Insurance & Commerce- House

The public service commission does. Thank Mr members of the committee of the public's push the button that there I think there's a lot of a lot of green okay I'm let out by the care you are need to be closer to it there is the public service commission's essential role is utility regulation of a regulated utility model we're sensually we assigned service territories to utilities and in exchange for them having been the only service provider we set the rates that is our core function that most folks are familiar with we also do tax assessment for utility property in common carriers so any plane that lands in Arkansas he corrected rights to Arkansas we do a property tax assessment we assess we don't collect we submit that the DFA name to your county and school district tax folks and they collect the third thing we do is is a pipeline safety for intrastate pipelines we have inspectors in the field that do pipeline safety inspection and they work with the federal entity in charge of that you'll see me this time on solar will be a very contentious issue of two years ago we passed a law that I think is a. As an innovative approach to solar of the central design feature in my view was to get ready if federal policy were to change with the change in administration announcements in the last week in terms of the personnel who will be at the EPA and be involved with that kind of policy and if in a federal court ruling that struck down one of the the key arguments That's coming back we're prepared. And I'm proud that we're prepared repair because this legislature acted. But this will be a contentious issue In preparing with the flexibility censuring exception to a regulated monopoly model and those who are monopolies oppose that and this committee will have the choice to legislature will have the choice you for up to these folks that they can round up the votes they would kill the program and will be unprepared. Or they could maim the program will be less prepared were they will try to exempt themselves from the program in which some of our state will be prepared and others will not have that will be contentious difficult issue and we'll work through that as best we can there's other issues but some of the broadband stuff of the PSC doesn't have a broadband authority of their network economic issues and I've talked with Administration folks in with legislators about those kinds of issues up so there's anything like that I'm glad to work with you and we got to talk to any of these issues with your your constituents. Just give me a call and let me know and I look forward back to working to the session in this screwball circumstances that would be the best we can with that I thank you for your time and feedback has any questions that we might answer. Thank you of any members have any questions for Mister Thomas K. we will of S. C. yes okay Representative flowers. Thank you Mr chair and normally I would ask this offline but I think that it might be something important for on colleagues to know as well. you know there's been a lot of expansion and telecommunications especially with voice over IP for example and I recently have a relative who had an experience a negative experience with a voice over IP company for business phone service with regard to And porting of the numbers and I know that and what I've been told is that is a complaint that would go to the FCC but. Is there no oversight and no way to get some sort of complaint and remedy process as it relates to a company that provides that kind of service and is not being forthcoming and communicative about the issues of our of our Their customers and our constituents. We have what we call quality of service jurisdiction over land lines only of course you know land lines. You are going the way of the dodo bird of phasing out over time we don't have any authority there is. Because we worked with them in the past. No informally even though we don't have formal jurisdiction. We can try to work with them but but third there just isn't in the course you know you can file your automated comply thinks he's the Senate often cyberspace and never write anything it just seems like there is there's no remedy for anyone who was sort of stuck out there. Trying to do business. One thing you know. The quality of service jurisdiction over any telecom thing I don't know what the telecom folks would think that would be. We can talk later but I guess the the point is that. People are sort of out there with no real No we're process where there is any teeth for anything to be done if they have an issue when they're being done on fairly by a telecom company that really doesn't have to worry about any penalties or any action taken against them for completely ignoring customers from stealing from customers and that kind of thing there's also some really tricky preemption issues you have to watch telecom okay all of those things get litigated and. Anything that we do. That has to be measure anything that the legislature tries to do has to be measured against what the legal arguments against a federal preemption are in that period two you're looking at a bill check that box thank you so much. Thank you thank you thank you Mister Thomas any other questions. If not we look forward to seeing you later members there is a bill that will be coming coming to use that related to some of the issues that to Mister Thomas actually reference so glad that you came and gave your preliminary introduction. Okay thank you. Okay we're we're gonna move to the to the regular agenda we will be because of Considerable interest in one of the bills on our agenda we are actually going going to skip over House Bill Levin fifty six today I don't know if represented Ladyman is made or not so we will take up in order H. B. ten twenty seven Representative Cavenaugh you are invited to the to the table introduce any witnesses that would be with you. And. Okay let me stupid let me stop you first there is an amendment on the bill and that amendment needs to be adopted. And I know members we of we have tried to lessen the amount of paper that we're dealing with but because we don't have the the instantaneous real time ability to see an amendment on your device you will need to actually see the amendment on paper so it's being distributed to you at this point. Thank you Mr chair The Amendment a very simple amendment it just as cosponsors that doesn't do anything for the chance to to the to the bill so it's only for a. Adding of co sponsors. At appreciate a good vote on that. Okay. We give everybody a chance to see if they want to vote against represented Pilkington being a co sponsor. You've had an opportunity to view the amendments is there anyone that would like to make to make a motion that we adopt the amendment. Represent of Evans a do pass and represented Lundstrum second all those in favor of approving the amendment signify by saying aye. Any opposed say no and there's no opposition so you're amendment has been adopted and you are free to introduce a bill to us as amended thank you so much thank you chair and thank you members of the committee this bill was brought to me by the self storage association and. It's a pretty simple bill currently there's a little clean up language in there you'll see where it says from electronic mail it changes that the email which is more current terms so that's what that does but the biggest thing is it does is it gives the owners of the self storage units another option of ability to advertised for people to come to their sales and why is that important because the more people that they can bring to the sale of the sale of US defaulted storage unit the more money that they can bring in and then that in itself lessons what the consumer always them. So really who would help in the end it makes this a self storage owner is whole as possible but the big thing it does is it stops the consumer who had not the ability to pay that amount of money for the unit shall actually less what is happened unfortunately is their advertising the only in the newspaper and in some areas of the state it doesn't bring any betters so there were left with no one to bid on these units and the end consumer is the one that pays that price this just doesn't take out their ability to advertise it in the newspaper this just give them the option to add other options abilities to get people to come and bid on these units and that's really the gist of the Of the bill. Sir of members anyone have a question for represent Kevin on a seat represented flowers you're recognized. Thank you Mr read the first night and understand What the bill is trying to do and appreciated the all I have two concerns one is that. And the other option is not specific. And while I think most. People in this business are hard working I know it hardworking folks and providing a service. There are those who I know for sure for sure who are not necessarily as Honest and compliant and. So the work while you have a standard where most might say okay we'll. I guess I'm not even really clear what that other option would be so my concern would be. That that option could be since it's not specified somebody could say well I put up flyers or I did a post on Facebook. And without there being a rift another standard defined. It leaves open for someone being able to do whatever and then selling somebody stuff and they're it since there's a whole sort of industry in addition to this where people look for folks who have not paid their bill. The the recourse for the owner is to sell the items that are in the storage unit but when you have folks a spread and so my second concern and then I'll stop in and and ask for your feedback my second concern is. In the midst of this pandemic you have people who lost their jobs who have not been made this is sort of down the line of priorities for many families. But still you know treasures and and and property in storage and so what happens when we change this and you know people are struggling to pay their rent and start their own businesses back and get another job. And their family photo albums or their you know property that they used for a summer landscaping business is just sold out from under them because they didn't know or they knew but they didn't know it was going to be sold because somebody put up a flyer or made one post on Facebook so I'm just worried about those two dangers and if you could elaborate on that thank you. Then fires but with I want to make sure that you understand this is not the notice to the consumer that they have defaulted that is not what this is This is the notice to let people know that there will be a sale the consumer has already been given notice they can get it through a mail. Or they can get their certified mail so they've already been notified that at this date this unit is going to sale if you don't respond so they're already familiar with the date of the sale is going to be the so this so there's two different parts of this process so what we're dealing with and allowing them to advertise is not the process to let the consumer know that it's going to be sold that is already occurred because they've either opted in to get it all by email or they're going to get a certified letter at the last known address that they provided the storage unit and say Hey I'm going to sell it on this state if you don't go ahead and respond to me and. Your bill so they already know the consumer knows this is really just to advertise to bring in more people really what it's about is to get more people into the sale because then it actually allows that person not the old amount of money it actually brings more people to the storage unit sale because there are a she brought out there are people that just looked back go to the sales and they have a a second job around there because they might feel different things so that's how they might get their inventory that's really what this is about is not really trying to notify the consumer that you've defaulted because by this time they are already aware that. Okay no problem Representative Richardson I believe you have a question. Thank you Mr chair so. Just to make sure I'm understanding this basically just gives the owner an opportunity to recoup their funds by more than just putting a notice in the paper right so this is sand he put in the paper they can use email they can use other options in order for that per for that owner to recoup the money that the person left on that particular unit. So it's really just trying to get them the ability to get more visitors there and that's really what this is about and it doesn't take away the ability for them to use the newspaper because in some areas of the state newspapers are still an effective way to do that this just give them another option. You're welcome okay. Representative Pilkington I believe that you have a question a. Motion for immediate consideration. The motion immediate consideration okay that motion is in orders or second. Okay of the motion of media consideration with the and any debate now there are people signed up to speak so that I would want you to keep that in mind in terms of voting on this motion. Okay to all those in favor of the motion for immediate consideration signify by saying aye by any opposed please say no. I'm gonna rule that the the immediate consideration motion was defeated. We what we may take it up again at another point or limiting debate but represented Lundstrum did you have a question. Yes. How many months to somebody have defaulted before it would go to advertising for sale. Electoral enter that if you were in a dish or self control. Charles my up for Mormon Bridgend president of the Arkansas so storage association the law requires a minimum forty five days before you start the process all if I might expand on that Mister chairman. The card information to expand on that yeah absolutely all the industry from our perspective. Does not want to don't want the items. I guess they just this day of cash the shoes but all our industry to do don't want items to go to cycle all what you are interested they on is trying to find the balance in the industry that's beneficial to the tenants and and the property owners together for example. In the past the newspapers required Page to be run as a legal notice because originally though was for a last ditch effort to notify the people their unit was in the fall however things have changed and we can now contact them with their permission via email text telephone calls. All of these people that are in the fall for the most part have dozens and dozens of attempts to be contacted the end up blocking or numbers all we even use and it's not required but many of the issues registered email so we can verify that the a bit least opened or received the email and that in an attempt to work with them to get the unit and to now on the other side of the coin we don't have the keys to the law you don't well you wouldn't want us as owner to have a key to your goods so we don't know what's in there until we go through a locked removal process and to Elaine charge on the unit oftentimes months and months after their in default when we open the unit they've been locked up empty and when we couldn't rent the units but a key point of this notice a in a in my opinion of this proposed legislation it opens the way for the newspaper to be able to sale advertisements in the past they have required to be in the legal section and he and that's not what the times these days with social media if you're or storage units and thankful you're not reading the label section a newspaper you might say and I did some lawyer you might say and I had on Facebook you may see an ad in the newspaper but it should not be forced to be a legal notice because we're no longer trying to give them notice on this now from the tenant's perspective that's in the fall. The more visitors that come to the site that it yes it helps us in one as owners but we do not get to keep the amount unit sales for over the date price that money goes back to that tenant so it's only fair to the tenant who's already struggling to get the most they can out of the unit and the more people that are there if the there's anything in the unit that fourth betting on then it'll raise a higher price which covers their date but it all it also leads to check for the tenant for what was over the date okay thank you thank you for the information represented Gazaway you're recognized for a question thank you Mr chairman I wanna see if I understand this correctly But this may be in the proper context so the way I understand the bill is that. You have the notice requirements which are not changed what what this appears to be to do and you tell me if I'm correct here is it defines what a commercially reasonable manner is a for purposes of advertising and we see this sometimes I'm sure represented cabin on those in the context of used cars at a used car as repo code and is later sold that sale has to be done in a commercially reasonable manner and if it's not then that still can be challenged and there's all kinds of issues that can arise if it's not what this bill does is says it will say that for purposes of selling items that have been in storage it will be considered cut done in a commercially reasonable manner if at least three better show up and there's advertising and it can be advertised in the newspaper. It does not change the notice to the tenant of the self storage unit is all that accurate. Yes it doesn't change the notice that the consumer has that they defaulted on this storage unit it just gives a commercially reasonable manner definitions on what remains commercially reasonable to fail. For a absolutely you're recognized. So with the definition of commercially reasonable manner being at least three independent better show up to the sale if three independent bidders do not show up to the sale would that give the occupant or former occupant of the storage unit the ability to challenge that sale in the amount items are sold. Yes and my understanding is if three don't show up they're going to have to advertise it again until at least three show up thank you. Thank you represent Gazaway. Actually issues you might want to ask about being a co sponsor. Are there any other questions. The other questions of members we do have we do have three people signed up to speak since we have been hearing the for side I'm going to first recognize anyone who is signed signed up to speak against the bill. And The first would be miss Ellen crass. Discret if you will come to the table and then identify yourself for the record. actually we just need to do it in order because I believe that there's also someone signed up to speak. Well actually we don't have anyone signed up to speak for the bill so yes you can come to the table. Is there a. Do okay. Okay you are recognized me please identify yourself for the record my name is Ellen craft and I'm the publisher and owner of the Madison County record and Huntsville before I can give you my testimony today I want to say that I watch the majesty of our government work yesterday and I applaud you and thank you today for being here and your service for all that you did and I own a local business and and it is a newspaper it is a local business and and my view of the newspaper is it's S. time stamp of history we print everything from church notes we hold elected officials accountable we report on basketball teams and we list obituaries we also have classified ads and those classified ads and listings of auction sales at at a storage units. We are predominantly a local business we do have an online and at issue. But we have people that still really are interested in buying our paper on a weekly basis in an ad for a self storage unit owner costs ten dollars to Lisette storage option we have a lot of other options in our county to and and they take the at a form of any state action but we do have the self storage options I can tell you this if you do not publish that in the local paper the local people will not go I looked at a study from two thousand and sixteen and eighty percent of the people in Madison County do not have reliable broadband that was two thousand sixteen I do think probably some efforts have been made to improve that and I do applaud the governor I know that that is on his agenda to improve that as of today. We do not have reliable broadband so you were going to place you're going to take that advertisement out of