Chairperson Gale convened a meeting of the Nebraska Real Estate Commission at 9:07 a.m. on September 22, 2005, in the Staybridge Room of the Staybridge Suites, located at 2701 Fletcher Avenue in Lincoln, Nebraska. All of the members of the Real Estate Commission were present. Chairperson Gale noted for the record that Jim Strand had resigned from the Commission and the Governor would be appointing a replacement in the near future. Also present were Director Les Tyrrell, Deputy Director for Education Teresa Hoffman, Deputy Director for Enforcement Terry Mayrose, and Administrative Assistant Monica Wade. Special Assistant Attorney General Neal Stenberg was present for the disciplinary hearing.

Chairperson Gale conducted a swearing-in ceremony for recently-appointed Commissioner Rita Griess, presented her with her Commission pin, and welcomed her to the Commission.

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 items 4a and 16a had been added since the tentative agenda was mailed to the Commissioners.

After review of the final agenda, a motion was made by Johnson and seconded by Shepard to adopt the final agenda as presented. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

The minutes of the Commission meeting held on August 24, 2005, were considered.

After review, a motion was made by Johnson and seconded by Poskochil to approve the minutes as presented. Motion carried with Grady, Johnson, Poskochil and Shepard voting aye, with Griess and Gale not voting having not been in attendance at the August Meeting.

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

Regarding the reports, Director Tyrrell noted that any unusual items were set forth on the explanation pages, and that examination and application fees were still running high.

The cash fund balance as of August 31, 2005, was $800,681.71, which compared to a cash fund balance of $721,700.84 on August 31, 2004.

After discussion, a motion was made by Shepard and seconded by Grady to file the August Receipts and Expenditures Reports for audit. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

Director Tyrrell presented an exhibit regarding a significant increase in examination expenditures for this Fiscal Year and the last Fiscal year, which exhibit is attached to and made a part of these minutes. If this trend continues, there will be an approximate $25,000.00 deficit in the Education Services line item.

Director Tyrrell requested authority to submit a Deficit Appropriation at the end of October 2005, for up to $25,000.00.

Chairperson Gale verified that Director Tyrrell would submit the Deficit Appropriation for an amount up to, but not to exceed $25,000.00. Director Tyrrell indicated that was correct and stated that he would keep the Commission informed.

After discussion, a motion was made by Grady and seconded by Shepard to give Director Tyrrell the authority to file a deficit appropriation with the legislature prior to the end of October for the amount up to $25,000.00. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

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 Shepard and seconded by Grady to ratify issuance of the licenses as set forth in the report. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

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

Commissioner Poskochil asked about examination scores on the property management section of the examination. Deputy Director Hoffman pointed out that there are only thirteen questions on the broker examination and nine questions on the salesperson examination on this topic so the percentage does not compare equally between topics. Commissioner Johnson noted that the number of broker examinations taken was high.

Commissioner Griess asked why only the State portion was taken by some. Deputy Director Hoffman explained that a person may pursue the license process in another State and the process, between examination and licensure, gets disrupted by moving to Nebraska. If the candidate has taken the examination by a nationally recognized provider within three years of moving to Nebraska with a passing score, the candidate is only required to sit for the Nebraska portion of the examination.

After discussion and review, a motion was made by Grady and seconded by Johnson to ratify the August Examination Reports for the purpose of issuing licenses. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

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

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

After discussion and review, a motion was made by Poskochil and seconded by Griess to ratify the reports. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

Deputy Director Hoffman presented an exhibit regarding a continuing education activity rejection, a copy of which is attached to and made a part of these minutes.

No action was necessary on this report.

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

No action was necessary on this report.

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

Presentation of Stipulation and Consent Orders

There were no stipulation and consent orders to be presented at the meeting.

A hearing was held on September 22, at 1:00 p.m., in the matter of Complaint #2005-019,

Michael E. & Donna R. Pontier vs. Mary Katherine Rosenthal. Neal Stenberg, Special Assistant Attorney General and Counsel to the Commission, appeared for the Complainant. Respondent Mary Katherine Rosenthal was present and represented by counsel Doug Ruge of Omaha.

After opening statements, Counsel Stenberg offered 5 exhibits, and Counsel Ruge offered 4 exhibits, all of which were received by Chairperson Gale.

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

Prior to any motion the following occurred. The Commissioners reviewed the original exhibits. Chairperson Gale noted that Ms. Rosenthal filled out the Listing Contract in red ink and signed in blue ink. It appeared that all of the blanks on the form were filled out with the same red ink at the time of signing. Chairperson Gale could not see how the term of the contract could be missed since it was in red ink. Exhibit 3 was only signed by Mr. Pontier and not dated at the time of signing. Ms. Rosenthal later had Mrs. Pontier sign and then Ms. Rosenthal inserted, at a later time, the dates which showed the order of signing. Chairperson Gale stated he was not comfortable with this practice. Chairperson Gale suggested the ability to prepare duplicate originals at the time of signing and to leave a copy at that time rather than making and supplying copies later would resolve this problem. Chairperson Gale also asked the Commissioners if there was an industry standard.

