Legislative Update on H.B. 532: Testimony from Kristin Rosan

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House Commerce and Labor Committee
Opponent Testimony – HB 532
Presented by Kristin E. Rosan, Esq.
Madison & Rosan, LLP

Chairman Young, Vice Chair DeVitis, Ranking Member Lepore-Hagan and members of the House Commerce and Labor Committee; thank you for the opportunity to appear and provide testimony on House Bill 532. My name is Kristin Rosan and I testify today as an opponent with a concern about the pre-licensure education changes proposed in the legislation.

I have been a partner in the law firm Madison & Rosan, LLP since the firm’s inception nearly 11 years ago. The firm represents many of Ohio’s largest residential and commercial real estate brokerages, with my practice centering on representing real estate brokers and salespeople before the Ohio Real Estate Commission and in civil litigation.

I obtained significant experience in the regulation of real estate brokers and salespersons during my tenure as Legal Counsel and Chief Legal Counsel with the Ohio Division of Real Estate and Professional Licensing. I personally participated in the negotiation and drafting of three legislative initiatives affecting the Division’s licensure and enforcement processes (S.B. 106 of 125th General Assembly, Agency Modernization Bill enacted 11/2004 & 1/2005; H.B. 272 of 124th General Assembly, Commercial Co-Broke Bill enacted 4/2002; H.B. 524 of 123rd General Assembly, Real Estate Modernization Bill enacted 9/2000). I have instructed numerous real estate seminars and continuing education courses educating brokers, salespersons and attorneys about the requirements of real estate license law.

Since December 2004, I have been in private practice serving primarily real estate brokerage clients. I am a member of the Ohio State and Columbus Bar Associations, Columbus
Bar Association Real Property Committee, the Columbus Bar Association Real Property Practice Institute Planning Committee and an Affiliate Member of the Ohio Association of Realtors and Columbus Realtors. In 2011, I was honored as the Columbus Realtors’ Instructor of the Year.

I appear today with a concern relating to the consequence of language included in the legislation, which would permit an applicant to obtain licensure with pre-licensure coursework that is unaccredited, unregulated and unchecked. The legislative scheme in place since the ’80’s, for equipping licensed real estate professionals for practice in Ohio, has always contemplated accredited coursework as a condition of licensure. Such is illustrated by the inclusion of a requirement in law that coursework for salesperson or broker licensure be completed at an “institution of higher education.” This means that a student must complete a certain number of hours of accredited college coursework to sit for the exam and obtain licensure. Such meaning applies equally to pre-licensure education for broker license applicants, in that the law requires them to complete two years of “post-secondary education” before sitting for the examination. The legislature’s use of phrases like “institution of higher education” and “post-secondary education” unequivocally connote college level accredited coursework is required for pre-licensure education.

During my tenure with the Division, there was no question or dispute as to what qualified as pre-licensure education for salesperson and broker applicants. In fact, an applicant’s provision of a copy of their college transcript was the necessary mechanism to prove completion of the pre-licensure coursework. However with the passage of time, change in policymakers and differing legal interpretation, what was once clear is now unclear. The interpretation of the law was expanded to include pre-licensure coursework completed through
unregulated adult learning or outreach centers affiliated with a college or university. To be clear, this pre-licensure coursework was not scrutinized, reviewed or accredited, but if at its completion the student obtained a certificate noting an “institution of higher education” at the top, the certificate was accepted as pre-licensure education.

In 2008, I studied one such example whereby a real estate brokerage was permitted to offer real estate pre-licensure coursework through a university’s outreach programming department. The courses were offered without university guidance or any other regulatory review or scrutiny of the instructors, student attendance, testing or course content. As long as the student produced a certificate of completion of the course through the university’s outreach department, the course was accepted for licensure.

You will recall that this timing was in the midst of the burst of the housing bubble, when state and federal regulators began the arduous process of reevaluating regulations pertaining to those professionals involved in the real estate lending and finance industries. The result was more stringent education, regulation and oversight of mortgage originators and appraisers. However until now, there have been no law changes to pre-licensure education for real estate salespersons and brokers in Ohio.

It goes without saying that real estate professionals play a critical role in assisting their consumer clients with navigating what arguably is the largest financial transaction of their lives. Real estate licensees are permitted to draft purchase agreements that bind their clients, formulate amendments, provide guidance on inspections and prepare materials for loan approval and closing. Licensee incompetence can be catastrophic for a client. Each year the Real Estate Commission reviews hundreds of investigations stemming from consumer
complaints about their agents. In my practice I’ve handled cases where licensees were ill-equipped for the challenges of professional practice: a case where a licensee unwittingly bound his clients to multiple contracts, subjecting the clients to lengthy and expensive litigation;
 a licensee who, due to a lack of understanding of basic agency duties, steered a customer into a decision that was not in the client’s best interest;
 a licensee killing a deal over a commission dispute;
 a licensee that didn’t have basic knowledge of how to research a property’s sale history in order to properly advise her clients as to market value;
 licensee not knowing how to handle a client’s earnest money;
 a licensee rendering legal advice on whether a contract was breached and damages; and
 a licensee drafting leases, option contracts, promissory notes and mortgages for clients.

The consequences for consumers harmed by licensee negligence can be life changing and financially devastating. I can understand no rationale whereby there is a benefit gained by permitting real estate pre-licensure education to be obtained in the manner suggested in H.B. 532. It will be a grievous error to codify pre-licensure education through distance learning that is unaccredited, unregulated and unchecked. I respectfully urge the Committee to amend the legislation and return the pre-licensing requirement to what was originally enacted: requiring all pre-licensure education for salesperson and broker licenses to be accredited through an institution of higher learning.

Chairman Young and committee members, please accept my thanks for your time and the opportunity to testify. I am available for any questions.