Real Estate Law

Fund Limits

$40,000 for any one licensee.

License Exemptions in Ohio, No License Required

*Buying, selling, leasing, renting, optioning, or performing other real estate-related negotiations or transactions on an individual's own behalf Performing duties as a legitimate receiver, bankruptcy or foreclosure trustee, executor, administrator, or guardian *Performing related duties as a public official *Performing duties as a licensed attorney at law *Brokering the sale of business assets not including real estate *Selling manufactured or mobile homes as personal property with no accompanying real estate *Selling commercial real estate as a nonresident commercial broker *Working as an hourly or salaried employee with residential rental property under a broker's supervision, engaged primarily in clerical support, maintenance, collection of rent or security deposits, or supplying applications or leases

License Required

*Listing or offering to list real estate for sale *Selling or offering to sell real estate *Purchasing or offering to purchase real estate *Negotiating, or offering to negotiate, the purchase, sale, or lease of real estate *Exchanging, optioning, leasing, or renting any real estate *Selling or purchasing real estate at an auction *Advertising or leading others to believe that you're licensed and engaged in offering brokerage services Performing a market analysis of a property for a fee in order to list the property for sale *Collecting rental information in order to refer prospective tenants to rental units *Finding or assisting in finding prospects for the sale or rental of real estate *Performing property management services, including renting, leasing, and marketing, or the physical, administrative, or financial maintenance of the property, or the supervision of these activities *Supervising other real estate licensees as they perform transactions for which licenses are required

Determining Experience for Ohio Broker Licensing

*One closed sale of real property where the licensee acted as the buyer's agent = 1/2 transaction *One closed sale of real property where the licensee acted as the seller's agent = 1/2 transaction *One commercial lease for at least one year where the licensee acted as the tenant's agent = 1/2 transaction *One commercial lease for at least one year where the licensee acted as the landlord's agent = 1/2 transaction *One lease of residential property for a term of at least one year where the licensee acted as the listing and/or procuring agent = 1/4 transaction

Requirements for Licensure in Ohio

+Age: 18+ +Background education: High school diploma or equivalent (if born after 1950) +Fingerprinting/ background check: Applicants must submit fingerprints for a criminal history check. +Experience required: None +Real estate education: 40 hours each: real estate practice and Ohio real estate law and 20 hours each: real estate appraisal and finance +Exam: Pass salesperson's license exam with 70% or higher +Affiliation: Must be sponsored and recommended by an Ohio broker Fee: $81.00 +License term: Three years +Post-license continuing education (CE): 20 hours of post-license instruction within one year of licensure

Broker

+Age: 18+ (but only in special circumstances; otherwise, applicant must have at least two years' experience [20+]) +Background education: Same as salesperson, since must have been a salesperson first +Fingerprinting/ background check: Applicants must submit fingerprints for a criminal history check. +Experience required: Two years' full-time (30+ hours per week) licensed real estate experience within the past five years, including at least 20 transactions or equivalent experience +Real estate education: 40 hours each: real estate practice and Ohio real estate law, and 20 hours each: real estate appraisal and finance One course each in: financial management; human resources or personnel management; business law; applied business economics Minimum of two years' post-secondary education or equivalent of 60-semester or 90-quarter hours Exam: Pass broker's license exam with score of 75% or higher Affiliation: Must include brokerage information, including names of partners or officers if applying as an entity rather than an individual Fee: $135.00 License term: Three years Post-license continuing education (CE): 10 hours of post-license instruction within one year of licensure

real estate recovery fund comprises funds fro

1. Depending on the amount in the fund, licensees may pay a per-year assessment when they apply to renew their licenses. Currently, the law states that this is $10 for each year of the licensing period if the fund amount is less than $500,000 on July 1 of the filing period. The assessment amount is $5 for each year of the licensing period if the amount in the fund is between $500,000 and $2 million. 2. Fines collected from licensees who are sanctioned for a license law violation are deposited into the fund.

