J_AGENCY_2005.qxd

Agency Compliance Manual

2005

Notes:

The Fair Housing Language was revised in Sept. 2011.

View Fair Housing Language

This affects the Consumer Guides to

Agency Relationships and the Fair Housing Language contained in the

"Requirements of the Agency Agreement" section

of this manual.

Internet Confidentiality

As of Jan. 1, 2013, brokers are

required to include in their company policy section a section on how

confidential information will be protected on internet websites including social

networking sites and blogs. Such language should be added to the section of

the policy dealing with Confidential Information. This affects the Brokerage

Company Policy and Sample Company Policy sections of this manual.

View Sample Language

This manual was prepared by The Ohio Association of REALTORS

staff.

Published by The Ohio Association of

REALTORS

200 E. Town St.

Columbus, OH 43215

Ohio Association of

REALTORS

All Rights

Reserved

This manual can also be found on OAR’s website at www.ohiorealtors.org in the Legal

Section.

The information contained in this manual is deemed correct as of the date of publication: November 2004.

he Ohio Association of REALTORS

is not responsible for any information contained herein that is later

rendered

inaccurate based upon a change in the Ohio Revised Code, case law or any interpretation thereof adopted by the

Ohio Division of Real Estate & Professional Licensing or the Ohio Real Estate Commission that occurs after the date

of publication.

Table of Contents

Introduction ................................................................................................................................ 5

Types of Agency Relationships ................................................................................................. 7

Requirements of the Agency Agreement ................................................................................... 8

Implied Agency .......................................................................................................................... 9

Agency Duties ........................................................................................................................... 10

Scope of Agency Relationships within a Brokerage/’Split’Agency ............................................ 12

Management-Level Licensees .................................................................................................. 14

Appointment of Agent ................................................................................................................ 16

Dual Agency .............................................................................................................................. 22

Brokerage Company Policy ...................................................................................................... 24

Disclosure of the Brokerage Agency Policy: The ‘Consumer Guide to Agency Relationships’ ... 28

The Agency Disclosure Statement and Procedures ................................................................. 32

Disclosure of Status as a Buyer Broker .................................................................................... 37

Confidential Information ............................................................................................................ 39

Changing an Agency Relationship ............................................................................................ 44

Termination of an Agency Relationship .................................................................................... 46

Citation Authority ...................................................................................................................... 47

Effective Date of SB 106 and Implementation Issues .............................................................. 48

Brokerage Policies and Consumer Guide Samples .................................................................. 49

Introduction of Company Policy A: Exclusive Seller Agency ............................................. 51

• Sample Policy A: ..................................................................................................................... 52

• Sample Policy A ‘Consumer Guide to Agency Relationships’ ................................................. 56

Introduction of Company Policy B: Exclusive Buyer Agency ............................................ 59

• Sample Policy B: ..................................................................................................................... 60

• Sample Policy B ‘Consumer Guide to Agency Relationships’ ................................................ 63

Introduction of Company Policy C: ‘Split’ Agency ............................................................... 65

• Sample Policy C: ..................................................................................................................... 66

• Sample Policy C ‘Consumer Guide to Agency Relationships’ ................................................ 72

Introduction of Company Policy D: Dual Agency ................................................................ 75

• Sample Policy D: ..................................................................................................................... 76

• Sample Policy D ‘Consumer Guide to Agency Relationships’ ................................................ 80

Introduction of Company Policy E: ‘Split’ Agency, But Never Dual Agency ..................... 83

• Sample Policy E: ..................................................................................................................... 84

• Sample Policy E ‘Consumer Guide to Agency Relationships’ ................................................. 90

Introduction ...

The Ohio Association of REALTORS

pleased to present this 2005 Agency

Compliance Manual, which incorporates

recent changes to Ohio license law

governing agency relationships entered into

by real estate licensees and their buyers

and sellers.

As a result of a collaborative effort between

the Ohio Division of Real Estate &

Professional Licensing and OAR, legislation

was signed into law that modernizes

agency disclosure and ensures that

consumers are provided full and timely

information on the various agency options

available to them and the role of real estate

licensees in real estate transactions.

This law, effective January 2005, is the

result of a comprehensive review of agency

disclosure that began in 2001 and

culminated with Gov. Bob Taft signing

Senate Bill 106 into law on Aug. 5, 2004.

REALTORS

and Ohio regulators agreed to

modify several key areas of Ohio’s existing

agency law in order to streamline the

disclosure process, reduce paperwork and,

as a result, provide the consumer with a

clear understanding of the licensee’s role

and duties in a real estate purchase or lease.

Ohio’s REALTOR

organization has been in

the forefront of supporting full and timely

disclosure on an array of issues -- from

agency to property condition. The recent

changes are designed to enhance state law

which first went into effect in 1989 and was

later amended in 1996.

OAR firmly believes that the current

revisions will be embraced by both

consumers and real estate professionals

and, as a result, ensure that the safeguards

contained in Ohio agency law will be

maintained and strengthened.

Ohio law defines the types of agency relationships that

licensees may enter into. They are: seller agency; buyer

agency; subagency; and dual agency (with consent). The

term buyer is defined to include a tenant, and seller is

defined to also include a landlord. Thus tenant agency

and representation of landlords are also permitted.

For easier reading of this manual, this same concept will

be utilized. Although the manual will generally refer to

buyers and sellers, these should be interpreted by the

reader to also mean tenant and landlord, respectively.

1) Q: Why isn't acting as a facilitator or transaction bro-

ker 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-level service is

ingrained in licensees' behavior. Second, buyers and sell-

ers want agency representation. Third, there was a con-

cern that facilitator status would be 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, sub-

agency 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 that true?

A: Ohio law does not mandate that you represent all buy-

ers. 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.

FAQs

Types of Agency Relationships

1) Q: Do I have to include the fair housing language

and logo in my listing, buyer agency or property man-

agement agreements if the real estate involved is com-

mercial, 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 ver-

bally.

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

purchase contracts?

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

Under Ohio law, listing agreements and buyer agency

agreements are not required to be in writing. However, it

is always a good business practice and highly recom-

mended that such agency relationships be reduced to

writing.

