Changes in the Real Estate Law

Changes to the Real Estate Law

Simplifying the agency disclosure process

As you should have heard by now, proposed changes the real estate law have been approved. The most significant changes relate to the agency disclosure process and will go into affect January 1, 2005.  However, other technical, non-agency related changes are effective ninety days after passage - in this case - November 3, 2004. Additional information is available on the Ohio Association of REALTORS® web site.

Sample Office Policies New Agency Disclosure Form (pdf) How to complete the new Agency Disclosure Statement

Non-Agency Related Changes

Continuing education requirement for licensees age 70+
Previously, only licensees who turned age 70 by June 14, 1999 were exempt from taking the full 30 hours every three years and only had to take the three required classes.  Anyone who turned age 70 after June 14, 1999 was still required to take all 30 hours of continuing education.  With this change, all licensees who reach the age of 70 will only need to take the nine hours of required classes (three hours of Ethics + three hours of Core law + three hours of Civil Rights). Note - This change applies to you if you turn age 70 during your 3-year cycle. So, for instance, should you turn age 70 the day your CE is due, you only need to turn in evidence of the nine hours (three required classes).

Distance Education
Previously, licensees could only take 15 hours of CE online or through video conferencing. The other 15 hours had to be taken in a traditional classroom setting.  Also, the three required classes (civil rights, core law and ethics) could not be taken online. Now, licensees can take all 30 hours of continuing education online or through video conferencing, including the three required courses (civil rights, core law and ethics). Note - Licensees can still only take up to 15 hours of distance education in computer specific courses, only six of which can be devoted to non real estate related computer instruction (i.e. Word, Excel, etc.)

License Transfers
Previously, the law did not allow a licensee to practice real estate until their license was physically returned from the previous broker to the Ohio Division of Real Estate and then forwarded to the new broker. Now, licensees can practice real estate once the Division has processed the transfer. The Division can do this as soon as the licensee completes a transfer application on which they certify that they have notified the broker in writing (email is acceptable).  They will issue a new license and the old one may be discarded.  Note: Failure to properly notify the previous broker of the transfer can subject the licensee to a hearing process.  Also of note - there is no burden upon the new broker to ensure that proper notification was given to the previous broker.

Broker return of license
Upon receipt of a written request from the Superintendent, a broker must immediately return the license of an agent or broker. Failure to return the license within 15 days of the date of the Superintendent's written request may be deemed to be evidence of misconduct in violation of ORC 4735.18(A)(6). Examples of when the Superintendent may request the return of a license is when a licensee fails to renew their license, meet their required continuing education requirement or is subject to a disciplinary sanction.

Please note that there has been no change in the law with regard to a broker terminating an agent's association with the brokerage. The broker must provide notice by certified mail to the agent of the termination within three business days of returning the agent's license to the Division.

Superintendent's authority to withdraw charges
If a complaint is filed against a licensee with the Division and a hearing date has been scheduled, the Superintendent upon receipt of additional evidence, may withdraw the charges. If this occurs, the Superintendent will notify the complainant and the licensee of the Superintendent's determination. Within 15 days after notification, the complainant may file with the Superintendent a request that the Ohio Real Estate Commission review the determination. The Commission can affirm the Superintendent's determination or reverse the determination and proceed with the hearing.

Continuing education for out-of-state courses not previously certified by the commission
Licensees may receive continuing education credit for a course that has not been previously certified by the Ohio Real Estate Commission provided:

• The course is not one of the three required courses - law, civil rights or ethics.
• The course is solely offered outside of Ohio.
• The course meets all of the Commission's criteria for continuing education course approval.
• The licensee submits the course for credit within the same continuing education reporting period of which the course was taken.
• For each course, the licensee submits an out of state education compliance form, the course syllabus, course attendance certificate and a $100.00 course approval application fee.

Agency Related Provisions

Since 1996, Ohio's real estate professionals have been required to provide two documents to buyer and seller clients: a copy of their brokerage's office policy on agency and the state-mandated disclosure form. These documents were required to be presented before the licensee performed any act that required a license. For sellers, it meant before a licensee marketed or showed the property. For buyers, it was required before the agent showed a house, prequalified or even asked for information regarding income.

Beginning January 1, 2005, only one document - the Consumer Guide to Agency Relationships - will be required to be presented prior to engaging in real estate practices and the new Agency Disclosure Statement will be transaction specific and required to be presented with the offer to purchase.

Consumer Guide to Agency Relationships
Beginning on Jan. 1, the Consumer Guide to Agency Relationships will be the sole vehicle for delivering information regarding agency to buyers and sellers at first contact. (The Agency Disclosure Statement will no longer be required at that stage.) Under SB 106 brokerages will develop their own brokerage policy on agency that must meet certain statutory guidelines. The policy can be in pamphlet or brochure format but must be titled "Consumer Guide to Agency Relationships".

Under these new rules, the following must be included by brokers in this "Guide":

• The brokerage name (Company logos, franchise names and logos and the REALTOR or other trade group insignia may be included. The names of agents, teams, or unlicensed persons may not);
• An explanation of the permissible types of agency relationships;
• The brokerage's policy on representing buyers, sellers, split agency, dual agency and working with customers;
• The brokerage's policy on cooperation and compensation of other brokerages;
• The fair housing logo and statement. The fair housing language must be no smaller than nine point font;
• A statement that the licensee is required to provide the consumer with the policy; and
• A place for the consumer to sign acknowledging receipt of the Guide
• Except for the fair housing statement, the text must be in a font no smaller than 11 point.

Sample policies that comply with the above requirements can be found at www.OhioRealtors.org

Whatever format is chosen, however, the consumer must be asked to sign, acknowledging receipt of that document. If the consumer will not do so, that fact must be noted, along with the date presentation was made.

The timing for providing this "Consumer Guide to Agency" will be the same as the current law for providing disclosure. It must be given to a seller by the listing agent before the property is shown or marketed. The most convenient way to comply with this requirement is for it to be included in an agent's listing packet.

As for buyers, the licensee will be required to provide them with the "Consumer Guide to Agency Relationships" before the earliest of the following events:

• Pre-qualifying the buyer
• Requesting specific financial information
• Showing property (other than at an open house)
• Discussing the making of an offer
• Submitting an offer

Whichever of the above events occurs first will trigger the licensee's obligation to provide the Guide to the buyer.

Under the new law there are a few exceptions to this duty to provide the Consumer Guide to Agency Relationships. It is not required to be given to tenants on residential leases of 18 months or less, in a referral situation, or if another licensee in the same brokerage already provided it to the buyer/seller.

Agency Disclosure Statement
The new Agency Disclosure Statement must be presented no later than the time the buyer decides to make an offer to purchase. At that time the form will be completed by the agent working with the buyer. It will accompany the offer and be delivered to the listing agent (or if there is none, to the seller directly). The listing agent will then present the form to the seller.

The new Agency Disclosure form is much easier for licensees to complete and for the public to understand. It includes all of the necessary disclosures, as well as complete disclosure and consent to dual agency, thereby eliminating the need for a separate dual agency form. The new form is 8-1/2 x 11 and two-sided and must be used starting January 1, 2005. 

The new Agency Disclosure Statement is/will be available as follows:

• Electronic
• Printed pads - CBR Member Service Center (December) - $5/pad of 50 (1pg, 2-sided)
• Autofill - CBR's PCF forms package - available January 1, 2005 (effective date of the form)

Additional information is available on the Ohio Association of REALTORS® web site.