our newspaper and your get cut down on the local people coming it's like them Representative flowers said it's going to really take away from that people who have them thanks in the storage units maybe somebody put it in there maybe it's and family heirloom maybe it's a Bible those people are not going to come to that not and I realize Representative having now you're saying that that's another option you want to give them another option they still have another option right now I went online last night as a storage unit owner and thought how to advertise the first thing this article says today is listed in the newspaper so I did some other research to just to see what other states are doing about this the ones who do the states that do you have and storage unit that statutes at thirty nine states still make you put it into a local newspaper now a lot of the states make you run it two or three times that's not so in this state act the way that I read the bill. Is this is not only a protection for the person who's trying to get their money back and I understand that it's also protection for people who may lose things in there so this provides a notice for people at the if I'm an owner I want to make sure I haven't you know taking property from someone in a way that it's not fair so that running it in the local newspaper protects me we are as we are at that time stamp we know that we have published that notice again it's ten dollars and it goes on our web page and I also want to point out that and the majority of these units that you with them the units would go online they're they're two different websites I think like storage units dot com or storage battles dot com the anyway there to predominantly big websites that probably most storage units would go on an advertised their out of state so somebody from Florida can get on and see what's for sale in Huntsville Arkansas can go in there and probably by those contents somebody from Huntsville Arkansas probably is not going to have notice it's kind of like you said reasonably M. sufficient sell commercially reasonable I think that's what the bill says he doesn't define whether that's on Facebook it doesn't define whether that's on some scattershot approach of maybe ten different websites and I'm the only you never I'm that unit owner maybe I didn't get the text maybe my email went to spam Act I am not going to know to go in there and bid on those contents it's also going to take away local business and you know the newspaper is a local business and I promise you when that Huntsville football team wants me to buy a banner on the football field I'm going to do that these were these national websites that you're going to put this one add on which again because that person ten dollars not gonna make or break me they're not going to support your local paper. I appreciate you hearing me out today and I'll be more than happy to answer any questions that you might have okay we do have a question from a member Representative fielding. I believe thank you Mr yes hello even print the paper. Forty or so minutes if you have come up we are weekly paper we have come out every Wednesday but our publication date is on a Thursday and you know we're very fortunate we still have people lined up to buy a paper each week. Thirty percent a weekly update the page where weekly. And you think that those who do not subscribe to your paper. The local paper will not know about this advertisement I believe that if you put it in Monday's paper the local people will find out about it now if they are not a subscriber they may hear from it from a friend they may meet for a Cup of coffee at the crossbow and the friend may say Hey I'm headed down to the local unit because they're having a big sale down there I don't know what's in it do you want to join me that person may not be a subscriber but they're going to go there gonna visit about it locally I guarantee you they're not going to pull up that phone when they're having a Cup of coffee and say I wonder what's on the storage units and what's for sale today and they're not going to let go they're not going to know take a look through ten different websites they're not going to look on Facebook. With them I have one more question one moment please sure you're identified you're recognized so. Your prescription of night went down. In in. I'm sorry I couldn't hear the question for your for your paper at the end of the have you out of all sales and published in your paper. Have a loss yes. my numbers you know interestingly enough we have lost a few subscribers yes for sure but and we've also had a lot of online subscribers do you think that because of the the way that that haven't happened going to get in now sh I think it's a combination of things that I think that the newspapers have been be up on a little bit as of late and I also think that a lot of people are reading there and out on their iPad and so you know I'm a pull at my iPad in the morning and turn around and give it to Mister Hamilton over here and let him read it but I would say the I still believe very strongly in our print edition and I do not have a lot of concern right now about our circulation numbers. Absolutely represent flowers believe you have a question. I do and So one of the things that you said that grab my attention and I know that we're that the the intent of the bill is to address advertising options for the sale of items but I do believe that the as I read the bill and I look at the language again it's under this section about notifying the person who who is renting who is leasing the space and I do I have a family member who was working in and out of state and and so I think that's why I'm so interested in this. Who For whatever his faults were in it. The items in his storage were sold before he was told that they would go up for sale and he could pay and he ended up. suing and there was a settlement and all of that stuff but the thing that I think that's important in this case is something you just talked about and you said that there is a time stamp it. Advertising in this way provides a time stamp so that when a and I think it does protect the business and it protects the consumer because when it does get to that point that the items are going to be sold. Then there is something that anyone can look up to say this is when this was advertised before the items were sold and again my concern is if there is not anything specific identifying what that alternative it is I'm not saying there shouldn't be one technology has dictated that times are changing but if we don't specifically state. What that alternative is to leave it open where would that time stamp be where could that time stamp the and I guess I would leave that question open to. those of you who were speaking for or against the bill thank you I appreciate your comments and I would like to say that this is not a binary solutions that you know I know that Representative Cavenaugh said this provides the owners of the storage units and other options they have that option right now they have Craigslist they have Facebook they have every option right now what we're asking is that you continue to maintain that they publish it at least once a week in a county newspaper with the good circulation reliable circulation to the local people the right to know that that sale is coming up so it is binding you don't have to choose the newspaper or. Per year to cheese does that you have every option right now what we're asking is that you keep that requirement thirty nine other states have right now in the newspaper to provide notice to the local people. Mr. If I can respond to that well actually there will be a another point for you to be able to hopefully to respond members if you will please not turn your microphones on until it into you're recognized it does create some feedback an interference represented Pilkington. Thank you for being here today I appreciate your publication some of the articles you've read about some of my colleagues have been really interesting So just get this straight you're going to make sure that we continue to. Average the state requires that we advertise and subsidize your business over others am I understanding that correctly. I would really take exception with a term that you use subsidized what I'm asking you to do is support by local state business instead of making the and not having the storage units act that looks provide local notice and it to their local people you're allowing them to put it on the mega websites at a state. I'm not you aren't subsidizing me and that I'm getting extra benefit from the ten dollars is not going to make or break me but I pay franchise taxes to the state I pay payroll taxes in this state I pay property taxes to the state I'm very happy to do it I'm a proud citizen of this state but no Sir you don't subsidize me I'll I'm asking you to do is to provide local notice to local people that's what I'm asking you to do follow up yes so. But we are saying that there is a requirement that we have to use your business over another business I mean why are we giving special treatment Q. as opposed to any sort of online company that can do the same advertising that's here in Arkansas because I am a legal business in your state and the newspaper has so many requirements to be at a newspaper I can't be sent star shopper that Jess has all advertisement so I'm a legal time date for your state and I provide legal notices to protect people who deserve that notice who have not had it otherwise you're the big websites do not have the legal requirements that I didn't and so I believe that in the best Avenue to protect those rights of the people who deserve notice thank you you're welcome thank you represented Gazaway you're recognized thank you Mr chairman. So I initially thought that I was for this bill and I like the three independent bitter requirement I think that that's a good step to defining commercially reasonable manner but when I look at the definition what I see is commercially reasonable manner means a manner in conformity with advertising practices among dealers in the type of personal property being sold or removed can someone tell me what that is. Currently I mean because I think there's a good point made that this is just put on some websites that nobody ever looks at them and you know your local folks in the people that really have an interest in buying that property thank of point is well taken that the may not show up not about subsidizing a business as much as is providing the local notice to the people who may be most interested in so if you're going to find commercially reasonable manner this way. What is the they can in conformity with advertising practices among dealers in this type of property what is that currently I'd like to know that thank you. The Representative Gazaway my counterpart Mr Hamilton has a lot of information on that I'm happy to allow him to come up and and provide that information to you if you would like okay I had mistakenly said awhile ago that there was not anyone signed up to speak for the bill so I would need to take someone from the for side before I would recognized Mr Hamilton Mr represents Gazaway I appreciate your comment and that I'm not going to not answer I'm going to defer to him because I do think that he has more information on that and I do it this time. Okay. It's possible this Germans already spoken Charles I can't read the writing. okay you did speak with with represented cat Cavenaugh okay all right well then is there anyone here that would like to speak for the bill that may not have signed up. If not I can now recognize Mister Hamilton Please identify yourself for the record. Thank you chairman Larry I am Lynn Hamilton I'm the president and general manager of the Arkansas Democrat Gazette would you please move in a little bit closer America was going to ask you chairman Larry I have real difficulty speaking through this mask in my glasses fog up bills you're not wearing a mask while you're speaking would be appropriate for me to take this off so I can bet Committee absolutely and I could sell you one of these clear shields Yes. How much is that if it's not in the legislation will it. but I'd like to I'm going to limit my comments I will try to make this really brief because I know your time is limited and I'm gonna try to be succinct at I think there's been some misinformation put out this morning that I need to clarify and some of it has to do with what is a commercially what is the term we have a commercially reasonable manner what that in and also it was said that this allows people to advertise that in all it does in other vehicles at that stage this is not correct I'm sorry. These owners of storage facilities can advertise right now anywhere they want to this doesn't enable advertising they've always been able to advertise the the original bill you will considering amending was approved it was Senate bill thirty six of April fourth nineteen eighty seven it's been in place that long and you will or for thinking about making a major change this bill in this nineteen eighty seven bill. Was written in the context of protecting private citizens whose stuff was being taken the legislation didn't exist exist to protect them at that time the reason the statement is in here about at advertising putting a notice in the newspaper it's so so people will know that it's being done it's not to help the owners of the facilities advertise in the statement was made will weave news newspapers for some to be in the legal notices Noel if they called and said I want to run a big ad on the back page you're a section would run it now that's a lot more expensive so they don't do that but there's no limit on how much they can advertise in any newspaper what they choose to do and what the what this commercially reasonable manner isn't gonna let me just read the exact language they're asking you all to approve the language says As used in this section commercially reasonable manner means a manner in conformity with advertising practices among dealers in the type of personal property being sold or removed has nothing to do with getting three bidders that's not what they're defining as commercially reasonable practices what the cover what they do today what the story I've learned a lot about storage facilities in the last twenty four hours this act first Representative Kevin on a and the rest of us had a meeting and I learned quite a bit then and then I did a lot of research last night here's what here's what the owners of these facilities do they go to national websites and they don't just post a notice that this that this is for sale the items that are for sale or on the website and people use that website to build they don't come to the storage facility and look at it they they built on national online websites and then you know what you know how they make money these websites they get a percentage of the state of the mail the so if if of the two thousand dollars. With the stuff come a is is sold they they get like two hundred dollars. Ellen do you to surveillance in her weekly newspaper which is where people like to put these notices so everyone of the committee will cost ten dollars ten dollars in the democratic is it to run it a notice in the entire state of Arkansas that scene by and everybody knows where to go to look for them today you know you go to a newspaper insured the number of number of subscribers or town everybody does that but everybody knows where to find the notices and if you want to fund them it all seventy five counties of Arkansas you can go buy a printed Democrat Gazette. You don't have to know about this national website where your stuff is being listed. All you have to do in it if you if these people will put your name on there the Hey I'm selling the stuff of Joe Smith Jones or one of his friends will say Hey your stuff's being sold and we'll hear about it someone said well you'll notice is all taken care of already with that you'll get an email or he'll get a letter also you know how that works sometimes you don't always read your email or the mail or the letter doesn't get delivered because you moved so this is really the reason this bill was written in nineteen eighty seven is to allow people to know their stuff is being so. And at that time. That the owners of facilities could already advertise anywhere they wanted to that's what that was not the intent of the bill what what's happening today is the association of storage facilities is asking you to stop the public notice that's the only change that's really happening here because this this language that you sure you can be in a newspaper if you want to or we can take our our stuff and keep posting on these national websites and we're gonna make more money. I mean that's that's what this is all about it's about not protecting the little guy like the bill was originally intended Really the. The admit to you that brought you heard Ellen say it's ten dollars to run those statewide in the Arkansas Democrat Gazette these notices typically or like a one inch ADD news usually two or three of in the Democrat Gazette your little local newspapers are the ones who get these notices it's not the democratic is it it's not going to affect us financially much at all but it will have a devastating impact in a cumulative way what all your little hometown newspapers not if if you're mad at your local editor because he's written something that about a friend or but you that you know like this is a great way to punish them but if you believe in protecting your little newspapers and protecting the jobs that those people have please don't vote for this legislation. The democratic is it is it this long wanted to at that is twenty one dollars and ninety eight cents to cover the entire state you wrote a big at the two it's it like some people do that's as big as they get it's twice that forty three dollars and ninety six cents this is not about saving money it's not about the ability to advertise because they can already advertise anywhere they want to and they're doing it this is about not putting it out to the public at I'm sorry I wish I could say it differently than that but that's just monthly that's just it okay thank you thank for much to represent a brownout I had to have had you in the queue and I didn't know do you have a question for this this witness. Or was it for the previous witness. Or is it just general. In general and I think the current witness can answer this question our Mike I see some conflict in the in the testimony. By the time. it's being advertised the person who has a strict as rented a storage unit already knows me they they knew that the deal when they signed up. They have already been informed that there in the fall. The storage unit owner. Is not receiving. The rent to which they are entitled. The storage unit owner can still put a legal notice in the paper. The I did here and I'll get to my question. I did hear that in the area where this paper is that of broadband is is really poor however of we heard also that if if people don't get the paper copy they can read it online now there's a conflict of their if broadband is bad then they won't be able to see it online. I think this. This thing that we do these days about always talking about the little guy is not just little guys that put stuff in storage buildings and We have. So people who have storage units can that they can still add they can still place a legal notice can they not this this legislation doesn't prohibit that does it you're correct now is this legal notice were truly effective for the storage unit owner do you think that they would be seeking other ways to advertise this is the intent of the law is to put out the public notice is not to facilitate takes sales for to the owner the if it doesn't bring in sales for the owner the owner need to advertise somewhere else but the public still needs to know that it's happening in the newspapers away that happens not some national website where they have an option for the contents what do you think it benefits the person who has the contents in the building who does can't either can't or won't pay their rent. If if the storage unit owner can get more. By advertising in these other right other ways to recover his lost her laws and then apply of anything over that to the debt of the person who has been reading the storage unit don't you think that the person has a storage unit contents don't you think