If a written agency agreement is entered into, Ohio

license law imposes certain requirements. A written

agency agreement includes a listing agreement, buyer or

tenant representation agreement, property management

agreement or contract to auction real estate.

First, the agreement must contain a definite expiration

date. Secondly, the agency agreement must contain the

fair housing logo and mandatory fair housing language if

the property involved falls under the definition of hous-

ing covered by the fair housing laws. This would include

agency agreements involving residential property and

vacant land.

The required language is:

It is illegal, pursuant to the Ohio Fair Housing Law, Division

(H) of Section 4112.02 of the Revised Code and the Federal Fair

Housing Law, 42 U.S.C.A. 3601, to refuse to sell, transfer,

assign, rent, lease, sublease or finance housing accommoda-

tions, refuse to negotiate for the sale or rental of housing

accommodations, or otherwise deny or make unavailable hous-

ing accommodations because of race, color, religion, sex, famil-

ial status as defined in Section 4112.01 of the Revised Code,

ancestry, disability as defined in that section, or national origin

or to so discriminate in advertising the sale or rental of hous-

ing, in the financing of housing, or in the provision of real

estate brokerage services.

It is also illegal, for profit, to induce or attempt to induce a per-

son to sell or rent a dwelling by representations regarding the

entry into the neighborhood of a person or persons belonging to

one of the protected classes.

Finally, the written agency agreement must contain a

place for the client to sign and date it and a copy must be

given to the client in a timely manner after the client

signs it.

Requirements of the Agency Agreement

FAQs

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 creat-

ing 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 list-

ing service such as a multiple listing service or other pub-

lic 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 prob-

ably should discuss it with the seller before you provide

them to the buyer.

For several years, many REALTORS

have been con-

cerned about the level of service they can provide a cus-

tomer without implying an agency relationship that was

not intended. Such a concern could arise where a listing

agent is working with a buyer as a customer or when a

buyer's agent is representing a buyer on the purchase of a

"FSBO" in which the seller is unrepresented.

Ohio law addresses this issue in two sections. First, it

provides that an agency relationship cannot be implied

between a buyer or seller and licensee as a result of the

licensee merely providing the following information:

• Information regarding lenders, inspectors, attorneys,

insurance agents, surveyors, draftspersons, architects,

schools, shopping facilities, places of worship and other

similar information; and

• Market information or other information obtained from

a property listing service or public records.

Second, Ohio license law clarifies that a buyer or seller's

promise to pay a licensee does not, by itself, determine

whether an agency relationship exists with that licensee.

This prevents a seller from claiming that a buyer's agent

represented the seller merely because the seller, either

directly or through his listing broker, paid the buyer's

agent.

FAQs

Implied Agency

Ohio law requires that licensees act as a fiduciary of their

client and act in their client's best interest.

In general terms, a licensee's fiduciary duties include:

• Exercising reasonable skill and care in representing the

client;

• Performing the terms of any written agency agreement;

• Following any lawful instructions of the client;

• Performing all duties specified in the license law, in a

manner that is loyal to the interest of the client;

• Complying with all requirements of the license law,

along with other applicable statutes, rules and regula-

tions. Those include the federal and Ohio fair housing

laws and the Ohio landlord tenant act;

• Disclosing to the client any material facts of the transac-

tion of which the licensee is aware or should be aware in

the exercise of reasonable skill and care and that are not

confidential information under a current or prior agency

or dual agency relationship;

• Advising the client to obtain expert advice related to

material matters when necessary or appropriate;

• Accounting in a timely manner for all money and prop-

erty received in which the client has or may have an

interest; and

• Keeping confidential all confidential information,

unless the licensee is permitted to disclose the informa-

tion. This requirement includes not disclosing confiden-

tial information to other licensees in the brokerage who

are not agents of the client.

Duties of a seller's agent

In addition to their overall fiduciary responsibilities,

licensees acting as seller's agents, whether they are listing

agents or subagents, owe these duties to the seller:

• To seek an offer to purchase at a price and with terms

acceptable to the seller. Unless the seller directs other-

wise, the listing agent is not obligated to seek additional

offers once the property is subject to a contract of sale,

lease or letter of intent to lease;

• To present an offer to purchase to the seller in a timely

manner, even if the property is subject to a contract of

sale, lease or letter of intent to lease; and

• To provide the seller with a copy of any agency disclo-

sure form signed by the buyer, prior to presenting the

seller with an offer to purchase.

Seller's agents are forbidden from offering subagency to

other brokerages or offering compensation to buyer bro-

kers without the seller's knowledge and consent.

But Ohio law specifically permits seller's agents, whether

they are listing agents or subagents, to show alternate

properties to buyers and to represent other sellers with-

out breaching their duties to the seller.

Duties of a buyer's agent

Licensees acting as buyer's agents also must fulfill certain

duties to their clients. These are in addition to their fidu-

ciary duties described above. Those duties are:

• Seeking a property at a price and with purchase or

lease terms acceptable to the buyer. Unless the buyer

directs otherwise, the buyer's agent is not obligated to

seek additional purchase or lease possibilities if the buyer

is a party to a contract to purchase property, or has

entered into a lease or has extended a letter of intent to

lease; and

• Presenting any offer or counteroffer to purchase or

lease to the listing agent in a timely manner, even if the

property is subject to a contract of sale, lease or letter of

intent to lease.

Buyer's agents are forbidden from offering subagency or

accepting compensation from a seller's agent without the

knowledge and consent of the buyer.

But a licensee does not breach any duty or obligation to

the buyer by showing the same properties to other buyers

or by acting as an agent or subagent for other buyers, or

as an agent or subagent for sellers, except that any dual

agency relationship must be disclosed to a client.

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 buy-

ers 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 sec-

tion 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 man-

ner, but what is a timely manner?

A: A timely manner is defined to mean as soon as possi-

ble 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.

FAQs

1) Q: My brokerage practices "split" agency. If I repre-

sent 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.

