2016 NAR Conference Report _________________________

Claire Jean Prager2016 NAR Resort and Second Home Real Estate Committee

RESORT AND SECOND HOME REAL ESTATE COMMITTEE 2016 REALTOR CONFERENCE & EXPO NOVEMBER 3, 2016

Legislative/Regulatory Update Russell Riggs National Flood Insurance Program- remains major issue Condo Financing/ HR 3700 should see results maybe 1st quarter MID on Second Homes remains a discussion H2B/EB-5, and other Visa Programs are still being looked over Sharing Economy Issues/ Airbnb, etc ... Arizona has SB1350 going into effect January 1, 2017. Waters of the US ... still tabled/deferred for now; in court

SHORT TERM RENTAL ORDINANCES TOOLKIT: Published and Online

RSPS Certification: Dianna Garcia, Committee Staff updated

Local Market Issues Discussed by Committee Members and Guests: FEMA remains issue. Also barring access to beach. Airbnb/VRBO issues nationally. Questioned Russell Riggs on what will happen in Congress depending on Election outcome ... basically the work will continue; but the outpouring of ACTION really helped get FHA Condo Financing to finally pass both House and Senate unanimously. I '"'orked on the Condo Task Force 3 years ago. Also, aging-in-place and elder care issues in some places have become local issues.

RSPS SESSIONS at Convention: Friday, November 4: Unlocking the Mystery of Home Sharing Economy Saturday, November 5: Overcoming Issues and Challenges: A Resort and Second Home Market Idea Exchange*

• I moderated 2 tables at the Saturday session.• Panel: Brian Blaesser ESQ., David Wyatt, CIPS was 1st before breakouts• 16 tables with 8 topic idea exchanges repeated 2 times ... Most popular were

luxury, global, short term rentals. Moderators were to switch but my tableattendees refused to switch ... wanted to continue with me and the referraltable guests and moderator, Ryan Servatius, joined us for the 2nd session.

2016 NAR Conference _________________________

Emmary Simpson

2016 NAR Social Media Advisory Board and AAR Professional & Business Development Committee

2016 NAR Convention Report Emmary Simpson

2016 Social Media Advisory Board 2017 Federal Finance and Housing Committee

Social Media Advisory Board 2016 is the last year of this committee, as previously reported. Since the committee is being “sunsetted”, members were directed to attend the Member Communications Committee Meeting for the Realtor.com updates, Get Realtor campaigns and The HUB announcements, as well as the Professional Standards forum for the update on Commitment To Excellence. Members of our committee will be “sent out” to assist in promotions in the coming year, however those marching orders have not been received.

Member Communications Meeting: NAR introduced the new communications platform called TheHUB. This will replace all current forms of communication for committee members and the like. It is currently in Beta testing for members of Member Comm and select NAR staff. The roll out for this will be in 2018. Members of Social Media Advisory will be involved with this in some context, however that role has not been defined as of yet.

The Get Realtor Campaign with the Modern Family tie in has been extremely successful with ALL age groups, as has the Elizabeth Banks “Dream Home” campaign. Other campaigns on social media – Throwback Thursdays on Facebook, Greeting Cards on Instagram among others have been just as successful. The Get Realtor campaign has resulted in a major visitor bump to Realtor.com which continues to be the 3rd most searched website behind YouTube and Facebook.

The Modern Family campaign will run through May, 2017. A decision has not been made as to if it will continue after that. The Elizabeth Banks spots will continue through 2017. NAR and Realtor.com will continue to pursue unique partnerships like Modern Family, BuzzFeed and others.

All main NAR sites will be using the .realtor domain, starting December 5, 2016 – nar.realtor will replace realtor.org, and users will have a single sign on to access sites.

Professional Standards Forum

Update from the Commitment to Excellence Advisory Board –

Over the last 19 months, this board has met to create NAR’s Commitment to Excellent program. This forum served as an update to the progress of this. C2EX as it is being called, is a program to promote REALTOR professionalism. The program has been designed to develop and enhance 11 competencies that show a REALTOR’s commitment to ethics, advocacy, technology, data privacy and customer service. The program starts with a basic assessment of these points, assigns “levels of achievement” for each and then starts the REALTOR on a path to complete each level to 100%. Once completed, the REALTOR will receive the C2EX endorsement. This program will also include a broker/manager path. I have a copy of the plan and can share with anyone interested.

During the forum, many questions were raised by committee members, as well as audience members to include difference scenarios such as, “If a REALTOR is found guilty of an Ethics violation while going through the program, what will happen?”. The committee chair stated repeatedly that this was still a work in progress and some of the questions that were asked did not have answers. Another update will be provided at the MidYear meetings in Washington DC.

There is no word on when this roll out will happen. The program will go through several beta testing phases, and again, Social Media Advisory Board members will more than likely be a part of this process as well as the roll out of the program when/if it becomes available.

Federal Finance and Housing Policy Committee

As a 2017 member of this committee, I attended their meeting as well.

Michelle Bradley spoke in regards to the perceived thought that there is a shortage of appraisers currently. That is not the case a there has been an increase over the last 10 years of certified general appraisers of 12%. The overall theme to her report is this: the appraisal industry is overly regulated which, in turn, creates a problem of getting appraisals done in a timely manner. Most are not willing to take on appraisals which are in the risk 3 to risk 5 category when a bad appraisal/problematic appraisal can follow for “a lifetime”. NAR and associated committees will be working on changing the regulations for this industry in the coming year.

She also spoke to a revision that came out in September of this year that has been problematic as well, the Single Family Housing Policy Handbook 4000.1. In this handbook, the statement in regards to appliances in a home – “Appliances that remain and contribute to the market value must be operational”. Situations have arisen in regards to who makes the call if they contribute, and if they are operational. Will an older washer and dryer detract from the value? This will be going back for a review.

2016 NAR Conference _________________________

Kent Simpson

TAR NAR Director

NAR 2016 Convention Report Board of Directors Meeting—Main Action Items There were several amendments to the NAR Constitution proposed—mostly housekeeping, but 2 proposals dominated the Convention—both having to do with changing the method in which Director seats would be allocated to Large Boards (like TAR) and States. Debate was loud and contentious in the hallways & caucuses, but minds were pretty well made up before both the Director’s meeting & Delegate Body meeting. Per NAR voting rules, changes to the NAR Constitution can only be ratified by the Delegate Body (1 person, usually the Association President or their designee, carrying the weight equivalent to the Association’s member number). The NAR Board of Directors vote on Constitutional Amendments is only passed to the Delegate Body as a recommendation. Director Allocation Proposed Change for Large Boards—defeated at Board & Delgate Body. This change would have caused TAR to lose 1 seat beginning in 2019, unless membership increased to 6,000. The Delegate Body was the location for binding vote & this was defeated there too. Result: no change to status quo Director Allocation Proposed Change for States—passed (but voted down in Delegate Body). This would have increased Director positions for Arizona at the State level by 7 seats, but the Delegate Body voted it down. Result: no change to status quo Approved: Changing Authority to Select NAR CEO from Board of Directors to Leadership Team. Dale Stinton is retiring at the end of the year—this allows the NAR Executive Leadership to conduct the search for a new CEO & hire on a timely basis without resorting to the expense of flying all 914 directors to Chicago for a Special Board of Directors meeting at the last minute. Approved (subject to approval of program costs by NAR Finance Committee & Board of Directors): REALTOR Commitment To Excellence Program—this will be a voluntary education & assessment program geared to enhancing the level of professionalism of REALTOR Members. Aimed at “raising the bar,” this program is under development & will concentrate on 11 competencies indicating a REALTOR’s commitment to Ethics, Advocacy, Technology, Data Privacy & Oustanding Customer Service. This replaces the Code of Excellence idea that was approved in November 2014. Referred Back: 1. RPAC Grants & Resources only be used by Associations within their Association territorial jurisdiction 2. Associations may not support political candidates outside of their Association territorial jurisdiction This is in reference to instances where 2 or more local associations may have overlapping natural interests in political entities, such as counties, though the assigned “territory” by NAR may not necessarily cover that area. Example: TAR & Green Valley each may want to weigh in on issues or candidates concerning Pima County. This proposal would prevent that without prior written agreement between the 2 association & approval by NAR. It was deemed by the BOD that the proposal needed more work before being fully considered by the Board.

