Vote yes HB2305
Committee unanimously sides with cabin owners
By M. Scott Carter
The Journal Record
Posted: 09:40 PM Wednesday, February 17, 2010
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Southeastern Oklahoma residents Karen Julian, Lindy Silk, Dian Jordan and Wenda Blankenship react emotionally to the House Economic Development and Financial Services Committee’s unanimous vote to exempt cabin rental companies from the state’s real estate code and regulate them, instead, under the Oklahoma Innkeeper Act. (Maike Sabolich)
OKLAHOMA CITY – With more than a dozen southeastern Oklahoma residents in the audience and three members of the Oklahoma Real Estate Commission watching, all 14 members of the House Economic Development and Financial Services Committee voted unanimously to exempt cabin rental companies from the state’s real estate code and regulate them, instead, under the Oklahoma Innkeeper Act.
The change – which would be made by House Bill 2305 – would place companies providing transitory housing for 30 days or less under the Innkeeper’s Act, eliminating the need for the companies to work under a licensed real estate broker.
Wednesday’s vote gives the bill a “do pass” recommendation and sends it to the full 101-member House for consideration.
Supporters of the measure – who traveled from southeastern Oklahoma to lobby for it – said they are elated by the vote.
“This is what we’ve been fighting for,” said Dian Jordan, the owner of Pine Meadow Cabins, a Broken Bow cabin rental agency. “But it’s just the first step. We still have a great deal more work to do.”
The bill was spawned by an investigation launched last summer by the Oklahoma Real Estate Commission.
Acting on anonymous complaints, the OREC sent letters to more than a dozen Broken Bow cabin rental agencies threatening the companies with fines of up to $5,000 or “the amount of compensation earned” for engaging in what the commission said was an unlawful real estate activity.
“This decision to open a formal investigation was based upon information … which indicates you appear to be acting as a property manager of vacation cabins you do not own,” said a letter from the commission’s executive director, Anne Woody.
Woody’s letter, sent to more than a dozen of the rental companies, cited Title 59 of the Oklahoma statutes which, she said, made it unlawful for an unlicensed person or entity to engage in licensable real estate activities.
“By offering properties for rent or lease that belong to others, with the intent of receiving compensation, it appears that you are involved in real estate-related activities without possessing an Oklahoma real estate license,” Woody wrote. Woody said the commission has the authority to fine an unlicensed person or entity for engaging in licensable activity up to $5,000 or the compensation earned, whichever is greater.
Officials with the area’s cabin rental agencies countered that since they provide transitory housing, much like a hotel or motel, they should be exempt from the code. In addition, the companies said they are regulated by the Oklahoma Tax Commission and the state Department of Health.
“We’re regulated by the Tax Commission and inspected by the Department of Health,” Jordan said. “It’s been that way for years.”
On Wednesday the entire House Economic Development and Financial Services Committee sided with the rental companies.
“We think we were on the right side all along,” said state Rep. Dennis Bailey, D-Broken Bow. “These people, they are innkeepers, they are not operating real estate.”
State Rep. R.C. Pruett agreed.
“I think it showed the will of the people,” Pruett, D-Antlers, said. “These representatives, every one of them out there, agreed with us that there’s some overkill in this law that’s on the books now.”
The issue, Pruett said, “was kind of a misunderstanding about who is supposed to do what.”
Officials from the OREC said they were simply trying to protect consumers.
“We’re concerned that this whole situation has been blown out of proportion,” Woody told lawmakers. “The question being asked today, is this area of the state being treated differently than everywhere else?”
The OREC’s investigation, Woody said, was launched “to ensure that rents and security deposits of owners that are collected by these property managers are placed in a trust account, ensure that the funds are properly accounted for and transferred to the owner and to ensure that one property owner’s funds is not used for another.”
However, while the OREC sent its first wave of letters out last summer, several cabin owners said they have heard nothing more from agency officials until this month.
“I got my letter and I replied, and then nothing,” Jordan said. “I didn’t hear from them at all.”
During last week’s monthly OREC board meeting, Woody said the agency would be sending its entire three-person investigative team to southeastern Oklahoma to examine the issue.
“I’m going to have all three investigators go down there and try to get it accomplished in a day,” she said.
Woody’s announcement didn’t sit well with committee chairman Daniel Sullivan. Sullivan, a Tulsa Republican, questioned the need for the OREC to continue its investigation.
“Are you saying that this is the most pressing issue that the Real Estate Commission has at this time, above and beyond all other complaints, that you are sending all of your employees that investigate complaints in southeastern Oklahoma?” Sullivan said.
“Yet it is,” Woody said. “Mainly because we have held it up from July. The rest of the licensees are saying, ‘Why are they special? You proceed with investigations on us, why do they get a say? That’s hard to justify.”
Tourism officials said the ongoing threat of an investigation could have a negative impact on the area’s economy.
“They are following significant business practices and making a significant economic impact in southeastern Oklahoma,” said tourism director Hardy Watkins. “And when you send a letter indicating a cease and desist, if you will, we’re talking about people’s livelihoods. We have some people who are afraid to rent cabins because they’re afraid they will be shut down. And we’re getting ready, in fact we are in the marking season, and so the delay or the uncertainty is the thing that works against us as we move forward.”
House members have until Feb. 25 to act on the proposal.
Read all articles by M. Scott Carter at The Journal Record http://journalrecord.com/2010/02/17/committee-capitol/
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