Agency Manual & FAQs

AGENCY COMPLIANCE MANUAL

The following FAQs should answer frequently asked questions about the Ohio’s agency law. (Effective Jan. 1, 2005).

Index …

Types of Agency Relationships

Requirements of the Agency Agreement

Implied Agency

Agency Duties

Scope of Agency Relationships within a Brokerage/’Split Agency’

Management-Level Licensees

Appointment of Agent

Dual Agency

Brokerage Company Policy

Disclosure of the Brokerage Agency Policy –The “Consumer Guide to Agency Relationships”

The Agency Disclosure Statement and Procedures

Disclosure of Status as a Buyer Broker

Confidential Information

Changing an Agency Relationship

Termination of an Agency Relationship

Citation Authority

Types of Agency Relationships

1) Q: Why isn’t acting as a facilitator or transaction broker an option under Ohio’s agency law, as some states allow?

A: The trend toward transaction brokers has died. Although considered at one time, it was not made part of Ohio law for several reasons. First, agency-levelservice is ingrained in licensees’ behavior. Second, buyers and sellers want agency representation. Third, there was a concern that facilitator status wouldbe misused and give licensees a false sense of immunity from liability. Finally, the lack of case law in this area also led to the conclusion that the concept of facilitator was not the solution to the bigger questions involved with agency.

2) Q: Does anyone still act as a subagent in Ohio?

A: Very rarely. With the advent of buyer agency, subagency has lost favor in Ohio and across the country.

3) Q: Someone told me that if a buyer wants to purchase one of my listings that I must act as buyer’s agent and thus be a dual agent. Is thattrue?

A: Ohio law does not mandate that you represent all buyers. Depending on your brokerage’s policy, you could either treat the buyer as a customer and just represent the seller, or you could act as a dual agent, representing both the buyer and seller if the parties agree.

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Requirements of the Agency Agreement

1) Q: Do I have to include the fair housing language and logo in my listing, buyer agency or property management agreements if the real estate involved is commercial, retail or industrial property?

A: No. Since these types of properties are not covered under the fair housing laws, this fair housing language is not required in agency agreements involving such properties.

2) Q: Does the fair housing language and logo need to be included in a listing agreement or buyer agency agreement for vacant land?

A: Yes. The fair housing language and logo must be in all agency agreements for vacant land. This requirement applies to all vacant land regardless of the intended use of the land or how the land is zoned.

3) Q: Do these requirements apply only to exclusive agency agreements?

A: They apply to any agreement in which a licensee agrees to perform services requiring a license, regardless of whether the agreement is exclusive.

4) Q: I thought listing agreements had to be in writing under the Statute of Frauds?

A: No, the Statute of Frauds does not apply to agency agreements. Although it is not a good business practice, you can legally agree to represent a seller or buyer verbally.

5) Q: Is the fair housing language and logo required on purchase contracts?

A: No, although it can be included if you wish.

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Implied Agency

1) Q: Someone told me that under Ohio law, whenever I am working with a buyer, that I will be a buyer’s agent. Is that true?

A: No. Under Ohio law, there is no presumption that you represent either the buyer or seller. Instead, you must affirmatively decide what agency relationship you want to establish with buyers and/or sellers.

2) Q: Does Ohio law totally eliminate the risk that I could imply an agency relationship through my words or actions?

A: No, it merely identifies several of the services that you can provide to a customer without unintentionally creating an agency relationship. It also clarifies that the source of compensation, by itself, does not establish an agency relationship.

3) Q: If I represent the seller, can I give the buyer “comps” without implying an agency relationship?

A: Yes, as long as they are obtained from a property listing service such as a multiple listing service or other public record. Ohio law provides that “comps”can be given to the buyer without creating an agency relationship with the buyer or breaching your duty to the seller. Of course, if these comps do not support the listing price, you probably should discuss it with the seller before you provide them to the buyer.back to top

Agency Duties

1) Q: I represent a buyer who is interested in seeing a property. Another buyer that I represent also wants to see the same property. Is it a violation of my agency duties to show it to both of them?

A: No. Ohio license law specifically provides that this is not a violation of your agency duties. To make sure buyers understand this, you may want to include language in your buyer agency agreement disclosing that you could potentially represent other buyers on the same property. Such a provision should explain that you will keep the confidential information of each client in confidence and not disclose it to the other party.

2) Q: What is the best way for me to obtain permission from the seller to offer buyer agency compensation?


A: The easiest way to accomplish this is to include a section in your listing contract in which the seller indicates that he permits this.

3) Q: Should I include the same kind of section in my written buyer agency agreement to obtain the buyer’s permission to receive my compensation from the listing broker or seller?

A: Yes.

4) Q: If the listing broker or seller is offering a bonus to the selling agent, am I required to tell the buyer this?

A: If you are acting as a buyer’s agent, your fiduciary duties would require you to disclose this to the buyer. Make sure you document your disclosure in your files. Remember, any bonus that you receive must be made payable to your brokerage.

5) Q: I know I must present all offers in a timely manner, but what is a timely manner?

A: A timely manner is defined to mean as soon as possible under the circumstances.

6) Q: Do I have an obligation to present verbal offers to my client?

A: Although a verbal agreement is not binding in Ohio, unless your seller instructs you otherwise, your duty to present all offers would require you to present even verbal ones.

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Scope of Agency Relationships within a Brokerage/’Split Agency’

1) Q: My brokerage practices “split” agency. If I represent a buyer who wants to buy property listed with another agent in my brokerage, are we both dual agents?

A: No. Unless that is the policy of your brokerage, you would be considered to represent only the buyer and the listing agent would represent only the seller.

2) Q: Does this mean I can actively negotiate on behalf of my buyer client and the listing agent can do the same for his seller?


A: Yes. Each of you are obligated to fulfill your fiduciary duties to your separate clients. This means that among other duties, you must each use your best skills and efforts to negotiate the best deal for your client and to act in their best interests.