NAR 2016 Convention—Director’s Report Main Action Items (continued) RPAC State & Local Issues Mobilization Support— 1. Approved $34,960 grant request of the Puerto Rico Association of REALTORS to support Phase 3 of campaign to enact legislation in 2017 that repeals a 2015 law imposing a sales tax on real estate services. This tax was initially set at 4%, rising to 11.5% this past April. With NAR assistance, the increase was stopped, now the goal is to remove the “double taxation” completely. 2. Approved $168,600 grant request of Texas Association of REALTORS to support Phase 2.5 of campaign to enact property tax reform legislation in 2017. Texas has no Income Tax, so a large part of the state’s revenue generation is based upon burdening homeowners with property tax increases. Over the last 2 decades, local property taxes have steadily increased to the point that many property owners are being forced to sell their properties. The Texas Governor & Legislature are working to identify solutions & the Texas Association of REALTORS supports increasing the state share of public education funding from 44% to 50% & strengthening current provisions that limit annual increases in property tax rates. Phases 1 & 2 focused on Public education, outreach & building brand identification for the Association’s “Hidden Property Tax” cam paign. Phase 2.5 will create & implement an “activist” model that highlights the people who are most likely to take action when requested. This model will be used immediately to identify targets for a direct mail piece that will be sent before the end of 2016. NAR Legal Action Committee 1. Approved—purchase of Master Policy for Professional Liability Insurance for NAR, its affiliates, member association & association MLS’s ($1,229,857) - coverage the same as previous year. 2. Approved—purchase of NPE Patent Infringement Liability Policy for NAR, state & local associa-tions & MLS’s ($125,000) - This will provide protection against patent infringement claims & lawsuits from “non- practicing entities...NPEs...aka “patent trolls.” 3. Approved—NAR will contribute $50,000 to St. Louis Association of REALTORS towards legal fees incurred in challenging a St. Louis County rental ordinance—this ordinance requires landlords to obtain a license from the County before renting property, requires landlords to evice tenants who have been convicted of a variety of criminal offenses—the Association claims the ordinance is preempted by state law & is unconstitutional for various reasons, including impairment of the owner’s property rights. The Association has won a temporary injunction keeping the County from applying or enforcing the ordinance & is now seek ing a permanent injunction. 4. Approved—$10,000 to be applied to 1/2 legal fees & costs by South Carolina Association not cov ered by NAR insurance coverage for associations due to an action filed by the losing side of an arbi tration award issued by SC Association concerning procuring cause. 5. Approved—$160,651.69 to be paid from Legal Action Committee budget for NAR’s successful challenge of the validity of a patent owned by Data Distribution Technologies entitled “Web-Updated Data-base With Record Distribution by Email.” DDT agreed to grant a “covenant not to sue” in exchange for NAR dismissing challenges to the validity of the patent. This covenant protects the entire real estate industry from further claims or litigation alleging infringement of this patent. Dot REALTOR domains—period for members to claim free .REALTOR domain extended until Octo-ber 31, 2021. The transition of realtor.org to nar.realtor will take place in December.

3 NAR 2016 Convention—Director’s Report Committee Reports: RPAC Participation Council: * Participation nationally is at 32% (Goal is 37% of all members) * National Fundraising is at 115% of goal * Arizona is one of just a few states that has exceeded the goal for Major Investors & President’s Cir cle members, and has reached its Fundraising $ goal! However, we are in last place for participation in Region XI with only a 20% Participation Rate (6 member states) —What this shows is that mem bers who understand the value of an investment in RPAC are stepping up even more, while 100% of REALTORS in Arizona are enjoying the benefits won, while 4 out of 5 Arizona REALTORS are riding the backs of those who even made a minimum investment—including a very high percentage of Top Producers. An investment of $30 is not much to ask for the benefits we receive that far outweigh the investment. If you only made $20,000 in commissions this year, RAPAC saved you $1120 in extra tax on your commission by defeating Professional Sales Tax bills—which will be coming up again in the 2017 Legislative Session. For each $200,000 price you negotiated, the fact that there is a constitutional provision against transfer taxes in Arizona, your clients saved $4400 due to RAPAC leading the effort. We have to do a better job of educating the “Agent In The Field” about the what this investment does for them—and their clients. TAR is at the top of large associations in Arizona at reaching our goals...except for participation. When you’re in your office, ask your cohort to invest their Fair Share—after all, you wouldn’t pay for your competitor’s adver tising budget, would you? Land Use, Property Rights & Environment Committee: (I will also serve on this committee in 2017) Gridlock in the Senate has stalled efforts on a myriad of issues—now with Congress nearing the end of its term, “Lame Duck” time is short, and if anything gets done at all, it will be deal ing with an Omnibus Bill or Continuing Resolution just to fund the Federal Government past Dec 9th, when the government runs out of money. Again. * Climate Change Work Group—continuing on revision to NAR Policy Position regarding Cli mate Change. Input & commentary is being sought & provided by other relevant NAR committees. * Clean Water Act/Waters of the US Update—EPA has created a policy, under the Waters of the U.S. provision in the Clean Water Act, that would basically cause ANY seasonal or occasional stream, wash, pond, gully or ditch to be subject to EPA regulation & interpretration...whether on pub lic OR private land. On August 28, 2015, this rule was finalized & put into effect, along with the US Army Corps of Engineers as a regulatory agency—expanding Federal jurisdiction over waters beyond current prac tice, guidance & limitations despite these limitations being affirmed by 2 separate Supreme Court decisions. On October 19, 2015 a Federal Court ordered a stay of implementation, which could be lifted or reversed at any time. NAR’s position: Only Congress can fundamentally alter the Clean Water Act & opposes any efforts through policy, regulation or guidance to expand the act’s reach or otherwise infringe up on private property rights.

