to keep a complete record, for three years, of all real estate transaction in which broker or employed licensee of broker engaged; provide upon request to any principal in a transaction an accounting for money or other property collected or held; keep a separate trust account in a bank into which broker will deposit all earnest money deposits, purchase money, security deposits, contingency funds, collected rental money, rental receipts, or other money collected in trust; if authorized by board of directors of a community association to collect, control, or disburse association funds, keep a separate account in a bank for the funds; make available to commission, on request, records under this section; ensure that records are kept for a minimum of three years even if delivered to another entity.

Section 27. Record of transaction. New. A real estate licensee shall keep, for a minimum of three years, complete record of all real estate transactions in which licensee was principal; if the licensee maintains records concerning management or sale of licensee’s own properties or client properties separate from the broker’s file, these shall also be retained for a minimum of three years; and licensee shall make available to the commission these records as requested.

Section 28. When commission or other fee is earned. Amends to provide that an obligation to pay a commission or fee to a broker is based upon the terms of a written contract. Licensee has no right under law to enforce collection of commission or other fee unless contract is in writing.

Section 30. Conflict of interest. Amends. Describes when a real estate licensee has conflict of interest. Provides that conflict must be disclosed in writing to principals and agents of the principals. Describes "conflict of interest" as: having a present personal interest in property which is subject of transactions; being a whole or part owner of business interest in the subject property; representing a person with whom licensee has a financial relationship or who has a present financial interest in the subject property; representing more than one party in a transaction; receiving compensation from someone other than a party to the contract or another party having a financial interest in the transaction.

Section 31. Disclosure of agency to prospective buyers and sellers. Makes minor language changes (i.e., "person’s" to "licensee"). Adds reference to "dual agency".

Section 32. Licensed assistants. New section. Permits a salesperson or associate broker to act as a licensed assistant to a real estate licensee other than the broker who employs the salesperson or associate person if: employment agreement is in writing and conforms to applicable state and federal employment regulations; is approved in writing by the broker of the licensee who employs the assistant; licensee who employs assistant agrees to be responsible or paying assistant’s wages and taxes and completing associated forms; broker of licensee who employs the assistant agrees to be liable for actions of licensed assistant.

Section 33. Prohibited conduct. Amended. Licensee may not falsely represent to be a member of a franchise or other business association in addition to current provisions. Licensee may not pay a fee or commission for which licensed required under this chapter to an unlicensed person. Broker may pay fee or commission to broker licensed in another state for assisting in transactions. Associate broker or salesperson may accept fee or commission only from employing broker except when acting as a licensed assistant.

Section 34. Prohibited conduct. New subsections. Licensee may not knowingly pay any part of fee, commission, or other compensation: to a person not licensed under this chapter except under certain circumstances; to another licensee except through that licensee’s broker; or to another licensee knowing that the other licensee intends to pay all or portion of that fee or commission to an unlicensed person. This prohibition does not apply to payment by a licensee to a person licensed to perform real estate activities in another jurisdiction if that person has assisted in something for which a license is required under this act, allows for negotiations between a licensee and a principal in a real estate transaction concerning amount of commission or other compensation, or payment from a licensee to a principal as part of a resolution of dispute regarding terms of transaction or property transferred.

Section 35. Preparation of documents: Adds "mobile homes" and "mobile home contracts" to this section.

Section 36. Real estate surety fund. Minor language changes (i.e., "brokers and salesmen" to "licensees").

Section 37. Payments by real estate licensee. Minor language changes.

Section 38. Claim for payment. Amended. Adds reference to community association manager. Adds "licensee" language. Adds requirement that claim for payment must be filed within two years after event. Adds reference to "or community association accounts under the control of a community association manager" after "conversion of trust funds". Adds the principal and any other licensee involved in the transaction to list of recipients of copy of the claim.

Section 39. Claim of payment. New subsection. Only owners’ associations are permitted to file claims with the surety funds for claims against a community association manager.

Section 40. Consideration of application. Minor language changes. Adds "or community association accounts under the control of a community association manager" after "conversion of trust funds". The word "trust" is added in reference to the type of funds in the "conversion" language.

Section 41. Consideration of application. Minor language changes.

Section 42. Consideration of application. Minor language changes including the "or community association accounts under the control of a community association manager" language.

Section 43. Findings and payment. Amends with minor language changes. Same as Section 42.

Section 46. Maximum liability. Minor language changes.

Section 47. Right to subrogation. Minor language.