3) Q: What is my brokerage’s role?

A: Your brokerage–the sole proprietor, partnership or corporation holding your license–would be considered a dual agent since both you and the listing agent work for the brokerage. Any management-level licensees in your brokerage would be considered dual agents as well.

4) Q: What restrictions are there on my broker and the management-level licensees in my brokerage as dual agents?

A: Although they are dual agents, your brokerage and the management-level licensees are still required to supervise both you and the listing agent to make sure you are each fulfilling your respective duties to your clients. However, in doing so, they cannot take either the buyer or seller’s side and they can’t advocate or negotiate for either the buyer or seller. If they learn any confidential information about the buyer or seller, regardless of the source, they cannot disclose it to the other party or their agent, or use it in any way to benefit one party over the other.

5) Q: Another agent in my brokerage and I work as a team, co-listing properties and working together with buyer clients. Are we always going to be bound by each other’s agency relationships?

A: Probably. If you assist each other in establishing the agency relationship or share a client’s confidential information with one another, this will bind you to each other’s agency relationships. Since it is probably a selling tool that your clients will have two agents working for them instead of one, you and your “teammate” probably want to each sign the agency agreement or include language appointing the licensee who is not signing it to be the client’s agent as well.

6) Q: I referred a seller to another agent in our brokerage because the property involved was outside my area of specialization. Am I considered to be that seller’s agent because I made the referral?

A: No, you would not be bound to represent the seller.

7) Q: My personal assistant works primarily for me but also has his own clients that he handles himself. Am I bound by his agency relationships?

A: You would only be bound by the agency relationships your personal assistant enters into if you were a management-level licensee, you helped him establish them, were appointed to represent his clients, or received confidential information from him about his clients. If you do not want to be obligated to represent your personal assistant’s clients, you need to make sure he keeps you out of those transactions he does on his own.

8) Q: Are my licensed personal assistants bound by the listings I take and the buyer agency relationships I enter into?

A: Your personal assistants would be bound to your agency relationships if they helped you establish those relationships, if they were appointed to represent your clients, or if they received confidential information from you. Since it is likely your personal assistants will come into possession of confidential information and be bound by your agency relationships, it is probably best if your assistants are appointed to represent your clients. In that way, they can provide you with the full assistance you desire.

9) Q: If a buyer’s agent in my brokerage tells me confidential information about his client, does that make me the buyer’s agent?

A: You would become bound to represent the buyer if you learn confidential information from the buyer’s agent. If that buyer later wants to purchase one of your listings, you must act as a dual agent and cannot share that information with the seller.

10) Q: From an outside source, I learned confidential information about a seller whose property is listed with another agent in our brokerage. Because I received this confidential information, am I now considered the seller’s agent?

A: No. You would only be considered the seller’s agent if you obtained the confidential information from the listing agent. If you learn it from a source outside the brokerage, you do not become the seller’s agent.

11) Q: If an agent in my brokerage tells me confidential information about one of his clients, could I later be named in a lawsuit involving a subsequent transaction in which I am never involved?

A: It is extremely unlikely that you would be named in any litigation resulting from a transaction in which you were not involved.

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Management-Level Licensees

1) Q: I am affiliated with a brokerage as a broker, but I am not the principal broker or in any type of management position. Instead, I function as a sales agent. Am I automatically considered to be a management-level licensee because I hold a broker’s license?

A: No. As long as you have not been assigned management duties that include overseeing a brokerage office or division and you do not supervise other licensees, you will not be considered a management-level licensee.

2) Q: I have some ownership interest in the brokerage with which I am licensed. However, I do not hold a management position or supervise any other licensees. Am I considered management level because of my ownership interest?

A: No. Under rules issued by the Ohio Real Estate Commission, you would not be considered to fall within the definition of a management-level licensee. The only exception to this would be if, because of your ownership interest, you acted in a manner that was designed to influence or affect transactions in which you were not personally involved. If you do act in such a manner, you could be found to be a management-level licensee.

3) Q: I have licensed personal assistants who work for me. Because I supervise them, am I a management-level license?

A: No. Although you supervise other licensees, you would only be considered management level if you have also been assigned oversight duties for the main office, a branch office or division of the brokerage.

4) Q: I am a branch manager. Will I always be a dual agent on all in-company transactions involving the salespersons in the brokerage?

A: You will be a dual agent if your brokerage has the listing and an agent in your brokerage also represents the purchaser as a buyer’s agent.

5) Q: What is my liability as a dual agent? Am I liable for transactions in which I never become involved, just because I am a manager?

A: It is unlikely that you would be named in a lawsuit or found liable in a transaction in which you never became involved. If you do become involved, you may have some possible exposure based on the nature and extent of your conduct.

6) Q: The listing agent on an in-company transaction works out of the branch office I manage. The agent in our firm that represents the buyer works out of a branch office managed by another licensee. Am I and the other branch manager still considered dual agents, even though neither of us supervises both of these agents?

A: Yes, even though you work out of different branch offices, both you and the other manager are dual agents.

7) Q: There is an agent in our brokerage to whom other salespersons go for advice on transactions. Is she management-level because of the mentoring role she plays in our firm?

A: Unless she has been assigned management duties and supervises licensees, she would not fall within the definition of a management-level licensee. The only exception to this would be if she is compensated for providing advice or assistance.

8) Q: I am the broker for my company. Our company practices “split agency.” If I personally list a property for my neighbor and one of my agent’s represents the buyer, am I a dual agent?

A: You are permitted to represent only the seller as the listing agent as long as there is another management-level licensee in the brokerage to supervise the salesperson in your office that is representing the buyer.

9) Q: Our brokerage policy is that we practice dual agency on any in-company transaction — even if there are two different agents involved in the transaction. If I list a property as a broker and the buyer is represented by one of my agents, are we both dual agents?