4 NAR 2016 Convention—Director’s Report Land Use, Property Rights & Environment Committee Legislation: H.R. 1732, the Regulatory Integrity Protection Act, sponsored by Rep. Shuster (R-PA), passed the House on 5/13/15. This bill would require the EPA to withdraw the rule and start the rule development process from the beginning, making sure the regulatory process is followed. Will be re- introduced during 1st 100 days of new Congress. * Working on the FY2017 appropriations and Omnibus Bill to fund the U.S. Government to include a provision to prohibit the EPA from expending any funds to implement the WOTUS rule. * Wildfires—funding to fight wildfires increasingly a problem. NAR is encouraging sufficient funding via the Forest Service’s Resilient Federal Forest Act (passed House, gridlock stalled it in Senate all year). Unlikely to be heard during Lame Duck session—efforts already beginning to reintroduce & pass both House/Senate during 1st 100 days of the next Congress. *Water Resources Development Act (WRDA)—basically, funding for Army Corps of Engineers —stuck in Lame Duck, will need to reintroduce. *Clean Air Plan—Power Plant Plan, which imposes standards impossible to reach by deadline arbi- trarily determined without examining cost or feasibility studies. Stayed in court. Unlikely to move for ward. EPA & concerned parties working together with utility companies to come up with new plan, with actu- ally reachable goals to improve haze & particulates without dramatically increasing cost to consumers. Example for AZ: Navajo Generating Station would have to shut down, without a replacement source in place (Public Service New Mexico was going to be the primary investor in a new natural gas plant, which would then allow phase-out of NGS, but was denied a rate increase by NM regulators to fund it). NGS is the primary source for electricity for the Central Arizona Project to pump water through its system, which runs “uphill” for major sections (i.e. from Phoenix to Tucson). *Comfort/Service Animals—Fair Housing Act—being worked on from many angles with HUD through several NAR Committees. *Colorado now has a law that it is illegal to lie about whether an animal is truly an “assistive animal” but the law has no teeth—$25 fine. What IS allowed under Fair Housing? 1. DO NOT ASK what the disability is, but you can ask for a medical provider’s statement that the animal provides a disability related service...you need to have a rule/policy in place...but also have a means in place to provide “accommodate a request.” 2. If a particular animal (not breed) has a history of violence, the animal can be removed or denied 3. Size of dwelling could be deemed a reasonable reason for denying an animal because of size ***ALWAYS 1st Consult An Attorney well-versed in Fair Housing for any issue related to service animals Should you or your clients experience an issue regarding service animals, please send your story to: Fred Under-wood, NAR Director of Diversity & Community Outreach Programs email Funderwood@realtors.org He can share them with HUD as we work towards solutions & guidelines.

5 NAR 2016 Legislative Conference—Director’s Report Land Use, Private Property Rights & Environment (continued) Positive News Regarding Wildfires! Firewise.org—great source for information to help your clients & community do simple things to reduce the risk of wildfires & protect homes. * Now, USAA gives discounts on homeowner policies for properties located within a “Firewise Community” work is ongoing to get more insurance carriers onboard. In our area, Summerhaven & Oracle are certified Firewise Communities. **Even individual subdivisions can become “Firewise Communities” with minimal expense—check out guide lines and how-to’s at Firewise.org —this could be a great way to show your value to your neighborhood or farming area. Even in non-forested areas, wildfire risk is growing (think buffel grass). Recent & Future Supreme Court Decisions on Private Property Rights: “If regulation goes to far, that constitutes a “taking” of property under the 5th Amendment.” —Oliver Wendell Holmes, 1922 Hawkes v Army Corps of Engineers—May 2016 (8-0 decision) A property owner has the right to have a court judge jurisdictional determination Background: A family business was told by the Army Corps of Engineers that their land was now sub-ject to their jurisdiction under the Navigable Waters provision of the Clean Water Act, and now had to apply for a Section 404 Permit to continue operating their family business (peat moss). This permit costs around $270,000 for fees & required studies to be performed. The nearest navigable waterway is 120 miles away from their land, so they disput-ed the jurisdiction, but the Corps of Engineers told them that they could not dispute the jurisdiction until they com-pleted the permitting process! Facing fines of $37,000/day & possible jail time, they still took the issue to court, and got an immediate injunction preventing collection of fines until it was determined whether they had a right to dispute jurisdiction or not. In May of 2016, the Supreme Court rendered a unanimous decision that property owners have the right to have a court judge jurisdictional determination, no matter what the Corps of Engineers says. Murr v Wisconsin—to be heard in April 2017, decision by June Can a government combine separate parcels without compensating the owner? Background: 40 years ago, the Murr Family purchased a residential parcel on the St. Croix River and built a 950 sf vacation cabin on it. 3 years later, they purchased the adjoining vacant lot as an investment for their kids future. Several years ago, the parents passed away & the children inherited both lots. In order to improve the existing cabin & update it, the family tried to sell the vacant lot next door. St Croix County halted the sale & told the family that they couldn’t sell it because the rules had changed—since the adjoining lot had no improvements, it was now tied to the lot with the house on it. Both parcels had separate Tax ID’s, and had always been taxed at different rates (improved/unimproved). Separate bills were mailed for each parcel, and no notification had been given that the parcels were joined by the County. Had the family bought a different parcel, not adjoining the original, there would have been no problem. This case was accepted by the Supreme Court in January of 2016. It will be heard by the end of April 2017,with a decision due by the end of June. These cases and others were argued by John Groen of the Pacific Legal Foundation, a non-profit group dedi-cated to the preservation of private property rights in the U.S. All cases are taken on a pro-bono basis.

Respectfully Submitted, Kent Simpson, Tucson Association of REALTORS NAR Director

2016 NAR Conference _________________________

James J. Tsighis

2016 NAR Chair Risk Management License & Law Forum; NAR RMC Member

NAR REALTORS® Conference & Expo Orlando, Florida November 2-7, 2016

Risk Management License and Law Forum Risk Management Committee

Report submitted by: “J.T.” James J. Tsighis, 2016 NAR Chair Risk Management License & Law Forum; NAR RMC member; I Risk Management License and Law Forum “Keep the Golden Years Golden: Vulnerabilities & Risk Mitigation When Serving the Elderly” Speakers: Erik Shuman, Gray Robinson, Miami, Fl. Barbara Fairfield, Dynamic Directions, Inc. Newington CT Highlights of this Forum included:

• Elder Abuse is considered the crime of the 21st Century • Financial Abuse reported to be 36.48 Billion in 2015 • Common scams by strangers include: home repair traveling con men; lottery and

sweepstakes; grandparents asked for money; • Common scams by professionals include: annuity sales; internet phishing; Medicare

scams • It has been reported that there is a 300% increase of death in 3 years after abuse • Abuse hit list: 90% are family member or trusted others • Alzheimer disease is on the rise; 2010 – 454,000; 2030 – 615,000; if a cognitive decline is

observed, get a professional physicians opinion • Be alerted to a recent conveyance of property or if a POA was created • Discussion of the different types of POA; guardianship and conservator; trusts and

probate • Pros and Cons of Reverse Mortgage solutions

Tip: Take a moment now to view the latest NAR introduction to Elder Abuse. Control/Click on the hyperlink below. Share it with fellow Brokers and agents in your office. Note: Premium Access registrants to the conference may access this session on PlaybackNow.

Window to the Law: Prevent Elder Abuse

NAR Associate Counsel Jessica Edgerton discusses how to identify and prevent elder abuse, an emerging risk management topic. NAR Associate Counsel Jessica Edgerton discusses how to identify and prevent elder abuse, an emerging risk management topic. www.realtor.org/videos/window-to-the-law-video-prevent-elder-abuse

II Risk Management Committee

Key Agenda topics covered included the following:

• ARELLO Report (see attachment) • Insurance Program Update, Eric Myers, Vice President, Victor O. Schinnerer commented

on the top E&O Claims including: fair housing, cyber fraud, property management, wire fraud; civil rights and new scams that are emerging such as the “Key Chain” and “Flash drive” scams;

• A new book entitled “Real Estate Brokerage Essentials” created by the NAR Legal Team was given to every member of the RMC. Navigating Legal Risks and Managing a Successful Brokerage is the most comprehensive business tool for brokers to run their offices efficiently and minimize their risks for legal liability. Available at www.store.realtor/rebe! Save 10% when you use code FLY16 at checkout.

