NEBRASKA REAL ESTATE COMMISSION

April 1, 2004

Staybridge Suites                         Staybridge Room                         Lincoln, NE


Opening

Chairperson Gale convened a meeting of the Nebraska Real Estate Commission at 9:03 a.m. on April 1, 2004, in the Staybridge Room of the Staybridge Suites, located at 2701 Fletcher Avenue in Lincoln, Nebraska. All of the members of the Real Estate Commission were present, with the exception of Commissioner Johnson, who was absent and excused. Also present were Director Les Tyrrell, Deputy Director for Education Teresa Hoffman, Deputy Director for Enforcement Terry Mayrose, and Administrative Assistant Heidi Burklund. Abbie Widger, Special Assistant Attorney General and Counsel to the Commission, was present for the Klein stipulation and consent order, the request for proposals for the errors and omissions insurance contract, and the rule change discussion.

Notice of Meeting (Adopt Agenda)

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

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

Director Tyrrell noted that agenda item 10b had been added since the tentative agenda was mailed to the Commissioners.

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

Minutes of March 3, 2004

The minutes of the Commission meeting held on March 3, 2004, were considered.

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

Receipts and Expenditures Report

There was no Receipts and Expenditures Report to be presented at the meeting.

Specialized Registrations

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

Non-Resident Licenses and Resident Licenses Issued to Persons Holding Licenses in Other Jurisdictions Report

Deputy Director Hoffman presented for ratification the Non-Resident Licenses and Resident Licenses Issued to Persons Holding Licenses in Other Jurisdictions Report, a copy of which is attached to and made a part of these minutes.

After review, a motion was made by Moline and seconded by Strand to ratify issuance of the licenses as set forth in the report. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

February Examination Report

Deputy Director Hoffman presented for ratification the February Examination Report, a copy of which is attached to and made a part of these minutes.

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

Deputy Director Hoffman reported that Jeff Davis from Applied Measurement Professionals (AMP) reviewed the Lincoln examination site three weeks ago, for the reported issues of sound, space, and temperature. AMP had received an estimate to insulate the room for sound and to improve the cooling system. AMP was reluctant to remove an examination station, but was looking at reconfiguring the hardware to provide more desktop work space. AMP had not made a commitment yet regarding the improvements. Deputy Director Hoffman was very pleased that they were responsive. The onsite coordinator was very professional, and since she had taken the comments, she helped ascertain the problems.

Real Estate Education Matters

Continuing Education Activity Approval

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

Commissioner Poskochil questioned the approach and content of the lending activity. Deputy Director Hoffman said there were many new financing options becoming available, and the activity educated licensees on those. Deputy Director Hoffman asked if Commissioner Poskochil wanted her to have further discussion with the provider. Commissioner Poskochil said no, but he was concerned with some lending practices. Deputy Director Hoffman said she would keep his comments in mind when reviewing future offerings on the subject.

Continuing Education Instructor Approval

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

Continuing Education Activity Significant Change

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

Commissioner Wiebusch asked if the report should indicate Eau Claire, Wisconsin, not Nebraska. Deputy Director Hoffman said it should be Wisconsin, and the error would be corrected on the minutes exhibit.

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

2003 Annual Report Summary
2004 Continuing Education Renewal Report

Deputy Director Hoffman presented the 2003 Annual Report Summary and the 2004 Continuing Education Renewal Report, copies of which are attached to and made a part of these minutes.

Deputy Director Hoffman said the reports were fairly typical in response rate and activity renewals. None of the activities being dropped were particularly unique, and were offered in some form by other providers. There was nothing troubling in the report. There was a nice selection of distance education available. Deputy Director Hoffman gave a brief review of the ARELLO distance education certification program, and the widespread acceptance of ARELLO-certified activities.

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

Deputy Director Hoffman said there was a recently discovered practice in Nebraska of real estate firm-sponsored study groups for real estate prelicense distance education students. The firm advertised that study groups were forming for the study of prelicense education to prepare students to enter a career in real estate. Those responding to the advertisement were then instructed to obtain approved correspondence study from an approved school, and to bring the materials with them to the study group. This group was coordinated by an individual who then served as the administrator of their study and the subject-matter expert to answer their questions on the material.