A: Yes. Because of the policy your brokerage has chosen you would both be dual agents.

10) Q: As the broker I listed a property that I personally own with my company. One of my agent’s represents a buyer who wants to purchase it. Do I have to be a dual agent?

A: If your brokerage practices “split” agency and there is another management-level licensee to supervise the buyer’s agent, then you can represent just yourself. If there is no other manager or you have chosen a policy of dual agency on all in-house transactions, then you would have to be a dual agent.

11) Q: My brokerage does practice split agency, but I am the only broker and have no other managers. If I personally list a property, the seller may see it as a disadvantage that I may have to be a dual agent if the buyer is represented by one of my agents. If that happens and the seller wants full representation, could I appoint another agent to represent the seller?

A: Yes, as long as the seller agrees, you could appoint another agent to be the seller’s agent. As the sole broker you would, of course, still be a dual agent.

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Appointment of Agent

1) Q: Do I have to get my seller’s authorization in writing to give me the authority to appoint other agents to represent them?

A: Yes.

2) Q: If my listing agreement contains language delegating to the listing agent the authority to appoint other agents to represent the seller, does the listing agent have to give the seller notice when an appointment is made?

A: Yes. The seller must be notified at the time of the appointment. It is recommended that this notification be in writing.

3) Q: What if the seller vetoes the appointment?

A. The appointment cannot be made or would terminate upon the agent’s notification of the veto.

4) Q: Can I include language in my property management agreement that delegates authority to the managing agent to appoint other agents in our brokerage to represent the owner?

A: Yes. The sample agency agreement appointment language provided on page 16 could be used by replacing “Seller/Buyer” with “Owner” and “listing agent/buyer agent” with “managing agent.” (The sample Notification of Appointment of Agent forms provided on pages 18-19 of the Manual could also be used by indicating the agent has been appointed to represent the owner in the management of his property and have the managing agent sign the form.)

5) Q: Under my brokerage policy if another agent needs to be appointed to represent a client, the appointment will be authorized by the client when that occurs. Does the client’s authorization have to be in writing?

A: No, but you must have the client’s “specific” consent. Therefore, it is a good business practice and strongly recommended that you have it in writing.

6) Q: When I am on vacation, another agent in our brokerage covers my transactions. Should that agent be appointed to represent my clients?

A: In order to be able to provide agency-level service to your clients while you are gone, it is best that this agent be appointed to represent your clients.

7) Q: I am going on vacation and another licensee in our brokerage will be appointed to represent my seller. When I return will that agent still be considered the seller’s agent?

A: Yes, unless the parties agree otherwise.

8) Q: Could the appointment be limited? For example, could it indicate that the agent is only appointed to be the seller’s agent for the three weeks I am on vacation?

A: Yes, as long as the seller agrees that type of language could be written in the appointment. The appointment should specifically indicate when the agency relationship begins and ends, and should explain the agent’s duty to maintain any confidential information even after the term of the appointment has ended.

9) Q: If the appointment were limited, could the agent later represent a buyer on that seller’s property?

A: Yes, however, the agent could not disclose any confidential information to the buyer that was learned during the time the agent was appointed to represent the seller.

10) Q: Is it possible for a management-level licensee to cover for me when I’m not available so I don’t have to go through this appointment process?

A: Yes, since management-level licensees are already bound by your agency relationship, no appointment would be necessary.

11) Q: If I hold an open house for another agent in our brokerage, will that automatically make me the seller’s agent? Do I have to be appointed as the seller’s agent to hold an open house for the listing agent?

A: You are not required to be appointed to represent the seller to hold an open house on behalf of the listing agent. You would only be found to represent the seller if such an appointment took place, if you hold a management position in the brokerage, if you received confidential information from the listing agent, or if you originally helped the listing agent get the listing.

12) Q: Should it be explained to the seller that the agent holding the open house is not the seller’s agent?

A: Although not technically required, it is recommended, so the seller doesn’t share confidential information with that agent.

Dual Agency

1) Q: Does Ohio law require that all in-company transactions result in dual agency for my brokerage?

A: Dual agency only occurs if your brokerage represents both the seller and buyer. This means the property is listed with your brokerage and your firm has an agency relationship with the buyer of the property as well.

2) Q: As an agent, am I always a dual agent when I sell my own listings?

A: Under Ohio law you would only be a dual agent if you represent the buyers as their agent and they want to buy your listing. If you did not agree to be the buyers’ agent, then the seller is your only client and the buyers are customers. You should check your brokerage’s policy on how they want you to handle this situation.

3) Q: As an agent, if I sell one of my listings to a buyer that I represent as a client, what do I need to do?

A: You are clearly a dual agent in this situation and must: 1) disclose all relevant non-confidential information to the parties; 2) have the buyer and seller sign the section of the Agency Disclosure Statement that discloses dual agency, and 3) perform your duties as a dual agent in accordance with the terms of that agreement.

4) Q: What would be an example of “relevant information” I would need to tell the parties?

A: An example of this would be if one of the parties is a family member or business associate.

5) Q: What happens if one of the parties refuses to consent to the dual agency?

A: If one of the parties refuses to consent, you cannot act as a dual agent. If your brokerage practices split agency you could offer to have another agent in he brokerage represent that party. If they will not agree to this, or your brokerage does not practice split agency, you will have to terminate your agency relationship with one of the two parties. You can continue to represent the other party.

6) Q: If they do agree to let another agent in the brokerage represent them, should we get that in writing?

A: Yes, a written appointment of the new agent should be signed.

7) Q: If a party refuses to consent to dual agency and we terminate our agency relationship with that party, can that party go to another brokerage to represent them? Do we have to recognize that other broker?

A: Once your agency relationship has been terminated, that party is free to hire another brokerage to represent their interests. You must present any offers written by that brokerage to the client you still represent and must handle all negotiations through the new brokerage that your former client has hired.