they benefit from that. If it theoretically as possible for them to get more money but what we just do what I mentioned a minute ago is there losing a significant percentage of the sales price that they don't lose it if the owners go in a different direction. I'm not sure to answer your question directly though I'm not sure that's correct at all. No more questions okay thank you Mister Hamilton you're your testimony earlier was that this is an attempt to be able to make more money off that unit so I mean you you said that as a statement of fact and not conjecture why would that not be a positive for both the the owner of the storage unit but also the the the tenant the person who had defaulted the chairman Larry that my only answer to that is a bigger percentage of this of the. Profit from sales it's being taken when they go to these national website and I don't you know like I say I've been on this for less than twenty four hours actually I haven't done the math okay and storage unit owner would know that I mean they would have the option of you know if they felt like the local notice was effective for ten dollars and the other was going to cost them two hundred dollars that that gives them the option of being able to make it financially beneficial decision correct sure the chairman Lowery the if the owner still is able today to spend the two hundred dollars plus ten so the cost is two hundred ten dollars okay. All right well thank you thank you testimony will but I have one question members at a let me to give an explanation for my call on the immediate consideration earlier it takes two thirds to pass an immediate consideration motion we clearly did not have that represented within. Mr Hamilton do you know the numbers of small town newspapers of closed. In the past few years I don't want someone in the audience does it actually do you have the. The question was how many small town newspapers have closed in recent years. Well I think we have to start walking if you're ready. Start a I think. One. In the entire state. If I'm looking at this correctly is more about advertising that is public notification yes Sir and one of wine. Well why would you want to limit their ability to do that their ability to the limit advertise it to whatever ties is not limited right now Sir they can advertise all the whatever to is what the effect of this legislation is they will pull out of the of newspapers and the Public notice element will be ended but they can still advertise all they want to right now today. I agree with Representative brown relative to the Owner or the renter. They sent a contract up front the study's how long they're renting it for all that time. This to me is a small business attempting to recoup what they've been denied by a legal contract. And should they not be able to use whatever means necessary to attract of the lawyers to be at yes Sir I agree with you a hundred percent and they're able to do that today. So what what if they're able to do that today than. One one would you object I object because the effect of this will be to the. C. flails public notices for the general public that will what will be happening is these businesses will be operating under the cloak of secrecy rather than out in the public light of day. The newspaper option that will be eliminated they will choose not to do that and today they're required to tell the public they're making the sale well I have been in business and I'm going use the most effective method. So so you're saying that even if your your media is effective that they will use. At I'm saying that they will choose not to notify the public they would rather make the sales without the public being aware of what's going on. Can you make that statement what what would prove to you have that they would not use these paper media Sir we're all offering our opinions I don't have absolute proof a lot of people will probably realize that the public needs to know but some who are not as scrupulous as others will not want the public to know that the sales being made they would rather operate with their friends and their role in their reliable Private contacts. Okay represented Cavenaugh know that you're itching. To respond but but the we'll have to wait for you to close and that's one of the reasons why I don't like immediate consideration motions because it does cut off your ability to respond to this so if you'll just. Just wait would get two years of Representative when. Representative Boyd. Thank you Mr chair okay so I'm I'm listening to this and on one word on one hand we're using the word advertisement then we're using the term legal notice right so what I'm here what I think I'm. And I want clarity is. We're really making an argument when we say legal notice for due process and so what I think I'm hearing is in nineteen eighty seven when this law was passed there was some reason we needed additional due process that didn't exist it could you help me understand if I'm understanding correctly. Any other questions represent board no okay Representative I think it's on the other hand over Hodges represent project you have a question yes. I thought in this build a whole lot easier I did to them them until point four brought out appreciate the paper for bring from points out that When when when. What I'm hearing is that we you know they can already advertising you thief that that redundantly up there at the table they can already advertised ever they want to so My question is what I meant will benefit probably for when when when per capita reckon Cavenaugh to when she when she closed the overstatement. Why we want to take the advertising away from the from our from a local paper take that from them now you know fee for closing on a piece of property the bank has to. When they do the sale of the property have advertised in the paper for a certain period of time before so so the public you know that this property is up for sale where the owner can retrieve the property back so why we treated any differently from. An item like that a foreclosure or or something like that I'm just kind of concerned they would taken from my local papers the ability to advertised and I do believe that. When you advertise locally. You give your your your citizens of that community that the the option to to retrieve are to to being back on that on that Although the item to the polls to put element on this big website Yes Sir and I know this is a question for represented Kevin of but I will answer real briefly you're you're absolutely correct every business in Arkansas that I know about that deals with the public is regulated in some manner and the storage building association is asking for an exception they want the option not to be telling the public what they're doing and the banks do it everyone does it newspapers course are highly regulated and we follow those laws to. Okay. I'd I don't see any other questions I do know represented Ferguson has a comment and and this would be the appropriate time for members to have open discussion before we allow represent Cavenaugh to close but I I would ask that you know this has gone a lot longer than we thought it would would but we want to have an adequate opportunity for represented Cavenaugh but then also the other bills that were waiting on so represent Ferguson. Thank you thank you Mister chair of any full disclosure I have on the part of a metes storage facility of I think you have to really understand the industry and and how it's moved it is really become sort of arcade to thank you gonna sell things locally from advertising in the paper of it's not a very effective way to disclose of contents almost all the mini storages particularly the bigger facilities have gone to these online companies like eBay to dispose of things so I mean I'm I'm for this bill out at me for local newspapers but in reality advertising in the paper and disposing of things that way it's not really been a very effective way for store just to get rid of these things they need she pointed out if you just keep holding that the injured is adding to the rent that the person's going to a long term on the on the unit thank you. I'm sorry I forgot to dispense the witnesses the you're free to leave thank you very much for your testimony members any other comments. If not represent cabin on you are recognized to to close in to answer back on any of the issues that have been brought up thank you Mr representa Gazaway I just want to raise your concerns about commercially reasonable it says on page one section eight commercial or is only that I manner in conformity with advertising practices among dealers that you brought out but then it goes on into page two and and B. it says it says the advertisement of a personal property sale of a personal property is conducted in a reasonably a commercially reasonable manner if at least three independent builders are present at the time of the sale or online so those to kind of go together to understand what commercial reasonably mains and that's what what it what it means. To address the issue about this is a public notice this is not a public notice this is advertising a sale of a unit. When they advertise this they don't put the person's name out that they're still in their unit they just say they're having a sale. So it can't be a public notice there's no name attached to it so don't let's not get the two confused the notice to the consumer has already happened it happened through a mail it happened through certified mail or make sure we understand that it certified mail which means that there is a return receipt showing they received so it's not just in the mail and get lost because quite frankly that happens with us a lot still going to make sure we understand that. So we're really just talking about advertising the other thing is the newspapers they were taken away the ability we are not we're just given another option there are some areas in the state where the local newspaper do break and bitters and they will continue to use that because I will make a solid business decision. This doesn't take away their ability to continue to use that newspaper it just give them other options. And with that I would just ask for a good vote on the bill as amended. Thank you Representative this time uh is there anyone who would like to make a motion. Represent of Evans. I'm sorry to. Yes motion to. A motion to approve the bill as presented in amended okay we have a motion of do pass as amended. Cap. My understanding is in the house we don't record for requires second but thank you very much it is noted all those in favor of the do pass motion on House Bill ten twenty seven signify by saying aye. Those opposed signify by saying no. The eyes have it represented Cavenaugh your bill is passed thank you chairman and thank you Committee thank you. We will now Rebecca moved to a House bill eleven sixty five Representative font. You are recognized to present your bill. Mister chair if it's okay with you all asked that Mr Josh Carson comes to the table also yes and Senator bart Hester. Okay and before you start there is an amendment yes there is to be passed out again members will have to do this by paper so it is being distributed to you. The Vaught you're recognized to present your amendment thank you Mr chair at this is language that was agreed upon by the bankers association they had concerns because they also sale. properties and this would alleviate any kind of problems that they would have been able to go forward. Okay. Members any questions on the amendment it is a friendly amendment for the member because so typically we do adopt that. Drive a motion to accept the amendment I have a motion and a second which okay second and third and fourth okay all those in favor of the amendment signify by saying aye. Any opposing no the amendment is adopted you are recognized to present the bill as amended thank you Mr chair good morning committee and Mister chair thank you for allowing us to present house bill eleven sixty five I know that you have been put through the wringer in the last twenty four hours and I would like to apologize for that. Even though you've been told the sky is falling the sky is falling we hope to pre today than in fact it isn't I hope you will just listen to our points up while we believe this to be a good and sound bill I believe that our side has tried to negotiate on this bill and have listened to everyone's concerns there's just some times when people can't come to an agreement and we live in an ever changing world and sometimes people don't like change. Some today I will say that this bill will take away sales or commissions for realtors outside in the market place this simply isn't true realtors outside this companies these companies aren't selling these homes already and another argument that you will here today is it is it burdensome for these companies. To allow these people to that they've hired to go get the realtor's license. To sell these homes for these builders. Yeah that may be for some people. Some people with means maybe they won't have trouble going to get that realtor's license but a mom with two children single that would be very much a burden for her. I hope is you listen today you'll remember those two points. It is burdensome for some people and these people are not already these people the realtors are already not selling these homes this is mainly about commissions. So with that Mister chair I'll ask Mr Carson. To speak. Please identify yourself for the record and you were then recognized. Impaired please push the the button had bill light up there your thank you Mr chairman my name is Josh Carson. Now the Representative and Vice P. executive vice president for a home builder in Arkansas I appreciate your letting me share and I'll try to be brief and answer any questions as a home builder I can speak for at least us and and other home builders we've discussed others can speak for themselves but as Representative Vaught said this bill is something that we home builders and and our employees of specific examples are are big champions of one of those reasons is every state around Arkansas already has this so it's a bit awkward that we operate this way this pay way with our sales employees and and all of these other states for us particular Missouri Oklahoma Texas and all the other states surrounding us I think it's been some misunderstanding with that position but I think we clarified and the laws pretty simple on that if it were not the case then hundreds of builders are in for a surprise is and all these other states and what have been operating but because of that we're we're excited to try to catch up to be honest with you and this bows down to serve our sales employees and the difference between sales employees and what are we have learned through this process is I think a lot may not understand the difference between our sales employees and and licensed real estate agents which are governed by the real estate commission a wrecked and subject to licensure requirements our sales employees are are full time employees like you Miss builders whether we have several or it's just construction foreman or or or the builder themself we do not so they do not suffer the public they do not sell for buyers or sellers that they simply aren't employee of their employer selling inventory customers come into our lots are neighborhoods online pick up their inventory and take it to the checkout I got to be careful not to diminish the value of her great sales employees but they understand the analogy they're not realtors they do not represent the public or. Buy or sell for the public or sell different properties they're just being sold selling trying to to sell our products just like any sales like a car salesman is a good analogy on a car lot the trouble is in Arkansas there actually is an exemption written in licensure law but it's it's a bit awkward it says that among other exemptions an employee may deal in real estate or sell real estate on behalf of its employer and only it's employer but there's a copy out a bit of a we're copy out not every other state has what I just said around us that exemption but the copy on Arkansas says but they can't get paid a commission. So that's always been a bit odd is so basically And as we talk with real estate commissioners realtors and and most everybody that the that is familiar with it we get essentially pay them a salary or retainer bonus but and not have to be licensed but all of a sudden when you pay a commission by magically become I guess a threat to society and now need to be licensed and that's been very odd when looked into this was that why is this this way thanks in the background is the exemption we hear for some was written for banks for banks salaried employees to sell Arial properties but nonetheless it's so broad that the way it is written allows companies like us and our employees to be exit if we pay them a salary there's a car out says if you're an acquisition company not sure what that is you can't do it but we're we build on a lot center home builders and sell homes so we are not that I understand it was an exemption for the bank and that remains today but bottom line that is what we are here to try to correct the glitch that we feel other states have corrected which is allowing our people to be paid commissions at the end of the day it really is about our sales people being able to be paid fairly and competitively lack of mention that are very different than realtors they are not realtors you'll hear from some of our. Excuse me you'll hear from some of our sales folks were the roles are apples and oranges we love our realtors they will always represent our buyers and will always pay for that we appreciate our brokers if we want to be listed we will continue to use them will have to it's just the the the hard part is our actual sales employees being license to be something that they are not is what is very difficult and what other states have have corrected the difficulties of that the of course there are there are there are difficulties is is the training the cost to pay rescue me pain for the licensure again number one to be something that they're really just not doing being trained on a writ procedures brokering deals in the state of the law which then they come to our company like any good company we've been trying them on our own procedures and and state and and forms the law will always be there I think some of that a concern will if they're not trained to be realtors how will they how has it ensure that they'll understand real estate law or procedures my simple and respectful answer that is the same way every other corporation has they have companies accountability is they have to be trained you don't send Walmart employees or car salesman or jewelry salesman to law school to learn the laws they have companies that are accountable if they mess up our employees get fired and there's we have to rectify the damages were as a real estate agent understandably they're on their own it's like an insurance agent or or lawyers they are autonomous independent professions and so naturally there's agencies that oversee that to make sure they get the proper training home builders we train on that we are responsible for making sure that we are following laws and and selling things member we are licensed builders so we have to ensure that we are selling things the right way or we get in trouble just like any other group so it is tough to the untrained in one way but teach them another it is. Also tough to train them to be something that they are not and then often times admit there's an economic interests that then they decide they want to go to the realtor world so we lose an investment we love to keep our employees that we've invested in in these other states and I love if they want to go out and be a realtor they're welcome to go get her license but that's a struggle we have here the training and finding those good employees at the end of the day I will admit our best employees are are those shoe salesman at Dillard's that we gave an opportunity it's that like Representative Vaught said it's that single mom that was the best waitress you had a cracker barrel for the last year showing up every morning on Tom and smiling and we say in our division presidents love those say I think you'd be good at something let me try this now if they can't pass a realtor exam which does happen does that mean they're not qualified to be realtors for the