May 26, 1978

Mr. Jack C. Burchill, Secretary 
South Dakota Real Estate Commission 
319 South Coteau, Box 638 
Pierre, South Dakota 57501

Official Opinion No. 78-23

Real Estate Commission has jurisdiction over persons dealing in oil and gas leases

Dear Mr. Burchill:

You have requested an official opinion based upon the following questions:

QUESTIONS: 

1.  Would anyone dealing exclusively in oil and gas leases and mineral rights come under the jurisdiction of the South Dakota Real Estate Commission? 
    
2.  If so, does the Real Estate Commission have the authority to license these people, and if so, would new rules have to be adopted to license them?

IN RE QUESTION NO. 1:

The term “real estate” is defined in SDCL 36-21-1 to 
    
[I]nclude any and every interest or estate in real property, realty, land or the improvements or fixtures thereon, whether corporeal, incorporeal, freehold or nonfreehold, and whether the real estate is situated in this state or elsewhere, and shall include leaseholds, condominiums, air rights and mineral rights;

The definitions of “real estate broker” found at SDCL 36-21-1.1(1) includes any person who: 
    
[F]or another and for commission, fee or other valuable consideration or with the intention or expectation of receiving the same directly or indirectly lists, sells, exchanges, buys, rents, manages, offers or attempts to negotiate a sale, option, exchange, purchase, lease or rental of an interest or estate in real estate, or advertises or holds himself or itself out as engaged in such activities;

These two statutes are plain and unambiguous and the words used must be understood in their normal context.  “Real estate” as defined in SDCL 36-21- 1 includes mineral rights.  Also, “real estate broker” is defined as one who buys, rents, sells, manages, leases, etc., an interest or estate in real estate.  Although you do not set forth a factual situation, if we assume that a person fits the definition of “real estate broker,” his or her exclusive dealing in oil and gas leases and other mineral rights will not alter the fact that they would need a license as a broker or a salesman.

The answer to your first question is yes.  If a person, for a fee or other valuable consideration, does any of those things set forth in SDCL 36-21-1.1 with respect to oil and gas leases, he or she must be licensed under Chapter 36-21.

IN RE QUESTION NO. 2:

It is generally provided in Chapter 36-21 that the Real Estate Commission will license real estate brokers and salesmen.  SDCL 36-21-28.1 is additional authority to issue restricted licenses to auctioneers, property managers, mortgage brokers and such other categories as the Commission may determine, i.e. appraisers.

While the Commission does have authority to issue a restricted license in the area of mineral rights, it is my opinion the Commission can license real estate brokers and real estate salesmen without adopting new rules.  This may seem a heavy burden on the person that deals only in the restricted area of mineral rights, but the reciprocal privileges available under Chapter 36-21 should not be overlooked.

In conclusion, the Real Estate Commission does have authority to license people dealing in mineral rights as brokers or salesmen without adopting new rules unless the Commission decides to issue a restricted license.

Respectfully submitted,

William J. Janklow
Attorney General

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