8) Q: Does Ohio law address entitlement to commissions between the brokerages in that situation?

A: No, commission matters in this situation are not addressed by the licensing laws. Any dispute between the two brokers must be arbitrated at their Local Board/Association of REALTORS.

9) Q: Does this mean I can’t tell my broker or manager the confidential information of my client?

A: You absolutely can share information of a confidential nature with your broker and manager. If you do, they must keep it in confidence and cannot disclose it or use it.

10) Q: If they are a dual agent, will I still be able to go to my broker or manager for help on transactions? What kind of help can they give me without violating their role as a dual agent?

A: Ohio law does not prohibit brokers or managers from assisting their agents or the parties they represent. They can still provide you with factual information, they can suggest objective options and solutions to problems and can help the parties in an unbiased manner to negotiate or fulfill the terms of a purchase contract or lease. The key in helping agents on this type of in -company transaction is that the broker and manager cannot use or disclose confidential information and must remain neutral and objective. This means they can’t act in a biased manner or take sides.

Brokerage Company Policy

1) Q: I am a sole proprietor with no licensees affiliated with me. Do I need a brokerage company policy for myself?

A: Yes, there is no exemption for one-person offices. However, since you work alone, your policy will be simpler than it would be if you had salespeople and had to address confidentiality issues.

2) Q: Do I have to advise all clients that they have the right to review my brokerage company policy?

A: No, but if they request a copy, you must make it available.

3) Q: Do I have to give them my whole office policy manual, which may also contain internal office procedures on other matters, or just the sections that contain the minimum information required by the Real Estate Commission?

A: You are required to provide your policy that covers the minimum criteria set by the Ohio Real Estate Commission. You are not required to provide any additional sections of your office manual that outline other internal procedures or policies.

4) Q: Do I have to actually list in my policy the names of the persons who hold management-level positions within my brokerage?

A: No, you only need to identify the positions they hold. For example, you might list “office manager” and “branch managers of the Centerville and Kettering offices.”

5) Q: In my policy I must address the relationships that my agents are to establish when they have a family relationship with a party. Does the rule define “family relationship?”

A: No. Therefore, you may wish to have your policy state that the agents must always act as the agent of their family member, unless you approve otherwise. That will give you the latitude to determine whether the relationship is so distant that perhaps the relative could be treated as a customer.

6) Q: In my policy, should I require my agents to disclose if they have a personal, family or business relationship with another agent in the transaction? For example, if the agent with the other brokerage is their cousin?

A: Yes, this type of relationship with another licensee in the transaction must be discussed in your policy as well.

7) Q: My office is very small, with just a handful of agents. We list properties and practice buyer’s agency as well. I don’t believe I can put into place policies to protect confidential information within my office. Can the agents just be dual agents on all in-company transactions?

A: Yes, Ohio agency law does not limit the brokerage company policy choices available to brokerages. However, in order to practice this policy you will have to take a few simple steps. Namely, you will need to have all agents in the brokerage appointed to represent the seller when you list property and do the same on your buyer agency agreements. Language accomplishing this can easily be incorporated into your listing agreement and buyer agency agreements. This type of policy option is discussed in greater detail in company policy D, beginning on page 75.

8) Q: My brokerage is going to practice “split” agency. To protect confidential information, am I going to have to start locking up my files?

A: That could be something brokerages do, but it is not specifically required. A less restrictive way would be to have general files that contain information that is not confidential. For example, on your listings this generic file would have in it information the seller would be willing to share with buyers and their agents. This could include the fact sheet, a picture of the property and other general information. This file would be available to all agents in the brokerage. The listing agent would then keep in a personal file information that is confidential in nature. This file would need to be kept in a manner so that it is not available to other licensees in the brokerage, who could potentially represent a buyer of that property. (The broker would probably want to require that a copy of the agent’s complete file be provided to the broker at the conclusion of the transaction.)

9) Q: We have weekly sales meetings where agents share information about new or existing listings or buyer clients. Do they need to be careful about what they say?

A: Yes. If your brokerage practices “split” agency, the agents should be instructed not to share anything of a confidential nature at those meetings unless the client permits such disclosure. This would include the seller’s motivation for selling, his reason for moving and the price he would be willing to accept. The same would be true of the buyer client information.

10) Q: We have a sales board on which we list the contract price of pending transactions. If we practice “split” agency, is this okay?

A: It is not a good idea to include the contract price on your sales board. This is because other agents in your office may represent buyers who might want to make a back-up offer. There is also the chance that the pending contract might fall apart and the property will be back on the market. By placing the sales price on the board, other buyer’s agents in the brokerage are now aware of the sales price the seller was willing to accept. Unless the seller approved this disclosure, posting it on the sales board could be found to be a breach of the listing agent’s duty of confidentiality.

11) Q: Sometimes clients leave messages with the receptionist that may contain confidential information. If we practice “split” agency, how should these be handled to protect this information?

A: There are different ways a broker could address this in the company policy. Rather than leave the message in a place where other agents in the brokerage could see it, the receptionist could be required to put it in an envelope in the agent’s mailbox or on his desk.

12) Q: I require my agents to do floor time on the telephones. Should they be instructed not to take detailed messages from the clients of other licensees in the brokerage, in case those messages contain confidential information?

A: This is something you need to address if you practice “split” agency in your brokerage. Some of the options you have would be to eliminate floor time; to use a voice mail system so callers could leave messages in their own agent’s confidential voice mail box; or have the agent on floor time refer the caller to a management-level licensee when the caller indicates he would like to leave a message beyond just a phone number.

13) Q: How can a brokerage that practices “split” agency handle faxes coming into the office that could be confidential?

A: One way to handle this would be to place your fax machine in the office or cubicle of the receptionist, an administrative assistant or office manager. That person would then deliver the faxes to the appropriate agent. Agents in the brokerage would be instructed not to take faxes off the machine.

