Hearings

regulating real estate men. Altogether there are about 25 States that have such laws and all the laws are quite similar in those States, and they all follow the general lines of this bill.

In some States the administration of the bill was placed under a State official; that is, the Secretary of State in New York, and in Pennsylvania; also, I believe, the Secretary of State acts as the commissioner in charge of the licensing.

In Wisconsin, however, and in some of the other States they have a real-estate commission, and I have followed that plan here. But in general this follows the line of the laws in all the other States, and there is no departure of consequence from it.

Senator BLAINE. Wisconsin has a separate real estate board.
Mr. BRINKMAN. Yes.

Senator BLAINE. There is an organization which is officially known as the Commissioners on Uniform State Laws. Did you take the matter up with them or study their proposal?

Mr. BRINKMAN. They have no proposal on this so far as I can discover. They have not drafted anything of this kind.

Senator BLAINE. I see.

Mr. BRINKMAN. The National Association of Real Estate Boards has gone over this bill, I think, and has no objection to it, so far as as I know.

It is along the general lines of the legislation they have favored. The bill, however, differs from the previous bill, introduced by Senator Capper, in that it eliminates the possibility of any real estate trust or monopoly here. That is, it provides that anyone who is competent and honest can be licensed, and there can be no charge that there is an undue limitation to license in the interest of those who are in the business.

The hearings on any application are open, and a record is made, and there can be no refusal of a license unless there is good ground to refuse it, on the ground of fraudulent conduct or action.

Senator BLAINE. Now, in connection with Mr. Brinkman's statement I might suggest that Mr. Brinkman made a report to the subcommittee on the bill, and I will ask that that be incorporated in the record.

REPORT TO THE SUBCOMMITTEE ON INSURANCE AND BANKS OF THE DISTRICT OF COLUMBIA COMMITTEE, UNITED STATES SENATE, WITH RELATION TO THE MATTERS AND THINGS CONTAINED IN SENATE RESOLUTION 58, SEVENTY-FIRST CONGRESS-SECTION II

REGULATING REAL-ESTATE DEALERS AND TRANSACTIONS

Hon. JOHN J. BLAINE,

Chairman Subcommittee on Insurance and Banks,

District of Columbia Committee, United States Senate. DEAR MR. CHAIRMAN: I have the honor to submit the following as the second section of my report on the work assigned to me by you in connection with Senate Resolution 58, Seventy-first Congress, first session, this section of the report dealing with that part of the resolution reading as follows:

"(b) No law prohibiting unethical, unfair, and unscrupulous real-estate and finance operators."

For a number of years there has been generally recognized throughout the United States the need of legislation to protect the general public from loss or injury resulting from the incompetence, misrepresentation, fraud, or unprincipled conduct of a considerable number of persons engaged in what is generally termed

the real-estate business.

In recognition of this need, a large number of States (25, I believe) have enacted quite similar laws providing for the licensing of real-estate brokers and salesmen. These States include Alabama, Arizona, California, Delaware, Illinois, Iowa, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Virginia, and Wisconsin. The District of Columbia, however, does not have any law which particularly inhibits fraudulent real-estate transactions, or which sets up any definite standard to be exercised in licensing real-estate brokers or salesmen. The District does collect a $50 annual license fee from real-estate brokers.

A number of complaints have been made to the Members of the Senate and members of the subcommittee, based on the alleged misleading or fraudulent conduct of real-estate brokers and salesmen or persons engaged in the business of loaning money on real estate. The Washington Real Estate Board, an organization composed of persons engaged in the real-estate business in the District of Columbia, for several years past have urged upon Congress the need for a licensing system similar to that set up in numerous States.

In an article published in the Washington Post, September 22, 1929, Mr. John A. Petty, secretary of the Washington Real Estate Board, made this statement:

"Visions of quick profits, mistaken ideas of requirements and the simple procedure necessary to embark in the real-estate business brings to this field of endeavor many misfits and failures from other walks of life and not infrequently those of questionable reputation.

"No business, perhaps, offers more temptation to slip off the track of honor and straight dealing. In its very nature the real-estate business is such that competency and honesty are absolutely necessary to insure the measure of protection the public has a right to expect and to receive.

"To the average layman customs and procedure in real-estate practice are little known. Many phases in the purchase, sales, or renting of real estate, are involved and complicated. One seeking or requiring service in such matters frequently is entirely dependent on the advice and guidance of a real-estate man in protecting his rights and safeguarding his interests. In addition to acquiring advantages one entering a real-estate transaction almost always assumes definite obligations. Thus the matter is of vital personal importance and the interested party is entitled to a reasonable measure of assurance that those who engage to advise and direct him have some accountability for their act."

It is hardly possible to pick up any volume of reports of decisions of the various courts throughout the country without finding ample evidence of the need for legislation to protect the public from the operation of negligent, ignorant, or dishonest real-estate brokers and salesmen. It is not unreasonable to assume that persons who have been disqualified as real-estate agents or brokers in States having protective laws have established themselves in the District of Columbia and other places where no examination as to character or competency is provided.

Νο

In the District of Columbia, a previous investigation by the Senate District Committee has shown very clearly the need for legislation to protect the public from dishonest practiecs of some of those engaged in the real-estate business. further investigation along this line has been made, other than a study of the complaints made by various individuals who have written to or otherwsie communicated with the subcommittee, particularly in view of the fact that the realestate organization previously referred to, not only has mentioned but specifically called attention to the evils existing in the conduct of the real-estate busimess in the District of Columbia.

Furthermore, the United States attorney for the District of Columbia, Hon. Leo A. Rover, wrote to the chairman of the Senate District Committee on October 3, 1929, as follows:

"A short while ago, at the request of the Washington Real Estate Board, I studied the provisions of Senate bill No. 1716, providing for a real estate license law in this District and pursuant to the request of the board, to express my opinion as favorable to the enactment of this legislation.

"At their request I am writing to say that I believe this legislation would be a further protection for the residents of this city and would have a tendency to further control unscrupulous real-estate salesmen.

"Anything you are able to do in causing this bill to be enacted into law will be very much appreciated."