Ohio's agency law specifies which licensees in a broker-

age are bound by the agency relationships created by that

company's agents. Under these provisions when a licens-

ee enters into an agency relationship with either a buyer

or seller, the following people are bound to that agency

relationship:

• The licensee forming the relationship;

• The brokerage the licensee is affiliated with;

• Management-level licensees within that brokerage who

have direct supervision over licensees (There are two

exceptions to this general provision. These are discussed

in the section on management-level licensees.);

• Any licensees within the brokerage who helped estab-

lish the agency relationship;

• Licensees within the brokerage who are specifically

appointed, with the client's consent, to represent the

client; and

• Any other licensees within the brokerage who receive

confidential information from the agent.

Unless they fall into one of the categories listed above,

the other salespeople in the brokerage are not bound by

an agency relationship created by another licensee in the

brokerage. This means that if one salesperson lists a prop-

erty, for example, other licensees in the same brokerage

are not also considered the seller's agents. If another

licensee enters into a buyer's representation agreement,

other salespeople within the brokerage are not automati-

cally considered buyer's agents.

This section of the state license law thus allows one sales-

person in a brokerage to represent the seller and another

salesperson within the same brokerage to represent the

buyer without either salesperson being considered a dual

agent. This is often referred to as "split" or "designated"

agency.

Licensees in this situation must:

• Serve as agent only to the party the licensee agreed to

represent; and

• Fulfill the duties owed to their respective client, as

spelled out in the license law and in the agency agree-

ment.

Even though the agents in a "split agency" situation are

not dual agents, the brokerage with which they are affili-

ated is. This is because the brokerage is bound by the

agency relationship created by each of its individual

agents. A brokerage includes, by definition, affiliated

licensees who have been assigned management duties

that include supervision of licensees whose duties may

conflict with other affiliated licensees. These manage-

ment-level licensees, in short, are dual agents as well.

(There are two exceptions to this that are discussed in the

section on Management-Level Licensees).

As dual agents, the brokerage and its management-level

licensees, have certain duties. Those include:

• To objectively supervise the affiliated licensees in the

fulfillment of their duties and obligations to their respec-

tive clients;

• To refrain from advocating or negotiating on behalf of

either the seller or the buyer; and

• To refrain from disclosing to any other employee of the

brokerage, or any party or client, any confidential infor-

mation of a client of which the brokerage or manage-

ment-level licensee becomes aware. In addition, the bro-

kerage or management-level licensee must refrain from

using a client's confidential information for the benefit of

another client.

Scope of Agency Relationships within a

Brokerage/‘Split’ Agency

FAQs

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 infor-

mation 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 lan-

guage 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 broker-

age 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 manage-

ment-level licensee, you helped him establish them, were

appointed to represent his clients, or received confiden-

tial information from him about his clients. If you do not

want to be obligated to represent your personal assis-

tant'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 confi-

dential 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 sell-

er'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.

Under Ohio law, management-level licensees in a broker-

age are bound by the agency relationships established by

the other licensees within the brokerage. This means that

if an agent lists a property, the management-level

licensees in that brokerage also represent the seller. If a

different licensee in the brokerage agrees to represent a

buyer, that management-level licensee represents that

buyer as well.

For purposes of the license law, a licensee will be consid-

ered a management-level licensee if:

• The licensee has been assigned management duties that

involve oversight responsibilities for the brokerage's main

office, a branch office or a division within that brokerage;

and

• Those management duties include the supervision of

affiliated licensees whose agency duties to their clients

may conflict with those of other licensees affiliated with

the brokerage.

The Ohio Division of Real Estate & Professional Licensing

has defined supervision as including the general over-

sight of activities or direction of activities conducted by

another licensee.

In determining whether a licensee is management-level,

the Ohio Division of Real Estate & Professional Licensing

will apply the two-pronged test described above. A per-

son holding either a sales or broker's license who meets

both of these criteria will be considered management-

level.

The significance of this is that on any in-company trans-

actions where both buyer and seller are represented by

the brokerage, the management-level licensees are con-

sidered to be dual agents. This is because the manage-

ment-level licensees are bound by the agency relationship

established by both affiliated licensees, and thus repre-

sent both buyer and seller. (How the management-level

licensee must function as a dual agent is discussed in the

section titled “Scope of Agency Relationships within a

Brokerage/‘Split’Agency.”)

There are two narrow exceptions to this general rule in

the license law. The first is where the management-level

licensee is selling his own property or purchasing proper-

ty for himself. The other is where the management-level

licensee is personally representing either a seller or a

buyer. In either of these instances if the management-

level licensee becomes involved in a transaction in which

the other party is represented by an agent affiliated with

the brokerage, the management-level licensee is not

required to be a dual agent.

Instead, Ohio law provides that on a transaction in which

the manager is either personally the seller or purchaser,

he is permitted to represent just himself. In the situation

where the manager is personally acting as the listing

agent or buyer's agent and the other party to the transac-

tion is represented by an affiliated agent, the manager is

permitted to represent just his client. In these instances,

however, the manager is not permitted to use or discuss

any confidential information he may know about the

other party to the transaction.

Under the licensee law the two above exceptions will

only apply if there is another management-level licensee

in the brokerage to supervise the salesperson involved in

the transaction. If there is only one broker in the broker-

age and no other management-level licensee, the above

exceptions do not apply. Thus a broker who has no other

managers must always be a dual agent on transactions

involving himself and another agent in his brokerage.

Management-Level Licensees

FAQs

1) Q: I am affiliated with a brokerage as a broker, but I

am not the principal broker or in any type of manage-

ment 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 manage-

ment 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 own-

ership 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 list-

ing 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 man-

agement-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 defini-

tion 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 per-

sonally list a property, the seller may see it as a disad-

vantage 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.

FAQs

As discussed in the "Scope of Agency Relationships

Within a Brokerage/‘Split’ Agency" section of this manual,

when an agency relationship is established with a buyer

or seller that agency relationship is binding on the bro-

kerage, the management-level licensees and the agent(s)

who formed the relationship with the client. Ohio law,

however, allows the brokerage to adopt a policy expand-

ing the agency relationship beyond those noted above.

For example, a brokerage may adopt a "dual agency"

company policy requiring all licensees in the brokerage to

represent all clients of the brokerage (see sample Policy D

beginning on page 75). Brokers who choose this policy

must include language in their listing and buyer agency

agreements appointing all agents to represent the broker-

age's clients.