14) Q: Do I have to file my brokerage company policy with the Ohio Division of Real Estate?

A: No. You would need to make it available for inspection, however, in the event you are audited.

15) Q: Can I send my policy to the Division of Real Estate or the Ohio Association of REALTORS for approval?

A: Given the thousands of brokerages in Ohio, it would probably not be feasible for either the Division or OAR to approve each broker’s policy. To make sure you’ve covered all of the areas required by the license law, you should compare it to the minimum criteria outlined in this section. You may also wish to have your personal attorney review it.

16) Q: What if one of the areas contained in the minimum criteria doesn’t apply? For example, our brokerage only represents buyers. Therefore, we don’t practice dual agency or “split” agency.

A: In this situation, you should merely indicate that your firm does not practice dual agency or “split” agency.

17) Q: I have adopted a company policy for my brokerage to comply with the license law requirements. Now that it’s actually been implemented, there are a few things I’d like to change. Can I do that, and is there any limit to the number of times I can change my company policy?

A: There is nothing in the license law that would prohibit or limit you from changing your policy. Therefore, you can amend it as many times as you like.

18) Q: My brokerage practice is primarily in the residential area. However, I do have commercial and property management divisions. Can I have different sections and procedures in my company policy for those different divisions?

A: No. Although the Division will allow you to vary your policies to fit the type of transaction, you cannot adopt different policies for different branch offices.

19) Q: My brokerage has a main office in one town and a very small branch office twenty miles away. I want to try “split” agency in my main office, but the agents in the branch office do not. Could I have different policies for different offices within my brokerage?

A: No. Although the Division will allow you to vary your policies to fit the type of transaction, you cannot adopt different policies for different branch offices.

20) Q: Are there any sample policies I can use?

A: Yes. Beginning on page 49 of the Agency Compliance Manual, there are five sample policies. Of course, since each brokerage is set up differently, you may need to modify some of the office procedures to fit your policies.

 

Disclosure of the Brokerage Agency Policy –The “Consumer Guide to Agency Relationships”

1) Q: Is this requirement for a “Consumer Guide” something new?

A: In legislation that became effective Jan. 1, 2005 the content requirements for this policy were expanded and the timing for delivery were modified. Moreover, to provide consistency, the Division requires that all brokers title this existing policy “Consumer Guide to Agency Relationships.”

2) Q: If I don’t like that title, can I change it?

A: No.

3) Q: Is there a mandatory format?

A: The only mandatory formatting requirements are that it must be a separate document; it must include your brokerage name; it must be titled “Consumer Guide to Agency Relationships;” the title must be in a font no smaller than 14 point; the text must be in a font no smaller than 11 point and the fair housinglanguage must be no smaller than 9 point. Other than these requirements, a broker can choose how to deliver this information. For example, it could be produced as a pamphlet, a booklet or a traditional 8 ½ x 11 or 8 ½ x 14 inch document.

4) Q: Is the mandatory fair housing language that must be included the same language that is in our listing agreement?

A: Yes.

5) Q: I am a commercial broker. Do I have to put the fair housing language in my “Consumer Guide?”

A: The fair housing language and logo is only required if the buyer or seller’s proposed transaction involves residential property or vacant land. If the property is commercial or industrial, the fair housing language and logo is not required to be included in the brokerage’s “Consumer Guide.”

6) Q: Can I include my brokerage logo, my franchise name and logo and/or the REALTOR term or the block “R” insignia?

A: Yes any of these may be included if you wish.

7) Q: Can salespersons, teams or personal assistants put their names on the “Consumer Guide?”

A: No.

8) Q: Can I get a pre-printed “Consumer Guide” from the Division, my Local Board of REALTORS or OAR?

A: No. Because these disclosures involve a brokerage’s individual policies, there is no pre-printed form that will work for each brokerage. However, the Ohio Association of REALTORS and the Division of Real Estate & Professional Licensing have worked jointly to develop sample versions of a “Consumer Guide” to Agency Relationships.” These are included within each Brokerage Policy section beginning on page 49 and are available on OAR’s website at www.ohiorealtors.org.

9) Q: Can I reword the language contained in those samples or is that language mandatory?

A: Except for the fair housing statement, none of the language is mandatory. You may reword it if you wish.

10) Q: As a broker can I draft my own “Consumer Guide” if I don’t like the samples?

A: Yes. You must make sure, however, that the “Consumer Guide” you draft contains all of the required information and meets the format requirements contained in the license law.

11) Q: Do buyers and sellers have to be asked to sign the “Consumer Guide?”

A: Yes, you must ask them to sign it, acknowledging that they have received it.

12) Q: If I provide the “Consumer Guide” as a pamphlet, how can I have the buyer and seller sign it, acknowledging their receipt?

A: This can be handled in one of two ways. Your pamphlet can have a tear-off panel that contains the consumer’s acknowledgment. They would sign that statement and your agents could tear off the panel and retain that portion for their records; the consumer would keep the rest of the pamphlet. The second way to handle the acknowledgment is to have a separate document the consumer would sign.

13) Q: The license law requires that parties be given a copy of any document they sign at the time they sign it. If I use a pamphlet and have a”tear-off” for the signature, do I need to make them a copy of the “tear-off” panel that bears the consumer’s signature?

A: No. The Division of Real Estate has taken the position that as long as the consumer has the pamphlet itself, they don’t have to be given a copy of the “tear-off” panel with their signature.

14) Q: Can I include the parties’ acknowledgment in a separate document? Could I put language in the purchase or listing agreement stating that they have received the “Consumer Guide?”

A: While you may have the parties sign a separate sheet acknowledging receipt of the “Consumer Guide,” it may not be included in any other agreement to which the consumer is a party.

15) Q: If I am the listing agent, when do I have to give the sellers my “Consumer Guide?”

A: As the listing agent, you are required to provide the sellers with the “Consumer Guide” before you show or market the sellers’ property. The most logical time to do this would be to incorporate it into your listing presentation.