Deputy Director Hoffman=s concerns with this practice were that of communication, expertise, and proper authority. The practice had been discovered when a coordinator had called requesting information for his students, and his knowledge regarding the application and licensing process was clearly deficient. In addition, he encouraged students to ask him questions regarding the subject matter of courses, rather than encouraging them to use the tools the school had provided, i.e. instructor contact and classroom resources. His qualifications as an instructor were unclear as he had not applied in that capacity. Finally, it appeared to Deputy Director Hoffman that this practice could very well be considered to circumvent the Real Estate Commission=s and the Department of Education=s statutes and regulations regarding the requirements for approved pre-license education.

Chairperson Gale asked if the coordinator was a licensed individual. Deputy Director Hoffman said yes. Commissioner Moline asked if it was happening in rural areas where there were no schools. Deputy Director Hoffman said yes. Commissioner Moline said that, if students took correspondence courses, they would struggle either way. Deputy Director Hoffman reiterated that she had no problem with an informal study group. The problem was that it was formalized to this extent, with an individual setting himself up as a resource. In distance education, the resource was the school, with a certified instructor. Students were provided with contact numbers for instructors. In this case, the individual set himself up as an administrator and a subject matter expert. Commissioner Moline asked if schools had all that set up. Deputy Director Hoffman said yes, but students were not sophisticated enough to know to rely on the school rather than the coordinator, who was setting himself up as an authority.

Commissioner Poskochil asked if the coordinator was charging students for his services. Deputy Director Hoffman said she thought it was a recruiting tool, and that he extracted a commitment for employment rather than money.

Commissioner Moline said it was probably a broker trying to get people through the test. Tech schools took 9 months, and were not serving the public. If people wanted to get together to ask questions, that should be a positive thing. Deputy Director Hoffman said if that was needed, a licensed school could set up a satellite location. Commissioner Moline said economics was why that had not happened.

Commissioner Strand said the Commission served as the Better Business Bureau for instruction, but questioned telling people they could not help educate students for the test. He agreed that, in terms of teaching methods, the practice was questionable. Deputy Director Hoffman noted the coordinator was not just teaching for test preparation, which would have been permissible since the Commission does not approve test preparation courses. The coordinator was acting as an instructor for prelicense education courses.

Chairperson Gale asked if the coordinator had placed advertisements in the local paper. Deputy Director Hoffman said yes, and she would get an ad to show the Commission. The coordinator advertised under the real estate firm name, saying he was getting together a group for prelicense education, and to contact him. Chairperson Gale said the coordinator could be seen as a mentor to individuals, but the problem entered in when he advertised his services to the public.

Strand asked if credit hours were required, in addition to passing the examination. Deputy Director Hoffman said yes. Commissioner Strand asked if students were accumulating credit hours that did not count. Deputy Director Hoffman said no, the courses were approved, but required an instructor support mechanism and administrative support. Schools answered questions individually, and students could usually attend classroom instruction on certain nights for free if desired, if there was an area in which a student wanted additional help. This situation preempted the support mechanism.

Chairperson Gale asked Deputy Director Hoffman to investigate further, and get more information on the situation. Commissioner Moline suggested that it be put on the next meeting=s agenda, and that the Commission invite coordinators to the discussion. Commissioner Strand said the tone should be to embrace distance education, and work with people on deficiencies. Correspondence courses augmented with a study group should be a good thing.

Director Tyrrell said the Department of Education, particularly Vocational Education, may make a ruling that a school needed to be registered with them. Deputy Director Hoffman said she will also pursue that issue in her research.

Pending Sworn Complaints and Investigative Matters

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:

Item A Complaint #2004-003 - Gary W. Wright vs. Kenneth John Jansen

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Moline and seconded by Wiebusch that the complaint be dismissed without prejudice. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

Chairperson Gale asked if a precedent had already been set for this situation, since the Commission had a similar complaint last month. Director Tyrrell noted that, if staff found no violation of license law, staff recommended dismissal of the complaint. If there was an allegation that was a clear violation, staff recommended that the complaint be set for hearing. If there was a grey area, staff sought Commission guidance. The Commission had to decide whether the specific issues in each complaint rose to the hearing level. Staff could not dismiss complaints. Even if a similar complaint was filed to one the Commission had already addressed, the Commission would still need to decide whether to go forward on the new complaint, based on the specific allegations and parties involved.

