Limited Service Bill passes House & Senate

There are many different business models emerging in the real estate industry, ranging from "fee-for-service" to Multiple Listing Service entry only agreements, according to a report issued in 2005 by an Ohio Association of REALTORS® Minimum Services Task Force.

These "limited-service" listing agreements, in which the listing broker offers reduced services or no services other than placement in the MLS, have left many real estate professionals in an ethical quandary.

In some situations, home sellers who employ limited-service brokerages are essentially representing themselves in the transaction. Often, when they encounter difficulties in the process, they ask the buyer's agent for advice.

Real estate agents that assist sellers in such instances could leave themselves exposed to claims of dual agency. On the other hand, choosing not to assist the seller places the transaction in jeopardy and may not be in the best interest of the buyer the REALTOR® represents.

To clarify the situation, many states have taken various approaches to deal with the issue of a minimum level of services a real estate professional must offer to a consumer with whom the licensee enters into an exclusive brokerage agreement. In many cases, the U.S. Department of Justice has opposed the approaches undertaken.

However, the bill introduced earlier this year by the Ohio Association of REALTOR® was premised on the following principles:

• Consumers should have the right to select the level of service they want from a real estate licensee. Regardless of the level of service the consumer chooses, however, there are certain basic fiduciary duties a licensee must always perform to assure the consumer is protected in their real estate transaction. 
• The license law should assure that consumers are making an informed decision regarding the level of service they receive. 
• The license law should not unreasonably restrict or limit emerging business models.

The Justice Department, in a letter to OAR, indicated that the Ohio proposal that "allows for the consumer waiver seems sensible." Further, that "by allowing consumers to waive the services they do not want, consumers remain in the driver's seat to determine the specific services that they want to buy to meet their individual needs."

HB 491 got shut down in the 11th hour due to an amendment attached at the last minute dealing with an Ohio Department of Development matter. However, due to quick thinking/action by OAR legislative staff, the principles were incorporated into another bill (HB 150) which passed both House and Senate and was expected to be signed by the Governor in late June (after press time.) The bill will go into affect 90 days after signing.

Details on the law will be printed in the September issue of the magazine.