• Regulatory Round-up included the topics on videos presented below:

Tip: Just Control/Click on the hyperlink and you’re in!

Window to the Law: New DOL Overtime Rules

Learn how the Department of Labor’s new Overtime Rule may impact the ability to continue to classify employees as exempt, and how to prepare for the December 1, 2016 effective date. Learn how the Department of Labor’s new Overtime Rule may impact the ability to continue to classify employees as exempt, and how to prepare for the December 1, 2016 effective date. www.realtor.org/videos/window-to-the-law-video-new-dol-overtime-rules

Window to the Law: Video and Audio Surveillance Issues

Learn about the legal considerations for real estate professionals when surveillance devices are present on a property. Learn about the legal considerations for real estate professionals when surveillance devices are present on a property. www.realtor.org/videos/window-to-the-law-video-audio-surveillance-issues Window to the Law: FAA Issues Drone Rules

Learn about the Federal Aviation Administration’s new “Small Unmanned Aircraft Rule,” taking effect on August 29, 2016. Learn about the Federal Aviation Administration’s new “Small Unmanned Aircraft Rule,” taking effect on August 29, 2016. www.realtor.org/videos/window-to-the-law-video-faa-issues-drone-rules

• The Risk Management License and Law Forum will sunset this year; The Risk Management Committee will have a new name next year. It will be known as the Risk Management Issues Committee.

• Risk Management Issues Report/Emerging Issues/State Reports; 9 pages; 18 responses from 16 states; (see attachment)

ARELLO Conference Vancouver, B.C. September 21-25, 2016 James J. Tsighis, 2016 NAR Chairman Risk Management License and Law Forum Sessions/Meetings Attended: Thursday, September 22 District 4 Caucus Law and Regulation Committee Fair Housing Committee Real Estate Practices Round Table Friday, September 23 Keynote Speaker Bruce Kirkby Regulation Around the World

The Right Stuff: Are We Getting It Wrong? Examining Core Competencies of the Real Estate Professional Appraisal Subcommittee Presentation

Saturday, September 24 Case Law Update Highlights of the Conference Law and Regulation Committee: Committee charge was read. “Monitors state/provincial/territorial and federal legislation and case law, real estate trends, regulatory matters affecting the real estate industry, related industries and consumers.”

• Various jurisdictions presented their updates and impact the North Carolina Supreme Court decision, dealing with anti-trust issues, has had on their state. Note: ARELLO has detailed, updated info on their website and will continue to monitor activity. www.arello.org

• Finley Maxson, NAR Senior Counsel gave his report on the following: License Portability: NAR is currently preparing a tool kit on the topic Drones: Rules have been finalized by FAA; commercial drones can be utilized; standards are lower than first indicated; some restrictions still apply; federal law still subject to local laws that deal with privacy issues; Feds are silent on privacy issues; complaints go directly to FAA not MLS; TRID: NAR was instrumental via letter to CFPB addressing lender’s ability to share information on the CD (closing disclosure) to real estate broker and agents in the transaction; some banks are still reluctant to share the CD pending final dissemination by CFPB; ADA website accessibility: some legal entities are sending demand letters to real estate brokerage firms indicating they are not in compliance; the DOJ proposed rule is coming in two years; 2 years to comply is based on a rulemaking they are undertaking for governments and so could be a model for the DOJ website rules. “COMING SOON” has reached the state of Alaska; NAR Risk Management License and Law Forum: An invitation was extended to attend the NAR Conference in Orlando and attend a special forum on “Keep the Golden Years Golden: Vulnerabilities and Risk Mitigation When Serving the Elderly”

• Discussion ensued on “Coming Soon” and the impact these listings were having on consumers and real estate agents along with the emergence of “surveillance issues” from both video and audio systems present in residential properties; Note: notwithstanding the fact that each state may be handling this issue differently NAR will be in the process of coming out with a new video on the subject soon.

Fair Housing Committee:

• Familial status issues such as discrimination against children and the disabled are still a serious concern taking place in rental units;

• A hand-out on a new “Showing App” was distributed by the Texas Real Estate Commission; these “mobile apps used to “hire” another license holder to show your buyer a property are popping up everywhere.” A practice tip issued by the TREC: Limit use of a “showing” app to agents within the same brokerage when broker has a written policy and consents to payments.

• Jurisdictions presented brief statements of what was happening in their respective areas; one major area centered on teams and new challenges such as: team adverting being misleading to the public; formation of new license laws addressing team issues; team leader names, size, and prominent positioning on agent signs to name just a few.

Real Estate Practices Roundtable:

• Teams: Many in attendance talked about teams and respective challenges; some jurisdictions are imposing financial fines and hiring specially trained individuals to handle increasing complaints;

• Communication: Jurisdictions are working on improving methods of communication with their members including electronic newsletters; articles; surveys; use of social media; mandatory courses for supervising brokers;

• Dual Agency or Limited Dual Representation: Few states have it; most d not; those that do are experiencing success without difficulties

Regulation Around the World:

• Introduction to this topic by Lisa White from Nova Scotia focused on the importance of educating the consumer; what consumers need to know; and the means and methods of educating the consumer; the importance and utilization of standard forms;

• Bryan Chaplog, CEO of EAAB (Estate Agency Affairs Board) from South Africa spoke on a variety of topics; combating unlicensed activity; the development of a safety app; the creation of a youth empowerment program and major efforts made to appeal to the youth (under the age of 35) in his country to sell and list real estate. He reported the results were extraordinary and very successful.

The Right Stuff: Are We Getting It Wrong? Examining Core Competencies of the Real Estate Professional.

• Marc Gould, Vice President, Business Specialties, National Association of REALTORS®, Dean, REALTOR® University moderated a Panel Discussion that covered questions covering: consumer protection; the meaning of having a real estate license; the focus or lack thereof on professionalism in our industry; the three buckets of concern presented by the moderator and covered by the panel included: if current education standards are appropriate; if proper consumer protection exists? And professionalism and the rules around it; This was a very informative and vibrant panel discussion which also included the components of specific test creators;

Appraisal Subcommittee Presentation

• Take a way’s included: appraisals for federally related transactions must be performed by appraisers active on the National Registry; a significant decrease of appraisers over the past few years down from 84,000 to 79,000 has taken place; recent complaints from appraisers are due to 1) AMC (Appraisal Management Companies) rules and fees 2) lender restrictions 3) collateral underwriting; 4) new minimum standards and requirements set by the AQB (Appraisal Qualifications Board);

Case Law Updates

• The format for this two hour presentation was both entertaining and informative; 15 actual cases were covered; ARELLO members role-played the parts of plaintiff and defendant; the audience was given a chance to participate in determining the actual outcome/decisions by using their I-phones;

• Each attendee was given a copy of the ARELLO 2016 Edition of the Recent Court Decisions/Law and Rule Changes produced by the Law & Regulation Committee.

