Peg Ritenour
Vice president
Legal Services and Administration
OAR’s Legal Assistance Hotline fields hundreds of calls each month from brokers and managers regarding a variety of legal issues. The most commonly asked questions can be found in the Legal Library FAQs section of ohiorealtors.org. Below are several recently asked questions regarding brokerage issues, including property management services.
Q: My brokerage wants to begin offering property management services, but I would like to do so in a different name, but still keep my existing name. For sales, can I get permission from the Division for a second “dba” (“doing business as”) name?
A: No, a brokerage can only do business in one name. While, the Division can give permission to a brokerage to do business in a “dba”, it will only grant one “dba” to a brokerage. If such permission is given, then that one dba is the sole name under which the brokerage must conduct all of its brokerage business.
Q: Can I start a second brokerage for purposes of conducting property management?
A: While nothing in the license law prohibits a broker from having ownership interest in more than one brokerage, you cannot be licensed with or act as the broker for more than one company at a time. Thus, you would need to find another broker to be licensed with and oversee the operation of the second property management brokerage.
Q: Do real estate agents licensed with my brokerage have to purchase, sell and lease their own property through my company?
A: There is no legal requirement that agents purchase, sell or lease their own property through the broker with whom they are licensed. However, a broker can require this as a condition of working for the brokerage. If a broker wants to impose this requirement upon his agents, it is advised that this be set forth in the independent contractor agreement with the agent and/or in the broker’s policy manual.
Q: Am I responsible or liable for my agent’s personal real estate transactions if they are not “run” through my brokerage? Does my agent have to provide me with copies of the documents involved in these transactions?
A: If the property is not listed with your brokerage and you are not otherwise involved in the sale, rental or purchase of the property, you and/or your company should not have any liability for these transactions. To avoid any claim that your firm is involved with or responsible for these transactions, you should make sure that your agent is not using purchase contracts, leases, etc., that bear your brokerage name, logo, etc., or reference “broker” any way (i.e. earnest money deposit sections). Further, because these transactions are not being handled by your brokerage, the license law does not require you to maintain copies of the documents involved in these transactions.
Q: One of my sales agents wants to handle the rental of a duplex his father owns. My brokerage doesn’t do property management. Can he do this on his own?
A: The leasing or managing of real estate for a fee, commission or anything of value, is activity that requires a real estate license. Therefore if the agent is being compensated for leasing or managing this duplex, this activity must be done in the name of his broker. The fact that the property is owned by a relative does not matter.
Q: I know I am required to keep copies of all records for three years. Do I need to keep ‘hard” copies or can I keep these files electronically?
A: The Division of Real Estate and Professional Licensing does allow brokerages to keep electronic records as long as the records are true copies of the original documents and can be produced upon request.
Q: Is it unethical or illegal for one broker to solicit the salespersons of another broker?
A: No. While at one time this was a violation of the NAR Code of Ethics, it has not been part of the Code for several years, and was never a violation of the license law. When soliciting agents, however, brokers should be mindful not to make false or misleading statements about the agent’s current broker or his/her business practice as such comments could violate Article 15 of the National Association of REALTORS® Code of Ethics.
Q: I am a real estate agent and would like to start my own brokerage, but I don’t currently qualify to be seated for the broker’s exam. Can I just hire a broker to be the broker of record, but actually run the company myself?
A: While there is nothing in the license law that prohibits a salesperson from owning a brokerage and having management duties, under Ohio license law, the broker is ultimately responsible for that company. Under Ohio Administrative Code Section 1301:5-1-14, it is misconduct for a broker to lend his/her license for the benefit of any entity or corporation or to fail to personally oversee and direct the operations of the brokerage. Thus, while you may hire a broker, that broker must be involved in the operation of the brokerage. This would include supervising the agents, handling the trust account, reviewing ads, paying agent’s commissions, responding to consumer complaints, etc.