Chairperson Gale asked, if there had been a similar complaint, would staff make recommendations based on Commission=s decision on the previous complaint. Director Tyrrell said staff had never been asked to review a complaint from the standpoint of previous complaints. In each complaint, there was a unique set of circumstances involving different individuals with different responsibilities in the transaction. While this complaint had some similarities to the previous complaint, there were some other issues raised as well.

Chairperson Gale said that the Commission made policy, and this was how the Commission made policy. Chairperson Gale said the Commission wanted to know the history of the situation and the other options available to them when making decisions regarding complaints. If there were prior incidents or complaints in a particular situation such as in this complaint, the Commission wanted a staff recommendation for Commission action, including what other choices were available to them. Director Tyrrell indicated that, if the Commission wanted staff to include actions taken in previous disciplinary actions in investigative matters, staff would do so.

Item B Complaint #2004-006 - Gary M. Gist vs. Richard Robert Berner

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Moline and seconded by Poskochil that the complaint be dismissed without prejudice. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

Item C Complaint #2004-007 - Patrick J. Morrow III & Amy Geren vs. Walter Edward Peffer Jr. & P. J. Morgan

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

Deputy Director Mayrose noted that there was a correction in the conclusion of the report, and that it should read, AStaff could find no violations of law as alleged by Complainant.@ File copies will be corrected.

After being advised of the results of the investigation and discussion, a motion was made by Strand and seconded by Shepard that the complaint be dismissed without prejudice. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

Item D Complaint #2004-010 - Freda W. Wasia vs. Michael W. Kircher, Valerie D. Kircher, Joyce Elaine Huffman, & Nancy Leila Wilhelm

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Moline and seconded by Wiebusch that the complaint be dismissed without prejudice. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

Item E Investigative Matter

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Moline and seconded by Wiebusch that the Commission file a complaint on its own motion and set the complaint for hearing.

Chairperson Gale asked if the Commission should set a policy of how much should come before the Commission. Director Tyrrell said that any time staff are made aware of disciplinary action taken against any license held by any real estate licensee, it had been the Commission=s instruction to staff that the matter be brought to the Commission. At that time, the Commission would determine whether to proceed with disciplinary action or not. When the disciplinary action was brought to the Commission, it was treated the same way for licensees as it was for applicants. Director Tyrrell estimated that Commission staff was only made aware of a small percentage of licensing issues from other jurisdictions. Staff would typically not find out about a disciplinary action until the next renewal was filed, unless the other jurisdiction sent the information sooner. Chairperson Gale verified that the same procedure was used as stated in the applicant guidelines for disciplinary action in other jurisdictions. Director Tyrrell said that was correct.

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

Item F Investigative Matter

Deputy Director Mayrose presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter.

After being advised of the results of the investigation and discussion, a motion was made by Wiebusch and seconded by Shepard that the Commission file a complaint on its own motion and set the complaint for hearing.

Commissioner Strand asked if the Commission hearing would be double jeopardy. Chairperson Gale noted that, if the person had a criminal violation, the Commission would still be entitled to take disciplinary action regarding the Nebraska real estate license. The element of double jeopardy would be the same, but the discipline was under a different jurisdiction.

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

Item G Complaint #2004-016, Commission vs. John Lamoine Jelkin

Counsel Widger presented the alleged violations and investigative report to the Commission and, when necessary, answered questions on this matter. The Commission had held the original complaint in abeyance, and had filed a complaint on its own motion regarding a single issue in the transaction. After further investigation, staff found that the issue had been handled properly by the Respondent.

After being advised of the results of the investigation and discussion, a motion was made by Moline and seconded by Strand that the complaint be dismissed without prejudice. After further discussion, Moline called the question and Strand seconded. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

A motion was then made by Strand and seconded by Moline to dismiss Complaint #2003-050, which had been held in abeyance pending the outcome of the Commission=s complaint. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

Presentation of Stipulation and Consent Orders

Complaint #2004-001, Andria & Leslie Davidson
vs. David Scott Klein

Counsel Widger presented a stipulation and consent order in the matter of Complaint #2004-001, Andria & Leslie Davidson vs. David Scott Klein. A copy of said order is attached to and made a part of these minutes. Mr. Klein was not present.