~ End ~

RISK MANAGEMENT ISSUES REPORT

(Responses received: 18 responses from 16 states)

OCTOBER 2016

ADVERTISING

Arkansas • Social media "advertising" is another concern to our Realtors as well as the Arkansas Real

Estate Commission. I believe more education is needed for our Realtors to understand that what they post on certain social media sites comes under the "advertising" regulations.

Mississippi • Proper display of brokerage information when advertising on the internet

ADA WEBSITE COMPLIANCE

Iowa • We are encouraging members to research the ADA Website Compliance.

Texas

• There has been much recent discussion about issues with ADA website compliance.

AGENCY

Arizona • Buyers, sellers, landlords and tenants unsure how to proceed after their agent’s license has

been terminated or their agent has received a cease and desist letter from the Department of Real Estate.

• Unrepresented sellers by listing agents – agency issues when a buyer’s agent presents and

discusses a contract with an unrepresented seller.

New Hampshire • Present the Brokerage Relationship form at the first business meeting.

U.S. Virgin Islands • Our license law is outdated and only recognizes agency and sub agency to Sellers. We also

still have temporary licensees without any real estate education. APPRAISALS Colorado

• There is a shortage of Appraisers in Colorado and we are experiencing delays meeting closing deadlines if the Brokers are not careful. We are seeing 3-5 weeks before an agent receives a call from appraiser to set up the physical inspection, then another 2 weeks before the appraisers report is delivered to the lender. VA is the most time delayed due to the shortage.

Washington

• Difficulty in obtaining timely appraisals. We’re hearing horror stories of up to three months for waiting periods. Of course a number of “entrepreneurial” appraisers’ are offering expedited services for horrendous premium charges (500% of normal fees).

AUDIO/VIDEO SURVEILLANCE New Mexico

• We recently created a form to deal with tenant-occupied properties. There was an incident in northern New Mexico in which a tenant threatened to bring an invasion of privacy suit against an owner/seller and broker because the broker had taken interior photos of the home for purposes of selling the home and those photos ended up on public-facing websites (via MLS syndication). The matter was settled prior to litigation.

BROKER ISSUES Louisiana

• Broker responsibility, or lack thereof, is a hot topic in Louisiana. Many agent issues could be avoided with strong broker leadership. In LA, for the first time in 2017 mandatory education for brokers will be required on broker's responsibilities. It will be required that brokers take this four-hour mandatory class in person, not on line. In addition, all broker licensees will be required to take the agent licensees' mandatory class topic (2017 topic is on various insurances) and on a four hours topic of their choice for a total of 12 mandated hours for the year. Responsible brokerage was also brought up as a concern by many at the recent ARELLO meetings.

U.S. Virgin Islands

• Lack of training, guidance, supervision and education by brokers. COMING SOON LISTINGS Alaska

• We are seeing a growing number of "Coming Soon" listings and I would like to hear how other states and areas are handling that issue. In many instances properties are being advertised before a licensee even has a signed listing agreement.

Arkansas

• Coming soon signs are another issue that I know is a problem here and across the nation. Louisiana

• Pocket" and "coming soon" business practices are emerging. These practices call into question the negative impact of the consumer's property not being exposed to the broadest possible audience.

CONTRACT ISSUES Arizona

• Unilateral canceling of contracts and ignoring obligations of the contract by both sellers and buyers.

New Mexico

• Liability arises when brokers who lack familiarity with the contracts and forms that they utilize fail to inform their clients/customers of their options and responsibilities under those contracts and addenda.

CRIMINAL BACKGROUND CHECKS Texas

• There has been much recent discussion about HUD’s Criminal History Background Check Policy.

CYBER SECURITY/DATA SECURITY Alaska

• Scams on Craigslist continue to be a problem. Scammers are obtaining our listing information and copyrighted photos through real estate portals and running ads for homes at ridiculously low lease rates. When called, they say they have an extensive list of people who are interested and the caller must put up a deposit to hold the home. Law enforcement is unclear who has jurisdiction over these types of scams since many are outside the USA. Perhaps NAR and Craigslist could put their heads together and figure out a way to stop it.

Arizona

• Lax monitoring of social media, email and websites and client information not being secure in emails – there is a need for more education regarding advertising in social media and how to handle security on the internet. The Arizona Association of REALTORS® offers, as a member benefit, free tech support. We must support tighter security.

Colorado • We are experiencing Wire Instruction fraud. Buyer are becoming victims to online banking

fraud, whereby our clients are receiving false emails containing Wire Instructions to a location that is off-shore or who knows where. Very savvy operations where the emails look very authentic from the title company or the real estate broker. Brokers are more aware and bringing to their client's attention.

Florida

• Cyber-security, e.g. hijacking of agent and closing agent emails and the altering of wiring instructions

Idaho

• The newest issue is related to wire fraud. Most of these examples are related to the agent/brokerage and the title companies, however we also have had cases where our Association office as well as our legal counsel have both been targets. We cannot express enough how serious this is and how smart these predators are as they actually log into your email accounts and watch correspondence between you and your contacts and know exactly when to strike! Everyone, please be careful.

Iowa

• We are encouraging members to be vigilant on Cyber issues. Ohio

• Ohio is experiencing Wiring Fraud and email cyber-attacks. Closing funds have been been victim to hackers.

Texas

• We are continuing to see issues with cyber fraud and security concerns including situations of wire fraud.

U.S. Virgin Islands

• Agents emails have been hacked and fraudulent instructions were sent to the customers instruction them to wire money to hackers.

• Homes that are for sale for many millions of dollars are appearing in rental ads on Craig’s

List. Totally fraudulent and customers send money to scammers to rent them. Washington

• Wire fraud

FAIR HOUSING New Mexico

• I'm concerned about the Supreme Court's holding in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. in which the Court held that a disparate impact claim is viable under the FFHAct. I believe it will arise in New Mexico in the context of denying the rental applications of felons and/or Section 8 housing voucher recipients.

FINANCING ISSUES Washington

• Using incompetent lenders thus wreaking havoc on buyers and sellers.

FLOOD PLAINS Louisiana

• Flood mapping dictates what homes are required to have insurance in order to finance through any federal program. If in certain high risk zones flood insurance is mandated. Many who don't get flood insurance based on this system should. Unfortunately, even higher areas that are not required to have flood insurance have experienced severe flooding in recent years. The reauthorization for the program is up in 2017 (again). If not reauthorized by congress, next year thousands of homes will not be eligible for financing programs because they can't obtain reasonable flood insurance rates thorough FEMA's subsidized program. And

due to a confusing mapping system that tells property owners that they do or don't fall into a high risk category, many don't get flood insurance who may really need it. Other natural disasters also occur each year. Is there a better way to insure all property owners who are subject to experiencing catastrophic losses (tornados, earthquakes, mudslide, etc.)? Is it time to look at a system where everyone pays something that goes towards immediate disaster relief when these tragedies occur?

LANDLORD/TENANT ISSUES Arkansas

• Landlord / Tenant issues are very much on the Arkansas Realtors Association radar. We know that there will be a lot of conversation in the 2017 Legislature in regards to these issues. There is a group that is wanting swing the pendulum too far in the tenant’s direction to make it almost impossible to evict a tenant for non-payment of rent.

MONEY LAUNDERING Florida

• Agents in 3 Florida counties need to be aware of the treasury's Fin Cen "Targeting Order". While the latest order affects only 3 of our counties, they are 3 of our most populous and therefore affect ten's of thousands of Florida agents.