Ohio Complaint Investigation Process

1.Consumer or licensee files a complaint with division of real estate 2.Superintendent acknowledges receipt to complainant and notifies licensee 3.Complainant and licensee decide whether to go to informal mediation 4.Superintendent assigns an investigator 5.Assigned investigator investigates, then files a report with superintendent. 6.Superintendent decides whether a licensing violation has occurred. If no, Superintendent informs everyone that investigation is over. If yes, formal hearing occurs. 7.Formal hearings are held, including witness testimony and document review 8.After hearings conclude, hearing examiner files findings of fact and conclusions of law with:• Superintendent• Commission• Complainant• Licensee 9.Real estate commission reviews the report at next regularly scheduled commission meeting; commission can hear additional testimony on request 10.Commission decides whether to impose disciplinary sanctions

timeline for launching an investigation

A consumer files a written and signed complaint with the division of real estate. Within five days, the superintendent responds to the complainant, and sends a notice to the licensee against whom the complaint has been lodged. If both the complainant and the licensee file a request within 10 days, an informal mediation meeting will be held. If both of the parties fail to file a request for informal mediation, or if they meet and can't reach an agreement, then the superintendent notifies them within five days that an investigation will take place. An investigator is assigned. The investigator reviews documentation, talks to witnesses, and investigates all aspects of the complaint. The investigator submits the findings in a written report to the superintendent within 60 days of either the receipt of the complaint OR the informal meeting. The superintendent reviews the report within 14 days and decides whether or not there's sufficient evidence of a violation. If there's sufficient evidence of a violation, within seven days of making that decision, the superintendent tells the parties the date that a hearing examiner will hear the case within an additional seven to 15 days. Either the superintendent or the licensee may ask for a 30-day extension. If there's not sufficient evidence, the superintendent must notify the parties within five business days. The complainant may file an appeal within 15 days. At their next regular meeting, at least 15 days after the complainant files the appeal request, the commissioners will review and may also hear testimony regarding the complaint. Should the commission decide to reverse the superintendent's decision, then a hearing will be held.

Principal broker

A licensed real estate broker who manages the operations of a brokerage; each brokerage must designate its principal broker

Additional Penalties in Ohio

According to Section 4735.181 of the Ohio Revised Code, the superintendent can take direct steps based on a professional determination of a licensee's failure to: Keep the license on hand for inspection. Inform the division of either a business or personal address change. Provide agency disclosures. Use agency agreements that abide by all legal requisites.

Contract law

Agreements that legally bind two or more people or organizations

Associate Broker

An individual or entity who is licensed as a broker, but who chooses to associate with and be supervised by another broker

Foreign RE salesperson

An individual who performs brokerage services outside of Ohio under the direction of a broker-level dealer

Principal Broker

An individual who's licensed as a real estate broker and has been designated by a brokerage to oversee and direct brokerage operations is responsible for complying with all office laws and regulations, displaying fair housing information, renewing licenses, returning the licenses of terminated licensees, complying with trust account requirements, maintaining accurate trust and transaction records, developing and maintaining company policies (including agency policies), and paying licensees.

Salesperson

Any person associated with a licensed real estate broker who performs any real estate-related acts or transactions

Licensee

Any person or entity licensed as a real estate broker or salesperson by the Ohio Real Estate Commission

Broker

Any person or entity that performs real estate brokerage activities on behalf of another for a fee, commission, or other valuable consideration; an entity may be a corporation, association, partnership, or a limited liability company

Foreign real estate dealer

Any person or entity who deals in any real estate activities or transactions in states outside of Ohio

Foreign Real Estate Dealer Licensure

Applicant's name and address Principal and other offices General description of business List of states in which the applicant is licensed Names and addresses of all salespersons

limited reciprocity agreements

Arkansas Colorado Connecticut Mississippi Nebraska Oklahoma West Virginia Wyoming

Small Claims Divisions

Both county and municipal courts have small claims divisions that hear civil cases involving damages up to $3,000. The procedural process is streamlined with these cases.

Unit 1: U.S. Sources of Law

Case law establishes legal precedent as a result of the court's interpretation of other sources of law. Administrative laws and ordinances govern the creation and operation of public regulatory agencies such as commissions, departments, etc. Statutory law regulates individual or private action. Constitutional law regulates government action. Sources of law include statutory, administrative, constitutional, and case law.

Who's in Charge?

Company applications must name at least one affiliated individual licensed as a broker to perform functions solely on the company's behalf

What are the four sources of law in the U.S.?