Brokerages that practice "split agency" do not appoint all

agents to represent brokerage clients. However, there

may be times where another agent will be needed to rep-

resent a buyer or seller client. This may occur when the

listing or buyer agent is on vacation or is ill. In that situa-

tion, another agent in the brokerage can be appointed to

represent the client. The term of the appointment could

be for a short time (i.e. just to cover the agent's vacation)

or for the remaining term of the agency agreement.

Ohio law permits two options for an appointment of an

agent. Clients can authorize their agent to make appoint-

ments on their behalf in their agency agreement or

appointments can be authorized by the client when need-

ed.

If the brokerage chooses the first option, clients will dele-

gate to their agent the authority to appoint other agents

within the brokerage to represent them. Ohio law

requires that the delegation of authority be in writing, be

signed by the client and include language notifying the

client of his right to veto any appointment. If an

appointment is made by the agent, the agent must notify

the client at the time of the appointment.

The best place to include language authorizing the agent

to make appointments is in the listing or buyer agency

agreement. Sample appointment language for an agency

agreement is provided below:

Appointment of Licensees. Seller/Buyer agrees to delegate to

listing agent/buyer agent the authority to appoint other

licensees within the brokerage to represent Seller's/Buyer's

interest. If an appointment is made Seller/Buyer will be notified

at the time of the appointment. Seller/Buyer has the right to

veto the appointment of any other licensee.

If an agent exercises this authority, Ohio law requires

notification to the client of the appointment. Although the

law does not require this notification to be made in writ-

ing, by doing so the agent has evidence that the notifica-

tion was given. Sample "Notification of Appointment of

Agent" forms for seller or buyer clients are provided on

pages 18-19. The longer form informs the client of the

appointed agent's position if the appointment is terminat-

ed prior to the agency agreement. This notification is

required to be provided to the client at the time of the

appointment.

If authority is not delegated to the agent, the client's

authorization to appoint another agent to represent him

must be obtained.

The law does not require the appointment to be in writ-

ing but it does require the client's "specific" consent to the

appointment. Therefore, it is recommended that the agent

obtain their client's written consent to the appointment. A

sample "Appointment of Agent" form is provided on

page 20.

Appointment of Agent

1) Q: Do I have to get my seller's authorization in writ-

ing to give me the authority to appoint other agents to

represent them?

A: Yes.

2) Q: If my listing agreement contains language delegat-

ing 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 manage-

ment agreement that delegates authority to the manag-

ing agent to appoint other agents in our brokerage to

represent the owner?

A: Yes. The sample agency agreement appointment lan-

guage 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

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 appoint-

ment 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 rec-

ommended that you have it in writing.

6) Q: When I am on vacation, another agent in our bro-

kerage 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 confi-

dential 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.

FAQs

‘... there may be times where another agent will be

needed to represent a buyer or seller client. This

may occur when the listing or buyer agent is on

vacation or is ill. In that situation, another agent in

the brokerage can be appointed to represent the

client. The term of the appointment could be for a

short time (i.e. just to cover the agent's vacation) or

for the remaining term of the agency agreement.’

Dual agency is permitted in Ohio as long as both parties

give their informed consent. The provisions contained in

Ohio's license law are designed to:

• Identify when dual agency exists;

• Provide guidance to licensees on how to function as a

dual agent;

• Achieve informed written consent to dual agency; and

• Explain dual agency to the public.

Who is a Dual Agent?

A single agent that has agreed to represent both the buyer

and seller in the same transaction is a dual agent, as is the

brokerage that agent works for and the affiliated manage-

ment-level licensees. Before they can act as a dual agent,

the parties must both have knowledge of the dual repre-

sentation and consent to it in writing.

In some situations where there are two different agents

from the same brokerage involved in a transaction they

may act as dual agents as well. This would occur if the

brokerage they work for has adopted a policy requiring

both agents to be dual agents on all in-company transac-

tions. In such companies even though there is one agent

acting as the listing agent and a different agent represent-

ing the buyer, both agents are dual agents. In this situa-

tion the brokerage and management-level licensees are

dual agents as well. (For more information on this policy

option see page 75.)

Disclosure and Consent

The Agency Disclosure Statement serves as the vehicle for

licensees to disclose if they are acting as dual agents. It

also provides detailed information regarding how the

licensee will function as a dual agent. This is necessary

because Ohio law requires a licensee to disclose to both

the buyer and seller all relevant information necessary for

the buyer and seller to make an informed decision as to

whether to consent to the dual agency relationship. An

example of such information would be where one of the

parties represented by the dual agent is the agent's family

member.

If there is a material change in the information disclosed

to the buyer and seller, the licensee must disclose that

change and give them an opportunity to revoke

their consent.

Duties of a Dual Agent

The duties and limitations of a dual agent are outlined on

the second page of the Agency Disclosure Statement.

These provide that if a licensee is acting as a dual agent

he must:

• Treat both clients honestly;

• Disclose latent, material defects to the purchaser, if

known by the agent(s) or brokerage;

• Provide information regarding lenders, inspectors and

other professionals, if requested;

• Provide market information available from a property

listing service or public records, if requested;

• Prepare and present all offers and counteroffers at the

direction of the parties; and

• Assist both parties in completing the steps necessary to

fulfill the terms of any contract, if requested.

It also clarifies that a dual agent may not:

• Disclose information that is confidential, or that would

have an adverse effect on one party's position in the

transaction, unless such disclosure is authorized by the

client or required by law;

• Advocate or negotiate on behalf of either the buyer or

seller;

• Suggest or recommend specific terms, including price,

or disclose the terms or price a buyer is willing to offer or

that a seller is willing to accept; or

• Engage in conduct that is contrary to the instructions of

either party and may not act in a biased manner on

behalf of one party.

In fulfilling its duties, the brokerage (and its manage-

ment-level licensees) may provide factual, non-confiden-

tial information that presents or suggests objective

options or solutions. The brokerage also may help the

parties in an unbiased manner to negotiate or fulfill the

terms of the purchase contract or lease, as long as a

client's confidential information is not used in any way in

formulating suggestions or providing assistance.

Management-level licensees and their role as dual agents

are both discussed further in separate chapters.