Commissioner Poskochil noted that Mr. and Mrs. Pontier appeared to have no objections at the time of signing. Commissioner Poskochil also commented on the fact it took Mr. and Mrs. Pontier four days to get the paperwork but when they received the paperwork and noticed the nine month listing they did not call to express their concern right away. Commissioner Poskochil reflected that the industry practice of copies given is different throughout the State. Commissioner Poskochil stated in Lincoln they used carbon copies, however, this is not done in all other areas. Commissioner Poskochil asked what is practical? Is mailing a copy acceptable or maybe the industry needs to change the standard?

Commissioner Poskochil asked Director Tyrrell to read the License Law cited in the complaint. Director Tyrrell quoted statute 81-855.24 (19).

Commissioner Johnson stated he did not feel Ms. Rosenthal was guilty, he thought the date was there but was not made clear to the Pontiers.

Chairperson Gale agreed that the expiration date appeared to be filled out but it still bothered him about the Pontiers not getting a copy of the contract promptly.

Commissioner Grady indicated the license law says to leave a copy at the time of signing. Carbon or NCR paper can be used for that form or fill out two forms. Commissioner Johnson said the industry standard in Omaha is to take two different copies to fill out at the time of signing the listing contract.

Counsel Ruge explained to the Commission that both Counsels had agreed to limit the scope of the hearing to 81-885.24(19). Counsel Stenberg agreed.

A motion made by Shepard and seconded by Johnson to dismiss charges. Motion carried with Griess, Johnson, Poskochil, Shepard, and Gale voting aye and with Grady voting nay.

The hearing was adjourned at 4:55 p.m.

Chairperson Gale reviewed the procedure for informal special appearances.

Mr. Barber stated his career was in agricultural finance. He worked in banks in Nebraska and Iowa with loans. He was fired from Farmers State Bank while the Federal examiners were there. After he was terminated, the bank filed a lawsuit against him. The court case finished just 60 days earlier and no fraud was found in the case, it was referenced as bad judgement by the Iowa judge. Mr. Barber noted he had also held a position at MetLife for three years doing real estate loans. He made it known that he was not proud of what he had done but he indicated he had been honest with the Commission.

A motion was made by Poskochil and seconded by Grady to deny Mr. Barber to sit for the examination. Motion failed with Grady and Poskochil voting aye and with Griess, Johnson, Shepard and Gale voting nay.

A motion was made by Shepard and seconded by Johnson to allow Mr. Barber to sit for the examination. Motion carried with Griess, Johnson, Shepard, and Gale voting aye and with Grady and Poskochil voting nay.

At 10:30 a.m. Mark Welsch, President of Group to Alleviate Smoking Pollution, a non-profit company, which deals with tobacco issues addressed the Commission. Mr. Welsch requested that a question be added to the Seller Property Disclosure Statement form which will ask if anyone has smoked in the building or property. This would help persons who are sensitive to smoke. An example of a case was discussed where a potential buyer, who was sensitive to smoke, asked the seller if anyone had smoked in the house and when the seller said no, the potential buyer agreed to see the house. When the potential buyer came to look at the house, the smoke odor was disguised by the sixteen candles that were burning. After purchasing the house the buyer had health problems due to her sensitivity to cigarette smoke residue in the house. She had to purchase another house to live in until the first house was suitable for her. Not having the question on the Seller Property Condition Disclosure Statement has cost the buyer a lot of money.

Chairperson Gale asked if someone was going to cover it up and lie about smoking, how would it help to put the question on the Seller Property Disclosure Statement? Mr. Welsch stated that people are more willing to lie verbally than in writing, and if the person does lie on the form it is easier to prove in court.

Chairperson Gale was concerned with how the question would be phrased, perhaps the seller would have no idea if guests have smoked in the house. Is the Seller being asked about every instance when a house has been smoked in? Mr. Welsch conceded history may not be known, perhaps the question could be limited since the smoke should be gone in four or five years. Chairperson Gale asked if this is something that should be on a home inspection such as mold or pets since the seller could have limited knowledge.

Mr. Welsch indicated as more businesses change to a non-smoking environment, people are noticing greater sensitivity. The problem is going to increase. Chairperson Gale noted a difference between irritation and severe allergic reaction and the fact that residue may not bother some people. Mr. Welsch agreed that residue may not bother some but that can depend on how much smoking was done in the house and how often. If the question was on the Seller Property Disclosure Statement and a seller answered yes then a buyer has the opportunity to weigh the option.