public of course it does but doesn't mean that they be an incompetent sales employee for us not at all does it mean to be a threat to the public not at all if you want proof we can give you lots of examples Joe Paulino was one he can't be here all explain why he didn't mind me using his name Mr Paulino was here and could not pass the test he tried it multiple times including in Alabama does that mean he cannot be a qualified realtor that's right that's what that means doesn't mean he would be incompetent sales professional not at all or that a be a threat not at all and how do I know that Mr Paulino was one of our best salesman and the state of Oklahoma now. And also he is one of our top salesman we had to ship him to Oklahoma so we can come from being a builder out in the dirt to realize his dream of being in sales couldn't pass the test and now he is flourishing in Oklahoma and he has never had a single complaint filing charge or any issue over there with any of our buyers just like or there's an Oklahoman taxes so that's an example of our employees who do just fine at what they do they're just not realtors on the builder side I'll I'll let another builder explain for themselves but some of coming in and thought how unique we were when they've been another state's not having this requirement so that's the the just I appreciate you all in this we are trying to catch up with the other states and and clarify the exemption but also make it more clear that we just want bill to pay them commissions like you do any good sales retail agent for what they do with their cell phones jewelry cars but they're not realtors are buyers will continue to be represented by realtors this bill even adds a disclosure requirement even though no the other states have this but that remote that that continues to require builders like us to even inform buyers that come in that we do not represent them and can be represented by the buyer agents so that is that is our hope to catch up and to clarify to pay the commissions for our good sales employees and be able to remove the red tape of having them get license to be something that that they are not we appreciate it very much thank you very much represent a voter you ready for questions now okay well I'll start to represent Hodges please put him down you've referenced salesman and I'm at this is directed toward your witness you you've talked about sales and you've referenced shoes and jewelry and cars but the home would be the the most significant purchase that a consumer would ever make and and all of the testimony we've heard I've not heard a single referenced. To protecting the consumer so what legal protections to the to the consumer at the consumer's have in terms of the contracts is there someone who provides oversight of the sales employees to make sure that the legal contracts that deeds the leans all of that have been properly submitted and and. Process. Thank you Mister chairman I'll try my best to answer and I mainly just dance I guess on behalf of us in the other builders we know how they operate as far as the title and all of that that you mention deeds we absolutely still have the title companies we don't close and subtitle companies are the ones like in every transaction that make sure that for example the mortgage in the bank that provides a loan for that buyer they're going to require just like every deal that title is clean they prepare the deeds we don't prepare the dates that's still done by the by licensed title companies saw the closing procedures and protections of getting clear title these that still done by the title companies and it always will be as for the contracting process speaking for us again you know the real estate commission has the ability understand some limited legal ability since they are autonomous and independent to fill in blanks on these a wreck forms kind of a bust a contract with a lot of things you can fill in hours for example and builders I represented in my past life they have lawyer prepared for this our folks are not preparing or filling in blanks it's like going buying bread and taking it to the check out line. You don't know if the bridge for ninety nine we don't have a back and forth about paying three ninety nine the contract is filled in preprinted it's just inventory maybe is the best way to put it with regard to the contracts so our contracts are not something that is manipulated or bargain or back and forth like a broker does a realtor with a buyer and a seller very different it's just the contract peace and you say how is that make sure that it's for an appropriate we have our legal team and lawyers that make sure that those are all appropriate contracts if we have a different contract that's going to come from the buyer's agent outside anyway and they're licensed and will always still have that so all of our contracts have to be our our attorney prepared approved and again like I said as any company we have to make sure we are following the laws you say what's the protections well one is obviously the court room we get a break trouble quick if there was I guess a buyer problems misrepresentation or fraud we have had before all successfully on the some folks of use the Attorney General Assembly that is better business bureau and a few other agency alternatives to just jumping into the court room we don't often have claims brought to us from buyers about any buyer issue on the contracting like any builder would have warranty issues that we've handled fix and we have a program a warranty program that were required to provide anyway but as for the contracting process itself the law offers the same remedies as it would anyone the thing we like about this also Mister chairman I think that answers your question is the protections it actually is more ambiguous now with the the the representation piece of our sales employees because technically could one of our sales employees who is now required to be licensed also then say how but I represent you to buyer. Technically under the law they could they have to do disclosure and get a sign off course they would be fired by us if they did that happen once and you say what's the protection from that they'd be fired and we would have to handle that they're not allowed to do that but they could because they're licensed we love the removal also in white works of any other states is now our own sales agents are not even allowed legally to represent that buyer their answer would have to be I'm sorry I'm just the employee of this company I can't represent you at all so it's not even possible but the legal channels and those other agencies are at the same disposal Mr chairman if that answers your question let me Let me of one just make a quick announcements some of the. Members have indicated that they're having a little bit of difficulty I'm sorry hearing so when you're testifying you can remove your mask summer yeah I know you've been wrestling with that mass so no that's okay or daughters that Santa brought it to us over Christmas and my panel doctor says we have two months left on our. on our health records so I think I hope we're safe okay I appreciate it sure maybe you're asking Mister chairman Senator Hester moneys their representation also on the buyer side our buyers absolutely can still and always will be able to have buyer agents represent them that happens all the time we rely on by our agents to bring us sales and we always will so they will also obviously always have the ability to be represented by their agent who is a licensed real estate agent and we pay their commissions just like we do any transactions so they still get compensating paid and they're always welcome to use a buyer agent welcome in the store they don't have to have one just like in any transaction remembered they're usually coming to us this isn't like what realtors out marketing different properties people usually saw us and came to our neighborhood not to window shop like for general they can for House and so they know where they're coming in our people sit in a model home and represent out of an office to sell their products so it's usually not real confusing who who they represent but regardless we still provide the disclosure because it's required under law in this bill actually requires us to continue providing that just to make sure it's clear okay well I have one follow up question I know Representative Hodges also is in the queue to ask question but let me ask questions you've referenced that the current law does allow you to to use give a salary or bonuses or speed of service whatever why why is that not it actually any reference back to some other testimony you gave you said that if the sales person does not meet the conduct or code of conduct or whatever that you want to hold them to you could fire them. Would that not also be the same recourse if you were to offer them a salary. And they weren't producing they weren't selling enough these properties one why is it important that you have the commission structure with the sales people. I guess the simple answer I can give from from ourselves provisions that's just the market that might be my easiest pun dancer that's how any a sales professionally homebuilder professionals are paid I have not run into any that are just paid on a salary I know that that availability is there we use that more is kind of a joke about how the law was written we wouldn't be able to get are attracting the sales agents to sell homes if we just pay them a small salary or retainer we don't have any other states and they would obviously specially if we had to have a licensed first thing they would do is say thank you for that license and thank you for your duties out we'll just go be a realtor out there but that just wouldn't be market. Okay my best answer but you did say that the law allows you to pay a bonus like I mean you talk about inventory I remember what I work for companies sold televisions and sound systems and all that that we would get spit ups we were salaried employees but if we sold a particular model of your oppo speakers or whatever we would get a Spiff could that not that structure be done in place of selling it offering a commission when I asked that and again in discussions because of the way the law is written and I will say it is a bit ambiguous a few others I think of so we think that the way the law is written you're actually not even allowed to do it with a salary. Most commissioners realtors and I would talk to or not under the impression the law does not appear to be written that way if it is meant to say that I hope not because they were even farther behind other states it's not even having the exemption could it be done as we we read the law I believe so the answer still Mr chairman that's just not how it's done we we wouldn't get any okay to go to something thank you for answering my questions represented Hodges I think I saw your hand no. Oh okay alright Representative of the board no excuse me sorry can put the glasses on here just see that the writing here. Okay well then they'll have their chance to do that who represent avoid if you're recognized. Well I've got you in that I've got Penzo. Okay represent Penzo. Good question for represented by. You mentioned adult. When you first sit down did you say realtors already selling these homes. Okay because of I know a lot of the companies are asking for this and but right and all from one right now and and I've done business with all these builders that have this model so I just wanna clarify the realtors are still in these houses right now. No no no I'm saying as a realtor and selling houses for these I just want to clarify because it sounded like you were saying realtors are. Sell the houses and then Mr Carson what states did you say don't require. What we do in Arkansas he said Missouri Texas and that includes the every single state actually that surrounds Arkansas has the exemption for employees of corporations the three states that we operate in and that's something we've researched with with our lawyers in those states and talk to companies that do it over there Missouri Oklahoma and Texas are the ones that we work in Get to do this and and pay commissions someone did bring about like a confusion that asked the question to the states deal have an exemption for home builders there please the answer is yes and I think a follow up questions as if they are licensed though can you pay them a commission of course the answer is no I think the miscommunication occurred when they didn't put those two together though if they are exempt it doesn't apply the commission that's the whole point if they're exempt from the requirements then the way that you pay is not applicable so you can pay them commissions over and all the states just like we do just like all the other builders doing the state or the I don't know that that's accurate and all try to figure out who I can ask to clarify that later because I don't think that's true that other states do allow what you want to do in Arkansas and I would like to say that. Stating that we need to catch up with other states of. Is not. Accurate other states probably need to keep up with us this is one of the areas that I think Arkansas probably is a leader in the country with consumer protection we probably have some the lowest lawsuit grade some of the lowest complaint rates and I think our population I know the real estate association has done great things to. Per prohibit that from happening are you are you familiar with the The recovery fund. That we have in real terms recovery fund yes Sir yeah so when you mentioned earlier you stated that You know if if someone there was a bad actor that happen to work for you your their current remedy would have to be hire an attorney take them to court and spend money in order to get. Resolution under you know sales realtors and other real estate agents are realtors you know if if they're found proven the the real estate recovery to go before the commission the real estate recovery fund. Makes it right financially and then the real estate commission comes to collect from the the bad actor so there's a remedy that is superior to having to go into the court system paying attorney VOL lawsuit so just wondered if you know I just wanted to clarify that and see if you were aware of that through over the recovery fund I guess I just would ask why why would we make an exception of Carville for sales agents. To sell real estate. N. N. remove consumer protections from that small group of sales agents when other sales agents in the state. You know have to adhere to a higher threshold and I guess I just wonder why a you'll think it's acceptable to remove consumer protections sure must. And I'm just the the. Well I'm the dummy on behalf of our home Miller that's all I can answer I think that goes back honestly Representative to our our fundamental point in all of this our people are not those realtors that this fund was created for we understand that the fun just like again an agency creates these funds to protect a Thomas industries because there's not a really good way than to go after someone for recovery for one and then this recovery fund does help a lot with of course a fraud claim misrepresentation that of course doesn't isn't the same as having to is something wrong with the home of the property that's being sold that's a warranty or a different matter people still have to go to court for that anyway but yes that the buyers or excuse me if the agent defrauded or if the agent did something inappropriate I think that Fund is great for these realtors that represent buyers and sellers in the public makes a lot of sense my best response to that is we are not that that's kind of the whole point our sales employees are just selling inventory on behalf of their employer so the the it's hard to think what exactly how they would do or or the fraud a buyer we haven't had that we don't read about those cases very often but that's because they don't represent that buyer I think when an agent represents the public that is very important and applicable that that recovery fund and the rules of a wreck but that's the fundamental difference our sales agents are not representing the public or buyers or sellers and so that's why it we've bills pretty big apples and oranges different profession. We're still dealing with the public with one of the largest financial investments and people will ever make and I think you know I don't I don't I mean then I don't think they're being protected there's a lot more to a transaction that takes place than just you know shown a property you mentioned that the you know that some of your employees you don't feel your employees are being paid a fairly. And that this would help you I am fairly no I'm sorry what no go ahead nope right now currently are method throughout Arkansas like a dancer Mr the the chairman to be marketing competitive we have to pay commissions there for now we get all of our employees licensed that's the issue we we we have to get them licensed in order to pay this commission and and which is what's the other states we don't have to do and what's caused the the problem that we were hoping to change if we were to pay them so that's why we considered a fairness and a payment issue because if we wanted to be exempt and not get them license like we request then we wouldn't be able to pay them fairly we can pay a like is a salary or something which is just is not market and we wouldn't have any sales people but that's the that's the issue we do license all of our sales people because we have to in order to pay them fairly. So what do not want a license what would I mean I don't understand what the aversion to have an license sales people Representative been trained and have to go to continuing education have oversight from the real estate commission I mean I don't understand what you want is people so real estate without having a real estate license maybe we should to allow plumbing without a plumbing license electricians with electrical license may maybe I mean I don't can you help me out with that the reasons that we we struggle with the Representative R. one again we believe it's a different profession I think it by keeps grouping our sales people like they are representing the public which they are not for the selling real estate the. Yes state absolutely. selling real estate for for the inventory of their employer that one of the reasons is the training as I will have a sales person speeding speak better than nine just like Mr Paulino situate something they just can't pass and some would say well that I guess they can't be your sales employee that's we again they're just fine sales employee for us even though they couldn't pass a real estate commission to learn the brokerage rules to be a broker and they shouldn't be if they can't pass that but again just like we do and all these other states we don't have any problems there we don't have any oversight issues or any claims so must be working but those are the reasons the cost training them up also losing them to to the real estate community and also represent like I mentioned with which does happen essentially happened more often you might think because our license R. eight R. sales employees are licensed it actually opens up the door for more problems which we have seen because that is when we see our sales agents attempting to represent a buyer why did they do that they're your employee the force to be licensed technically they're allowed to do that and so again they get fired I'd I do think that the recovery fund provides a good remedy for agents who are a thon misli representing the public but when someone can go to our company and we can punish and just like any company and we can handle that and there is accountability of the corporate chain to make sure they are following the rules we definitely don't just send them out Tellem there's a House please sell it we make sure that they're trained so we don't get in that trouble so we have to be we have to hold them accountable and trying them. My best way to thank you some kind of answer. Represented Ferguson you're recognized. I am trying to understand you're now licensing them as real estate agents or brokers of you who were broker they working under we have an internal broker in Arkansas so and we can do that we also work with locally like in Little Rock since our principal broker we also use limited brokers or executive brokers under the principle