16) Q: As a listing agent, will I ever have to give the buyers a “Consumer Guide?”

A: As the listing agent, you will only have to give the buyers a “Consumer Guide” if you are working directly with the buyers in a real estate transaction. If the buyers are working with a cooperating agent, that agent-not you-is required to provide the buyers with the “Consumer Guide” developed by their brokerage.

17) Q: If I am working directly with buyers, when do I have to give the buyers the “Consumer Guide?”
A: The buyers must be given a “Consumer Guide” before the earliest of the following events: initiating a prequalification to determine whether the buyers have the financial ability to purchase or lease a particular property; requesting specific financial information from the buyers to determine their ability to purchase or finance real estate in a particular price range; showing the property to the buyers, other than at an open house; discussing with the buyers the making of an offer to purchase real property; or submitting an offer to purchase or lease real property on behalf of the buyers.
18) Q: How do I give a buyer a “Consumer Guide” if the first thing I do is to pre-qualify him over the telephone?

A: The law specifically addresses telephone conversations. It provides that if an event that normally triggers your obligation to provide the “Consumer Guide” happens on the telephone, then you must verbally disclose the nature of your agency relationship in that conversation. You are then required to give the buyer a “Consumer Guide” at the first meeting you have with him.

19) Q: Will I be required to give a buyer a “Consumer Guide” if a potential buyer calls to ask for basic information about a property, such as the price, address, number of bedrooms and the like?

A: No. This type of conversation does not trigger your duty to give the buyer a “Consumer Guide.”

20) Q: Do I have to give every person who comes to an open house a “Consumer Guide?”

A: No. The open house situation is specifically exempted from those events that will trigger your duty to give the buyer a “Consumer Guide.”

21) Q: If a buyer comes back at the end of the open house and I begin to pre-qualify him or ask him for financial information, will I have to give him a “Consumer Guide” at that time?

A: Yes. Since you are now going beyond just making the property available for him to tour at the open house and are doing a pre-qualification, your duty to provide a “Consumer Guide” would be triggered.

22) Q: I am showing a FSBO to a buyer that I represent. Do I have to give the seller a copy of my brokerage’s “Consumer Guide?”

A: No. Only agents representing the seller must provide one to the seller. If you are acting as the buyer’s agent, you are not required to give the seller a “Consumer Guide.”

23) Q: I manage property. Do I have to give a copy of my company’s “Consumer Guide” to the owner? What about the tenant?

A: You are required to give the “Consumer Guide” to the owner before you market or show the rental property. The best time to do this is when you sign the property management agreement. As to the tenant, you would only be required to provide him with a “Consumer Guide” if the property is commercial, industrial, retail or involves a residential lease over 18 months. If it is a residential lease of 18 months or less, you are not required to give the tenant a “Consumer Guide.”

24) Q: I have a listing that is going to expire. If the seller agrees to extend it, do I need to give him another “Consumer Guide.”

A: No. If you are extending an existing agency relationship, the disclosure does not need to be provided again.

25) Q: I represent a buyer and provided him with a “Consumer Guide.” I am going on vacation. Another agent in my brokerage will be covering for me. If he shows the buyer property, does he have to give the buyer another “Consumer Guide?”

A: No. As long as you already provided one to the buyers you represent he is not required to give them another “Consumer Guide.”

26) Q: I am a licensed personal assistant for another agent. If I show one of his listings, do I have to give the seller a “Consumer Guide” if he has already done so? What about the buyers?

A: Because the listing agent already gave the “Consumer Guide” to the seller you do not have to give the seller another one. As to the buyers, if they have not previously seen this property or another property with an agent in your brokerage, you are required to give them a “Consumer Guide” before the showing.

27) Q: Do these requirements apply to commercial, industrial or rental properties?

A: Yes.

The Agency Disclosure Statement and Procedures

1) Q: I am a listing agent. Do I still give the sellers an Agency Disclosure Statement at the time of listing?

A: No. Effective, Jan. 1, 2005 you are no longer required to provide the seller with an Agency Disclosure Statement at that time. Instead you will provide information regarding agency to the seller via your brokerage’s “Consumer Guide to Agency Relationships.”

2) Q: When will I give the Agency Disclosure Statement to the sellers as the listing agent?

A: Under Ohio law the Agency Disclosure Statement will be completed by the agent working with the buyer. It will then be delivered along with the offer to you as the listing agent. You are required to present the form to the sellers and obtain their signature before you begin presenting the offer to the sellers.

3) Q: I am working with buyers. When do I give them the Agency Disclosure Statement?

A: It must be given to the buyers no later than discussing making an offer to purchase.

4) Q: As the buyer’s agent, I don’t know the seller’s name to fill in at the top. What should I do?

A: You can ask the listing agent for the seller’s name(s). If the listing agent can’t be reached, time doesn’t allow or the listing agent will not give you the seller’s name, you can leave that section blank. The listing agent can then fill in the seller’s name(s).

5) Q: If I’m selling property at auction, how do I handle the Agency Disclosure Statement?

A: Before the actual auction begins, you must verbally announce to the audience that you represent the seller. After the auction, the successful bidder must then be provided with your company’s “Consumer Guide” and the Agency Disclosure Statement before he signs the purchase contract.

6) Q: How do I complete the Agency Disclosure Statement if I represent a buyer who wants to keep his identity confidential?

A: As the buyer’s agent, you have a duty to keep the buyer’s identity confidential if he so directs. In this situation, provide the buyer with a statement and have him sign his name. Maintain that statement in your file to show that you did provide a statement to the buyer. Do not give a copy of the statement to the listing agent, however, as it would reveal the buyer’s identity. Instead, complete another form with the same information and sign it as “an agent for an undisclosed principal.” Provide this statement to the listing agent, along with any offer the buyer makes. Another option would be to have the buyer appoint an attorney or a trustee to represent him in the purchase, and then have that attorney or trustee sign the statement.