Commissioner Poskochil indicated the form was not changed often and may change at a later date with other issues that may also be brought up to the Commission. Director Tyrrell stated the form gets reviewed approximately every two to three years and was last updated in 2004. Chairperson Gale asked Director Tyrrell if there were any questions on the form about allergies. Director Tyrrell replied no, there are, however, questions regarding toxic materials, chemicals or hazardous materials on the form. Mr. Welsch suggested that perhaps when the form changes it could get added to the toxic material question.

Commissioner Griess indicated that a person would still not write that they smoked five packs a day for twenty years, and the buyer will still not know if someone smoked occasionally or all the time. Perhaps this should be looked at but it is not a cure-all. If there is a high degree of sensitivity it should be put in the purchase contract. Commissioner Poskochil said this should be investigated by the real estate agent such as termites or carpet residue from new carpet, this is a burden on the agent representing the buyer-client. Perhaps this needs to be on inspections not as a broad question on the Seller Property Condition Disclosure Form. Mr. Welsch stated that the question on the Seller Property Condition Disclosure Form is just to get the response in writing.

Commissioner Johnson indicated that it could be taken under advisement, perhaps the Commission could look in to what other jurisdictions have done and on the next Seller Property Condition Disclosure form update, it would be reviewed.

Chairperson Gale asked Mr. Welsch to submit materials and a business card to Director Tyrrell who will contact him when the form gets reviewed next.

A motion was made by Johnson and seconded by Grady to consider this issue when the form is next reviewed. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

Director Tyrrell presented a Preliminary Consideration of Builder/Buyer Exemption to Estimated Closing Costs Disclosure - Title 299, Chapter 5-003.11. Director Tyrrell indicated he saw no down side to approve this and it could solve the problem for the future. Chairperson Gale asked for this matter to be referred to a subcommittee on rule changes. Commissioner Poskochil asked what is the definition of a builder, or new construction, would a licensee be confined to the definition? Commissioner Poskochil asked if a licensee had to prove the buyer was a builder? Director Tyrrell suggested that it go to the established subcommittee for further discussion.

A motion was made by Johnson and seconded by Griess to send to the established subcommittee for recommendation. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

Director Tyrrell presented an exhibit regarding the 2005-2006 objectives of the Commission. A copy of said exhibit is attached to and made a part of these minutes.

Commissioner Poskochil requested the Agency Relationships Brochures for Buyers and Sellers be reviewed for clarity on the tasks an agent needs to perform. Commissioner Griess indicated there was flexibility built in to allow personalizing the brochure. Director Tyrrell said he can look into modifying those brochures. Commissioner Poskochil will review his notes and let the Commission know later if he still thinks this should be an objective. Director Tyrrell said he would put a hold on the idea for now.

Commissioner Johnson inquired about the current annual renewal process versus renewal every two years or on a monthly schedule. Director Tyrrell said that birthday or other alphabetical renewal systems can cause problems with errors and omission insurance. Director Tyrrell also brought up the fact that if a broker does not renew then all affiliated licensees go on inactive status. Director Tyrrell said he would report back pros and cons of various renewal strategies. Director Tyrrell admitted that renewal time is hectic and indicated the need to hire a temporary staff member to get us through renewal this year.

Chairperson Gale asked if one of the objectives should be to make more online filings available to the licensees. Director Tyrrell stated that the only form not available online is the fingerprint cards. Director Tyrrell indicated that NOL is working with staff to make the original applications available for online submission, however, licensees are currently able to download the form.

A motion was made by Poskochil and seconded by Grady to adopt the objectives as amended. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

Director Tyrrell announced that an Audit will be performed during October.

October 13-14, 2005 - Ramada Limited South, Lincoln
November 16-17, 2005 - Ramada Limited South, Lincoln
January 18-19, 2006 - Staybridge Suites, Lincoln

At 10:11 a.m., Chairperson Gale declared a brief recess, and reconvened the meeting at 10:30 a.m.

At 12:13 p.m., Chairperson Gale declared a recess for lunch, and reconvened the meeting at 1:00 p.m.

At 2:50 p.m., Chairperson Gale declared a brief recess, and reconvened the meeting at 3:00p.m.

At 4:57 p.m., there being no further business to come before the Commission, a motion was made by Johnson and seconded by Shepard that the meeting adjourn. Motion carried with Grady, Griess, Johnson, Poskochil, Shepard, and Gale voting aye.

I, Les Tyrrell, Director of the Nebraska Real Estate Commission, do hereby certify that the foregoing minutes of the September 22, 2005, meeting of the Nebraska Real Estate Commission were available for inspection on October 4, 2005, in compliance with Section 84-1413(5) R.R.S. 1943, of Nebraska.

Respectfully submitted,
Les Tyrrell
Director