MINUTES OF MEETING OF LOUISIANA REAL ESTATE …

1 MINUTES OF MEETING OF LOUISIANA real ESTATE commission august 18, 2011 The LOUISIANA real ESTATE commission held its regular MEETING on Thursday, august 18th, 2011, at 11:00 , at 9071 Interline Ave, Baton Rouge, LOUISIANA , according to regular call, of which all members of the commission were duly notified, at which MEETING the following members were present: commission Frank Trapani, Chairman Tim Flavin, Vice Chairman Patrick T. Caffery, Jr., Secretary Mike D. Bono Paul Burns Archie Carraway Sterling Joe Ory Cynthia Stafford STAFF Bruce Unangst, Executive Director Arlene C. Edwards, Legal Counsel Stephanie Boudreaux Debbie DeFrates Mark Gremillion Robert Maynor Summer Mire Lester Patin Al Rowe Marsha Stafford Sara Wheeler Jenny Yu GUESTS Nell Carmichael, New Orleans Metropolitan Association of Realtors Chris Donaldson, Donaldson real ESTATE School Cindy Rice Grissom, Rice Insurance Scott Johnson, LOUISIANA Realtors Brent Lancaster, Bob Brooks School of real ESTATE commission members James Gosslee, Rodney Noles, and Judy Songy were not present for the MEETING .

2 Commissioner Stafford led the Invocation; Commissioner Carraway led the Pledge of Allegiance. Commissioner Stafford made motion, seconded by Commissioner Caffery, to approve the MINUTES of the MEETING of July 21, 2011. Motion passed without opposition. PERSONAL APPEARANCES: 1. Jimmy Garrard Mr. Garrard was not able to appear at the scheduled MEETING time. 2. Shawn Trapp Mr. Trapp appeared before the LOUISIANA real ESTATE commission in connection with his request to sit for the real ESTATE exam. 1 On September 9, 2002, Mr. Trapp pled guilty to simple burglary, bank fraud, issuing of worthless checks, possession of a Schedule II controlled dangerous substance, cocaine, and theft. For this offense, Mr. Trapp was sentenced to five (5) years probation and the court ordered sentences to run concurrent with each other.

3 On May 30, 2007, Mr. Trapp pled guilty to possession of a Scheduled II controlled dangerous substance, cocaine. For this offense, he was sentenced to a period of five (5) years at hard labor, credit time served. The court ordered the sentence imposed to run concurrent with the sentence the defendant was currently serving. Mr. Trapp is currently on probation and is in full compliance with the terms and conditions of his parole. His expected release date from probation is March 8, 2012. Mr. Trapp discussed his passion for real ESTATE and his current sobriety and life changes. After answering Commissioner s questions, Commissioner Flavin made motion, seconded by Commissioner Stafford, to approve Mr. Trapp to sit for the real ESTATE sales exam. Motion passed 5 1 with Commissioner Caffery voting in opposition and Commissioner Ory abstaining.

4 COMMITTEE REPORTS: 1. Budget Commissioner Stafford discussed the budget report prepared by Al Rowe. Commissioner Stafford and Mr. Unangst briefed the commission on the procedure in which the Appraiser s Board pays a portion of expenditures to the commission . The Appraiser s Board currently pays the commission monthly building rent as well as 9% of expenditures. Due to the lack of revenue of the Appraiser s Board, the legislative auditor has suggested that the commission reduce the amount from 9% to 7 % for the 2010 2011 fiscal year. The Appraiser s Board has recently passed legislation to fund the licensure and regulation of appraisal management companies. This will increase their revenue for the 2011 2012 fiscal year. The Appraiser s Board will continue to pay the 9% of expenditures for the upcoming fiscal year.

