MARYLAND REAL ESTATE COMMISSION



MARYLAND REAL ESTATE COMMISSION

500 North Calvert Street

Baltimore, MD 21202

Mission: Protecting the health, safety, and welfare of the public

through examination, licensing, and regulatory activities regarding real estate

BUSINESS MEETING MINUTES

October 29, 2009, 10:30 a.m.

Highlights from the meeting:

License count is 47,214

Guaranty Fund balance $2,320,291.75

PSI wins exam contract

Disclosures, disclosures

PRESENT:

Commissioner J. Nicholas D’Ambrosia, Chair (Industry)

Commissioner Anne S. Cooke, Vice Chair (Industry)

Commissioner Marla S. Johnson (Industry)

Commissioner Surina Jordan (Consumer)

Commissioner Nancy R. Simpers (Industry)

Commissioner Georgiana S. Tyler (Industry)

Commissioner Colette P. Youngblood (Consumer)

Harry Loleas, Deputy Commissioner, O & P

Elizabeth Trimble, AAG, Counsel

Katherine F. Connelly, Executive Director

J. Steven Long, Assistant Executive Director

Patricia Hannon, Education Administrator, Session Recorder

ABSENT:

Commissioner Robin L. Pirtle (Consumer)

PUBLIC IN ATTENDANCE:

Donald White, Pr.Geo’s Comm Coll and MREEA

Bob Johnston, AACAR

Mark Feinroth, MAR

CALL TO ORDER:

J. Nicholas D’Ambrosia, Chair, called the meeting to order at 10:45 a.m.

APPROVAL OF MINUTES:

Motion (made by Nancy R. Simpers, seconded by Marla S. Johnson) To approve the minutes of the September 30, 2009 business meeting. Unanimous approval.

REPORT OF COMPLAINTS/ADMINISTRATIVE DISMISSALS:

Motion (made by Nancy R. Simpers, seconded by Anne S. Cooke) To approve the Administrative Dismissals for the month of October 2009. Motion carried.

COMMITTEE REPORTS:

1. Education – Georgiana S. Tyler, Education Chair – Commissioner Tyler reported that in September 2009 the real estate testing vendor, PSI, administered 374 salesperson exams and 29 broker exams. These numbers compare to September 2008 when 299 sales and 45 broker exams were given.

2. Legislative – Anne S. Cooke, Legislative Chair – no report today

COMMENTS FROM EXECUTIVE DIRECTOR: Katherine F. Connelly

1. Current license count is 47,214, of which 4,863 are brokers, 3,211 are associate brokers, 38,173 salespersons, 711 branch offices, 3 timeshare developers, 55 reciprocal brokers, 16 reciprocal associate brokers, and 182 reciprocal salespersons. Of the total count, 4,643 are inactive.

2. The Guaranty Fund balance as of September 30, 2009 is $2,320,291.75. This balance reflects payouts logged for both August and September.

3. The real estate licensing exam contract was awarded to PSI, the lowest bidder, by the Board of Public Works on October 7, 2009. We will meet with PSI to review the details of the new contract and the changes to be made.

4. PSI has changed its broker exam-national portion. There will now be two narratives with five multiple choice questions related to each transaction described, a total of 10 new questions. The remaining 70 questions will continue in the current format. PSI developed the narratives after a study and expert committee review. The emphasis on these items is application. Other jurisdictions are already using the new exam, and Ms. Connelly has heard good feedback from them at ARELLO meetings. After discussion, Commissioners were in agreement to accept the change to the broker exam which only applies to the national portion. State exam questions will be reviewed separately. No specific startup date yet.

5. A third career school is nearing approval by the Maryland Higher Education Commission to offer principles and practices for salespersons by internet delivery.

6. Outreach to the industry – Ms. Connelly met with 80 agents for a sales meeting in Burtonsville and with the Board of Directors of the Carroll County Board; she will teach continuing education classes in November and December.

