by Peg Ritenour
Vice president
Legal Services and Administration
In today’s global economy, it is not usual for commercial Realtors to represent clients who wish to sell, lease or purchase property in other states. In the past, representation of such clients was limited by the need to be licensed in the state where the real estate is located. These types of laws, usually referred to as “turf laws,” limited brokers to working on a referral basis only.
Today, many states, including Ohio, have eased these licensing restrictions to permit brokers from out-of-state to actually represent their clients across state lines, as long as certain requirements are met. Ohio’s law allowing out-of-state brokers to basically “cooperate” on Ohio commercial property was passed in 2002. The purpose of this article is to review how Ohio’s law works.
First, the 2002 legislation allowing out-of-state brokers to participate in Ohio transactions applies only to the sale or lease of commercial real estate. This is defined as any property other than real estate with one to four family units. Thus, this legislation applies to vacant land, property without dwelling units, or property with five units or more. If a property has 1-4 residential units, an Ohio license is required to participate in the transaction beyond a referral.
Under Ohio’s law a broker licensed in another state is permitted to fully represent a client in an Ohio commercial/industrial transaction as long as several requirements are met. The out-of-state broker must:
• Work in cooperation with an Ohio real estate broker
• Enter into a written agreement with the Ohio broker that includes the terms of cooperation and compensation and a statement that the out-of-state commercial broker and its agents will agree to adhere to the laws of Ohio
• Furnish the Ohio broker with a current certificate of good standing from any jurisdiction where the out-of-state commercial broker maintains an active real estate license
• Sign an irrevocable written consent that legal actions arising out of their conduct may be commenced against them in Ohio
• Include the name of the Ohio broker on all advertising
• Deposit all escrow funds, security deposits, and other money received by either the out-of-state commercial broker or the Ohio broker in the trust or special accounts maintained by the Ohio broker
• Deposit records and documents related to the transaction with the Ohio broker
To assist our members who want to work with an out-of-state broker under this law, OAR has prepared sample cooperative agreements and a “Consent to Jurisdiction” form. They are available on OAR’s website, www.ohiorealtors.org, under the Commercial/Industrial section.
It is important for Ohio REALTORS to recognize that the above provisions apply when an out-of-state broker agent seeks to participate in the sale of commercial property located in Ohio beyond a mere referral. If an Ohio licensee wishes to sell or lease real estate located outside of Ohio, it is necessary that they contact the Real Estate Commission of the state where the property is located to determine what requirements must be met in order to do so.