to oversee our our sales agents our sales employees locally we will continue doing that and that's one big question I think some asked is just because we removed the requirement of the licensing from our actual sales employees if we want to continue listing properties on MLS we've got to use go through licensed agent anyway we intend to do that we will still be will still need to use brokers so that we can get listed and they can oversee in those areas we think that's important not only for the listing but also for the accountability those although they may be out independent of us and we use an outside group that's another way that we would still work with brokers to make sure there's oversight through the transaction because we do need listed but like again we do in other states that doesn't really than trickle to the agent our employees themselves they're not the ones listing them they don't need to be we don't want them to be if anybody's gonna list we will use a group or principal broker or executive outside to help oversee that anyway and that's what we do now. The end of Mr chairman it at some point maybe we can get the real estate commission to come I have some questions about the exemption and sort of I think there's some kind conflict with what I understand it and the way you presented it but just so I'm clear this is this is primarily for really large construction companies that have a large inventories that there's nothing in the law now that prevents may if I want to flip a house from selling it myself or is an owner is that right an individual can sell their home yes I'll there's some other builders here that'll be better examples of some smaller custom builders that unfortunately the definition of real estate activity Arkansas so broad you basically say the word or talk pricing AS one will share his construction foreman they don't have a lot of sales folks that come to them my one house bill but the second his construction foreman or or or his son or someone that works for them wants to start discussing pricing or the House they now have crossed the line in real estate activity there's technically supposed to be licensed it is tough it is broad and that's course if they want to be paid a commission you have a sales people some of these groups just have one or two but even as owners there's an exemption for management but usually they're the ones that own the not the one building so it it it does get gray and tough but yes you personally of as I understand and I hope you can sell your own home without a license yes again semi trying to understand you're trying to save money by these employees not being real estate agent you can pay them less than you would if they got a real estate license all we pay the same we pay the commissions and everything the sign and that's what we do now the savings of monies on the fees for a licensee in the like sum that obviously is an economic interest of ours it's not like a huge windfall savings it's definitely important it's more just the principle of being apples and oranges and we're training them to to do something they're not we have someone that can. Explain that better than I being trained on these procedures or or ways in conducting real estate transactions in the regulations behind that Justin go to a company and learn a different way perfectly legitimate way but different it's very tough but the savings on licensure obviously that's a that's a good it's not a huge one but that would definitely be a benefit that we that we enjoy in these other states okay I'll wait for the commission that that the coverage yes I will allow that before we take the for and against all I have several state commission clarified let me ask questions talk about savings it in the states where it is illegal to sell and be able to if you're sales agents to receive a commission. Is it a lesser commission then what a real estate agent would charge and if so do the savings go to the consumer or does it go to the bottom line profit profit line of the builder. Make sure I'm I'm following in our other states do they get paid less of a commission it is this yes is there is there a a a commission structure that is less than what a real estate agent would typically charge and if so if it is less do those savings accrue to the consumer or does do the savings actually go to the company's the builders bottom line I think employ our commission structure is I can't say universal that is some are division presidents they handle with all their employees we do have a baseline we have a base that we and our sales we we pay all of our sales employees that is market wide but some markets actually to detect different percentages for that and so they are division presidents have the ability to do that do the do we pay them a less commission then an outside agent would be pretty sure yes now the reason for that is unlike outside agents to find their food our sales agents were providing their inventory I mean they're being given a neighborhood with a lot of homes and so naturally again we don't offender great sales agents. People are walking in and we can sell a lot of these online the sales agents are there to help the process and finalized again they're not brokering the deal the source of our shop to buy the house so yes there's usually a less than what you'd call market because they have so many homes in their inventory unlike a realtor who is not given just handed homes by their broker okay secure advocacy would be that it is a benefit to the consumer type terms of what they are paying I wanna make sure I'm honest the is it a savings I'm sure it is doesn't allow us to maintain in our particular product I can't speak for every different builder the the the commissions that we pay in the rates we pay our employees obviously or at a rate that one lets them do very well but keeps our prices at a very healthy place that's what our market is we're proud of it are entry level keeping our prices down yes okay thank you. Representant Allen you're recognized for a question. thank you thank you Mr chairman the follow up of the tour S. where the savings goals does it go. To the bottom line that's the money that you all savings for the company is that correct. I don't know if I can say that that's true because we've always done and really just help keep our prices low so that the money does go. The company. No I I think if we chart let me I make sure I'm understanding let's say we do a two percent is our base for our our agents markets maybe three percent okay again we're handing out a lot of inventory so it did make as much sense they didn't bring in those houses so that extra percent is what if we had to charge or if we paid three percent obviously then that's going to be tougher to keep our our our pricing down where it is our margins are extremely high on our product we do a lot of volume so that helps the buyer have a cheaper home when we involve the buyer's agent maybe just a good way to answer let's they have an agent involved for them and we agree to pay them three percent obviously that comes off of of ours and that's no problem but we can still keep the the price of the home Los so since we've always done it no I don't think I could say that it's a bottom line savings it's just the amount that helps keep our product low okay If what you're doing now. Is currently working. Why do we need this legislation. I guess we would say represented it doesn't it doesn't work very good that's the problems we're having and they're not. You the problems like we've set our one the training licensing them to be something they're not number one another is the tough part of hiring our employees who don't have a license may not can get one they start with us immediately remember they may have a few closings. We can't pay them for that we have had situations where we have had agents thank you well done you've got some early closings. But until we get your license and help you and pay for your license you cannot get a commission on that that's an awkward conversation what do we do I can't speak for DP's had a they pay rent I think we have sometimes try to program here they're of draws in and fronting stuff but we don't have to do that in other states so that's one of the troubles is getting good talented employees to come and like Mr Paulino others say I want to get my commissions day one if I'm selling homes I'm sorry Sir in Arkansas you've got to wait now some will say well it's only a two week course our people work full time doing this so it's taken quite a few of ours months to get there and try to get in we have to wait that long to even then pay them commissions so that's a big struggle the other is what we also mention is training them up with this degree for them to then go out and leave us enjoin the realtor community we have that happen much more often in Arkansas than our other states as you can imagine or other states if they want to work would be a realtor tomorrow there are more than welcome to do it and go get a license and take a different profession here because we've already licensed them they can join remax tomorrow and and that's that's tough all because we train them to get a license that really didn't apply to what they're doing anyway we equip them to go out and get a different profession in the it does happen we have a good amount that may run to for different reasons brokerage company and work so those are just some of the hardships that we would say one year hardships under different from email company and in the state of Arkansas companies trying people all the time in the league we educate people during college through our colleges all the time they go to college in Arkansas all the time and they leave the state of Arkansas to give a get a job so we in essence train and educate the and then they go get a job so other place people go where they can find. Good opportunities. Or better opportunities sure correct I agree and I think that's partly our point we wouldn't have the same competition from if we didn't have to get them licensed like we do in Oklahoma can they then go join remax tomorrow no they don't have a license can they do it in Arkansas yes so when I hear that was in the competition the same problem only because we are forced to license them to create that problem that's the point of wanting it removed also is we protect our investment in our employees like we see in our retention is much better in Texas and Oklahoma that it is in Arkansas so I don't know if the you're right every every business competes the problem here's were being forced to give them the very tool that that allows them to go compete if we were to remove that like these other states we could retain them and they would still do their job just fine. As my best answer. Caption are you through yes thank you okay Representative Murdock you're recognized. The chairman okay in I think represent Allen county want their at the end and you the you you expound a little bit because what I was wanting to hear and you make expelled more is in other states how has the home builders associations or and the realtors associations how have they came to a conclusion a Happy of compromise it seems here it and I wasn't ready for this today to be honest with you I whenever you have this type of legislation I would have expected there to be more of a conversation between you all to try to find a happy compromise before we come you know so early in the session and deal with this sometimes things usually work out but be that as it may what what is happened in other states to bring some compromise for this type of art because obviously there's two sides of this in in we sit here as a committee and those of us that are not in the industry but familiar with what you're saying we hear both sides of this issue and and both sides are very passionate and in art in arctic and I'm sure we'll hear from the other side again about their position on this so and I've heard it through emails texts and phone calls but. I'm more interested in a compromise right now that I am in trying to choose a winner or loser on this so help me. On a compromise conversation if you can't represent I don't know with other state your question is how other states unfortunately don't know if I can answer that because all the other states simply have an exemption. so what would a compromise look like I'm not positive again every state and and I we have the laws used Texas bling them there's the simplest it simply says all of these laws about licensure do not apply to someone who works for someone who builds and sells structures read as. It's and it's an exemption the other states all have the same form as a more long winded and unknowingly legal but it also is pretty much the same thing employees of a corporation are exempt from as long as usually it's not really compromise that's what we have anyway as long as they're only working for one for example I think that's usually a prerequisite you may see we are to have that though as long as it says as long as they're just doing this and selling on by how big on behalf of one employer obviously would be quite a loophole if they could run around two hundred different employers and sell on behalf of a hundred different employers are now they're finding a way to do realtor business so when looking at the states around us Representative they all pretty much just tap the exemption sought a compromise would look like but I I don't think that's a bad idea I don't know what to be. Okay so you're saying really Arkansas was the only one that has to we are unique in that we were the only ones that have the situation such as this and the the legislation that my colleagues is bring in for is to is to remedy that that's what this is today you're saying. Thank you that's correct and a follow up There has been discussions on of its appropriate for me to say I agree wish we could I think there was some offers a reach out about of course we wish we could find a middle ground I think an offer discussion point was how about we let your sales employees show homes but not sale discuss contracts. I could tell that was a legitimate offer eleven just to show homes of course that that will work that's what our sales employees of course they're involved in the that's the point they're checking in them out of the register if there are others I think it has been brought up maybe by the bar some that had a bit of a concern about some legal issues there's nothing really have changes anything legal I think mentioning could we narrow this to license builders if this is the main group that has the problem of course we be that solves our problem are there others out there like this that sell the real estate I'm not sure what those are But yes that there was a narrow to licensed builders because they understand our issues really just our own property in inventory being sold out I think that would be an opportunity. Thank you Representative of represented flowers you're recognized. Thank you Mr chairman. I'm going to ask a couple questions that revolve around the initial conversation that I had That I had And I'm and since then I've gotten sort of competing information so I want to get clear when I was first approached about this what it amounted to me was sort of how you presented it. But on a larger scale I kind of saw it is okay this is sort of a for sale by owner but in an individual can do but a developer for their own property makes sense and when I was approached you know the first thing I asked was okay if you can already do this why do we need the legislation and you've kind of spoken to that and Reprezent Allen is kind of spoken or responded to that and so that's there's that. And. One of the things that I've heard from my local real estate folks the was about. That you really can't do it if you are doing it here your operate outside the law and that there is a fine currently and so I guess my first question would be are you is that the case. At this point the chair aware of we are the first answer the simplest we are operating and paying commissions are getting licensed so we're definitely operate within the law I do know it's been brought up Representative in conversations with realtors even the real estate commission and as we've operated all for a long time again I don't know anybody a builder who pay salary or retainer it actually came up recently when we read the law the way it is and said we see what it says someone so well actually it doesn't let you do that at all. We got close to allow I hope that's not the case because they were even further behind what someone mentioned was you see there there is a piece of the exemption that says. This doesn't apply to the exemption doesn't work if you're an acquisition company or in the business of acquisition was that we really have no idea what that means that's one reason I think we've also added a word a represent about it or to clear up that that means brokering acquisition of property we agree that shouldn't be exempt because now you're become you're acting like a broker we build we have lots delivered to us and build houses and sale so we don't we're not an acquisition or ownership of land company we weren't really sure what that meant I don't know if anybody's ever operated like that was a restriction I think that's where someone brought up we think that actually means none of you can actually do this and again I hope that's not the case because even real estate commissions realtors and others I've talked too so you can do a salary so maybe we're all confused but no as currently written it it says commissions as the bad guy okay so it sounds like. As as the law is now to do what you're wanting to do without the law it would be a violation which to me then would give rise to why the law is being presented today. And so Mr chairman if I could. Continue yes okay thank you. and so then. I've also heard different perspectives on what is actually happening as it relates to exemptions in surrounding states. And there seem to be some nuances as it relates to maybe commissions I don't know. so to me it's sort of those two issues are which were my primary concerns. now sort of it asides that would probably need to be worked out as Representative Murdock said in a compromise so then it leaves for me to really super primary issues. And the easiest when would be you know what's the threshold and you were kind of speaking to this earlier. Loopholes that might exist so that way if you're not dealing with just licensed builders to ensure that this could be something that could be taken advantage of for people to circumvent. You know beaten operating is real estate as realtors without a license which I would. Absolutely oppose that. which leads to really the big issue. Is consumer protection you know I heard Representative Penzo ask a lot of questions and I'm not in the industry so I I guess my question would be and I heard you say that. Your. Sales agents or employees would not really be doing what a realtor does. I understand. That if there if there is that limitation I get that but there seem to be doing some of what really teachers to. And so where does that how does that affect. The consumer what you know in terms of what real estate agents as rages or realtors are trained to do in the protection of the public and consumers in particular because most people don't come to the to the table with an agent of their own and I think many folks don't even realize that. They are protected by the laws and the regulations that guide what real estate agents can and can't do. for whoever it is they're working for. So. Even though you're saying that they don't do what a real estate agent does can you tell us how that is you know how is it different and how might that affect the consumer and I'm going to pose this question to people who come before us on the other side as well thank you sure represented. My best answer to that is a few things One I think a lot of the regulation and intent behind the real estate commission rules are not not just about protection of public a lot of the rules when you read them their protection and procedures for handling your client number one art room and there's a that there in lies a big difference when you say how do we protect agents who represent their clients and make sure that they're doing the right job for them remember our sales employees have no client lets you call it because their licensed they're the boss they're builder we're not real