Constitutional law, Statutory law, Administrative laws and ordinances, Case law

court of common pleas

Each county has. which are the primary trial courts in Ohio Certain misdemeanors Felonies Almost all civil cases, especially those that exceed municipal and country courts' damages limitations or jurisdictions Real property cases, such as contract disputes and foreclosures County court or administrative agency appeals (municipal court decisions appeal instead to the court of appeals).

Case Law

Establishes legal precedent as a result of the court's interpretation of other sources of law The laws associated with this source of law are created when judges rule on the facts of a particular case.

Corporate law

Federal and state statutes that govern the formation and operation of corporations

Audit Checklist

General items Display broker license. Display fair housing sign. Have commission pamphlet available. Have all salespersons' licenses on hand. Comply with advertising rules. Agency agreements Commission rate Expiration date Fair housing language Signature lines Broker ID information Branch office items Number of branches Separate trust accounts Branch managers' names Trust account Bank and account number Date of last statement Account balance Interest-bearing or not Columnar ledger Proper designations Account balance details Clients' names, deposit dates, and amounts Earnest money total Broker funds included Statement balance

Administrative laws and ordinances

Governs the creation and operation of public regulatory agencies (boards, commissions, departments, etc.) The laws associated with this source of law are enacted by administrative agencies, which are governmental bodies of the city, county, state, or federal government. Legislation associated with this source of law is allowed by the state and enacted by local governments within the state. Examples include zoning and building codes.

U.S. Bankruptcy Court

Hears cases involving bankruptcy. There is one bankruptcy court per district.

U.S. Court of International Trade

Hears cases involving international trade dispute

U.S. Court of Federal Claims

Hears cases involving monetary claims against the U.S. government, such as tax refund suits or government contract disputes

Terms of penalty not met - results

If fines aren't paid, educational requirements aren't met, or other terms aren't fulfilled by the prescribed due date, then the license is immediately suspended. When licensees wish to reactivate their license, they must do so within 12 months. If they fail to do within that time period, the license is revoked.

Ohio Settlement Agreements

In settlement agreements, licensees must: Explain the behavior or action that led to the complaint. Admit that they committed that behavior or action. Concede that the behavior broke the law. Waive a hearing. Note that their attorney evaluated the settlement. State the superintendent's suggested sanction, if any. Waive the right to appeal or any other consideration. At their next meeting, the commissioners will review the settlement agreement. They can opt to hear testimony, but only as it relates to the settlement. They can't ask for additional witnesses or exhibits. The commission will then accept the settlement agreement, reject it, or accept it with reduced sanctions.

Substantive Law

Laws Governing Behavior

Tort law

Laws addressing harm inflicted on a person or property, either intentionally or unintentionally

Family law

Laws addressing how to handle family matters (marriage, divorce, etc.)

Property law

Laws involving real or personal property ownership, rights, and inheritance as well as the sale and purchase of real estate and real property

Private Law (Civil Law)

Laws that address issues that affect individuals, families, businesses, etc.

Criminal law:

Laws that address offenses against society

Administrative law:

Laws that control the actions of governmental agencies

Constitutional law:

Laws that protect citizens' rights

Trusts and wills

Legal vehicles by which ownership of property is transferred from one party to another

Ohio Complaint and Disciplinary Appeal

Let's say the superintendent reviews the investigator's report and determines that the licensee didn't commit a violation. The complainant can ask the commission to review the superintendent's decision within 15 days of receiving that decision. At the next commission meeting to occur at least 15 days in the future, the commission will review the complaint and the investigator's report. If the commission affirms the superintendent's decision, parties will be notified within five days. If the commission decides to reverse the superintendent's findings, a formal hearing will be scheduled. What if a licensee disagrees with sanctions the commission imposes? The licensee may appeal. The first appeal is to the Court of Common Pleas. The decision can be further appealed to the Ohio Court of Appeals, then to the Ohio Supreme Court. Ohio case law can provide numerous case studies of such appeals, with decisions both for and against appellant licensees.

Dispute Resolution: Three Methods

Mediation Arbitration Litigation

County Courts

Misdemeanors Felony case preliminary hearings Civil cases up to $15,000 in monetary damages, provided the case doesn't involve real estate contracts or real property title recovery.

