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Legally speaking: Can a listing automatically renew?

By Peg Ritenour, OAR Vice President of Legal Services/Administration

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. The following addresses a common inquiry regarding listing agreement renewals… 

Q: My brokerage does both property management and residential sales. Sometimes it is difficult to get the seller’s signature to renew at the end of the listing period, especially if the seller is out of town. I would like to include language in my listing agreement that provides that at the end of the original term the listing would automatically renew unless the seller notifies me in writing 30 days before the expiration date that he does not intend to renew. Is that okay? Could I include a similar clause in my property management agreement that it will continue to renew for one-year terms unless I am notified 60 days in advance by the owner?

A: Under Ohio Revised Code Section 4735.18 all written agency agreements must have a definite expiration date. This includes listings agreements as well as contracts for buyer representation, property management, tenant representation and auction services. Usually the definite expiration date is specifically stated (i.e., February 28, 2016) or is stated as a certain number of days from the date of the listing (i.e., 180 days).

According to the Division of Real Estate and Professional Licensing, such agreements can include an automatic renewal provision, as long there is a cap on the number of times the contract can automatically renew (i.e., the listing could only automatically renew for one 90 day period). This assures that the person entering into the agency agreement with the brokerage can ascertain at the time of signing what the “definite” expiration date will be if they take no action to terminate that agreement.

Tags: legal, Legally Speaking