7) Q: After the buyer signs the statement, at what point do I give it to the listing agent?

A: After it has been signed by the buyer, it will be delivered along with the offer to the seller.

8) Q: What if it’s a for-sale-by-owner property?

A: If the property is not listed, you deliver the Agency Disclosure Statement to the seller with the offer.

9) Q: Do I have to give the listing broker or seller the original Agency Disclosure Statement the buyer signed?

A: No, the new law provides that you can give them a copy.

10) Q: As the listing agent, what are my obligations when I receive the Agency Disclosure Statement from a cooperating agent with an offer?

 

A: You must present the Agency Disclosure Statement, signed by the buyer, to the seller before you present the offer to purchase. To document that you did this, have the seller sign and date the statement.

11) Q: Can I refuse to present an offer if the cooperating agent fails to give me an Agency Disclosure Statement with the offer?

 

A: No. If time permits-for example, if the offer is not going to expire soon-you may wish to contact the cooperating agent to request the statement. However, you may not refuse or fail to present it until you receive the statement, as this may result in the seller losing a possible sale. Make sure you disclose to the seller the fact that you have not received the statement. Also, put notes in your file to document what has happened.

12) Q: What do I do if the seller or buyer refuses to sign the Agency Disclosure Statement?

A: In this situation you are required to note on the bottom of the statement the following: 1) the parties to whom the statement was presented; 2) the date and time the form was presented; 3) the fact that they declined to sign it; and 4) the reason they refused to sign it if you know. You must also communicate what has occurred to either your principal broker or another management-level licensee in the brokerage that supervises you.

13) Q: What do I do if the reason the buyer or seller won’t sign the form is because they don’t agree to dual agency?

A: You must have the consent of both the buyer and seller to act as a dual agent. If either of the parties won’t sign the Agency Disclosure Statement consenting to dual agency, then you cannot represent both parties. As an agent you need to notify your broker or manager immediately. Your broker/manager has a few options. Usually the broker retains representation of the seller and notifies the buyer that they will be treated as a customer. If the buyer wants representation and your brokerage practices “split agency,” the buyer can be referred to another agent in your brokerage. If they will not agree to that or your brokerage does not permit split agency, then the buyer will have to be referred to another brokerage or an attorney for representation.

14) Q: I engage in commercial sales and leasing. Are these agency disclosure requirements any different for me?

A: No. You should treat agency disclosure requirements the same in the sale and leasing of commercial real estate as you would in the sale of residential real estate.

15) Q: I practice property management. What are my agency disclosure responsibilities?

A: Under Ohio law, the lease of residential real estate is exempt from the agency disclosure requirement if the lease is for 18 months or less. Again, this exemption only applies to residential leasing. Therefore, you are not required to provide an Agency Disclosure Statement to the landlord or tenant if the property you manage is residential in nature and the subject lease is 18 months or less.

16) Q: I am a manager and have a property listed. The buyer is represented by an agent in our brokerage. Our company practices split agency and there is another manager in the company. What section of the Agency Disclosure Statement do I complete?

A: Because there is another manager to supervise the agent representing the buyer, you are permitted in this situation to represent the seller. (See the section in the Agency Compliance Manual on Management-Level Licensees for more information about this exception.) Therefore, you and your agent can act as split agents and you would complete the first box under Section II.

17) Q: Assume the same facts as question #16, but I am the only broker and there is not another manager to supervise the buyer’s agent. How would I complete the disclosure form?

A: As the sole broker you would have to be a dual agent. Again you would check the first box under Section II. You would fill in your name on both lines indicating you represent both the seller and the buyer. The buyer’s agent’s name would only be filled in as the agent of the buyer.

18) Q: Can I make any changes to the Agency Disclosure Statement?

A: No.

19) Q: Can I put my company name or logo on the Agency Disclosure Statement?

A: No.

Disclosure of Status as a Buyer Broker

1) Q: If I am a buyer’s agent, when do I have to notify the listing agent of that?

A: Ohio’s agency law contains language regarding disclosure of your status as a buyer’s agent that is almost identical to the National Association of REALTORS Code of Ethics. It requires you to disclose your status as a buyer’s agent to the listing brokerage at first contact. This would generally be when you call for information regarding the property or to schedule an appointment.

2) Q: What if the property isn’t listed?

A: If the property is not listed, you must disclose your status as a buyer’s agent at your first contact with the seller. You are also required to disclose any intention to seek your compensation from the seller at that time.

Confidential Information

1) Q: What are some examples of information that I should realize is confidential without the seller or buyer telling me?

A: In general, confidential information includes anything that could have an adverse effect on the client’s position in a transaction. For example, the seller may tell you that he may be willing to accept less than list price, or mention his motivation to sell. This information, if learned by a buyer, could result in the buyer offering less than full price. Because it could negatively impact the seller’s position, this would be considered information you must keep confidential even if the seller doesn’t specifically state that it is confidential.

2) Q: What should I do if I’m not sure if my client considers something to be confidential?

A: It is best to assume that everything your client tells you is confidential unless he specifically authorizes you to disclose it. If you aren’t sure, you should check with him. To avoid problems in this area, some brokerages use an addendum or form on which the client checks off from a list those items that he permits his agent to disclose. Such a list might include the seller’s reason for selling, the price the seller originally paid for the house or information regarding the buyer’s credit report. Examples of such forms are included on pages 41-42 of the Agency Compliance Manual.

3) Q: If my client authorizes me to disclose something, do I have to get that in writing?

A: It is not required that you obtain your client’s permission in writing, but it is strongly recommended that you somehow document that authorization was given.

4) Q: What would be an example of information that is required by law to be kept confidential?

A: An example of this would be information pertaining to the buyer or seller’s race, sex, color, religion, familial status, ancestry, disability or national origin. Under the fair housing laws, this type of information cannot be considered in a real estate transaction and therefore would be confidential.