concerned this isn't self serving that were not real concerned about little of corporate getting taken advantage of by other employees who represent that's the point the only person they represent is of the employer and their company so the rules that are designed to protect and make sure there are mechanisms for the protection of clients or so many rules about how you deal with clients on your disclosures the things you have to provide notice of dealing handling deals making sure there's no inappropriate trading or behind the scenes deal our employees can't do that that's in our sales manuals are guys like any employee they can't represent them anyway even though license gives them the power to get they can't do that so when it comes to how do we protect the public I think that gets to be in your other question what are the things that that are people do that are so different from what realtors do and that warrant a difference in protection again realtors are brokering. Between a buyer and a seller they're they're representing one of those parties in the finding of lots of properties for million dollars beyond an entity they're not studied on that product that they're very good at what they do in getting familiar with the product but our folks just have one piece of inventory again no disrespect to what our to our product they're trying to only on our product I like a car salesman they do not go out and solicit to represent a buyer or a seller like a rice is real estate agent does and that's what gives them it gives them the power to do to be that publication our people are not in a cannot be an agent or police cannot be an agent for anyone. I think another miss conception is well could not still be confusing though when they're out there in the world trying to get a buyer to buy a house and then all the sudden thank that day or your agent it's a good question and that then deals with the difference in how we can conduct business realtors are very good about being out in the world with lots of different properties handling that between buyers and sellers and connecting them to fill their real estate needs our folks again nope not at not impugning their work at all they work in model homes at the cash register people come to us our customers come to us doesn't mean that our our agents cannot advertise and market ourselves out there to everybody but people walk in the R. rash Coleman home with a rash Coleman logo on the shirt using around common contract and pictures of Roscommon everywhere if it's not real clear who are people represent. Then we go the distance anyway because law requires and we tell we have a verbal disclosure requirements and our contract actually states in there just to be perfectly clear we represent the seller only so we do the notice requirements anyway and we actually propose will continue to do that and so otherwise that's the that's the best answer I can give you represent how different they really are we do have one of our sales agents here the price being better that though. Okay thank you it members I'm I'm wanting us to be very thorough in our question but I will probably have to the some point maybe in this questioning go to just a question of follow up Having said that I have a question that I hope. I will have a question and a follow up maybe I'll just have a question put to trying get is to get it to try to get this to the point that Representative Murdock is talking about about compromise language because I think one one thing that I am hearing is that there there is concern for protecting the consumer the buyer of. Would it be a possible compromise or maybe there's something or is already in place you said that a buyer that comes to you could contract with a real estate agent to represent them what so they could do that. They're it doing that though they have an understanding that it's probably going to cost them more to buy the house correct no no no no that just comes out of that comes out of our pocket. It does really. Okay so I guess the by follow up then would be could could there be some required disclaimer or waiver that is given to the consumer letting them know that they have the right to hire an outside agent if they so choose. And that it will not affect the cost of the property that they're by. I think that requirement Mr chairman is similar to what's in place now for licensed agents I know there's a wreck form that a recuses for example that provide what is to meet your sales people though what are sales people providing something that goes sound like a little further to say just so you know you can have an agent it didn't know that right we we don't you be open to allowing to mandating that that type of a disclosure be made to the buyer that they have the right to hire an agent I have to ask ourselves folks I know what realtors would say that or some because we passed and joked about it they may not say it the well. Yes it may not get us any closer to having real estate entities support this bill but I think you would give this to a comfort level of making sure that consumers are protected sure I have to talk to the builders and sales to see if that's something I know I don't know if any realtor prefers to tell an agent that there's more money that could come out of commission at all otherwise make if you go to other prior so I think it's probably universal sentiment but if that's something that was needed for protection I don't think it's unlike its on reasonable okay all right read a Representative fielding and then Representative Penzo. Thank you Mr chairman and and I guess as long the same line the two and represent a Murdock. Brought up. And it's a dealing with. Compromise the mind a bill who is a relative unknown PI relented and magnolia. Call me the bad B. as. This bill is not a consumer protection bill so. I guess. Rather than a vote is that a possibility this bill might be to be pulled down and. And trying to work on some type of compromise. Represented by a. Okay are you. Like we've tried to compromise if the safety issue is a problem that might be something that we can. Get amended on Senator Hester's and if there's something that you want to be added to it for. Consumer protection even though I think it's already there. But I would rather as go ahead and listen to all the testimony and then make your decision about me pulling it down. Okay represented Penzo and I know that some of you also have represented brown will be getting to you and represented would will begin to you but right now we're following the order representatives L.. just just to clarify this this would open it up to anybody not just a company that has a reputation but it would open it up to anybody that wanted to start an LLC and sell real estate. Then not work for a builder it would open up to anybody that. And go out and sell products. I mean is that bad that's my understanding that they did did anybody can go out and start selling real estate without a license I mean I understand you that you're going to put your people through training that you said but I think it I think it's pretty clear that it says that anybody can go out and sell real estate now without a license and not represent public so it's not just your company it's any anybody out there could go do this so maybe that's a big problem yes so if they build a home and if it's their property they can already do that this allows somebody to go to the homeowner. In and sell the real estate. No it it's only for an employee of a corporation that's the car only in a full time employee who sells real estate on behalf of their their employers owner so nobody could be an agent of someone else it's just full time employees. Okay I don't know that's. That's accurate okay I mean I I think anybody can. Go out and start of an LOC and. I'm saying that's what I had attorneys tell me so I don't know that you will understand the implications of what this bill does is not just going to open it up for you all it's going to open up for anybody did they may not be trained they may not have oversight so I just just want everybody to understand that and and I'd also like to ask that is the home builders association do they support this. I can we of the state H. B. A. that can speak for that yes all the builders that we worked with the have have been sporting because I know that is a Representative I'm going to have to stick to the question follow up we put you back in the queue Representative brown. Thank you Mister chair Mister Carson. Sometimes I'm you know I'm trying to get the picture of what's going on here so we are talking about builders who build a lot of homes and have a lot of inventory who who are primarily concerned about this legislation is that am I correct about that we are of all your bill or we have some another we talked to that are small custom builders and in the in the discussions that That has been going on I have been told what we do we already do this. What you're saying is you do this in other states in Arkansas your sales people have to get a real estate license. And what is happening is your training you are paying for the training and then they are going off in pursuing other careers that is not areas you're more or less your sales people if I understand this correctly kind of reminds me of the tract homes in California you go to the office and they say we've got this model this model in this model. And you can have this view this view or this view. And this is this is our inventory this is what we have to sale and so they are sales people they are not real estate agents alike if you buy a time share you're dealing with a sales agent and and so you're not talking about somebody he's. Like you said you're recognized your people are representing your company they are not representing the buyers the buyer's willingly come to your location to do business with you. Is that correct ninety nine percent of the time that is correct Sir them to us for and representations actually a tough word we just have to use it since we're licensed they just work for harm please work for us so that the big disadvantage for your company and companies that do this is that your. Your training your people your employees that you shopped for yourself it only to have them go and do something else and you have paid for that training was really have that happen yes more in Arkansas than the other states with the exemption naturally is that the bigger challenge racing I've given you several follow ups. read thank you you're welcome represent Wooten. Thank you Mr chairman of before I start I Warren. Preface my remarks phone that Mister chairman by one of these firms operates in my community. And through their actions and through their activity into their investment they have permitted many young couples. And families to be able to have adequate low cost housing. I understand that my question is is the kind kind of lengthy but I thank you will help some better understand exactly what we're talking about a realtor deals in one area as you said while ago that's set up funding listing selling homes for people in that type thing. But in your aspect this is just a small segment of your business model relative us a small but the sales employee is just one segment of your corporation is that correct absolutely develop build houses and all that. Do your model this is to provide low cost homes on a volume basis. Is that right okay try that is in order to do that you have to go out and buy a large tract of land make a large investment in the property and then you divide that property put in sewer water and utilities streets curbs gutters and all that. And then and then like represented brown says it becomes a a tract home sales there so is it is that is that a correct assumption that that's a great global reminder and synopsis of yes how we do from beginning to end the sales pace we focusing so much on is just the checking out of the register part we do all of the rest along the line. Let me let me and and represent would need you bet your question follow up we do have a number of witnesses signed up and in all fairness some of them are against the bill I mean I think you've been very fair in terms of representing the landscape but I think it in all fairness and and so I'm just going to ask permission of those who have asked is the Representative Richardson flowers Clowney if it's okay with you and the sponsor we would like to move to testimony other testimony is that fine. Okay. I mean this will be the this would be the last opportunity to ask a question of represent a Vaught her only opportunity would be to close so if you have a question that's pressing we can do that do you represent the flowers. Thank you yes I think the question should be posed to represent what with all the conversation about compromising the different points that have been made especially limiting this to license builders and then we heard represent Penzo so that would open it all the way up. And then I heard volume versus custom. I noticed there's no threshold so there's no threshold the real definition about. What a custom or volume builder would look like is it one hundred homes five homes thousand homes how do we how could we do this so that it wouldn't be opened up widely in a way that makes sense for some of the points you will have made. Please yes. Represent who you're asking. about the different sizes and compromise sorry about the definition because you're saying licensed builders and I heard representatives of that it just would open it up and I could start it will see tomorrow and B. you know I'm a licensed builder I guess and if that's the case if we don't have a definition about what that is and create some sort of threshold so that I couldn't just be **** nilly and say I'm building three homes and I don't have to I'm gonna hire somebody to sell one three homes for me and they don't have to be a licensed real estate but at what point do we decide that a licensed builder is someone who qualifies for this where they have an employee that does that on the on the scale that you do. I don't know about the number that's not part of exception and in the other state I do think and what represent bodies point out that Page one line twenty two is where it's defined that this only applies to a person employed by a corporation I think it's been brought up or suggested that someone could go out start a company if they own that the company known property can they sell it of course but it can in limited liability partnership or other business and I'm not trying to be argumentative I just wanted to be clarity because you know I want to support something that makes sense so that someone can do business if it in fact different. But if they're issues about consumer protection or opening this up widely so it's something that people can take advantage of. I just I think we ought to be clear I just think that's really brought you years concern you're saying we wanna make sure that. We can't do what represented Penzo suggested that someone has a company they own property but can't that have an agent or a a fake employee or ex outside herself which of course that's an appropriate they have to be a full time employee of the corporation to sell this but clarifying that more I think would be perfectly appropriate and even on line twenty two and then also Mr chairman online twenty two it's a person employed it strikes out primarily at a salary or hourly rate. So that seems to own almost take away from someone actually being I'm just trying to be clear so if you can help. Members again we we do have some people of travel to and to give testimony represents Clowney do you have a. A quick question the. I will can you yeah okay of since we've had this link the to just like with the previous bill this like the time of basically testimony for the I'm going to take testimony against I would like to to be considerate we do have a state Representative one of our colleagues it signed up but if you will allow me to have a Representative of the realtors association of speak first as against Speaker and then we have before Speaker that is going to have have to catch a flight it will so thank you very much thank you. So at this point I would recognize curing Crowson or Krause and to speak on behalf of the realtors association and this is testimony against the bill so I identify yourself for the record and then you're free to. Give your testimony come on now I guess thank you so much represented Lowery I appreciate the opportunity to be here before the committee today my name is Karen Crouse and I am I'm. A broker in Benton Arkansas and so I just want to give you a little bit of. History about me and I'm sorry I have my phone up here hope it doesn't buzz but I do have some notes on my phone that I may refer to as well I want to they tell you you know my history I'm a thirty four year veteran as far as being involved in the realtor industry I'm and and and being a real estate licensee. I am a service that past president of the Arkansas realtors association I am I have a past commissioner for the state of Arkansas from two thousand seven to two thousand twelve for six years I served as a real estate commissioner I where I regulated real estate activity so I am kind of wanted this to happen people. The creatures that are laws develop because not only do I have a license that I have to abide by to sell real estate but I wore that regulator had for a long period of time and so I am very pro consumer protection and I feel like my license is a part of that the the fact that I have a real estate license that teaches me how to sell real estate I'm with doing so and within the law and and because before license laws hundreds of years ago it was it was buyer beware you know the buyer and his cabbie out into or that that buyer had to be aware of what they were buying it without any kind of protection laws out there and so I'm very proponent of the laws that we have and being license I have a lot of random notes here especially in listening to the testimony today that was brought before you some of the things that I want to point out to you and I really appreciate I represented flowers your questions about consumer protection you know what what what is this change on that because that would be part of my concern but also the fact that that these sales people eat you know and there is indeed I appreciate you represented would you wouldn't pointing out what routes Coleman has done in the number of homes that they brought in for first time home buyers and I also think about to represented Bob that single mom with two children who is coming to work for them you know in employment but there's also that single mom with two children who's buying this home as their first investment you know and this is the largest investment of their lives and they're buying this from a sales person who has been likened to a shoe salesman or a car salesman and I take offense to that because this is my industry this is an industry that I have poured my heart and soul. N. two for thirty four years and I know the importance of that this if nothing else the sixty hour basic real estate course that I took that taught me what a mortgage was because honestly I have had agents come to work with me that were yeah I'm just fresh out of high school first year of college and one of them didn't even know what a mortgage was until he attended that class that taught him the sixty hour basic real estate course in how to sell real estate didn't have a clue what a mortgage was and you know that to me would be very important for first time home buyer to have someone who is knowledgeable in that aspect and that has to go through not only that basic course but a continuing education of just seven hours. Which is you know still not enough in Arkansas but seven hours of training every year to keep them on their toes and to know what laws have changed and so this is an important aspect of our business and protecting consumers to make sure that the person who that they're dealing with and brokerage activities of buying and selling a home is licensed In my role as a commissioner in two thousand twelve I served as president of a relative around low is the association of real estate license law officials which is an international association comprised of people who regulate real estate activities you know this is something that around the country and these are people who are still employed by state government who work in the regulatory