Dual Agency

1) Q: Does Ohio law require that all in-company trans-

actions 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 list-

ed with your brokerage and your firm has an agency rela-

tionship 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 informa-

tion" 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 con-

sent 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 the 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 broker-

age 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 commis-

sions 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 transac-

tion 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.

FAQs

Ohio law requires each brokerage to develop and main-

tain a brokerage company policy. A copy of this policy

must be made available to any clients or potential clients

who request it.

The Ohio Real Estate Commission has established the fol-

lowing as the minimum information that brokerages

must include in this policy:

• The types of agency relationships the affiliated

licensees of the brokerage may establish, including an

explanation of each agency relationship authorized, and

whether dual agency is permitted;

• A current list of positions in the brokerage, if any,

which are designated by the brokerage as management-

level;

• The procedure to be followed for an affiliated licensee

to be appointed to represent the client of another affiliat-

ed licensee. This must include the procedure for giving

notification and obtaining approval of the client for this

appointment;

• The type of agency relationship that shall be estab-

lished and the disclosures that shall be made when

licensees are handling real estate transactions involving

persons with whom they have a personal, business or

familial relationship;

• The type of agency relationship that shall be estab-

lished and the disclosures that shall be made when

licensees are handling real estate transactions involving

themselves or any affiliated licensee as a party to the

transaction;

• The procedures to be followed to ensure that confiden-

tial information is not disclosed in violation of the

licensee's agency duties. These procedures shall include

those steps affiliated licensees are required to follow to

protect confidential information from being disclosed to

other licensees within the brokerage who are not bound

by the agency relationship. This must include:

1. Office files;

2. Computerized records and messages;

3. Office meetings and discussions;

4. Facsimile transmissions;

5. Telephone messages, inter-office messages and

any kind of conversations; and

6. Meetings and conversations with clients.

• If the brokerage practices dual agency, the procedures

to be followed by a licensee in the event any of the fol-

lowing occurs:

1. A party to a real estate transaction refuses to

consent to dual agency;

2. A party to a real estate transaction seeks to

terminate an agency relationship as the result

of an attempt to create a dual agency

relationship; or

3. There is a material change to any of the

information that was previously disclosed to

any party prior to obtaining full consent to the

dual agency.

• The procedures to be followed by a licensee who wish-

es to change an agency relationship. This must include

procedures for securing the written consent of the client

or clients to such change; and

• The types of cooperation that are offered other broker-

ages, including:

1. Whether the brokerage offers subagency;

2. Whether the brokerage offers compensation to

subagencies and buyer's brokerages;

3. Whether the brokerage accepts compensation

from other brokerages; and

4. Whether the types of cooperation are

offered on a consistent and equal basis to all

brokerages.

A discussion of the various agency options available to

brokers is found in the Section titled "Brokerage Policies

and Consumer Guide Samples.” Examples of policies that

meet the above criteria are included.

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 sim-

pler 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 avail-

able.

3) Q: Do I have to give them my whole office policy

manual, which may also contain internal office proce-

dures 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 addi-

tional 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 rela-

tionship with a party. Does the rule define "family rela-

tionship?”

A: No. Therefore, you may wish to have your policy state

that the agents must always act as the agent of their fami-

ly 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 dis-

close if they have a personal, family or business rela-

tionship 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 pro-

tect confidential information within my office. Can the

agents just be dual agents on all in-company transac-

tions?

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, begin-

ning 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 con-

fidential. 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

FAQs

see more FAQs on page 26

FAQs

broker would probably want to require that a copy of the

agent's complete file be provided to the broker at the con-

clusion 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 con-

tract 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 recep-

tionist 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 tele-

phones. Should they be instructed not to take detailed

messages from the clients of other licensees in the bro-

kerage, 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 mes-

sage beyond just a phone number.

13) Q: How can a brokerage that practices "split" agency

handle faxes coming into the office that could be confi-

dential?

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.

F A Qs • Continued from page 25

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 inspec-

tion, 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 cov-

ered 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 mini-

mum 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 broker-

age 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 resi-

dential area. However, I do have commercial and prop-

erty management divisions. Can I have different sec-

tions and procedures in my company policy for those

different divisions?

A: Yes, according to the Ohio Division of Real Estate, you

can vary the policies and procedures for the different

types of transactions handled by your brokerage.

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, there are five sample poli-

cies. Of course, since each brokerage is set up differently,

you may need to modify some of the office procedures to

fit your policies.

As of Jan. 1, 2005 new provisions regarding the content

and timing for providing a brokerage's agency policy are

effective. Under these provisions the brokerage's agency

policy is the sole vehicle for delivering information

regarding agency to buyers and sellers at first contact.

The Agency Disclosure Statement is no longer required at

that stage.

Statutory Requirements

Under Ohio license law, brokerages must develop their

own brokerage policy on agency that meets certain statu-

tory guidelines. The Division of Real Estate &

Professional Licensing adopted rules that specify what

must be contained in this policy. To assure uniformity, the

Division rules require that the policy that brokers devel-

op must be titled "Consumer Guide to Agency

Relationships." Further, this title must be in a font no

smaller than 14 point.

The following must be included by brokers in the

"Consumer 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 rela-

tionships;

• The potential for other licensees within the same bro-

kerage to act as a subagent, dual agent, buyer's agent or

seller's agent on the same transaction;

• The fact that a buyer's agent represents the buyer's

interests even if the seller's agent or seller compensates

the buyer's agent;

• The possibility of a licensee acting as dual agent, along

with the client's options and consequences if that situa-

tion occurs. Options might include terminating the

agency relationship and seeking representation from

another licensee;

• The brokerage's company policy regarding cooperation

with other licensees acting as subagents, seller's agents or

purchaser's agents. The policy must state whether the

broker offers compensation to those agents or will seek

compensation from those agents;

• The fair housing logo and statement. The fair housing

language must be no smaller than 9 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 “Consumer Guide.”

Because these disclosures involve a brokerage's office

policies, there is no mandated form to make these disclo-

sures. Instead, each broker must choose how he wants to

make these disclosures and develop his own disclosure

piece.

