D.C. Law Library
Code of the District of Columbia

Chapter 2. Building Associations.

Subchapter I. General.

§ 26–201. Formation; general nature and powers.

(a) Any 5 or more persons who desire to form an incorporated building or homestead association, all being citizens of the United States, and a majority of them residents of the District of Columbia, may make, sign, seal, and acknowledge, before some officer authorized to take the acknowledgment of deeds, and file for record in the Office of the Recorder of Deeds, a certificate, in writing, to the same effect as that required in Chapters 1 and 3 of Title 29 for the formation of the corporations therein mentioned.

(b) When such certificate shall have been filed for record as aforesaid, the persons who have signed and acknowledged the same, and their successors, shall become and be a body politic and corporate, in fact and in law, by the name stated in the certificate, and by that name have succession and be capable of suing and being sued in the courts, of the District, and of purchasing, holding, and conveying such real estate as may be necessary to the conduct of its business, and to make reasonable bylaws not inconsistent herewith.

§ 26–202. Powers as to stock.

Such corporation shall have power, in its certificate of incorporation or in its bylaws, to provide that its shares of stock may be issued in series; to limit the number of shares which each stockholder may be allowed to hold; to prescribe the entrance fee to be paid by each stockholder at the time of subscribing; and to regulate the instalments to be paid on each share and the times at which they shall be payable. It shall also have power to enforce the payment of all installments and other dues by such fines and forfeitures as its bylaws may from time to time provide.

§ 26–203. Bonus to be paid by late subscribers.

Any person applying for membership or stock after a month from the time of the incorporation may be required to pay on subscribing such bonus or assessment as may be fixed by said bylaws in order to place said new members or stockholders on a footing with the original members and others holding stock at the time of such application.

§ 26–204. Object; supervision by federal board; strict compliance with provisions required; exception; violations.

(a) The object of such corporation shall be the accumulation of a capital in money to be derived from the savings and accumulations by the members thereof, to be paid into said corporation in such sums and at such times as may be designated by the bylaws of said corporation, from which the members thereof may obtain advances upon their shares of stock; provided, that the Federal Home Loan Bank Board is authorized, whenever such Board may deem it useful; to cause examination to be made into the condition of any building association incorporated under the provisions of this chapter, as well as any other building or loan association located or doing business in the District of Columbia. The expenses necessarily incurred in making any such examination shall be paid by such association to the Federal Home Loan Bank Board at the time of the making of such examination; and provided further, that every building or loan association located and doing business in the District of Columbia shall make to the Federal Home Loan Bank Board at least 1 report during each year, according to the form which may be prescribed by such Board, verified by the oath or affirmation of the president or secretary of such association and attested by the signature of at least 3 of the directors.

(b) The Federal Home Loan Bank Board shall also have power to take possession of any company or association whenever in the Board’s judgment any such company or association is insolvent or is knowingly violating the laws under which it is operated and to liquidate the same in the manner provided in rules and regulations which said Board is hereby authorized to adopt, and said Board may also provide in such rules and regulations a procedure for the voluntary liquidation of any such company or association; and if any such company or association which has not gone into liquidation and for which a receiver has not already been appointed for other lawful cause shall discontinue its operations for a period of 60 days, the Federal Home Loan Bank Board may, if such Board deems it advisable, appoint a receiver for such company or association; provided further, that from and after the 1st day of July, 1909, no person, company, association, copartnership, or corporation shall conduct or carry on in the District of Columbia the kind of business named in this section and § 26-206, without strict compliance in all particulars with the provisions of this section and § 26-206; provided, that building associations organized and in actual operation before March 4, 1909, need not be incorporated. After April 11, 1986, the preceding language in this section shall not apply to entities formed under this chapter. Thereafter the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] shall supervise these entities.

(c) Any person, officer, or agent of any company, firm, or corporation who shall wilfully violate any of the provisions of this section shall be deemed guilty of a misdemeanor, and shall on conviction thereof be punished by a fine of not more than $1,000 or by imprisonment not longer than 2 years, or by both said punishments, in the discretion of the court. That any wilful false swearing in regard to any certificate, or report, or public notice required by the provisions of this section and § 26-206 shall be perjury, and shall be punished as such according to the laws of the District of Columbia. And any misappropriation of any of the money of any corporation or company, formed under or availing itself of the privileges of this section and § 26-206, or of any building or loan association located or doing business in the District of Columbia, or any money, funds, or property intrusted to any such corporation, company, or association, shall be held to be theft and shall be punished as such under the laws of said District.

