Opinion ID: 303769
Heading Depth: 2
Heading Rank: 2

Heading: The exemption under Sec. 26-610.

Text: 76 Hartford argues that an integral part of the real estate brokerage business includes not only negotiation of loans on behalf of other investors, but also the placing of loans on behalf of the brokers themselves. This may be true, but this part of the real estate brokerage business is more properly described as the mortgage banking business. 77 Semantics aside, the District of Columbia statute involved does not say that making loans on real estate is exempt. When originally passed, the exemption section 26-610, listed the exempted organizations as defined in the Act of Congress of July First, 1902, 32 Stat. 621. Paragraph 15 of that Act defines real estate brokers as follows: 78 . . . That real estate brokers or agents shall pay a license tax of $50.00 per annum. Every person who sells, or offers for sale, as the agent for others, real estate, wherever located, including mining and quarry property, or who makes or negotiates loans thereon, or who rents houses, buildings, stores, or real estate, or who collects rent for others, shall be regarded as a real estate broker or agent. 30 79 The key questions revolve around the italicized words. 80 First, if, as Hartford contends, the words makes or negotiates loans thereon mean that the making or negotiating of the loan may be for the broker's own account, then anyone who makes or negotiates loans thereon . . . shall be regarded as a real estate broker or agent. This simply cannot have been the legislative intention, to define as a real estate broker or agent anyone who is in the business of making or negotiating loans on real estate for his own account. 81 Second, in the interpretation of this clause, the words as the agent for others, although dreadfully misplaced, must modify all of the activities described in this one sentence, i. e., who sells or offers for sale, who rents houses, buildings, stores, or real estate, or who collects rent for others. The concept of agent for others must apply to all of these activities, which, if done for others, do constitute proper functions of a real estate broker or agent. 82 Third, if as the agent for others does not refer also to who makes or negotiates thereon, then we have the peculiar situation that the person who is a real estate broker or agent is one who makes or negotiates loans for his own account, but there is no clause in this entire sentence referring to the broker or agent making or negotiating loans as the agent for others. The interpretation urged by Hartford, i. e., that agent for others only refers to the part preceding who makes or negotiates, would leave out completely the authority of the broker or agent to make or negotiate loans for others, which is the whole sense of the business. 83 So we conclude that the loan as originally made by Walker & Dunlop did not fall within the exemption of Sec. 26-610, and therefore the loan was subject to the licensing requirement of Sec. 26-601. In contrast to the position of the insurance companies, real estate brokerage firms have always been exempt from licensing under Sec. 26-610. Mortgage banking, however, has never been exempt from Sec. 26-601. Thus the loan in question, as it was a result of mortgage banking activity, was not exempt from Sec. 26-601, and the security instrument executed in connection with the loan is void under Sec. 26-601, unless the claim of Hartford as a holder in due course can prevail. 84