Municipal Courts

Misdemeanors Felony case preliminary hearings Ordinance violations - Note that mayor's courts may hear ordinance violations cases when they occur in a municipality without a municipal court. Mayor's court decisions can be appealed to the municipal or county court, in which case a new trial will be conducted. Violations of building codes and health and safety codes (heard by municipal courts that have housing divisions) Civil cases in which plaintiffs seek monetary damages up to $15,000

Violations

Misrepresentation Giving false promises with the intention to sway, convince, or manipulate Ongoing misrepresentation or making false promises through agents, salespersons, advertising, etc. Dual agency other than what's permitted in Ohio Revised Code 4735.71 Neglecting to account for money belonging to others within a reasonable time frame Dishonesty, gross negligence, misconduct, or incompetency Obtaining a real estate license by fraud, deceit, or misrepresentation

Court of Appeals

Ohio has 12 appellate districts, with at least three judges in each district. A panel of three judges decides each appealed case. The court of appeals hears cases appealed from municipal courts and those appealed from courts of common pleas. Each district court sets precedents for all the courts in its district. However, a precedent set in one district doesn't necessarily translate to other districts. When there's a conflict between the precedents of two district court of appeals, the matter is brought before the Ohio Supreme Court.

Company Licensing in Ohio

Ohio law recognizes that both individuals and corporate entities—such as partnerships, limited liability companies (LLCs), and associations—may be licensed as brokers. If a partnership, LLC, limited liability partnership (LLP), or association submits the broker application, the application must include all of the members.

Categories and Roles of Ohio Licensees

Ohio licensing laws differentiate between two categories of licensure: broker and salesperson. Three roles are also defined: associate broker, principal broker, and management level licensee. Every salesperson or associate broker must be affiliated with a broker in order to perform brokerage services.

Superintendent

Ohio's superintendent of the Division of Real Estate and Professional Licensing

Partnership law

Procedures for forming, organizing, and dissolving legal business arrangements between two or more persons

real estate recovery fund won't pay:

Punitive damages Attorney's fees Interest on a judgment amount (unless the fund is unable to make payment upon application, in which case interest may apply) Real estate commissions or fees Real estate investors' losses

Constitutional Law

Regulates government action This is the supreme source of law, and it's based on the U.S. Constitution. This source of law is applicable in every state and is the basis for every state constitution.

Statutory law

Regulates individual or private action The laws associated with this source of law at the federal level are enacted by Congress and include areas of mortgage lending, environmental laws, and civil rights.

Ohio Superintendent of Real Estate

Required Responsibilities Oversee real estate brokers in the state. Organize and carry on an investigation and audit to investigate complaints, perform brokerage audits and inspections, and make other queries deemed appropriate. Name a hearing examiner for disciplinary action proceedings. Manage the real estate recovery fund. Other Responsibilities The superintendent may also choose to: Subpoena witnesses in investigations and audits. Seek a court hearing and judgment against any person who violated or plans to violate any real estate law provision. Appoint a trustee to conclude business transactions of deceased brokers, or those with revoked or suspended licenses. Request the superintendent of the Bureau of Criminal Investigation to conduct criminal records checks of any applicant or licensee whom the superintendent has reasonable cause to believe has committed a crime. Send advisory letters to licensees instead of taking any disciplinary action.

Out-of-State Commercial Brokers in Ohio

Requirements: enter into a written agreement of cooperation with an Ohio broker who holds a valid license. The agreement must outline the cooperation and compensation terms, state that the out-of-state broker agrees to abide by Ohio law, and include an agreement that any legal actions arising out of the transactions that involve the out-of-state broker will fall under Ohio's jurisdiction. The out-of-state broker must also provide a current certificate of licensure good standing.

Procedural Law

Rules That Govern Court Proceedings in Civil, Criminal, and Administrative Suits

Law of agency

Rules that govern the relationship between one party (the agent) acting on behalf of another party (the principal)

Already realtor in other state need to do:

Submit two forms: The Salesperson Reciprocity Application (or the Broker Reciprocity Application) and the Non-Resident Real Estate Licensee Consent to Service of Process. The latter form indicates that you will recognize the laws and regulations of Ohio as binding, and all Ohio state court decisions as valid. If you're applying as a salesperson, the broker who's sponsoring you in Ohio must sign your application. Along with the application, submit a letter of certification from the state in which you're licensed verifying your status and that you've been continuously licensed for at least one year, two years if a broker or the equivalent in your state. Submit proof that you completed 40 hours of education on Ohio real estate law. Submit the relevant application fee ($60 for salespersons and $100 for brokers).

