The Association of Real Estate License Law Officials, a group of regulatory officials from U.S. states and other nations, has taken a stand against U.S. Office of the Comptroller of the Currency legal opinions that support banks’ development of real estate developments including condo, hotel, office and retail projects.
“ARELLO is concerned that expanding the authority of banks to develop real estate could lead to banks being given authority to broker their own properties and, as the next step, being given authority to broker real estate for others. If that happens, it will place the regulatory structure of the state-regulated real estate industry at risk,” ARELLO officials said in a statement.
“The extremely broad preemption authority asserted by the OCC in its … regulations could permit banks and their operating subsidiaries to broker real estate without having to become Iicensed under, or otherwise comply with, state/territory real estate law. These laws, administered by our members, regulate real estate transactions in every jurisdiction, provide for licensing of qualified real estate brokers and agents, and protect consumers,” according to a statement by ARELLO that was passed by the group’s board of directors on April 8.
“These laws authorize real estate regulatory agencies in each state and territory to monitor their licensees and investigate allegations of illegal or fraudulent real estate practices,” according to the group.
“ARELLO believes the OCC should take no action that would give banks authority that could result in preemption of state and territorial laws under which real estate consumers are protected.”
The National Association of Realtors, which has aggressively lobbied against the entry of federally chartered financial institutions into the business of real estate brokerage, has also opposed the OCC rulings.
Comptroller of the Currency John C. Dugan met with National Association of Realtors representatives in February and issued a statement about the OCC opinions related to banks’ real estate developments.
“First, none of our interpretative letters has anything to do with real estate brokerage – nothing at all – even though this is the issue of most direct interest to NAR’s members,” Dugan said, adding, “there is only limited legal authority for national banks to engage in real estate and investment activities. These approvals fell within that limited authority.”