Counsel Widger reviewed the circumstances involved and noted the provisions of the order, which had been signed by Mr. Klein. The order specified a censure of Mr. Klein=s broker license, plus six hours of additional continuing education, consisting of 3 hours in license law and 3 in ethics, to be completed within six months.

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

Complaint #2004-020, Commission vs.
Carla J. Mason & Janell Dianne McMann

Deputy Director Mayrose presented two stipulation and consent orders in the matter of Complaint #2004-020, Commission vs. Carla J. Mason & Janell Dianne McMann. Copies of said orders are attached to and made a part of these minutes. Ms. Mason and Ms. McMann were not present.

Deputy Director Mayrose reviewed the circumstances involved and noted the provisions of the orders, which had been signed by the respective respondents. The Mason order specified a censure of Ms. Mason=s broker license, plus three hours of additional continuing education in agency law to be completed within 90 days. The McMann order specified a censure of Ms. McMann=s salesperson license, plus three hours of additional continuing education in agency law to be completed within 90 days.

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

Hearings

There were no hearings scheduled for this meeting.

Informal Special Appearances

Regi Steinmark, Potential Applicant

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

Chairperson Gale reviewed the procedure for informal special appearances.

Mr. Steinmark said that his criminal history when he was younger was really bad. He did some really stupid things because of alcohol. He still goes to Alcoholics Anonymous, and felt that, at age 43, if he got a license it would be a good future for him.

Chairperson Gale asked Mr. Steinmark to go over his education and work history. Mr. Steinmark said he attended Platte Community College, and had to complete 2 more semesters to get his business degree. He had worked in factories doing welding for the past 5 years. His eyes were getting worse, so he wanted to get out of that type of work. Chairperson Gale asked if he belonged to a trade union. Mr. Steinmark said it was not a union job, and did not require certification. It was just welding in a factory. Chairperson Gale asked if Mr. Steinmark attended school to learn how to weld, or learned it on the job. Mr. Steinmark said that he took a couple of welding courses in college. Chairperson Gale asked if Mr. Steinmark was now attending evening classes to get an associate degree in business. Mr. Steinmark said yes, he had taken a semester off, and was going back to school. He had only 2 semesters to go. He had 50 credits, and needed 15 more. Chairperson Gale asked if Mr. Steinmark had attended real estate classes. Mr. Steinmark said no, only business law and ethics classes. Chairperson Gale asked what inspired Mr. Steinmark=s interest in real estate. Mr. Steinmark said he had seen an ad in the newspaper for Randall School, and it looked interesting. It would be learning more about what he had found out while buying his home. Chairperson Gale asked if Mr. Steinmark had taken prelicense courses. Mr. Steinmark said no.

Commissioner Strand noted Mr. Steinmark=s felony for wire fraud in Texas, and that he got out of prison in 1998. Mr. Steinmark said yes. Commissioner Strand noted the 2000 speeding violation, that it was a parole violation, and that Mr. Steinmark had gone back to jail for 18 months and gotten out in 2001. Mr. Steinmark said yes. Commissioner Strand asked if Mr. Steinmark was still on parole, or done with his sentence. Mr. Steinmark said his obligations were all completed. He had gotten a driver=s license, and had been in no trouble. He found it was a lot easier to go through life that way. Commissioner Strand asked if there was any probation or post-release sentence for that. Mr. Steinmark said no. Commissioner Strand asked if Mr. Steinmark was free and clear. Mr. Steinmark said yes.

Commissioner Moline noted that Mr. Steinmark=s letter said he worked selling water purifiers, but the owner was running a scam. Mr. Steinmark had only worked there 2 months, but was indicted and sentenced to 5 years in prison, which was a pretty serious sentence. Commissioner Moline questioned that Mr. Steinmark had no idea it was a scam while he worked there. With a real estate license, there were a lot of responsibilities and trust. Mr. Steinmark had done a good job with Alcoholics Anonymous, but that part bothered him. Commissioner Moline asked Mr. Steinmark to tell the Commission what really happened.