7. Ms. Connelly attended ARELLO’s 2009 Annual Conference in Miami from October 22-24. There were many opportunities to discuss issues of common interest with other regulators as well as educational sessions with excellent presenters. Ms. Connelly agreed to serve on the Board of Directors representing District 1, which includes Maryland, Delaware, DC, New Jersey, New York, and 5 other states, joining Chairman D’Ambrosia who was re-appointed for another year. One of the sessions attended by Commissioner Cooke and Ms. Connelly covered website advertising and its challenges to regulators.

8. Commissioners were given a copy of ARELLO’s 2008-2009 Case Law Report, a summary of the latest court decisions reported by member states.

9. Steve Long is working with the Department’s IT Unit to develop a program which will allow licensees to pay fines or reimburse the Guaranty Fund online with their credit card. The program is not yet ready but will be shortly. All money collected goes to either the State Treasurer or the Guaranty Fund account, not MD REC.

10. Ms. Connelly read a complimentary letter from a broker thanking Charlene Faison, licensing supervisor, for her professionalism and service.

11. Licensees are asking about using the disclosure form during an open house. A buyer who is just looking – no scheduled appointment - is not the “first scheduled face to face” as set out by the law. If the buyer begins to enter into a conversation with the agent and asks for additional information, the listing agent/open house representative must present the agency disclosure form to protect the potential buyer from revealing too much. If the interested person refuses to sign, the agent need only

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note it was presented and something to remember the person for the record. The next issue of the newsletter will address these situations.

12. The Greater Capital Area Association of Realtors is informing its students of the deadline to use DC-GRI education for Maryland’s broker exam.

13. The Maryland Higher Education Commission has made available FY 2008 statistics on private career schools. Ms. Hannon will construct a report on pass rates for the November meeting. MHEC’s statistics for FY 2009 will be available in the spring.

COMMENTS FROM COUNSEL: Elizabeth Trimble

In response to Commissioner Tyler’s inquiry about the status of the re-proposed legislation on teams, Ms. Trimble advised it has been submitted but nothing heard yet whether it will be introduced. It is the same proposal as last year and is a broker supervision issue.

COMMENTS FROM CHAIR: J. Nicholas D’Ambrosia – no comments today

UNFINISHED BUSINESS: None

NEW BUSINESS:

1. Discussion on amending regulations to include employees as a “member of the firm” (COMAR 09.11.02.02D). Consumers perceive employees as having an advantage with inside information or relationships. Whether buying or selling, the disclosure requirement should be the same. Counsel will prepare language for consideration at the November business meeting.

2. Discussion on possible new regulations for brokers when another entity holds the deposit (17-502) –When funds are held by another party, how does the broker verify that the check was deposited or cleared? Who controls the funds? Can brokers accept checks payable to their brokerage when there is no brokerage escrow account? These are a few of the questions asked. The licensee must inform consumers what is usually done on escrow deposits and how their transaction is different. The broker has responsibility under the license law. Counsel will prepare language for discussion at the November business meeting.

3. Discussion on disclosing all fees to consumers, including administrative fees - Any additional costs to the consumer must be disclosed and consented to by the consumer. Financial arrangements must be in writing and signed by all parties. An article will be prepared for the next newsletter.

4. Commissioners reviewed the written policy of a broker whose properties are bank-owned, foreclosed, or REO sales. Ms. Connelly and Mr. Long will follow up with several brokers who have these written policies.

5. Counsel recently contacted the US Office of Comptroller of the Currency, the agency which oversees federal banks, to learn the OCC’s policy on the obligation of federal banks to protect the consumer in real estate transactions. Banks claim to be exempt from state laws of disclosure, FOA, condo documents, lead, etc. Ms. Trimble is awaiting a response from OCC’s legal counsel.

ADJOURNMENT:

There being no further business, the meeting adjourned at 12:10 p.m. The next monthly business meeting is Wednesday, November 18, 2009.

APPROVED AS PRESENTED ____________________________________________________

J. Nicholas D’Ambrosia, Chairperson

APPROVED AS AMENDED ______________________________________________________

J. Nicholas D’Ambrosia, Chairperson

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