Formatting the “Consumer Guide”

Ohio license law allows brokers to choose the format for

this document. For example, brokers could opt to provide

their policy as a pamphlet or as a traditional 8 ½ x 11-

inch document. Except for the fair housing statement, the

text must be in a font no smaller than 11 point. Whatever

format is chosen, however, the consumer must be asked

to sign, acknowledging receipt of this document. If the

consumer will not do so, that fact must be noted, along

with the date presentation was made.

The acknowledgement can be on a separate document,

but cannot be included in any other contract the buyer or

seller signs such as a listing agreement, buyer agency

agreement or purchase contact.

Delivering the “Consumer Guide”

The "Consumer Guide to Agency Relationships" 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.

With respect to buyers, the licensee is 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; or

• Submitting an offer

Whichever of the above events occurs first will trigger the

licensee's obligation to provide the “Consumer Guide” to

the buyer.

Disclosure of the Brokerage Agency Policy --

The ‘Consumer Guide to Agency Relationships’

Under Ohio 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.

Sample policies that comply with the above require-

ments, in an 8 ½ x 11-inch format, are included in this

manual. Brokers may choose from several versions

depending on the agency policy they have chosen for

their company (i.e., split agency, dual agency, exclusive

buyer agency only, etc.) These are found in the section

titled "Brokerage Policies & Consumer Guide Samples."

Sample Receipt of "Consumer Guide to Agency

Relationships"

At right is sample language for consumers to sign

acknowledging receipt of the "Consumer Guide to

Agency Relationships." It is to be used if a brokerage

prefers having the acknowledgement on a separate docu-

ment rather than included in its "Consumer Guide." This

language may not be included in any other agreement to

which the buyer or seller is a party.

FAQs

1) Q: Is this requirement for a "Consumer Guide" some-

thing new?

A: Yes and no. Beginning in 1996 brokers were required

to develop a brokerage agency policy and to provide it to

clients at the beginning of their relationship. Therefore,

all brokers should already have an agency policy they are

providing to buyer and seller clients when they begin

working with them.

In legislation that became effective Jan. 1, 2005 the con-

tent 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 small-

er than 11 point and the fair housing language 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 resi-

dential property or vacant land. If the property is com-

mercial or industrial, the fair housing language and logo

is not required to be included in the brokerage's

"Consumer Guide."

Receipt of Consumer Guide

By signing below, I hereby acknowledge that I have

received the "Consumer Guide to Agency

Relationships" of

_______________________________________________

(brokerage name)

______________________________________

Print Name

______________________________________

Signature (date)

see more FAQs on page 30

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 lan-

guage 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 con-

tained 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, acknowl-

edging their receipt?

A: This can be handled in one of two ways. Your pam-

phlet can have a tear-off panel that contains the

consumer's acknowledgement. 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 acknowledgement 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 signa-

ture, 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' acknowledgement in a

separate document? Could I put language in the pur-

chase 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 con-

sumer 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

F A Qs • Continued from page 29

FAQs

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; dis-

cussing with the buyers the making of an offer to pur-

chase 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 conversa-

tions. It provides that if an event that normally triggers

your obligation to provide the “Consumer Guide” hap-

pens on the telephone, then you must verbally disclose

the nature of your agency relationship in that conversa-

tion. 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 infor-

mation 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 prequalification, 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 sell-

er agrees to extend it, do I need to give him another

"Consumer Guide."

A: No. If you are extending an existing agency relation-

ship, 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.

Since 1989, real estate licensees have been required by

Ohio law to disclose to buyers and sellers who they rep-

resent in a real estate transaction. Since its original pas-

sage, this requirement and the form for making this dis-

closure has been modified by the Ohio legislature twice,

most recently in legislation passed in 2004.

Included in this manual on page 35 is the new Agency

Disclosure Statement, which is effective Jan. 1, 2005. This

form replaces not only the previous Agency Disclosure

Statement, but also the Dual Agency Disclosure

Statement that was used from 1996 to 2004. The new 2005

version incorporates all of the disclosures regarding the

role of the licensees with whom the buyers and sellers are

working, including whether they are acting as dual

agents.

Providing the form to the buyer

Licensees working directly with a buyer, whether as a

buyer's agent or the seller's agent, must provide the buyer

with the Agency Disclosure Statement no later than the

time the buyer is ready to make an offer to purchase or

lease property. Unlike the previous form, the new Agency

Disclosure Statement is now designed to be "transaction

specific." This means the form is to be completed based

upon the actual property on which the buyer is making

an offer and the role(s) of the specific licensee(s) involved.

Completing the form

As explained above, the process for completing the

Agency Disclosure Statement is initiated by the agent

working with the buyer. The first step in completing the

form is to fill in the address of the property on which the

buyer is making an offer. The agent also must fill in the

names of the buyer and seller. If the agent does not know

the seller's name, it can be left blank and the listing agent

can fill it in upon receipt of the form.

The agent must then complete Sections I, II or III of the

form depending on which situation applies in that partic-

ular transaction. Section I should be completed if the

transaction involves two separate brokerages--one that

represents the seller and one that represents the buyer.

This is usually referred to as a "co-op" or cooperative

transaction.

Section II should be completed if the transaction involves

two agents who are both licensed with the same broker-

age: one who is acting as the listing agent and one who is

working with the buyer. Under Section II the agent

should check the first box if the agents will be acting as

"split agents." This means the listing agent is representing

the seller and the other agent is representing the buyer as

a buyer's agent. The second box under Section II applies

to those brokerages which have instead adopted an office

policy that even though there are two different agents,

both agents in this scenario will be dual agents.

Section III is to be completed if only one agent is involved

in the proposed transaction. If that agent is acting as a

dual agent representing both the buyer and seller, the

first box under Section III should be completed. If the

agent is representing only one of the two parties, the sec-

ond box should be checked. If the agent is representing

only the seller as the listing agent, the box for "seller"

should be marked. On the other hand, if the sole agent

involved in the transaction is representing only the buyer

on a "FSBO" or "for sale by owner property" the "buyer"

box should be checked by the agent.

After completing the appropriate sections of the form the

agent is required to ask the buyer to sign the form. Once

it is signed the agent can then begin discussions with the

buyer regarding the offer to purchase he wishes to make

and assist the buyer with that process.