Mr. Steinmark said he got the telemarketing job through the Sunday paper. The owner did the hiring, and had 40 employees working 2 shifts per day. Mr. Steinmark worked on the night crew, but got out after 2 months. People would charge the water purifiers on their credit cards, and then would call back and say they did not get the prize they were promised. Mr. Steinmark told his wife that something was not right, and got out of it. Three years later, he was told the federal government had used wiretaps at the business. He went in front of a grand jury and went to trial, because he did not take the plea bargain. His lawyer said he did not see how they could convict him. He probably would have received probation if he had accepted the plea bargain.

Commissioner Shepard asked what sentence the other 40 employees received. Mr. Steinmark said the other guy who went to trial with him got 2 years also. The others, who plea bargained, got probation. The owner got 5 years= probation, which was supervised release.

Chairperson Gale said he was on the Pardons Board, and that convicts could get pardons after 10 years if they had no further problems with the law. Pardons gave them the opportunity to recover their reputation and rehabilitate themselves. If a person was given a real estate license, it was a position of high public trust, with the public trusting him with their lives, funds, and transaction integrity. Licensees cannot cut corners, but have to be straightforward as a professional. The Commission guidelines stated that, unless extraordinary circumstances were present, a license would be denied if a person was convicted of a financial crime. Mr. Steinmark was also convicted of driving during revocation, which called into question his integrity, because the state had taken away his license and he drove anyway. That showed a total disregard for the law, as if Mr. Steinmark thought he was above the law, and not responsible to the law. That was another felony, with a 15 month sentence. Mr. Steinmark had behaved in a very reckless, careless manner, as recently as 2000. Chairperson Gale thought that Mr. Steinmark was on the road back, but was very early in his rehabilitation. Mr. Steinmark had a lot of history to overcome. Chairperson Gale said he needed several more years of getting his life together, on the straight and narrow, before he personally would trust Mr. Steinmark with the public=s lives and funds. Chairperson Gale said the public trusts licensees, and it was not the same as applying for a job at Walmart. There was a much higher degree of public trust.

Commissioner Poskochil asked if Mr. Steinmark lived in Columbus. Mr. Steinmark said yes. Commissioner Poskochil asked if Mr. Steinmark was employed. Mr. Steinmark said no, he was in the process of selling his home and moving to Omaha, where his wife worked and he went to school. He was currently fixing up his home to put it on the market. Commissioner Poskochil said he had the same issue as Chairperson Gale, in that Mr. Steinmark=s time between problems with the law was not great enough yet. Commissioner Poskochil encouraged Mr. Steinmark to continue with Alcoholics Anonymous, because if he was ever licensed, the public would be entrusting him with their lives in his car. Mr. Steinmark would also be responsible for the public=s money. Commissioner Poskochil said that, when Mr. Steinmark had more time between problems with the law and had a stable work history, he should come back before the Commission, and Commissioner Poskochil would look upon his situation more favorably. There was not enough distance yet, but Mr. Steinmark was headed in the right direction, and Commissioner Poskochil encouraged him to not give up.

Commissioner Strand asked who was the person who wrote Mr. Steinmark=s letter of recommendation. Mr. Steinmark said she was a friend of his. Commissioner Strand asked what she did for a living, and if she was in real estate. Mr. Steinmark said she was disabled and owned her own home in Omaha. Commissioner Strand asked if she was just a social acquaintance. Mr. Steinmark said yes.

After discussion, a motion was made by Moline and seconded by Poskochil to not allow Mr. Steinmark to sit for the salesperson examination at this time.

Commissioner Strand said he agreed with the discussion, but that Mr. Steinmark was 15 years from the event. Commissioner Strand asked when would be a good time for Mr. Steinmark to come back to the Commission. Commissioner Moline said maybe in a year, with a good record, and with more information on the conviction to corroborate Mr. Steinmark=s version of events, like a police report. Commissioner Poskochil suggested that Mr. Steinmark=s attorney write a letter.

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

Consider Request for Proposals on Errors and Omissions Insurance Plan for 2005

Director Tyrrell presented exhibits regarding the request for proposals (RFP) on the errors and omissions insurance plan for 2005. Copies of said exhibits are attached to and made a part of these minutes.