Section 48. Exceptions: Amends and adds new exceptions. Provisions of this chapter that require licensure do not apply to:

AMENDED: person may manage or make real estate transaction on with respect to real estate person owns or is seeking to own so long as the compensation the person receives does not include any portion of the commission or other compensation paid to a real estate licensee in the transaction.
attorney in fact under power of attorney may accomplish a specific real estate transaction; may not act as such for more than two transactions in a calendar year (current law);
Lawyer performing duties as lawyer (current);
Public official in conduct of official duties (current);
Person acting as receiver, trustee, administrator, executor, or guardian (current);
Person acting under court order (current);
Person acting under authority of a will or trust (current);
Person dealing in mineral rights transactions (current);
AMENDED: an employee of domestic or foreign corporation, general or limited partnership, or limited liability company, when performing duties incidental to regular course of business; does not apply to person employed by these entities who performs either as a vocation or for compensation if the amount of such compensation is dependent upon or related to value of real estate.
Resident manager (current)
NEW: bookkeeper or accountant performing bookkeeping or accounting functions;
NEW: secretary or receptionist in real estate office who accepts rent or association fees and provides written receipt for same;
NEW: tradesmen or vendors of services performing maintenance and repair functions;
NEW: employee of real estate firm or property owner who delivers or accepts a real estate contract or application, or related amendment, to or from another person;
NEW; individual assisting in performance of real estate activities by carrying out administration, clerical, or maintenance tasks;
NEW: person managing a total of four or fewer residential units for others;
NEW: resident owner of a unit in property organized under AS 34.07 or AS 34.08 who is a member of a self-managed community association;
NEW: developer of community association while that developer owns at least 51 percent of association;
NEW: attorney in fact acting for a relative under a power of attorney. Relative means: spouse, great grandparent, grandparent, parent, uncle, aunt, sibling, child, nephew, niece, grandchild, or great grandchild by the whole or half blood or by marriage but does not include a relative who is only related through a step relationship such as a stepbrother or the child of a step brother but does include a stepchild; or
NEW: mobile home dealer licensed under AS 08.67 performing within the scope of the dealer’s license.

Section 49. Definitions. New subsection (b) indicating that while a person may be exempt from licensure, that person is not exempt from AS 08.88.401(3)(1) (See Section 34).

Section 50. Definitions: Amends definition of "commission" to mean Real Estate Commission except where the context indicates that it refers to a fee paid for personal services.

Section 53. Definitions. Adds new definitions for:

"Community association management": activity undertaken for an owners’ association with regard to property organized under AS 34.07 or 34.08 under an agreement in exchange for a fee, commission or other valuable consideration.

"Employ", "employing," "employs", "employed", "employee", "employees", and "employment" include being an independent contract with an employer.

"Knowingly" means same as AS 11.81.900(a). AS 11.81.900(a)(2) states:

A person acts "knowingly" with respect to conduct or to a circumstance described by a provision of law defining an offense when the person is aware that the conduct is of that nature or that the circumstance exists; when knowledge of the existence of a particular fact is an element of an offense, that knowledge is established if a person is aware of a substantial probability of its existence, unless the person actually believes it does not exist; a person who is unaware of conduct or a circumstance of which the person should have been aware had that person not been intoxicated acts knowingly with respect to that conduct or circumstance;

"mobile" home has the meaning given in 08.67.080, which states in part:

(3) "mobile home" means a vehicle designed and equipped or human habitation, and that may only be moved by another motor vehicle when authorized by permit.

"Property management": activity undertaken for another with regard to real property under an agreement in exchange for a fee, commission or other valuable consideration.

"Real estate licensee": Person who holds license under this chapter; includes broker unless context clearly excludes brokers

"Real estate transaction:" (1) sales means transfer or attempted transfer of interest in a mobile home or real property, an act conducted as result of or in pursuit of a contract to transfer interest in a mobile home or a unit of real property, or act conducted in attempt to obtain a contract to market real property.

(2) property manager: lease or rental of a mobile home or a unit of real property including collect of rent from a tenant of a mobile home or a unit of rented or leased property, attempt to rent or lease a mobile home or a unit of real property, an attempt to collect rent from tenant of a mobile home or rented or leased real property, or an act conducted as a result of or in pursuit of a contract to manage a unit of leased or rented real property or a mobile home.

(3) community association management: collect or attempted collection of dues from unit owner or an activity conducted as a result of or in pursuit of a contract with a community association to manage the affairs of that association.

Section 54. Repeals AS 08.88.111 (Commission regulations with regard to examinations).

Section 55. Transitional provision. Person may practice community association management without a license under this chapter until January 1, 1999.

Section 56. Regulations. Permits Commission to adopt regulations before the effective date of Section 7.

Section 57. Revisor’s instruction: Wherever "salesman" appears, it shall be read as "salesperson".

Section 58. Effective date for 08.88.091(f) and (g). See section 7.

Section 59. Effective date for all other sections. Immediate.