PROPERTY CONDITION/DISCLOSURE Arizona

• Seller Property Disclosure – incomplete information and lack of explanation when issues are raised.

Colorado

• Brokers taking it upon themselves to write poor disclosures. Not understanding the legal ramifications, the contract, and not seeking legal counsel.

• Broker's failure to disclose defects/ adverse material facts has been a big concern.

New Hampshire • Reminding agents to not fill out the sellers disclosure for their sellers.

New Mexico

• Disclosure/Misrepresentation, including erroneous square footage measurements, description of properties (for example, calling a 2 BR w/a basement a 3 BR home), failure to disclose that building permits were not obtained for additions/remodels and representing a property could be purchased using FHA financing when it could not (for example, due to FHA flipping rules).

U.S. Virgin Islands

• Sellers Disclosure of Property condition issues.

PROPERTY MANAGEMENT

Mississippi • Property management services provided by licensees who lack adequate understanding of

specialized skills, responsibilities, and liability that stems from these services.

U.S. Virgin Islands • We have many management companies and individuals handling short term vacation rentals.

Some may not be handling funds properly as escrow accounts cannot earn interest.

PRIVACY

Arizona • Violations of the DNC List by REALTORS® and the Arizona Attorney General’s filing of

consumer fraud lawsuits against “telemarketers who ignore the law and continue to harass Arizonans on the Do Not Call List”.

REALTOR® PROFESSIONALISM

Arizona • Additional information and classes on the Code of Ethics (more than every 2 years).

SHORT TERM/VACATION RENTALS

Arizona • The question is “An American citizen owns a rental property and wants to offer it for rent

through AirBNB”. Are they bound to the Federal Fair Housing laws? AirBNB just posted some changes to their rules for owners, but they are muddy and do not reflect what happens when an owner asks their agent for advice.

SOLAR PANELS

Arizona • Leased versus owned and how it affects a sale, and the buyer’s ability to qualify under a

lease.

Colorado

• Brokers not disclosing the lease terms for solar panels installed on homes at the time of listing to potential buyers. Buyers must qualify for the lease amount and because of lack of awareness of lease terms being undisclosed is causing delays in closing or worse.

New Mexico

• Several issues have arisen as of late. For example, in one, the buyer had to qualify with the financing company to assume the solar panels loan, but they had not done this before closing. In another, the buyer was not keeping the solar panels and they were removed. However, the

financing company would only move them to another property, not take them back, so the debt still existed until the seller relocated the panels which delays closing.

Utah

• CEO Message: The Solar Storm It seems like every time I turn around another neighbor has installed solar panels. It’s an exciting advancement in clean energy and home tech, but what does it mean for home buyers and sellers? It means that you, as agents, need to know a little about solar. Here are a few questions to ask if you are listing a home with solar panels or if your buyer is interested in a home with solar panels: Does the seller own the solar equipment? Some homeowners buy the solar panels and equipment outright, others lease them. This is important info to know. If they are owned, then the seller could leave them and there may be no further obligation for the buyer. If they are leased, then the buyer may be expected to assume the lease and begin making the payments. The lease would need to be looked at to see what options the seller has to terminate the lease if the buyer is not interested in picking up the payments. Either way, this is a good conversation to have early on in the buying process so that you can avoid misunderstandings at settlement. Does the seller plan on taking the equipment? Some sellers may plan on taking their solar panels and or equipment and installing it at their new home. Some solar companies have an option where if the seller is financing the solar equipment, the solar company will move it to a new home for a nominal fee. Just like any other included/excluded item, a buyer needs to know if the solar equipment is staying or not. Is there a lien on the property for the equipment? Even if the seller “owns” the solar equipment, they have usually financed it. Sometimes in financing the solar equipment, the homeowner will agree to let the solar company put a lien on the home. As you can imagine, this can become a problem at settlement. Who is paying off the lien? Are those funds coming out of the proceeds? These are all questions that should be addressed long before settlement. Solar technology keeps evolving and is likely to become more and more common. Brush up on how some of the more popular solar companies approach the cost and installation and make sure you ask these basic questions to avoid any potential issues at settlement.

TEAMS Arizona

• Unclear signage, unclear MLS agent websites, and non-identification of the agent writing the contract. Who is the “real” agent?

Louisiana • Louisiana is still experiencing issues with teams. Some months ago the LA Commission

required that team names shall not contain any of the following: real estate, brokerage or real estate brokerage, realty or company. The intent was for the public to not be mislead or confused as to with whom the team/agents are affiliated and clarify that they are not the Broker but licenses. The enforcement of this change is ongoing. Additionally, in advertising, especially on signs and printed ads, the broker's name, logo and contact information is often so small, shadowed or non-existent that the public is misled. In recent ARELLO meetings it appears that most states have similar issues.

Mississippi

• Questions center around the operation of teams

MISCELLANEOUS ISSUES

Alaska • Alaska, because of its size (one REALTOR® per 400 square miles) faces some challenges

with remote listings where no licensees reside. Since it is not economically feasible to incur thousands of dollars in travel expenses to take a listing, many of these properties are sold without the licensee ever seeing the home or meeting the seller in person. Additionally, the licensee is often left with no alternative but to hire local unlicensed help to conduct some of the activities on site (showings, scheduling inspections, etc.).

• Alaska is a non-disclosure state, and we are frequently seeing sites such as Zillow obtaining

sales data, presumably from licensees. Are other N.D. states experiencing similar issues? Arizona

• Zillow – there is no control over incorrect information or expired ads.

Colorado • A couple title company and brokers organized/created their own joint venture. Title premium

is split between the title company that does all the work and the created "title company" that is the joint venture. The whole point is to pay back the brokers for sending their title business to the small title company. Clearly, potential for the public to be harmed.

• CO Division of Insurance regulation 8-1-3 is a very comprehensive re-write of what Title

Companies can do in their business development activities. Colorado took that further than RESPA does. The changes and restrictions are significant. The purpose of this regulation is to ensure that consumers receive the benefits of competition in the area of title insurance and to ensure consumer protection. The regulation also proscribes unlawful inducements, deceptive trade practices, and discriminatory acts, all of which are detrimental to the consumer and, in the aggregate, may threaten the solvency of title insurance companies and title insurance agents.

New Hampshire

• Agents understanding what they can and can’t do depending on their relationship with the consumer particularly as a Facilitator.

New Mexico • Several suits have been brought in the last three months dealing with seller-financed

transactions in which the buyer did not obtain title insurance or even a title search. When the buyer went to refinance the property, the buyer learned there were excessive liens against the property. In a couple of these transactions, brokers were involved on one or both sides.

• Realtor.com and its associated sites are accepting listing data from anywhere. They should

only be allowed to post listings from accredited broker sources. This fraudulent ad was syndicated from VFlyer (see attached). By not assuring their source of data, Move Inc is dragging the Realtor brand through the mud. I would suggest that if their contract with NAR does not currently say so, that they be precluded from accepting data from non-broker sources. I just got off the phone with VFlyer, and they are doing what they can, but it’s not enough.