Director Tyrrell noted that Rice Insurance Services Company LLC currently administers all mandatory errors and omissions insurance programs. Commissioner Moline asked if any states had lost coverage. Director Tyrrell said that Alabama lost coverage because of too many claims. No carriers would pick up their policy without underwriting. That left Alabama licensees to get market coverage, which Director Tyrrell imagined was expensive. Alabama had received no bids the last time their errors and omissions policy went out. They also put in their contract that, if the carrier did not get a certain percentage of licensees enrolled, the carrier could cancel the policy. There were a number of reasons they could not get coverage. Commissioner Poskochil asked what else affected their coverage. Director Tyrrell said that Alabama was the most litigious state, according to the Alabama Real Estate Commission.

Commissioner Strand asked if the Commission should negotiate an aggregate of $500,000 for $5 more, like South Dakota. Director Tyrrell said he could not guarantee that would be the price. Commissioner Moline said the $300,000 aggregate was not enough. Director Tyrrell noted that when the Commission started the plan, there was no aggregate, so coverage was unlimited. The insurance industry killed the Commission on that. At the time, all carriers agreed on a $300,000 aggregate. It ended up the same cost for insurance with or without the aggregate.

Commissioner Moline noted it was $300,000 for each person, which was required by state law. If a broker wanted to negotiate his own insurance, he could not buy a million-dollar aggregate for all employees, because coverage had to be on the individual. Director Tyrrell agreed that the coverage had to be on the individual. If not, it would not be equivalent coverage.

Commissioner Moline said that agents would think he had lost his mind, but he thought the Commission should push the deductible up. 4-6% did not look like much additional cost now, but if the premium kept going up, it added up. Director Tyrrell said that had created a problem with equivalent coverage. There was a provision in the proposed rule change that, if a policy was written in July and expired in June, it used the deductible limit in effect during the calendar year the policy went into effect. That way, if the Commission changed the deductible on the Commission-offered plan, licensees would not have to renegotiate equivalent coverage in the middle of their policy period.

Commissioner Wiebusch noted that, on page 5, the RFP asked what the premium would be with a deductible of $2500. Director Tyrrell said that was what the Commission had asked him to do. Currently, the Commission could ask the question, but could not accept a bid based on it, because the rules specify no more than a 1% deductible. This question would allow the Commission to collect the information, but the Commission would need a rule change before accepting a bid with a higher deductible.

Commissioner Moline noted that, even if the Commission decided against raising the deductible this time, the rule change would give future flexibility in negotiations. Director Tyrrell agreed, and said that if the Commission started the rule change process now, the rule hearing could be held at the May meeting. Rule change filings might move more quickly through the Governor=s and Attorney General=s offices while the Legislature was out of session, so it was possible that approval could be received in August. The Commission could plan to award the contract at the June meeting, but had the option to hold off until August. If the carrier agreed, it would still be possible to change the deductible for next year=s policy. Commissioner Moline reiterated that, even if the Commission did not do it for this year, there would be more flexibility in the future without the time delays required by a rule hearing.

Commissioner Shepard asked if the Commission would receive more than one bid. Director Tyrrell said that two additional companies had requested to receive the RFP, in addition to Rice and Williams Underwriting Group. Director Tyrrell=s guess was that the Commission will receive two bids. When others insurers saw that the policy required guaranteed issuance, they usually did not send a bid.

After discussion, a motion was made by Moline and seconded by Wiebusch to approve Exhibit 13 as presented for the RFP on the errors and omissions insurance plan for 2005, with appropriate wording changes as needed, and with the additional deductible question. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

Initial Consideration of Proposed Amendments to Title 299, Chapter 8 - Errors and Omissions Insurance - Change Deductible Limits and Delete Obsolete Language

Director Tyrrell presented an exhibit which was a preliminary hearing draft of proposed changes to Title 299, Chapter 8. A copy of said exhibit is attached to and made a part of these minutes.

Director Tyrrell noted that Commissioners had requested a draft of proposed changes at the March meeting, in case raising the deductible on the errors and omissions insurance program would significantly lower the premium. Per Commission instructions, a change allowing a deductible up to 3% was noted, and licensees with equivalent coverage would not be required to renegotiate coverage if the Commission plan changed during their policy period.