§ 26–205. [Reserved].

§ 26–206. Foreign associations.

(a) No foreign association shall make loans of any kind or transact any building and loan business within the District of Columbia or maintain an office in the District of Columbia for the purpose of transacting such business until it procures from the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] a certificate of authority to do such business in said District, after complying with the following provisions:

(1) It shall deposit with the District of Columbia Treasurer $50,000 in cash, or bonds of the United States, or bonds which the United States guarantees the payment of both principal and interest. A foreign association may collect and use the interest on securities deposited with the District of Columbia Treasurer, as hereinabove provided, so long as it fulfills its obligations and complies with the laws of the District of Columbia. It may also exchange them for other securities of the United States or for cash. The deposit made by a foreign association with the Office of the Treasurer shall be held as security for all claims of residents of the District of Columbia against such association, and be liable for all judgments or decrees thereon, and subjected to the payment thereof in the same manner as the property of other nonresidents. Should an association cease to do business in said District, the District of Columbia Treasurer, upon a certificate from the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking], may release securities in his discretion, retaining sufficient to satisfy all outstanding liabilities.

(2) It shall file with the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] a certified copy of its charter, constitution, and bylaws, and other rules and regulations showing its manner of conducting business, together with a statement such as is required semiannually from all associations.

(3) It shall file with the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] a power of attorney appointing a citizen of the District of Columbia, resident within said District, the agent or attorney for such foreign association upon whom process of law can be served. There must also be filed a certified copy of the vote or resolution of the directors appointing such agent or attorney, which appointment shall continue until another agent or attorney is substituted, and said writing or power of attorney shall stipulate and agree on the part of such foreign association making the same that any lawful process against said association, which is served on such agent or attorney, shall be of the same legal force and validity as if served on such association within the District of Columbia; and, also, that in the case of the death or absence of the agent or attorney so appointed, service or process may be made upon the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking], and such power of attorney cannot be revoked or modified (except that a new one may be substituted) so long as any liability remains outstanding against such foreign association in the District of Columbia. The term “process,” used above, shall be held and deemed to include any writ, summons, or order whereby any action, suit, or proceeding shall be commenced, or which shall be issued in or upon any action, suit, or proceeding by any court, officer, or magistrate.

(4) It shall pay to the Collector of Taxes the following fees:

(A) For filing an application for admission to do business in the District of Columbia, $500; and

(B) For each certificate of authority and annual renewal thereof, $200.

(a-1) The Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] shall not issue a certificate of authority to any foreign association pursuant to this subsection after October 12, 1988. After October 12, 1988, the certificate of authority shall be issued pursuant to § 26-1204. The Superintendent [Commissioner] may consider an application for a certificate of authority, which was filed pursuant to this subsection, prior to October 12, 1988 and may grant the application if the applicant meets the requirements imposed by § 26-1202(a)(3) and any other requirements imposed by the Superintendent [Commissioner]. The Superintendent [Commissioner] may enforce any commitments made by an applicant under this section in accordance with the procedures set forth in § 26-1202(a)(4).

(b) When a foreign association has complied with the provisions of paragraph (3) of subsection (a) of this section, and the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] is satisfied that it is doing or will do its building and loan business in the District of Columbia in accordance with the laws of the District of Columbia, such Superintendent [Commissioner] may issue a Superintendent’s [Commissioner’s] certificate of authority to such foreign association to do a building and loan business in the District of Columbia. Annually thereafter, if the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] is satisfied as herein provided, the Superintendent [Commissioner] shall issue a renewal of such certificate.

(c) Should the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] find that such foreign association does not conduct its building and loan business in accordance with law, or that the affairs of such association are in unsafe condition, or if such foreign association refuses to permit examination to be made, the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] may revoke the certificate of authority granted, after 90-days notice, to such foreign association to do a building and loan business in the District of Columbia; provided, that upon revocation of such certificate of authority the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] shall mail a notice thereof to the home office of such foreign association and cause a similar notice to be published in at least 1 daily newspaper of general circulation in the District of Columbia. After so notifying said home office and after the publication of said notice, it shall be unlawful for any agent of such foreign association to receive any further payments from shareholders residing in the District of Columbia.