5) Q: If I accidentally leak confidential information to an agent in my firm who represents the other party to the transaction,what should I do?

A: First, you should notify your principal broker or other management-level licensee in the brokerage who supervises you. Both parties to the transaction must be notified in writing that this breach of confidentiality has occurred and given the opportunity to terminate their agency relationship.

6) Q: What happens if one of the parties wants the brokerage to resign from representing them?

A: If this occurs, the brokerage cannot represent that individual and is not entitled to any compensation from that client. The brokerage can continue to represent and be paid by the client that chooses to continue the agency relationship with the brokerage.

7) Q: What if the person in the brokerage who improperly disclosed the confidential information to me wasn’t another affiliated agent, but rather an unlicensed employee, for example, a secretary or personal assistant who works for the brokerage?

A: The same procedures would apply. The parties would have to be notified in writing and given the opportunity to terminate their agency relationships.

8) Q: If my client elects to terminate our agency relationship because of a breach of confidentiality, and I refer them to another brokerage, can I receive a referral fee from that brokerage?

A: Ohio law specifically states that you cannot be paid by that client, but it does not address whether you can receive a fee from another brokerage to whom you refer that client. It would be recommended that due to the circumstances, the brokerage receiving the referral should not pay any referral fee to you without the knowledge and consent of its new client and that you should not accept it without that consent.

9) Q: If I receive confidential information as a result of the breach of confidentiality of another agent in my brokerage, can I pass it along to my client?

A: No. Ohio license law specifically prohibits you from disclosing that information to or using that information for the benefit of your client.

10) Q: I represent the buyer on property listed with another agent in my firm. What if I receive confidential information, not from the listing agent, but from a source outside the brokerage? Can I disclose that to my client?

A: Yes. The only time you would be prohibited from disclosing that information is if you received it as a result of a breach of confidentiality by the brokerage, its affiliated licensees or employees. If you received it from a source outside of the brokerage, not only are you able to disclose it to your client, but your duty of full disclosure of material facts to your client would require you to do so.

11) Q: Can the parties elect to terminate the relationship even if they weren’t harmed by the breach of confidentiality?

 

A: Yes, it is not necessary for them to demonstrate actual harm or damages to terminate the agency relationship and their obligation to pay the brokerage.

12) Q: If neither of the parties decide to terminate the relationship, can the brokerage continue to represent them both? Do I need to get that in writing from them?

A: Yes, you can continue to represent them. It may be prudent to have the parties acknowledge in writing that they waive their right to terminate that agency relationship as a result of the breach of confidentiality.

13) Q: If both parties elect to terminate their agency relationship with the brokerage, can they still complete the transaction?

A: Yes. Nothing in Ohio law precludes the parties from completing any real estate transaction that was pending.

14) Q: Is forfeiting your commission the only remedy buyers or sellers have for breach of confidentiality?

A: No. They could also sue you for any actual damages they suffered as a result of the breach.

Changing an Agency Relationship

1) Q: Our company policy is that we never act as a dual agent. If an agent represents a buyer who wants to make an offer on property listed with that agent, the relationship with the buyer is terminated and we just represent the seller. Do we still need to get this in writing, if it was disclosed to the buyer as part of our company policy?

A: Yes, you need to obtain the buyer’s consent in writing to now represent the seller. The seller should also be told that you previously represented the buyer and that none of the confidential information that was learned from the buyer can be disclosed to the seller.

2) Q: If I am switching from a buyer’s agent as described above, at what point do I need to get the buyer’s consent to act as a seller’s agent? When I merely show the buyer property I have listed or when the buyer wants to make an offer?

A: It is not necessary to obtain written consent until such time as the buyer determines that he wants to make an offer on property listed with you.

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Termination of an Agency Relationship

1) Q: Can I disclose confidential information in an ethics hearing or arbitration at my Local Board/Association of REALTORS? What about in a lawsuit to collect a commission owed to me?

A: It can be disclosed in these situations as long as the disclosure of the confidential information is necessary to defend yourself from an accusation of wrongful conduct or to establish your claim for a commission.

2) Q: I had a listing that expired. Now I represent a buyer who wishes to purchases that property. Am I prohibited from disclosing to my buyer/client any information that I learned from the seller during the listing?

A: Yes. Ohio law provides that your duty of confidentiality continues even after your listing has expired. Therefore, you cannot share this information with the buyer if it is confidential.

3) Q: What if the seller didn’t specifically tell me it was confidential, but I think it might be?

A: Even though the seller didn’t specifically tell you it was confidential, if the information would negatively impact the seller’s position if disclosed, it is considered to be confidential. If you aren’t sure, it is best to ask the seller for permission to disclose it to the buyer. Make sure you document any consent you are given.

4) Q: Aren’t I breaching my fiduciary duty of disclosure to my new client, the buyer, by not telling them the information?

A: No. Ohio law specifically states that while you have a duty to disclose material facts, this does not include information that is confidential under a previous agency relationship.

5) Q: Should I tell the buyer that I previously represented the seller and that I know information that may be material to them, but I can’t disclose it because it is confidential?

A: Yes, it is probably advisable for you to explain this to your new client.

6) Q: Couldn’t I just be a dual agent in that situation?

A: Yes, as long as both parties agree, that would be one way of handling it. However, if you act as a dual agent, you cannot actively negotiate or advocate on behalf of your buyer or the seller.

 

Citation Authority

1) Q: If I don’t think I violated the agency provision the Division alleges, can I contest the citation?

A: Yes, you can request a hearing. The burden will be on the Division to prove you have violated the provision alleged. You have the right to introduce evidence and have legal counsel represent you at this hearing.

2) Q: Will all agency violations result in a $200 citation?

A: Under Ohio license law, the Superintendent has discretion to determine whether to issue a citation or file formal charges against a licensee that is believed to have violated agency laws.