Chairperson Gale asked if the deductible should be higher. Commissioner Moline said yes, for brokers. For individuals, a higher deductible may be prohibitive. Commissioner Poskochil asked if the Commission should consider coverage changes. Director Tyrrell said that the per claim limit of $100,000 was pretty standard. Chairperson Gale noted that claims would be fully defended, and a licensee would only have to pay the deductible if found negligent. Director Tyrrell said there were approximately 50 claims per year, on average.

Commissioner Poskochil asked what would happen if one claim was over $100,000. Director Tyrrell said the insurance company would pay the first $100,000, then the agent would be liable for the rest. Commissioner Poskochil asked about mold coverage. Director Tyrrell said he did not believe there was any coverage for that. Commissioner Poskochil asked about fraud coverage. Director Tyrrell said the licensee would be criminally liable.

Commissioner Moline asked if Rice had sent information to brokers regarding additional coverage, because he had not seen it. Director Tyrrell said he would call them and check. Deputy Director Hoffman said she thought that information went out months ago.

After discussion, a motion was made by Wiebusch and seconded by Moline to use the preliminary hearing draft as presented for the public hearing on Title 299, Chapter 8. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

Consider Approval of Revised State Data Communications Network Acceptable Use Policy

Director Tyrrell presented an exhibit which consisted of the revised State Data Communications Network Acceptable Use Policy. A copy of said exhibit is attached to and made a part of these minutes.

Director Tyrrell noted that this was an office policy. Since 1995, the Commission had adopted the State Data Communications acceptable use policy. This was their new, improved version.

After discussion, a motion was made by Wiebusch and seconded by Moline to adopt the policy as presented.

Commissioner Strand asked if item #5 meant a staff member could use the network to notify people of United Way fundraising. Director Tyrrell said that it could, if those notified were within the state system.

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

Legislative Matters

Director Tyrrell noted that LB 845 was on Final Reading.

Chairperson Gale asked if any Commissioners would like to work on item 16d with his office, to provide input. His staff may also bring in home inspectors. Commissioners Moline and Wiebusch offered to participate, with Gale, as an informal working group of the Secretary of State=s office. Commissioner Poskochil also expressed an interest in serving. Director Tyrrell noted that, if the group=s final product came before the Commission, there should not be more than 3 Commissioners on the group at a time. Commissioner Poskochil said he would wait until Commissioner Wiebusch=s term was over.

No action was necessary on this report.

Information Matters

ARELLO Mid-Year Meeting - Omaha - April 21-24, 2004

Director Tyrrell noted that the ARELLO Mid-Year Meeting will be held in Omaha on April 21-24, 2004.

Commissioner Moline noted that he could not attend the Omaha meeting, but he had a letter regarding the Comptroller of Currency rule on exempting banks. Commissioner Moline asked that those attending the meeting bring back the lending roundtable discussion information for him. Director Tyrrell said he would.

No action was necessary on this report.

Updated Information - ARELLO District 3 Meeting -
Charleston, SC - June 24-27, 2004

Director Tyrrell presented an exhibit which consisted of updated information regarding the ARELLO District 3 Meeting. A copy of said exhibit is attached to and made a part of these minutes.

Commissioner Wiebusch, the District 3 Vice President, noted that the North Dakota Real Estate Commission voted that they could not afford to host the ARELLO District 3 meeting in Bismarck this July, as originally planned. Commissioner Wiebusch thanked Ms. Burklund for coordinating the emails with the district administrators. Group consensus was to join the District 2 meeting, which will be held in Charleston, South Carolina, on June 24-27, 2004. Director Tyrrell noted that the Commission had already approved attendance at the district meeting, this was just a different location and cost. Commissioners could go ahead and make their hotel reservations.

No action was necessary on this report.

Errors and Omissions Insurance Loss Report through 12-31-03

Director Tyrrell presented the Errors and Omissions Insurance Loss Report through 12-31-03. A copy of said report is attached to and made a part of these minutes.

Director Tyrrell noted that there was nothing unusual in the report, which will be incorporated into the RFP.

Commissioner Strand questioned the terminology Atotal incurred,@ since the expenses listed had not actually been incurred yet. Outstanding claims were yet to be determined. Director Tyrrell agreed the claim amounts were not yet determined to be owed, so were not yet incurred, but it was not his wording.