industry but also people like myself who were appointed to serve for their stage jurisdiction to regulate real estate activities and this is so she ation is a proponent of licensure of course because it's consumer protection I also want to point out because I heard it talked about the fact that that they're just selling their own product and other real estate licensees are not selling these homes and that is absolutely not true my office alone has sold a number of rows common homes where we have represented the buyer and then on the other side of the transaction with them it's been it's been a good process David you know paid us a commission at as a portion of that offering a commission to an compensation to a buyer's agent we have had instances for instance I think about one just recently that we had where when my agent who is representing the buyer went in with this homeowner to do their final walk through and there were still some things that weren't done with the House. The employee of Roscommon. Who also I was just an employee I think he was probably in a foreman position or something like that who is this law changes would be the person possibly selling the homes this employee mention to the homeowner when they were talking about some of the things that they felt like still need to be done several you're not buying a home mention all. To this homeowner that was a home and should all. This was their first time home that they were purchasing add to them that meant and probably a larger percentage of their income going toward that home then it would be for someone buying a home mention all. And so my agent was appalled. You know and of course likely that buyer was represented by someone who is licensed in Arkansas that that is you know burst on consumer protection and was you know looking out for their best interest so to do away with that because this is something they're still selling a home to someone they're still selling the largest investment of someone's life even though in this is that may be a first time home buyer is still there investment and to do away with the laws that would govern how that transaction takes place I think is is just appalling to me there was I want to make sure I cover some of this because I do agree with represented Penzo in that we have some concerns about the language that this would allow someone to just do a start up LLC and start paying that employee I. commissions based on selling those products for them home inspections are a huge part of the purchase of a home now I in every bit of transactions that we do our courses on the the contract that is written by not the Arkansas real estate commission but the Arkansas real tors Association not every licensee has to be a real tore okay there's a difference with their belonging to the realtor association our realtor association is the one who has the the forms and contracts that we use that are approved by an Arkansas attorney that we recommend home inspections in fact a buyer coming in my office cannot close until they've signed off that they're not getting it that they've chosen on their own behalf not to get a home inspection they I have a form that they have to say that their way being that okay because I think that that is super important to them even in new construction I sold a house one time the second owner. Buying the house the first owner was it had bought it is a new construction and when that second purchase came around they got a home inspection only to find out that the home had never had insulation in the attic. You know had that been something that had been done and offered to that first buyer that might have been revealed to them before they were paying way too much and utility bills. The other thing I guess it was said about one of their top reasons was that they're losing agents that they have trained for ad and and they're going to other brokerage firms it's so funny because of their top agent in Little Rock right now I trained. She was license with my office for a year so I spent the money on training I spent the money on getting this person if I didn't pay for their license that was her own investment because she's a self employed independent contractor under me but I still did training our company offers free training for new agents and so we went through a six week course of training and and teaching this agent and she's phenomenal her mother is still license with me and it's my top producing agent my office so she not only was trained by me but by our mom but she's their top agent little rock this year and sold over twelve million dollars in real estate. That's a lot of real estate transactions to go through and not have someone represented and not governed by the license laws of Arkansas. I thank you so much for the opportunity to be here and to speak against this bill and to ask you please to consider if nothing else for the sake of consumer protection that we need to make sure that this does not pass. I do know that I do did want to point out to that there is some disagreement over at what other states around us are doing you know I'm never one to say that Arkansas has to do something because other states are doing it because I think we are unique and we're better in a lot of ways and so I I would ask that you look at that more closely. Thank you for thank you very much yes members we are coming and well we just went past at the twelve o'clock hour I am we do have a witness for this bill who I believe is traveled from out of state if you will bear with this we will hear his testimony and then at that point we'll just have to make a decision whether we are going to hold this bill over for another meeting or not but Mr Schumer you're recognized Damon shipper to speak for the bill is that right yes. I was. I'll be glad to bring her back yet but I know Mr Schumer's got it. Let I'll bring her back for the again so you can ask your question to Mr Schumer let me recognize you. please identify yourself for the record okay I'm Damon shipper former resident of Joplin Missouri proud new residents of northwest Arkansas so good about a month ago so I'd be part of the state. I wrote a recognize myself or not I would know you do you have been so we're right and ready for your test okay so home builder in southwest Missouri got our roots there and about the only place we've built our mentor builders out of out of a West Texas beating both homes we build in Lubbock Midland Odessa and they kind of taught us how how to build homes and what their systems and processes are. And so we've we've grown up in that about four years ago we moved to expanded into northwest Arkansas region and we were that surprised at the requirement for our our sales people to be licensed agents and so it was surprising partly because in Missouri and and Texas those states I know where I'm familiar with if people come to be our sales people that already have a license we require them to park it require them to make it an active because we don't want that conflict of interest you're not a realtor anymore representing the public you are becoming employee of our company representing our product and so. We as we moved down here I'm I'm the first one I got my real estate license and then we had a couple of our sales people come down as well and get get licensed to do that I will say that after a year of being within the first year we got it all evened out to where we we operate. With zero differences between our two markets now other than the requirement to be licensed realtors them in Northwest Arkansas so what I mean by that. Is Our sales people don't have any authority they don't have any authority to make decisions that are authority to negotiate pricing they don't have authority to do anything beyond show product asking what colors they want in a home and if they want to buy the home or not that's the amount of forty that they have and so they're not autonomous on any level and so at least for marketers like XP speak two is is what our company's experiences in there just hasn't been issues I know that. Blick just protection of the public some it's very important to us of our buyers to us We treated like family what raving fans a mental a business grosses is to have have people refer you and and love your product and so to do that you have to take care of people really well and so that being in the home building industry knowing other home builders the amount of investment that it takes to build a home capital amount of risk To do that to save three percent commission is not something I would see people starting up LLC's to do in order to sell property to save it a three percent commission about eighty percent of our buyers coming represented by agents already so they come in with buyers agents or we are happy in fact we pro actively say have you been working with agents because we want to be We have to have great relationships with agents in the community because they're important and they bring buyers to us and so sometimes buyer see our commercials are see our ads and they'll come in our R. P. people ask might even work with an agent if they say yeah we'll call the agency come on in here we don't want to cut you out because even though they were procuring because they didn't bring the buyer they didn't tell about us that into anybody favors for us to sell home that buyer not pay that commission and every home builder knows that realtors are essential part of the real estate industry and they have to they have their place in our system I think at home builder system I mean we're just for sale by owner we're building and selling a product and you know our our people know the product and could represent the product that's all that the authority they have to do so. Thank you for testimony members any questions for this witness. Okay thank you your dismiss I'm gonna back to bring back ms Crowson of because there were members I have questions for you not the collected to. To ask them. The problem with this room of having everyone's back to me is I can't see their facial expressions to tell me they want to ask a question so who who wants to ask a question. Okay represent Ferguson that represent of Evans. Yeah I was going to ask this of the commission but it used to be the commission then you probably can answer can you clarify the existing law and the exemptions that exist yes I will tell you that there is a Representative from the commission here in it because I think that you do need to hear from executive director offered that there is a it gets my understanding and I've you know it's a little rustic as it's been since two thousand twelve that I sat on the commission and and I didn't quite review it but at the exemption as is it was done of several years ago when that check with the extension was put into place was really to allow effect I think we commonly referred to it as the Walmart rule to allow a corporation such as Walmart who has a real estate division to be able to handle their own transactions in acquiring property building Billings buildings and then disposing at those buildings and so that was a current exemption so what is being proposed now to me FX you know the very root of why we have public protection and real estate loss of homeowners people who are buying these and investing their own money it's not a big corporate deal it's not something like that we're a corporation is a Walmart buying up land to build their own building on this is something totally different because this involves the livelihoods of of our the people of the constituency you represent the people who are buying and investing in real estate as their home and to me that to take away that licensure would just be a travesty. Thanks for the follow up yes please yes Hey I know you referenced inspections and some things that realtors do maybe you could tell us some other things that are consumer protections under the fair housing act that protects against discrimination I mean there a lot of things that go into so I health besides just Senate for contract yes yes and you know and I think about to you know in representation I know that it was brought up that they have to disclose you know who they represented there right there if they're representing just the seller because these agents that are employed by them are just representing their product and yes they're just representing that that seller I'm in you know when I started selling real estate a long time ago when we only represented sellers you know back in the early days before we had buyer representation we all just represented sellers we didn't have to tell anybody it was just done that way Byers thought they were being represented but they weren't and now because of advocacy for consumers we know that we have to inform everyone involved in this real estate transaction who are legions to and who we represent and so I'm employed by a seller when I take a listing so you might as well say I'm an employee of theirs because I am the difference is that when I start working with the buyer is a lot of times I you know it don't know which house at buyers going to bind so I they're coming into my office I'm sitting down with them explaining about buyer agency and how we can represent them and then that was odd situations that occur sometimes where that buyer wants to see something that's currently listed with my office and we become what's called a dual agent which is allowed in Arkansas with full disclosure and everyone agreeing to that but they're they're well aware of who that who's being represented and what their rights are and but our contract to that we use and I know that I roused common for instance uses their own contract I'm you know I'm I'm okay with that because. They are a builder and and I work with other builders who want to use their own contract that have been approved by the state of Arkansas by an attorney in Arkansas for them to use but I go back to to the the public county decision about us being able to only as a licensee all I can do is fill in the blanks on a simple real estate contract that was that was given to us by the by the Bar Association in a huge case that took place in nineteen ninety one that it was laid out very specifically what a real estate licensee could and could not do involved in a real estate transaction and basically I'm allowed the right to practice law according to them it as it pertains to this listing and selling of real estate and in filling out a form that was prepared by an attorney for my use so you know it I just think that we're going to start so much of that of what could be provided as far as protection and our real estate contracts because I've sat on that committee with the Arkansas realtors association the last twenty years is very much a protection for well it probably is leaning more toward buyers right now but it does represent it does provide adequate compensation and ways to terminate the contract and everything between the buyer and seller of arrival will move on to the next question that's okay yeah and I just wanted this that's okay because sometimes our questions are not concise either so I'm going to ask members to be concise in their questions and the witness to be concise and enter answer so Representative Evans. Thank you Mr some is present thank you for being here today and for your very I can tell you very sincere testimony it seems like when you really feel this issue back we're talking about two things that that your side of the the debate is is concerned with one is the fact of changing to a commission structure. and how that affects the the the fact of having a real estate license or not in the second thing is consumer protection I I appreciate your your emotional plea about the buyer who was put in a bad position in the shin all comparison but then you made a statement of continuing to talk about the consumer protection so I'm really struggling to understand how. A sixty hour course to get a license. Elevates consumer protection to the point of your emotional testimony. And so I'd like you to expand on that secondly five followed Mr. Yes thank you is you you you were very quick to to draw that line in the sand and put your foot down and say but I don't pay for that for that training in the sixty hour course because they are a self employed independent contractor and you're very clear about that and every real drive ever known that that has been a broker and owner of a season very clear to state they are not my employees so if we're talking about consumer protection we're talking about making sure we're giving the provisions in the transaction. The do you as as in your position do you provide your employees with health insurance and four oh one K. and and benefits or do you stand at their just self employed independent contractors okay so that's a two part question I'm gonna go with the sixty our basic course first and how that actually trains a person provides that what they would need to be able to provide consumer protection and to abide by the laws of Arkansas but that course does teach them just basic real estate knowledge to I mean it doesn't prepare them to go out and actually start meeting with clients that's what the principal broker does an office because the way that Arkansas structure with our licensure that sales agent could not immediately get a sales agent license to and just go out and start selling real estate their license under principal broker that instructs them and works with them on a day to day basis on how to abide by the laws of Arkansas and how to go about the real estate business and so that that basic course now would only at only really prepares them to pass that licensing exam and then as far as the. I yes I mean my my sales associates are independent contractors our company is I have helped them along the way with the at some because we're a large firm I work for prior like and we have a multi state offices and so we have a abilities to provide them with the insurance and entities through that and also through the realtors association they have access to insurance you know it may not be as affordable as somebody who was an employee. Thank you. Thank you for represent of ray. Thank you Mister chair I want to go back to the consumer protection issued so in states that allow for employees to builders to operate without a license and I know there's some dispute over which states do in which stage down. Are you aware of widespread consumer protection issues are there higher incidences of complaints or frankly I'm not aware of any states that allow that. Okay you. I'm saying the ones that we checked with the round Arkansas do not allow that do not allow for the payment of commissions to real estate license to real estate people who are working for a builder to do that well several states my question is not specifically about the payment of commissions but the to be able to sell the property without a real estate license yeah I again I'm gonna deferred but I you know I have notes that I have from the states around us that that is not allowed okay I present follow up real quickly yes so in in your in your own words what do you believe is the difference between an individual selling their own property like in the a for sale by owner and a company selling their own property you know I really for instance I have a builder in my that is licensed under me in my office and he is Didn't really start out of the body builder he's building a great number of homes right now and he is a licensed realtor you know when he's when he shows his own property of course he discloses that it is his his product he's a seller he represents himself and so he is you know he he knew enough to make sure that he was license because he wanted to go through that and to make sure that he was handling things the proper way and so he didn't have to he's a builder he's doing it on his own but he maintains that real estate license because he feels like it's important to him to be able to know anyone to use our contracts as well because we have wonderful contracts. All right thank you thank you very much members for allowing me to bring this witness back in thank you miss Carson thank you at this point and where we are it I know members are needing to leave we don't want anyone to leave without the vote but there is a need for some clarification from the real estate commission this is and and I would just caution the agency had for the commission had to do not provide any testimony that would to amount to