Legally speaking: What you need to know when selling, buying or leasing your own property
On January 2, 2018
By Peg Ritenour, Ohio REALTORS Vice President of Legal Services/Administration
The Ohio REALTORS 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 we spotlight some of the timely questions that are being asked by REALTORS. This one centers on properly handling the sale, purchase or lease of your own property…
Q: Do real estate agents have to purchase, sell, or lease their own property through their brokerage? If an agent is selling or leasing her own property, does she have to include the brokerage name in the advertisement?
A: While there is nothing in the license law that requires agents to purchase, sell or lease their own property through the broker with whom they are licensed, a broker can require this as a condition of working for the brokerage. If a broker wants to impose this requirement, it is advised that this be set forth in the independent contractor agreement with the agent and/or in the broker’s policy manual. The broker should also check with his E&O insurance carrier to make sure that there won’t be any issue with coverage on transactions involving agent owned properties.
Here are some other important issues related to licensees selling, buying, leasing and managing their own property:
- As to whether the name of the brokerage must be included in advertisements, the answer depends on whether the property is listed with the brokerage. If it is, then the brokerage name must be included. If the property is not listed with the brokerage, then the brokerage name should not be included. In that case, only the agent’s name should appear in the ad. Regardless of whether the property is listed with the brokerage or not, under the license law any licensee who is marketing his own property must be identified in the advertisement by name and must indicate that the property is owned by the licensee. Examples of proper identification are “Tom Smith, Agent/Owner” or “Mary Jones, Broker/Owner.” This must be done in all forms of marketing, including yard signs, websites, print ads, etc.
- Use of Forms. If the transaction is not being “run” through the brokerage, the agent should not utilize and documents or forms that include the brokerage name and that could create the appearance that the brokerage is involved in the transaction when it isn’t.
- Disclosure of license status. Additionally, whenever an agent or broker enters into an agreement to sell or to purchase property for himself, Article Four of the NAR Code of Ethics requires written disclosure of the fact that he is a licensee. Such disclosure must be made prior to entering into a contract. This is typically done in the purchase contract or lease, but it could be included in a separate document, e-mail etc.
- Agency. Under Ohio license law a licensee cannot act as a dual agent in a transaction in which that licensee is a party. That means if you selling your own property you cannot also act as a buyer’s agent. Instead the buyer must be treated as a customer or referred to another licensee for representation. Likewise, if you are purchasing property for yourself you cannot also act as the seller’s agent, as this would make you a dual agent. For FAQ’s on this issue click here.
Legal articles provided in the OAR Daily Buzz are intended to provide broad, general information about the law and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.
Tags: legal, Legally Speaking