Senate Bill 1438(Enrolled)

Contact: Office of Policy and Legislative Affairs

Agency: Licensing and Regulatory Affairs

Analysis

Topic: Realtors
Sponsor: Senator North
Date Introduced: September 19, 2002
Date Enrolled: December 12, 2002
Date of Analysis: December 19, 2002

Position: The Department of Consumer and Industry Services supports the bill.

Background: Currently, all real estate brokers, associate brokers, and salespersons renew their licenses annually. Further, MCL 339.2504(4) requires that licensees complete 6 hours of continuing education per year as a condition of renewal. Obviously, the present law speaks in annual terms. The proposed bill would increase the license cycle to three years, which would require an adjustment in the number of continuing education credit hours required over a 3-year cycle.

Description of Bill: SB 1438 proposes to increase the annual renewal cycle to a three-year license cycle. Concurrently, the annual continuing education requirements would be increased from 6 clock hours to 18 clock hours.

Incremental continuing education requirements would be phased in over time to prevent continuing education providers from losing business due to lack of enrollments (which might occur if licensees were to procrastinate and try to obtain all of their continuing education requirements in the final year of a 3-year cycle). The bill proposes the following regarding continuing education courses and clock hour requirements:

· A licensee shall complete at least 6 hours of the required 18 hours of continuing education courses during the time period from November 1, 2003 and ending on December 31, 2004.
· During calendar year 2005, a licensee shall complete at least 6 hours of the required 18 hours of continuing education courses.
· During calendar year 2006, a licensee shall complete at least 4 hours of the required 18 hours of continuing education courses.
· During calendar year 2007 and thereafter, a licensee shall complete at least 2 hours of the required 18 hours of continuing education courses per calendar year.
· Any education approved by the department that is received by a licensee for further professional designation (i.e. upgrading from an associate broker to a broker) shall be counted toward the total continuing education credits required for the 3-year cycle.
· At least 2 hours of an education course per calendar year must involve law, rules, and court cases regarding real estate.
· If a licensee has completed at least 18 credit hours of continuing education within the 3-year licensing cycle in the required subject matter areas but has not otherwise met the annual (credit hours) requirements stated above, the licensee can still be issued a renewal license, as long as s/he provides evidence satisfactory to the Department that s/he has good cause for not meeting the minimum yearly requirements (i.e. the person could not meet the two hours per year requirement because they were out of the country).
· For licensees who obtain a license in the 1st, 2nd, or 3rd year of a licensing cycle, the breakdown in credit hours required to renew their license is pro-rated as follows:

· The minimum number of clock hours a course must be designed to be taught has been reduced from 2 hours to 1 hour, provided that the Department determines that the subject matter, course outline, instructional materials, etc. can effectively be met in a course which is conducted for less than 2 hours.

Arguments For: Both the Department and the Michigan Association of Realtors (MAR) support increasing the licensing cycle from one year to three years. As a result of a reduction in the state work force and pending budget cuts in response to the weakening economy, state agencies must find practical and technological methods of delivering the services that are statutorily required in a manner which enhances efficiency. Increasing the licensing cycle from one to three years would theoretically reduce the amount of "handling" required of state agencies, which would increase efficiency.

Further, MAR supports allowing continuing education courses to be taught in one-hour (minimum) increments. By allowing for one-hour courses, continuing education courses could more readily be offered in conjunction with statewide conferences. Offering continuing education courses in conjunction with conferences provides an incentive for realtors to attend the conferences, as it allows them to "kill two birds with one stone."

Amendments that require licensees to spread their coursework over the 3-year period instead of procrastinating in years 1 and 2 and completing all required coursework in year 3 address concerns of real estate educators. If minimum numbers of hours are not required in each year, educational programs could go out of business if licensees fail to take courses in years 1 and 2. In such a scenario, by year 3, there wouldn't be enough courses available to meet the needs of licensees who postponed taking courses until the final year. Further, licensees who wait until the last minute to take courses could end up paying a premium price for them. Hence, it is important that minimum yearly requirements be established so that licensees have incentive to take courses in years 1 and 2.

Arguments Against: Although the Department understands the concerns by continuing education providers regarding the annual minimum continuing education clock hour requirements, we remain concerned about the additional resources that may be required to enforce these requirements. By specifying the minimum number of credit hours required, it places the Department in a position to have to deny renewal licensure to licensees who miss the mark by, for example, one hour. The House Commerce Committee agreed to an amendment sought by the department that will give the department an alternative to denying relicensure requests, at least in some instances.

Fiscal Impact: The proposed legislation should provide the department with a mechanism of reducing the time spent on renewal activities. The department could better utilize their precious and dwindling human resources for activities such as the on-site monitoring of continuing education courses and the enforcement of current licensees, activities supported within the real estate community. By performing renewal activities once in 3 years rather than annually, staff should be freed up to work on licensing activities associated with the other occupational license professions.

Administrative Rules Impact: SB 1438 would require a change in the administrative rules for real estate brokers and salespersons, namely rule set R 339.22101 - R 339.22667. In particular, R 339.22655 would need to be modified to reduce the minimum time for continuing education courses from 2 hours to 1 hour.

Further, R 339.22659 would also need to be modified to reflect a three-year license cycle. Presently, the rule requires 6 clock hours of continuing education for each annual renewal period. The required number of clock hours will need to be modified to reflect the three-year renewal cycle.