advocacy but just to clarify some issues about the exemption so. Is there someone here from the real estate commission okay. You'll identify yourself for the record. Good afternoon good afternoon chairman and members my name is Andrea offered I'm the executive director of the Arkansas real estate commission and I'm happy to answer any questions you have okay represent Ferguson I know you have a question about the exemption. Well that is to know if you had further clarification from the previous witness ADD I just there was some discussion about exactly what the existing exemption allows. The existing exemption would. Would not allow the employees of a home builder to perform real estate activities without a license. They are required to be licensed currently regardless of how they are paid. Okay. It any other clarifying questions for members for the commission. I'm sorry of representatives. Not sure if you can answer this or not but can. What they're asking for in the states around this do what they're asking for right now. Thank you based on. Based on the information that that I have received from the executive directors of those of those real estate commissions. Some of those states have a narrow licensure exemption for unlicensed employees of builders if certain conditions exists however none of the states exemptions allow the payment of commissions to those. Exempt employees okay and then also just just. Help me clarify because I think there was some confusion with some other questions it It is acceptable in the state of Arkansas for a builder to sell his own property without a real estate agent correct that is correct okay it's just the when you get in the employees doing it that's where the issue comes in but the the builders can sell their own properties without hiring a real estate agent I just wanna make sure that's that's clear and then I don't know if you can speak to the. May not be something you can answer but it's for is somebody a flipper set up an LLC and put in a property under contract and say and that's ownership and then turn around and sell the property for you know is it I mean I don't know if you can answer that question or not but would that be a possibility in order to qualify for the exemption the individual has to have an ownership interest in the property and. Took a contract be considered. Ownership. No Sir it cannot okay okay. Represent of Clowney you're recognized for a question and then Representative would. Thank you Mr chair. I just to follow up on our present evidence as question with respect to what happens out in other states surrounding us in particular you mentioned just now the exemption applies if they're at two to employers of builders do you know if surrounding states have that language limited so that it's employers or employees of builders that qualify in other words in what I'm looking at right here reducing employees of corporations or LLC's and you know as as other members have mentioned it seems very broad enough it's tighter that language is tighter in other states codes thanks yes ma'am thank you I. I don't have the exact language in front of me from each from each state that I would be glad to provide that and my understanding is that. It well it varies from state to state so in some in some states they may specify that it's an employee of a builder but. But most of what I found is that specifies an employee of a corporation and LLC a partnership. Yes ma'am. Thank you represent of wooden. Thank you thank you Mr chairman if I understood your or your previous comments to represent the Penzo if a life of a home builder. Can she sell the property if the shields of interest in is that what you stated. If she has an ownership interest in the property she would qualify for an exemption from licensure okay we'll one follow up yes very quickly of what Mr what was the comment made about let me go this way. How many exemptions do you currently have. In place if I may check. I know there are at least ten Representative Wooten and. I believe there are approximately ten or so exemptions already to the licensure of provision. Yes Sir those exemptions. Primarily center around individuals with an ownership interest and attorneys who are who are performing certain activities okay thank you Mister chairman okay thank you. Senate Evans very quick thank you Mr under current under current statute if I am a if I am a builder operating under an LLC. I can sell the home that I build myself to you. That is correct if if my son chooses to get into the business with me as an employee of my LLC. Can he sell that home to you. Without a real estate license if if your son does not have an interest in. These are tricky if your son does not have an ownership interest in the property in order to perform brokerage activities he would have to have a real estate license. Thank you. Thank thank you very much for your clarity all thanks issues member state we're gonna keep with the for and against but and we have an against Speaker but then at that point I'm going to just leave it to the sponsor to decide whether she wants to close or to have another witness because after that we only have speakers lined up for the bill so to speak against the bill is. I'm sorry I can't with the Bar Association I can't read the. The name. Someone from the Bar Association. In the holding room okay hopefully they are they have heard. They were calling for the. Okay. Are you the German with parcels Education okay I'm. If you will identify yourself for the record and then provide your testimony. The song so My name's don Overton and I'm a builder I'm an attorney in a developer I'm here on behalf of the board sociais Asian. also just for a little background of. Of my knowledge experience but to a past chairman of the construction section of the Arkansas Bar pastor of the real estate section. Current chairman of the business. And I'm also the secretary treasurer for the Little Rock homebuilders association. So. I know a little bit about the subject matter for the reason why I'm here. something that was touched on briefly by the realtor realtors. And was not addressed at all. By the supporter of the bill even though we've talked about this before we had a discussion is the fact that. In nineteen eighty one Arkansas Supreme Court had a decision which allowed the realtors to practice law without a license. that was the case that was referred to earlier by by the woman from realtor. in that case nineteen eighty one Arkansas Supreme Court carved out a very narrow exception allowing realtors or licensees to practice law the licensing that they are allowed to. Do legal work prepare contracts for payment. For customer. How that law has been in effect for forty years it has been challenged and upheld numerous times but Arkansas appeals court rules Arkansas Supreme Court. On this bill will overturn forty years. Of. The law in Arkansas. What this bill does is it strips away. That exception and a limb it basically opens exception up to anyone that is an employee of a company. And according to the language Amendment use my phone because I forgot to bring a copy of the paper copy bill apologize. But the language that's in there says. And but one represents binge that earlier. Property owned or leased by the entity or an affiliated entity under common ownership or in connection with the proposed purchase sale rental or leasing to the bill doesn't say a home builder. That builds a home and his employees but that's not what the bill says that that's not what the plain language of the bill sets the plain language the bill says. A corporate that person employed by a corporation for. A limited liability company or a partnership or other business entity. So. For an affiliated entity under common ownership so it it's it's extremely broad it's not narrowly. Detailed and it's not narrowly defined so the the bill is asking. From a legal aspect to take a narrow exception it was granted by the Arkansas Supreme Court that's been in place for forty years. And take that narrow exception just bust it wide open because there there's no definition of what the affiliated entities or or could be there's no there there was some discussion earlier about an exception for a large scale builder or a builder that builds a certain number of homes I don't see what I read the bill that that that it even gets to it being a builder that builds homes it's any affiliated entity with any amount of common ownership interest. And so so that's that's the big problem from from the bar association's aspect is that this bill flies in the face of forty years worth of of law in Arkansas and. I'm not appear just complain as an attorney that you know this isn't a good law but but the that narrow section was created for a specific purpose and that purpose is to protect the citizens state of Arkansas it's to protect an innocent homeowner it's to protect the poor the uneducated the starry eyed person who's buying that first home which has been mentioned numerous times that's the single greatest investment that most people make an entire lifetime. So so the law is in place to protect the citizens of the State of Arkansas that exception was created to protect the citizens of the State of Arkansas and I believe in the bar association believes that this bill does not does not do that K.. The thank you for your testimony we do have one question a believer percent of Murdock. S. zero witness will be we're going to need to move on the I know the sponsors rate to close on the bill but we will allow these quick questions well that that was the sponsor related question I guess before the gentleman came to testify that question about what the sponsor decision is going to be with what I'm looking at them with a cluster here that was one what we're going to start I was trying to get okay yes after this testimony we're going to allow the Representative thought to close represented wooden. Okay. Your microphone's not on Sir. Thank you Mr chairman I need clarification on the Polk County route it was my understanding that that ruling just merely said that realtor could in essence practice limited law. The because that's not the case yes for the Senate The and and that's my point is that that that was the initial decision and that that's This Is and has been elaborated over the last four years and I understand it's been there for forty years but I don't understand how that's going to make a big difference in growing this exemption are you saying that the people who may be selling or crooks thieves or I the ruling is operated said they could practice limited to all so the House it goes strode the law if you give This exemption what will the first thing Representative is that the Supreme Court said that realtor's not realtors but licensees that have gone through training and are regulated by the real estate commission that that they have the exception. And that and I agree with you that's what it said but it didn't say that they have that exception unless somebody else wants it and then they can have it to and that's what this bill is saying is is Dave the Supreme Court defined that narrow exception that never exception is in place this bill is asking to take that narrow exception in and opened up. The and that that does not go to the to the spirit of no more the intent of the supreme court's ruling because when you open up that exception there's no oversight and I'm not saying anybody's crooks but we all know that there's there's good apples in bad apples and there needs to be some oversight and currently that oversight is the real estate commission there's a licensing education program to where. They're supposedly I'm not a realtor so I don't know every nuance of that course but they do have ethics they have to follow and they have oversight and this will would would have people that do not have oversight. So in that other than the employer and. The other question is what about the bottom line and and you know most businesses run in the business to make money out and I know that the small businesses I have I'm a businessman not. But the same time a law licenses overseen by the board by the Arkansas Supreme Court and my assistant can't practice law she can't sign contracts because she's not an attorney. One followed Mister represent we really need to move to the sponsors closing okay let me just worry quickly. What what is what is it what okay we'll never mind. See how this is going to go. Fifteen other exemptions destroy that forty years of law. Well I believe that she said there were ten exemptions well ten and and this is the only one that that I have research for today's on the other nine I don't know the details of that would be another discussion but I'd be more than happy to visit with you after this thank you thank you all right thank you and thank you With this I'm sorry I didn't catch it on overturned yes Mr over to thank you very much Sir. At this point I'm gonna recognize Representative Vaught she has deferred even though she has other witnesses signed up the she's deferred to go ahead and close so that we can move to a vote. Levant thank you Mr chair I think something was said that was not correct a minute ago a person employed primarily at eight this is the law I person employed primarily at a slough flowery. Or hourly rate by a corporation limited liability company partnership or other business entity acting with respect to real property owned or leased by the entity or an affiliated entity under common ownership or in connection with the proposed purchase sale rental or leasing of real property by the entity or the affiliate if the acts are not performed by the employee for or an exception of Commission or other compensation resulting solely from as a successful transaction. employee is not providing real estate services to or on behalf of more than one entered seek not affiliated by common ownership and I want to make sure that I brought that out at the beginning so. We really are comparing apples to oranges you've heard testimony from the realest religious wars and you've heard testimony from the home builders and home builders association is on full support of this board. When you go by phone. From Verizon or AT&T do you get asked do you want to buy insurance for that from. Most of us are asked would we like to put insurance on this phone right. Some say yes some say no but does it say yes by the insurance does that mean that that person now has to have an insurance license to sell you insurance for your phone. DM Vaught. Home builders DM Vaught what was it corporation damn Vaught realist of. Development there are three different entities rat but they're all under the same person the I'm reports I've been represented to rot. I'm not asking for us to move a mountain I'm not asking for there to be any less Safety procedures I've gotten sold homes that actually the really toward did not do a good job on and it ended up costing me a lot of money that I had to go back and fix that home before I could sell that home and it was due to the real tore and not the home builder themselves so I think there's bad actors no matter what we do and we can't legislate morals. But what we can do is help corporations that build their own homes. There's no. People come seek them out be able to sell their their actual looking for the word I don't stay home but their product. Their actual product and that's what this bill will do. Senator. Hester has agreed to. That will put an amendment and on his side I think Senator Representative flowers. line twenty I will not wait down to one thirty two we can add and the buyer has the right to their own realtor so they know they do not have to buy. From that agent they could seek their own rules for. And with that I'd appreciate a good vote okay. Thank members is there is there a motion. Representative brown. Motion to pass okay we have a motion to pass I do have members that have asked about discussion. And I'll I will allow it but I just want you to know that me we are twenty minutes from the end to gavel in. Pardon yes this is a do pass recommendation as amended yes represent Gazaway. Thank you Mr chairman I guess what I would say is I came into this meeting today with the idea that I really like this bill and intended to vote for it as I've heard some of the discussion and the points that were brought up by the Bar Association I personally would like to see some amendments I thought the points made by the realtors association about consumer protection which by the way I'm thrilled to hear that they are very concerned about consumer protection I think that's an important point and I would like to to see some amendments that would really go toward the consumer protection piece of this and I think the bar associations points are well founded and so because of that and I represent a bus on my favorite people in the legislature but I'm gonna have to vote no thank you. Of represent of flowers did I see your hands yes I felt compelled to say really echo what Representative Gazaway just mentioned All the way to the area and Vaught being one of my favorite colleague. especially that and since she mentioned my name and I do appreciate Senator Hester being willing to amend on the Senate side I think that's a great start but my concerns to extend to what you just heard from Representative Gazaway M. probably one more piece as well and that line twenty two I think it's very very important to tailor this in a way that addresses the specific concerns of builders and not anyone who wants to start a corporation in which would include me I I would love to enter into this and elevate my business to a builder but not on the backs of consumers and not on the backs of realtors license religious so with that I'll have to vote no at this time but hope that there can be a. Really good compromise to make this something everyone can live with that be happy with format format about. The represented Penzo then represented Murdock. Okay just a real quick owed I'd like to mention I got a forty text message I'm not sure who it's from but it's is still Penzo that NWA homebuilders declined to support this bill so not all home builders associations in the state to support this my understanding from this text message all need clarified heard rumor that but I just wanted to but no that not all home builders associations and state are behind this also this is not apples to oranges if you're selling real estate you're selling real estate I mean it's it be likes like I said to be like carving out an exclusion for electricians you look traditions need to get a license but you know you other if you don't get license you don't have to which point have an licensure and and protections for for the the bars in the state I mean I I think this is a very bad bill I think it brings up a lot of legal issues with the the these these sales people practicing law and the divorce so CH metric point and I think I think we need to seriously think about we're doing here and appreciate a no vote K. thank you I actually had forgotten that represent of Allen was down so you're good okay represent Murdock. Yes along the sentiment of what we've been hearing today I think what we have here is a piece of legislation that we're not ready to really make a decision and by virtue of that I think it may work to the detriment I think the more wiser thing to do would be to wait and try to and you guys get together to work on this I know that's not my choice I mean that's not my call but is certainly I know your passion I know what you do here in our I think this is just wrong for that and you hear it all throughout the ledges the testimony on both sides so I wish that could happen so that you could have a better chance. Later in the in the process that's Bobby. Thank you K. H. chair yes correct I'll go ahead and pull it today we will try again we've tried as but we will try again to get it to where it's more appetizing for y'all just know that we have had people to the table and they walk out of the ring because they don't get their way you can't negotiate with people who are not willing to negotiate I just wanna put that out there but will pull it down today thank you Sir all right and we will we will keep the bill on the agenda at I will probably at that time entertain a motion that we limit public public testimony it I know it's gonna be a totally different animal maybe when you bring amendments back but we have spent several hours so thank you for pulling it down members we are edger.