5 Commissioner Flavin made motion, seconded by Commissioner Stafford, to approve the reduction of expenditures of the Appraiser s Board from 9% to 7 % for the 2010 2011 fiscal year. Motion passed with Commissioner Ory and Commissioner Bono abstaining. (Attachment A) Mr. Rowe announced that the august MEETING will be his last MEETING with the commission as he is retiring after 18 years of service. The commission commended and thanked Mr. Rowe for his years of service. 2. Education/Research/Publication Commissioner Caffery announced the Special Committee on Continuing Education met prior to the business MEETING . The committee reviewed the continuing education guideline document and noted some items that may need to be amended. The committee will meet again at 9:00 before the September business MEETING to discuss the possible amendments and to finalize the document.

6 3. Legislative/Legal/Timeshare Commissioner Flavin stated that Legal/Legislative Committee met at 10:15 prior to the regular business MEETING . During the MEETING , the notice of violation for advertising violations was discussed and accepted. Commissioner Caffery made motion, seconded by Commissioner Burns, to adopt the notice of violation and to advertise second offenses on the website and in the Boundary Lines newsletter. Motion passed without opposition. The issue of short sale disclosures was discussed and tabled. Commissioner Flavin also reminded Commissioners that there will be a brief MEETING with the Home Inspectors Board at 1:00 after the regular business MEETING . This is a continuation of the Legal/Legislative Committee MEETING and will discuss the use of home inspection reports by licensees.

7 4. Standardized Forms Mr. Unangst discussed the New Construction Addendum and stated that it would be posted on the LREC website. 5. Strategic Planning No report. 6. Errors & Omissions Commissioner Bono welcomed Cindy Rice Grissom of RISC Insurance. RISC Insurance is the current group provider of the LREC errors and omissions insurance. Ms. Grissom made a presentation of the RISC insurance program. RISC Insurance handles all 2 processes of the errors and omissions insurance, including claims. Ms. Grissom discussed the history and long term relationship between RISC and the LREC. Ms. Grissom presented reports on the LOUISIANA Claims Analysis for 2003 2011, the LOUISIANA Claims Information, and the LOUISIANA Group Program Claim History. (Attachments B, C, D) Ms.

8 Grissom discussed tail coverage. The cost of a three year tail coverage policy is 200% of the expiring coverage. This may not be economically feasible for the group program. Ms. Grissom recommended that licensees transferring to inactive status be educated on tail coverage. Commissioner Carraway inquired as to whether the broker will be sued if a retired agent is also sued. Ms. Grissom stated that 95% of the time, the broker is also named in the suit. Commissioner Burns questioned whether we currently require inactive licensees to carry error and omissions insurance. The LREC does not currently require this. Commissioner Caffery discussed the possibility of the broker escrowing money over to the active years to pay for the three year tail coverage. Commissioner Trapani questioned if the commission could require inactive licensees to pay for errors and omissions insurance.

9 Commissioner Stafford stated she feels that tail coverage should be a decision made by the broker and not the commission . Commissioner Flavin also feels that this is an educational item that should be addressed through Boundary Lines and the website. Commissioner Flavin discussed LOUISIANA s abandonment period. Scott Johnson, LA Realtors, stated the abandonment period was recently changed from a five year period to a 3 year period. It would be a difficult challenge to change the legislation. Ms. Boudreaux inquired to Ms. Grissom if she could provide an article for the LREC Boundary Lines newsletter. Commissioner Flavin would like to see an analysis for the average cost of the claim for the different abandonment periods. Ms. Grissom stated there may be some discrepancy due to varying attorney fees and higher transactions for other states versus LOUISIANA .

10 Mr. Unangst stated he has not heard any negative comments regarding RISC s coverage. LOUISIANA is one of the lowest priced states. The $ premium amount is not unreasonable or out of line with other states. Ms. Grissom has agreed to absorb the costs of the credit card charges the commission incurs for online renewals. If approved, the one year extension of the RISC contract will be contingent on these payments. Commissioner Flavin made motion, seconded by Commissioner Bono, to extend the RISC contract contingent on the payment of the credit card charges. Motion passed without opposition. Commissioner Burns inquired of the proper procedure for addressing whether inactive licensees should be required to maintain errors and omissions insurance. Mr. Unangst stated that would need to be discussed and decided on prior to the end of the calendar year so that the proper legislation could be drafted for the next upcoming session.