Ohio Supreme Court

Supreme court decisions are binding on all Ohio's inferior courts. The Ohio Constitution sets the number of elected supreme court justices at seven. The court is required to hear cases in which district appellate court decisions are in conflict. It hears other appealed cases at its discretion. Cases include: Criminal defendants sentenced to death who lost in the court of appeals State or federal constitutional matters Other specialized cases

Division

The Division of Real Estate and Professional Licensing

due process of law

The Fifth and 14th Amendments to the U.S. Constitution guarantee all legal proceedings will be fair and reasonable and that the government will not arbitrarily or unfairly deprive individuals of their basic constitutional rights to life, liberty, and property.

Commission

The Ohio Real Estate Commission; five members appointed by the governor, four who've worked in real estate as licensed brokers for the 10 years immediately preceding the appointment, and one member to represent the public

Ohio real estate recovery fund

The fund helps compensate victims after they've been awarded a judgment against a licensee but haven't been paid. Consumers apply for relief from the fund, and the licensee repays any amount paid out by the fund.

recovery fund issued as long as:

The person obtained a legal judgment All appeals have been exhausted, and the application is filed within 12 months of the end of all legal proceedings The applicant isn't the spouse or personal representative of the spouse of the debtor The application has been filed within one year of the completion of all proceedings

Additional Penalties

The superintendent can serve citations and impose sanctions personally or via certified mail. Each citation can include a fine up to $200 per violation instead of or on top of commission fines. All collected fines go into the real estate recovery fund. A licensee may request a hearing to appeal a citation. If the superintendent cites a licensee three times, additional disciplinary action will begin.

Informal Mediation in Ohio

Their chief purpose is to avoid the time and expense of the formal investigation and hearing process. However, they can only take place if both the consumer who filed a complaint and the licensee against whom the complaint was filed agree to a mediation meeting. Once the superintendent responds to the complainant and gives notice to the licensee, both parties have 10 days to request an informal mediation. The meeting will be scheduled within 20 business days of the requests, but either party may ask for an extension of up to 15 business days. During mediation, the parties may opt to have legal representation. Anything the parties or their representatives say or do during the meeting is confidential and won't be disclosed or used as evidence in any necessary subsequent hearings. If the parties reach an accommodation, the investigator will prepare a confidential, non-binding agreement, including relief provisions. All parties, as well as the superintendent, sign the agreement, and the complaint is officially closed. But what if the licensee doesn't satisfy the agreement's terms? When that happens, the agreement is null and void, and the licensee is guilty of misconduct. The superintendent will launch a formal investigation. When the shoe is on the other foot and it's the complainant who fails to comply, despite the licensee's good faith efforts, then the superintendent will consider all terms to be satisfied and the matter will be closed. Not all parties can reach accommodation during mediation. When that happens, the superintendent will initiate a full investigation within five business days.

Administrative Agencies/Boards

These agencies and boards hear cases involving agency claims and disputes.

Appellate/circuit courts

These courts review decisions made by the lower courts if an appeal has been made to reverse the original verdict.

Trial/district courts

These courts try and decide cases.

Armed Forces Court of Appeals

This court hears appeals for cases having to do with active military personnel.

Veteran Claim Court of Appeals

This court hears appeals for cases having to do with claims made by retired military personnel.

U.S. Patent/Trademark Office

This court hears cases having to do with patent and trademark issues.

U.S. Tax Court

This court hears federal tax law cases.

U.S. Supreme Court

This court reviews evidence and may reverse or modify decisions made by the lower courts. The decision of this court is final.