(d) Every foreign association doing a building and loan business in the District of Columbia shall be subject to the same examination as are domestic associations and such examination may include examination of all subsidiaries of such foreign associations and all business operations wherever apparent; provided, that the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] may accept reports of examination by other supervisory agents in lieu of making such examinations and provided that all the actual and necessary expenses of such examinations of such foreign associations shall be paid by the association examined.

(e) Whenever any taxes, fines, penalties, fees, licenses, or conditions precedent are imposed by the laws of any state upon building and loan associations organized or incorporated under the laws of the District of Columbia, and doing business in the said state, in excess of the taxes, fines, penalties, fees, licenses, or conditions precedent imposed by the laws of the District of Columbia upon foreign associations doing a building and loan business in the District of Columbia, the same taxes, fines, penalties, fees, licenses, or conditions precedent shall be imposed upon every association incorporated under the laws of such state doing, or applying to do, a building and loan business in the District of Columbia, so long as such excess taxes, fines, penalties, fees, licenses, or conditions precedent are imposed by such state; and upon the failure of any association incorporated under the laws of such state to comply therewith the Superintendent of Banking and Financial Institutions [Commissioner of the Department of Insurance, Securities, and Banking] shall revoke the certificate of authority of such association to do a building and loan business in the District of Columbia or shall refuse to grant such certificate of authority in the first instance.

(f) A foreign association which does a building and loan business in the District of Columbia without first complying with the provisions of this chapter, or which wilfully violates or fails to comply with the provisions of laws relating to foreign associations, shall forfeit and pay not less than $25 or more than $500, to be recovered by an action in the name of the District of Columbia and on collection paid into the Office of the Treasurer.

§ 26–207. Advancements — Payments of premiums.

The moneys accumulated from time to time shall be offered to such shareholder or shareholders as shall bid the highest premium for preference or priority of right to an advancement of the ultimate value of 1 or more of his or their respective shares. The said premium shall consist of a percentage on the amount of the advance and shall be deemed to be a consideration or bonus paid by the shareholder for the present and immediate use and possession of the future or ultimate value of the share so advanced, and shall not be deemed usurious. The said premium may either be deducted in advance from the amount to be advanced to the shareholder or be made payable in monthly installments, in addition to legal interest on the sum advanced, as the bylaws may provide.

§ 26–208. Advancements — Security.

For every advance made as aforesaid a bond in a penalty equal to the ultimate value of the shares advanced may be required, secured by a first mortgage or deed of trust on real estate, and a pledge of the shares advanced upon, as additional or collateral security, which bond shall be conditioned for the payment at the stated meetings of the corporation of the monthly dues on the share so advanced upon and the interest on the sum advanced, and the installments of premium, if made so payable, and all fines chargeable upon arrears of payments, until said shares shall reach their ultimate value aforesaid, or said advance be otherwise canceled or discharged.

§ 26–209. Advancements — Participation of all shares in profits.

The shares advanced upon shall participate equally with the other shares in the profits and the amounts paid by the advanced shareholders, together with such proportion of the profits accrued or such rate of interest as said bylaws may determine, the same as allowed on shares withdrawn not advanced upon, less all fines and a proportionate part of losses and other charges incurred.

§ 26–210. Advancements — Redemption on failure to bid.

Where advances from the funds on hand cannot be made on satisfactory terms, the shareholders failing to bid therefor, the bylaws may provide for the redemption of shares of stock, with the consent of the shareholders, and in case that cannot be done, for the involuntary withdrawal and cancelation of shares, the said shares to be selected by lot, always from the oldest series, until exhausted, or the funds to be applied ratably among the owners of shares of the same series.

§ 26–211. Withdrawal by shareholder.

