Legally speaking: Can agents get paid directly on BPOs?
On February 8, 2016
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 receiving compensation for a BPO…
Q: My agents are often asked by lenders who have acquired property through foreclosure and other owners to provide an informal opinion on the value of their property. These are usually referred to as a BPO or CMA. Can my agents do this on their own and be paid directly or does payment have to be run through my brokerage?
A: Under Ohio license law, any acts that require a real estate license must be performed by a real estate agent in the name of the brokerage with which the agent is affiliated. Those acts requiring a license are set forth in Ohio Revised Code Section 4735.01. Although it may be surprising, providing an opinion as to the value of real property for a fee or other consideration is NOT an activity that requires a real estate license. (Of course providing an appraisal, may require an appraiser certification or license.)
Because providing an opinion on the value of real property does not require a real estate license, according to the Ohio Division of Real Estate and Professional Licensing that activity does NOT need to be performed by an agent in the name of the brokerage and the agent can be compensated directly for that service. The only exception to this is if the opinion of value or comparative market analysis is part of a transaction. If it is, then under Ohio Revised Code Section 4735.21 the compensation must be received in the name of the brokerage.
So to summarize, as long as the fee is not part of a transaction, an agent can be paid directly for doing a CMA or BPO. Of course a brokerage can require that BPOs be done through the brokerage as a matter of brokerage policy. In making a decision on whether to adopt a policy requiring affiliated agents to handle BPOs through the brokerage, it is recommended that brokers check with their E&O insurance carrier regarding coverage.
Tags: legal, Legally Speaking