Here’s what happened to a NM broker this week:

This is not the first time this has happened to one of my listings. In this case, it was a rental managed under my property management company – M&S Property Services, LLC. The property was at 4542 Pyrite Ct NE in Rio Rancho, NM. I had placed an ad on my own website and syndicated it to 9 other sites, including Zillow and Trulia. I was working at the home yesterday, and several potential tenants stopped by the home and asked to see it. When we started talking about rent and deposits they kept quoting a rent of $750, although the advertised rent was $1095. When I inquired as to where they were getting their numbers, one person showed me an ad on Realtor.com, and another on Doorsteps.com, which is a Realtor.com controlled site. I immediately contacted Realtor.com, who contacted VFlyer.com and had the ad removed. Below is a copy of the ad on Backpage.com. Notice the last sentence in the description which begins “Landlord pays all utilities and no credit and income checks…” that was not in my ad of course. I am trying to get VFlyer to return a call to identify the user for this flyer. There is a flyer number bottom right. Vflyer charges a subscription fee to users and syndicates their rental ads to 10 different websites. There is no individual or company name, and the link is no longer working as I had the ad killed, but all that was there was a gmail.com email address. This may have been anatomized by the web site, but one of the prospects received emails. They make these ads so enticing and convincing it’s hard for a strapped consumer to resist.

I find these ads based upon my photos and my copy all the time, primarily with homes for sale which they advertise for rent.

This is a daily fraud perpetrated on New Mexico consumers. I believe this issue deserves some immediate attention.

*Update: Since my post, realtor.com reached out to me with the following:

Realtor.com thanked me for the detailed information as they do not want bogus listings appearing on the realtor.com website. They advised that we do not need to call VFlyer directly if we find these inaccurate postings on realtor.com. To have any bogus listing removed, they are requesting that we call realtor.com Customer Care at 800-878-4166. Realtor.com will also request that VFlyer permanently block anyone found posting inaccurate listings so they cannot send any further listings to the realtor.com website. Although this type of listing is seldom found on realtor.com, if this continues to be a problem, they will take further action.

I am pleased with realtor.com responded quickly to this concern, please feel free to share this with your members.

Washington • Waiver of contingencies in a competitive market

Bidding purchase prices well above a sustainable market value

2016 NAR Conference _________________________

Lee Cooley

AAR Communications Manager

2016 CDI | NAR Convention Key Takeaways Lee Cooley, AAR Communications Manager COMMUNICATION DIRECTORS INSTITUTE (CDI)

• NAR Consumer Advocacy Outreach Director Rick Miller (retiring) and TargetSmart Digital Communication Strategist Kevin Reid reviewed Home Ownership Matters

o Social media now includes Twitter and YouTube, as well as Facebook previously o Pos. redirect from HomeownershipmattersAZ.org or AZHomeownershipmatters.org to

http://homeownershipmatters.realtor/states/arizona could qualify as consumer-facing webpage: themed content 1x mo.; (national) videos 3x mo.; CFAs in right nav, but we must share any collected consumer data -- Note: This is not reciprocal, but HOM will send any approved local/state CFAs to 189,322 AZ consumers for a price

o Gave a shout out to Illinois’ www.realpropertyalliance.org (AAR looking into it) o Rick Miller’s replacement will be Erin Murphy (emurphy@realtors.org)

• NAR Director of Member Engagement Nobu Hata quickly revisited online best practices

o Few folks Read More, so keep FB posts to around 140 characters

• Reporters Roundup* w/Mary Doyle-Kimball, Nat’l Assn of Real Estate Editors; Mary Shanklin, Orlando Sentinel; Ralph Bivins, Realty News Report; Steve Brown, Dallas Morning News

o Story tips: Trends illustrated w/actual buyers/sellers, community news; historic homes

• Roundtable Discussion w/CommDirs from Chicago; Houston; Michigan; Monmouth County (NJ); Palm Beaches; Royal Palm Coast

1. Rebranding o Good exchange about rebranding from MAR to MR o RPCRA: remember to change voicemail greetings too

2. Consumer Outreach o RAPB advertises in Sunday newspaper only w/full pg. advertorial from assn.

president re. community outreach, etc.; also have dedicated consumer site o MOMLS has a 25 person committee that works community events, keeps leads o HAR has a robust consumer site as well; plus 6 communication staffers, 34K

members and an annual ad budget of $1.3M plus trade advertising; they use an UBER model for sharing unassigned leads

3. Marketing to Members (primarily RAPB as they’re using RAMCO/ClickDimensions) o Incentivize members to test new website w/gift card drawing at trade shows o Some had white listing issues with AOL o Avg 22% Open Rate with Members o Subset emailing lists by subject line opens; e.g. EDU o Dynamic Advanced Find in ClickDimensions re. Opens, registrations, even calls o Free Dues Contest for Early Renewal; Three levels: 1) Full, 2) Local, 3) MLS o HAR has a master list that prevents opt-outs of dues, board elections emails;

separate list for participating PAC investors

CDI cont’d 4. Social Media:

o HAR will share social media policies for staff and officers; uses Mevo for FB Live o Out of 7 associations, only RPCRA had an Instagram page; not on homepage

NAR CONVENTION

• Charitable Foundation Idea Exchange (36+ attendees) o Rent a sports arena for tour-fundraiser, promote as “Billion $ House” o Hockey VIP teams: tickets, jerseys, Zamboni ride raffles o Opt-out donation w/dues; 4 levels from $15 to $250 o Scholarship program, Benevolent Funds toolkit o Home Depot quick to contribute gift cards; HD Foundation Grants o Solicit airline miles for raffles o Chili Cook-Off w/3 gal. donations from local restaurants o OCAR-Palooza with food trucks and bands o REALTORS® Care Foundation of GTAR includes down payment assistance pgm o Ada County Assn of REALTORS® House of Soup (video)

• Valuing Solar Installs for Resale – Craig Foley; Eileen Oldroyd; Sandra Adomatis; Chet McGensy

o Electricity Markets and Policy Group o PV Value® Photovoltaic Energy Valuation Model (registration required)

• Social Media Risk Management – Trista Curzydlo, Esq. (course list)

o Does my online brand conflict with my off-line brand? o What is my potential for litigation? o Contextual Integrity - conceptual framework for understanding privacy expectations and

their implications o Astroturfing - masking the sponsors of a message or org to make it appear as though it

originates from and is supported by a grassroots participant o Paradox: Gen-Xers write/distrust most online reviews! o NAR SOP Article 15.2: …refrain from making false or misleading statements about other

real estate professionals, their businesses, and their business practices...applies whether false or misleading statements are repeated...by technological means (e.g., the Internet)

o Online posts affect you, your broker, company and the industry o Do you own photo rights? o Remember: give attribution and get permission to repurpose content and assets

• ADA Compliant Website – Keynote speakers Alisa Carr, Mary Brougher

ADA Title III Regulations apply to (websites) of public accommodations W3C First Review of Web Accessibility, end-user testing is critical Google Chrome Accessibility Developer Tools W3C Web Content Accessibility Guidelines (WCAG) 2.0 AudioEye free accessibility analysis

2016 NAR Conference _________________________

Nikki J. Salgat, Esq.