A shareholder shall be entitled to withdraw at any time, by giving such notice as the bylaws may require, where no advance has been made on his shares, in which case he shall be entitled to receive the amount of dues paid in by him on each of his shares, together with such proportion of the profits accrued or such rate of interest as said bylaws may determine, less all fines due and a proportionate part of all losses and other charges incurred; provided, that not more than one-half of the funds in the treasury at any time shall be applicable to the demands of the withdrawing shareholders without the consent of the board of trustees.

§ 26–212. Repayment of advances.

A shareholder who has been advanced may at any time repay his advance upon application to the corporation, whereupon, on settlement of his account, he shall be charged with the full amount of the advance and of the accrued installments of the premium, if that has been added to the advancement and made payable in instalments, together with all monthly dues, interest, and fines accrued and charged, and shall receive credit for all monthly dues paid on his shares and the profits thereon the same as are allowed under the bylaws on shares withdrawn not advanced upon, and, if the premium has been deducted in advance, with such proportion of the premium as the bylaws may direct, and the balance remaining due, over and above such credits, shall be received by said corporation in satisfaction and discharge of said advance; provided, that in case of the insolvency of the association, he shall not be entitled to credit for the full amount of dues paid by him, but shall only be entitled to a dividend upon said amount, in common with the nonadvanced shareholders.

§ 26–213. Forfeiture of stock.

Any nonadvanced shareholder failing to pay the instalments due on his share and the fines due from him for such time as the bylaws shall determine, shall forfeit his stock, but may, on application, receive a return of the amount paid in on account of his stock, less the accrued fines.

§ 26–214. Foreclosure of advanced shareholder’s security.

In case any advanced shareholder shall fail to pay all dues, interest, or premiums and shall be in arrears for any part of the same for the period of 2 months, the payment of the same and of the principal of the advance may be enforced by a foreclosure of the securities given for the same, and if upon a statement of account, as in case of a voluntary settlement of said advance, as hereinbefore authorized, there shall be any surplus of the proceeds of sale of the property given as security over the amount found due from such advanced shareholder, together with all costs incurred by the corporation, such surplus shall be paid to said defaulting shareholder, or his assigns, and his shares of stock so advanced upon shall be the property of the corporation.

§ 26–215. Purchase of real property.

Such corporation shall not invest its fund in any real estate except what is necessary for the conduct of its business, but may purchase such property at sales made upon foreclosure of mortgages or in satisfaction of judgments or other liens held by it; provided, that such property so purchased be sold within a reasonable time thereafter.

Subchapter II. Federal Securities.

§ 26–231. Purchase of federal securities.

The board of directors of any building association incorporated or unincorporated, organized and existing under the laws of the District of Columbia to do or now doing in the District of Columbia a building association business, in their discretion, may purchase the bonds of the Home Owners’ Loan Corporation created pursuant to the authority of the Home Owners’ Loan Act of 1933, approved June 13, 1933 (and said association is hereby permitted to carry said bonds as an asset at the par value of said bonds) or may subscribe and pay for shares of any federal corporation created or authorized by law to lend money to building and loan associations.

§ 26–232. Exchange of securities or real estate for federal bonds.

Any building association incorporated or unincorporated, organized and existing under the laws of the District of Columbia, to do or now doing, in the District of Columbia, a building association business, is authorized and empowered to exchange mortgages or deeds of trust or the notes or bonds secured thereby or other obligations and liens secured on real estate or any real estate which it may have or hold, for the bonds of the Home Owners’ Loan Corporation created pursuant to the authority of the Home Owners’ Loan Act of 1933, approved June 13, 1933, and said association is hereby authorized to carry said bonds as an asset at the par value of said bonds.

Subchapter III. Transfer of Remaining Functions to the Superintendent of Banking and Financial Institutions.

§ 26–251. Remaining powers, duties, and functions of Comptroller transferred to Superintendent of Banking and Financial Institutions.

Any powers, duties, and functions of the Comptroller of the Currency with respect to building associations and building and loan associations operating in the District of Columbia which are not transferred to the Federal Home Loan Bank Board by the specific statutory amendments herein contained are also hereby transferred from the Comptroller of the Currency to the Federal Home Loan Bank Board. After April 11, 1986, the powers, duties, and functions referred to in this section shall reside in the Superintendent of Banking and Financial Institutions [now Commissioner of the Department of Insurance, Securities, and Banking].