Ohio Court System

Trial courts (municipal, county, and courts of common pleas) (lowest) State court of appeals State supreme court ( highest)

Unlicensed Membership

Unlicensed members of an association, unlicensed partners in a partnership, and unlicensed officers of a corporation should submit affidavits stating that they won't act as a real estate broker on the company's behalf

Regulations

What created them? Division of Real Estate Where are they? Ohio Administrative Code What do they cover? Licensing regulations and some general provisions regarding trust accounts, referrals, continuing education, and agency relationships

Laws

What created them? Legislature Where are they? Ohio Revised Code What do they cover? Licensing, agency, requirements, duties, prohibitions, investigations, disclosures, and other practice-related issues

Penalties for Ohio License Law Violations

When licensees are found guilty of violations, they may face license revocation or suspension, fines (not to exceed $2,500 per violation), public reprimand, or required continuing education that won't fulfill regular CE requirements for license renewal.

Litigation

a lawsuit settled in court. There is generally a plaintiff, a defendant, and a judge whose decision is binding (though the parties may have the right to appeal the decision to a higher court).

Management Level Licensee

a licensee who's associated with a real estate broker, and who has supervisory responsibility over other licensees in that brokerage A broker's license isn't required.

broker

a person or entity who, for a fee and on behalf of another, engages in licensable real estate activities.

Application Process

application to the court of common pleas of Franklin County The application should specify: The nature of the act or transaction on which the judgment was based What the applicant has already done to try to collect on the judgment An accounting of the actual and direct losses, attorney's fees, and court costs incurred A copy of each pleading or order in the court action

Ohio Investigations

at any time within three years from the date on which an alleged violation occurred. If a complaint has been filed, then the date of filing is considered to be the investigation start date. The commission's investigations relate to license violations only, not a licensee's criminal or civil liability.

A civil procedure

describes the rules and judicial practices used by the courts to conduct a civil trial as opposed to a criminal trial.

Ohio Civil Penalty for Practicing without a License

first-degree misdemeanor commission can impose a civil penalty of up to $1,000 per violation fail to pay the penalty, the superintendent can file a civil suit against them collected fines for this offense are deposited into the Ohio division of real estate operating fund,

Ohio Brokerage Audits

help ensure that licensees comply with Ohio's real estate license law brokerages that haven't been audited in the last three years Brokerage and transaction records must be retained for three years Auditors don't need subpoenas or warrants to examine records as part of the audit. take a few hours, but they can take several days, depending on the size of the firm

Cleveland Municipal Court

is unique in that it can hear cases involving the recovery or foreclosure of real property, which includes mechanic's liens and judgments, as well as mortgage foreclosures in the amount of $15,000 or less.

Ohio division of real estate operating fund

is used to pay all operating expenses of the division of real estate. The fund is also used to pay the division's portion of the overhead costs of the state department of commerce.

International law:

laws that specify how nations should interact with one another

Penalties

pay required fines within 30 days of the order to do so, but the commission can extend a grace period upon request.

Licensure requirements

protect the public from untrained, unsupervised individuals who don't understand real estate laws and practices. Helps ensure that licensees have adequate education, knowledge, and supervision, and it provides regulatory oversight and the ability to discipline those who violate the rules of the profession.

Fund Repayment

the licensee's license is suspended on the date of payment. reinstated until the former licensee has made full repayment to the fund, including interest at a rate specified in the law. Bankruptcy doesn't cancel any repayment requirements unless the original judgment was included and discharged by the bankruptcy court.

arbitration

the parties agree to let an arbitrator actually determine the outcome of the dispute

mediation

the parties meet with a third party, the mediator, to attempt to resolve their differences

Ohio Hearings

the superintendent has seven days to inform the parties of the date a hearing examiner will hear the case. Either the licensee or the superintendent may ask for a 30-day extension. When the formal hearing concludes, the hearing examiner prepares a full report that includes findings and legal conclusions. The examiner submits the report to the superintendent, the commission, and the affected parties within 25 days after the hearing wraps up. The commission reviews the hearing examiner's report at its next regularly scheduled meeting to be held at least 15 days after members receive the hearing examiner's report. If they so choose, commissioners can request to hear additional testimony. The commission also maintains a transcript of the proceedings, composes a written opinion, and notifies the complainant of the possibility of suing for recovery if there was financial loss due to the licensee's violation. Then, within 60 days of the hearing examiner filing the report, the commission decides whether or not to impose disciplinary sanctions against the licensee in violation. Sanctions may include license suspension or revocation, additional education, censure, probation, or fines. With such a reliance of written reports, determinations, and other communications, the law requires that all documentation related to a complaint be mailed via certified mail with return receipt requested.