AAR Associate Counsel

2016 REALTORS® Conference & Expo November 3rd - 6th

Nikki Salgat

11/3: Legal Seminar 1. Litigation Update

• Copyright Infringement o obtain proper permission to use photos by way of a written agreement and comply

with DMCA • Agency

o CA lawsuit = misrepresentation regarding square footage; Appellate Court ruled fiduciary duty due to dual agency; currently at Supreme Court

• RESPA o paying fair market services = no violation o PHH case probably not over

• Patent Infringement o NAR filed petitions with the U.S. Patent Office against Digital Distribution

Technologies challenging the validity of patent claims; settlement = prevent the company from suing or threatening to sue real estate practitioners, brokerages, MLSs and other companies in real estate industry that offer email alerts to consumers about new or updated listings

2. Trademark Video – Maintaining the REALTOR® Brand for the Next 100 Years

• History of the REALTOR® trademark • Proper format, use and context • Use of REALTOR® Logo in branding

3. Telephone Consumer Protection Act of 1991 & Texting

• Obtaining consent • Discussed best practices for obtaining member cellphone numbers

4. ADA Websites, Criminal History, Drones & Overtime

• Use of sUASs – requirements, operational limitations • ADA website accessibility – 9th Circuit = ADA only applies to physical structures and

requires a “nexus to a physical structure” • Tips for website accessibility and compliance • Department of Labor – Overtime Rule • Use of criminal history and disparate impact standard

5. Core Standards Update

• Procedural changes effective with Third Compliance Cycle • Discussed the Organizational Alignment Core Standards policy that was approved by

BOD on May 14, 2016 • To date: 29 surrendered charters, 115 mergers

6. Policy Update • Partnership with the Council of Multiple Listing Services • Discussed Commitment to Excellence Advisory Board

7. Multi-Board Directors & Conflict of Interest Panel

• Panelists discussed and answered questions regarding fiduciary duties and duty of loyalty when representing multiple boards

8. NAR Risk Management Videos

• Presented risk management videos submitted to NAR 9. Annual Antitrust Compliance Program and Other Matters 11/3: NAR 360

• “And then some” videos • Elizabeth Mendenhall interview regarding realtor.com

11/4: Federal Issues

• Political position is fine regardless of whether the Republicans or Democrats take the House or Senate

• FNMA/Freddie Mac 1. GSE discussion = Trump is silent on housing issues; Clinton is on the defensive 2. Federal Housing Finance Reform = not priority for at least 2 years (2018)

• Flood Insurance 1. Important for 2017 2. NFIP deadline for authorization = 9/30/17

Will push for long-term reauthorization Go to FEMA for rulemaking instead of waiting on regulatory Go to states to get private market flood insurance; adopt own flood

insurance program • Tax Reform – discussed 3 tax reform plans and their effects

11/4: Expo

• Visit vendors 11/4: Risk Management & License Law Forum – Elder Abuse

• Elder abuse is vast and expected to rise • Elders are abused by strangers, professionals, friends, families, caretakers • Discussed the effects of elder abuse and how seldom it is reported • Alzheimer’s is on the rise

o if there is cognitive decline, get a physician’s opinion • Discussed Power of Attorney, Guardianship, Conservator • Discussed revocable trust, irrevocable trust, and probate • RED FLAG – if property was recently conveyed or POA was entered into • Discussed reverse mortgages

11/4: Risk Management Committee Meeting

• JT gave report on Elder Abuse and ARELLO o Committee members that attended Elder Abuse class gave positive feedback o JT recommended to keep sending chair and vice-chair to ARELLO

• Insurance – Top E&O Claims o civil rights, fair housing, property management, cyber fraud/wire fraud/phishing,

dual agency, marijuana • Legal update

o sUAS, Department of Labor overtime rules, ADA website accessibility • Risk Management Issues

o Discussed issues in states o Only 16 states reported their issues to the committee

11/5: Navigating Treacherous Roads in Property Management

• Every state is different. Know your state’s laws. • Have policies in place and follow them • Abandonment – how do you know?

o Status of utilities o If rent is delinquent o Is there personal property in the home? o Contact tenant in multiple ways o Post a notice

• Personal property o Take inventory of personal property photos o Store personal property of value

• Evictions should be last resort • Service/comfort animals

o Fair housing service animal does not require training o Insurance issues

Is there another company that will give insurance Is the new insurance a reasonable accommodation Document everything

o Can ask for vaccinations o If proven history of danger, then may be able to deny o If HOA or city ordinance that does not allow animals, then have the renter go to

HOA for permission o Call Fair Housing office in state to ask questions

11/5: Property Rights and the Supreme Court

• Murrs o The 5th Amendment provides that the government may not take property without

just compensation. Court cases have determined that “parcel as a whole” is not considered a taking. However, how is “parcel as a whole” defined?

o U.S. Supreme Court granted review to the Murrs.

The Murrs owned a parcel with a cabin and purchased the vacant lot next door 3 years later. The children now want to sell the vacant lot but the government will not them sell the parcels separate even though taxes have been paid separately and the parcels have never been joined. The Murrs are suing for taking of the property.

• Hawkes o Section 404 of the Clean Water Act established a program to regulate the

discharge of dredged or fill material into waters of the United States, including wetlands.

o The Army Corps of Engineers designated property owned by The Hawkes Co., Inc., Pierce Investment Company, and LPF Properties as “wetlands” over which the Corps has regulatory authority.

o Does the Army Corps of Engineers have regulatory power? o Supreme Court in an 8-0 decision said that a person can challenge the assertion of

jurisdiction in court. • Pacific Legal Foundation is a 501(c)(3) company that assists with property rights

o http://www.pacificlegal.org/page.aspx?pid=3833 11/5: Professional Standards Committee/Professional Standards Forum

• Forum o Discussion regarding parties being offered an opportunity to settle at the

conclusion of arbitration hearings o Commitment to Excellence Update

A lot of membership discussion – for and against • Committee

o Passed changes to Code of Ethics and Arbitration Manual Hearing Panels are not required to accept the Directors’ recommendation

to increase discipline. Offer parties an opportunity to settle at the conclusion of arbitration

hearings. Add additional example to list of non-arbitrable issues

o California Association of REALTORS® pilot program updates Program = publication of ethical discipline Publish name, photo and summary of findings of fact

• Member sign form (license to publish) and provide photo Discussed cost of program (staff and other) to create and implement

o Commitment to Excellence framework passed to move forward with program 11/5: General Session

• Paula Serven recognized as REALTOR® of year • General Colin Powell presentation

11/6: Code of Ethics Quadrennial 11/6: Arizona Caucus

1. Discussion regarding Delegate Body voting for a proposed change to the allocation formula for state and local association representatives to the board

2. Professional Standards • Housekeeping to the Code of Ethics and Arbitration Manual • Commitment to Excellence framework passed

3. RAPAC • Exceeded Major Investor and President’s Circle

4. Risk Management • Elder abuse

5. Resort & Second Home • Doing well

6. Broker Involvement • Encourage Call to Action from Broker email

7. Membership & Jurisdiction • 29 Boards dissolved

8. Research • Student loans and tiny homes impact • HUD pet laws

9. Diversity • 50th Anniversary of FHA • 89 diversity grants = $172,000 • NAR support legislation – sexual orientation and gender identity

10. MLS & Policies: • Keep an eye on upstream and CMLS

11. Diversity • Workshop – before grant – already approved • How to enter conversations

12. Professional Development Committee • Rewrites of: (1) ABR (Evan Fuchs); and (2) SRS and new handbook • Investment = new • CRB is looking for instructors and content to change course

13. Land Use & Environment i. Working on Clean Water Act, Power Plant Plan

ii. Lame duck 14. Commercial Legislation & Advisory Board

• 1031 exchange 11/6: Region 11 Caucus

• Each region presented a couple of the most recent issues