Delivery of the Agency Disclosure Statement to the

Seller

After the Agency Disclosure Statement has been signed

by the buyer, the agent working with that buyer must

deliver the form, along with the offer to purchase, to the

listing agent. If there is no listing agent or the agent also

has the property listed, the agent must present the form

directly to the seller. In any case, the Agency Disclosure

Form must be given to the seller prior to presenting him

with the offer to purchase.

Auctions

Auctions are a separate matter and are addressed specifi-

cally in the license law. Licensees selling property at auc-

tion must provide the seller with their "Consumer Guide"

before they market or show the property. At the auction,

they must verbally disclose to the audience that they rep-

resent the seller. Then the auctioneer/REALTOR

must

provide a "Consumer Guide" and an Agency Disclosure

Statement to the successful bidder, prior to the bidder's

signing a purchase contract.

The Agency Disclosure Statement and Procedures

Exemptions

Licensees do not have to use an Agency Disclosure

Statement in these situations:

• Rental or leasing of residential properties, if the rental

or lease agreement can be performed in 18 months or

less;

• Referral of a prospective buyer, tenant, seller or land-

lord to another licensee;

• Transactions involving the sale, lease or exchange of

foreign real estate; and

• Transactions involving the sale of a cemetery lot or a

cemetery interment right.

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 informa-

tion 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 list-

ing agent. You are required to present the form to the

sellers and obtain their signature before you begin pre-

senting 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 pro-

vided 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 situa-

tion, 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, how-

ever, as it would reveal the buyer's identity. Instead, com-

plete 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 deliv-

ered along with the offer to the seller.

9) 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.

10) 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.

11) 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.

FAQs

seemore FAQs on page 34

12) 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 cooper-

ating agent to request the statement. However, you may

not refuse or fail to present it until you receive the state-

ment, 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.

13) 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 bot-

tom 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.

14) 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 imme-

diately. 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 attor-

ney for representation.

15) 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.

16) 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 resi-

dential in nature and the subject lease is 18 months or

less.

17) 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 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.

18) Q: Assume the same facts as question #17, 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 rep-

resent both the seller and the buyer. The buyer's agent's

name would only be filled in as the agent of the buyer.

19) Q: Can I make any changes to the Agency

Disclosure Statement?

A: No.

20) Q: Can I put my company name or logo on the

Agency Disclosure Statement?

A: No.

F A Qs • Continued from page 33

FAQs

A buyer's agent must disclose to a listing agent that he

represents the buyer in a transaction. This disclosure

must take place at the first contact the buyer's agent has

with any employee or licensee of the listing brokerage.

If the seller is not represented, a buyer's agent must

disclose his status directly to the seller. This disclosure

must be made at the buyer agent's first contact with the

seller. The buyer's agent must also must disclose any

intention of seeking compensation from the seller.

This section of the Ohio law mirrors a REALTOR'S

ethical duties under Standards of Practice 16-10 and 16-11

of the NAR Code of Ethics.

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 disclo-

sure of your status as a buyer's agent that is almost iden-

tical 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 sell-

er. You are also required to disclose any intention to seek

your compensation from the seller at that time.

Disclosure of Status as a Buyer Broker

FAQs

‘When a licensee obtains confidential information

concerning another client of the brokerage in a dual

agency relationship as a result of a breach of

confidentiality of another affiliated licensee, he shall

not, under any circumstances, disclose that

information to or use that information for the

benefit of the licensee's client.’

The law defines confidential information as any informa-

tion that the client directs a salesperson to keep confiden-

tial; information that would negatively affect the client's

negotiating position if it were disclosed; and any informa-

tion required by law to be kept confidential.

If a brokerage determines confidential information from a

client has become known by a licensee representing the

other party as a result of the failure of the brokerage, its

licensees or its employees to maintain confidentiality, the

brokerage shall:

• Immediately notify both clients in writing about the

breach; and

• Offer to resign representation of both clients.

If either client decides to accept the resignation, the bro-

kerage is not entitled to any compensation from that

client. If both clients refuse such resignation, the broker-

age may continue to represent both clients.

When a licensee obtains confidential information con-

cerning another client of the brokerage in a dual agency

relationship as a result of a breach of confidentiality of

another affiliated licensee, he shall not, under any cir-

cumstances, disclose that information to or use that infor-

mation for the benefit of the licensee's client.

A client of a brokerage who is involved in a dual agency

relationship may bring an action against a brokerage and

any licensee who has failed to comply with the notifica-

tion procedure to recover actual damages and to rescind

the agency agreement with the brokerage.

Confidential Information

FAQs

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 men-

tion 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 posi-

tion, 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 con-

siders 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 informa-

tion regarding the buyer's credit report. Examples of such

forms are included on pages 41-42.

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 permis-

sion 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 sta-

tus, ancestry, disability or national origin. Under the fair

housing laws, this type of information cannot be consid-

ered 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?

see more FAQs on page 40

FAQs

A: First, you should notify your principal broker or other

management-level licensee in the brokerage who super-

vises 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 rela-

tionship.

6) Q: What happens if one of the parties wants the bro-

kerage to resign from representing them?

A: If this occurs, the brokerage cannot represent that indi-

vidual 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 improp-

erly 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 rela-

tionship 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 cir-

cumstances, 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 dis-

closing 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 mate-

rial 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 confiden-

tiality?

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 relation-

ship 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.

F A Qs • Continued from page 39

‘The law defines confidential information as any

information that the client directs a salesperson to

keep confidential; information that would

negatively affect the client's negotiating position if it

were disclosed; and any information required by

law to be kept confidential.’

Although changing your agency relationship is discour-

aged, Ohio law does not prohibit it. Instead, it imposes

two requirements on licensees before they can change

their agency relationship. These procedures must be fol-

lowed if the change occurs after an Agency Disclosure

Statement has been signed or after the agent has verbally

established an agency relationship with a client.

To change the agency relationship, licensees must:

• Obtain written consent from the party originally repre-

sented to represent another party in the transaction; and

• Promptly disclose the change to everyone who had

been told about the original relationship.

Following this process to change an agency relationship

is crucial for brokerages who have adopted Company

Policy E (see page 83). Under this policy, a brokerage

allows its agents to represent buyers and sellers and to

practice "split" agency on in-company transactions

involving two salespersons. However, it does not permit

a listing agent to also represent a buyer and function as a

dual agent. Instead the agent represents only the seller

and the buyer is treated as a customer.