No action was necessary on this report.

Commissioner Moline said he had received an email containing suggestions from a licensee, which he would like to discuss.

The first suggestion was about prelicense education. The licensee felt that a lot of material in prelicense education courses was not on state law. The licensee suggested that current course content be condensed, perhaps in the Finance class, and a section added on Nebraska license law. Deputy Director Hoffman said that had been looked at over the years. The curriculum was designed by national experts, and was education-based, focusing on theory and general practice. Commissioner Moline said that the chapters on federal home laws and the Federal Modernization Act were no longer useful. Deputy Director Hoffman said she would be happy to look at the curriculum. She noted that it also depended on how each school used the course outline. Director Tyrrell said schools had options to adapt the curriculum to current laws and textbooks. Staff reviewed the curriculum every so often. Commissioner Moline asked that staff look into it. Director Tyrrell noted that the philosophy for prelicense education courses was that the courses should give potential licensees a broad, general knowledge of the real estate industry and how it worked, but that the Commission could always change the philosophy. Study of the License Act was considered to be examination preparation. Commissioner Moline said that the material covered in the Finance class was never used or retained.

The second suggestion referenced the Lincoln Mayor=s task force on flood plains, and suggested adding specifics to the Seller Property Condition Disclosure Statement regarding whether a property was in a 100- or 500-year flood plain. Commissioner Moline said he was not sure sellers would know. Commissioner Poskochil noted that the Seller Property Condition Disclosure Statement currently asked if the property was in a flood plain, not if it was in a 100- or 500-year flood plain. Commissioner Poskochil felt that the licensee should check on that anyway. The MLS listing required licensees to indicate whether the floodplain was 100-year, 500-year, none, or unknown, so it was covered in Lincoln. Commissioner Strand said that 99% would be marked as unknown. Commissioner Poskochil said, in that case, it should be up to the buyer=s agent to find out.

Director Tyrrell said he had been asked to speak to a flood plain task force last year, and that was one issue discussed. The consensus was that nobody would know the answer. One person pushed for it, but could not convince the task force. The Commission could add it to the Seller Property Condition Disclosure Statement by holding a rule change hearing. The discussion would probably end up the same, because people did not know, and would always indicate that they did not know. The issue stemmed from the Antelope Valley project. Commissioner Wiebusch asked if every county had a FEMA map, and a floodplain contact person. Director Tyrrell said people may be able to find out from the Corps of Engineers. Commissioner Wiebusch said she thought one person was the point person, and if that person did not have the answer, then surveyors would have to be brought in.

Commissioner Strand asked if there had ever been a complaint filed regarding floodplains. Director Tyrrell said yes, but it was based on the seller answering yes or no, not from a Adon=t know@ answer. Commissioner Strand noted that, if a buyer found out later the property was in a flood plain, they could not get insurance. Chairperson Gale said there was a bill to provide relief in the Scottsbluff area, which was technically in a flood plain, but was lucky to have water at all. Commissioner Poskochil noted that maps and floodplains changed over time.

Future Meeting Dates

May 19-20, 2004 - Days Hotel Carlisle, Omaha

June 14-15, 2004 - Ramada Limited South, Lincoln

August 17-18, 2004 - Staybridge Suites, Lincoln

Recesses and Adjournment

At 9:53 a.m., Chairperson Gale declared a brief recess, and reconvened the meeting at 10:05 a.m.

At 11:04 a.m., Chairperson Gale declared a brief recess, and reconvened the meeting at 11:12 a.m.

At 11:57 p.m. on April 1, there being no further business to come before the Commission, a motion was made by Wiebusch and seconded by Poskochil that the meeting adjourn. Motion carried with Moline, Poskochil, Shepard, Strand, Wiebusch, and Gale voting aye, and with Johnson not participating or voting, being absent and excused.

I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing minutes of the April 1, 2004, meeting of the Nebraska Real Estate Commission were available for inspection on April 13, 2004, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.

Respectfully submitted,
Les Tyrrell
Director

Guests Signing the Guest List

Harding Collis, NP Dodge, Omaha
Monica Humpal, CBSHOME Real Estate, Omaha
Beth Lube, Re/Max Real Estate Group, Omaha
Mike Matukewicz, Omaha