Under this policy, if buyers with whom an agent has

already established an agency relationship decide to

make an offer to purchase property that is listed with that

same agent, the listing agent must notify the buyers that

he is no longer representing them. Instead the agent will

only represent the seller. As stated above, the buyers

must consent to this in writing and all parties must be

notified. A sample form for obtaining the necessary con-

sent and providing notice is found on the following page.

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 writ-

ing, if it was disclosed to the buyer as part of our com-

pany 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 mere-

ly 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.

Changing an Agency Relationship

FAQs

Ohio license law addresses the issue of what duties are

owed to a client after an agency relationship has ended,

either because it expires, the transaction closes, or it

terminates for another reason.

Duties that continue after termination of an agency

relationship are:

• To provide the client with an accounting of all money

and property relating to the transaction; and

• To keep confidential all information received during the

course of the transaction, unless:

1. The client permits disclosure;

2. Disclosure is required by law or by court order;

3. The information becomes public from a source other

than the licensee;

4. The information is necessary to prevent a crime the

client intends to commit; or

5. Disclosure is necessary to defend the brokerage or

its licensees against accusations of wrongful

conduct or to establish or defend a claim that a

commission is owed.

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 pro-

hibited from disclosing to my buyer/client any informa-

tion that I learned from the seller during the listing?

A: Yes. Ohio law provides that your duty of confidentiali-

ty 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 sell-

er 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 infor-

mation that is confidential under a previous agency rela-

tionship.

5) Q: Should I tell the buyer that I previously represent-

ed the seller and that I know information that may be

material to them, but I can't disclose it because it is con-

fidential?

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.

Termination of an Agency Relationship

FAQs

Under Ohio license law, the Superintendent of Real Estate

has the discretion to issue a "citation" to a licensee who is

believed to have violated the license law provisions

involving agency. This citation will notify the licensee of

the charge against him and offer him the option of paying

a $200 fine. If the licensee wishes to contest the charge, he

may request a full administrative hearing before a hear-

ing officer. If a licensee is issued more than three citations

in a 12-month period, the Superintendent must handle

any subsequent alleged license violations by means of a

formal administrative hearing.

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 discre-

tion to determine whether to issue a citation or file formal

charges against a licensee that is believed to have violated

agency laws.

Citation Authority

FAQs

Several provisions of Ohio's agency law were amended

effective Jan. 1, 2005. These include: the requirements for

the "Consumer Guide to Agency Relationships"

(the brokerage's agency policy); the Agency Disclosure

Statement; provisions regarding management-level

licensees and the citation process for agency violations.

1) Q: I listed a property in November, 2004 and gave the

seller our brokerage policy on agency at that time. If the

property is still on the market after Jan. 1, 2005, do I

need to give the seller our company's "Consumer Guide

to Agency Relationships?”

A: No, as long you gave the seller your previous policy at

the time of listing you don't need to give them your

"Consumer Guide."

2) Q: I signed a listing in June, 2004. It is going to expire

on Jan. 31, 2005. If the seller agrees to extend it or signs

a whole new listing after Jan. 1, 2005 should I give the

seller a "Consumer Guide?”

A: Yes.

3) Q: I began showing property to buyers in 2004 and

gave them the old Agency Disclosure Statement and our

brokerage policy on agency. After Jan. 1, 2005 if I am

still showing the buyers houses, do I need to give them

our "Consumer Guide to Agency Relationships?”

A: No, since you complied with the agency requirements

in place in 2004, the Division of Real Estate does not

require you to give them a "Consumer Guide."

4) Q: If the buyer wants to make an offer after Jan. 1, do

I give them the new Agency Disclosure Statement or

deliver the old one they signed in 2004 with the offer?

A: You must use the new form that becomes effective

Jan. 1, 2005.

5) Q: A purchase contract was written in 2004, but will

not close until 2005. Do I need to give the parties a

"Consumer Guide" or the new Agency Disclosure

Statement after Jan. 1?

A: No.

Effective Date of SB 106 & Implementation Issues

FAQs

Ohio license law requires that every brokerage have a

brokerage company policy and develop a "Consumer

Guide to Agency Relationships" to give to the public.

Besides satisfying the license law, having a brokerage

company policy will serve other vital functions. First, it

will allow brokerages to set the types of agency rela-

tionships it will allow its agents to establish and the

manner in which they are created. It can also serve as a

tool to educate and train affiliated licensees on how to

make required disclosures and how the brokerage

wants certain situations handled.

Developing such a policy, along with the specific forms

and procedures you want your affiliated agents to use,

will result in more uniformity and in better trained

agents.

In this section of the manual, various brokerage compa-

ny policy options are discussed, along with the pros

and cons of each option. Regardless of the policy you

choose for your brokerage, it must meet the minimum

criteria established by the Ohio Real Estate

Commission. These criteria are set forth and discussed

on page 24 of this manual.

Examples of policies that meet the Ohio Real Estate

Commission requirements are included for each option.

These sample policies are set up so that brokers may

insert their brokerage names and the management-level

licensee positions and use these samples. To do so,

however, there are also a few places in each sample

where the broker must choose between one of two sug-

gested clauses. Brokers who want to use one of the sam-

ples must make sure to include only the clause they

pick and delete the other from their policy.

It should be stressed that these sample policies are

merely suggested formats. Brokerages are free to modi-

fy and probably should modify them to fit their particu-

lar office. There are certainly several ways to handle

some of the issues involved, especially in the area of

procedures to protect confidential information. Those

indicated are merely an example of how each area

could be addressed.

Each broker should adopt procedures that fit his office.

Brokers may also wish to augment these samples to

address how they want other matters handled in their

office. For the most part, these examples address only

the minimum criteria required by the Ohio Real Estate

Commission. There may be other procedures brokers

want their agents to follow that can be included.

These sample policies are available in an interactive

format at OAR's website: www.ohiorealtors.org

. If

brokers develop their own policy, it is recommended

that brokers have their personal attorney review it to

determine compliance with the license law.

Besides adopting its brokerage company policy, each

brokerage must also develop a "Consumer Guide to

Agency Relationships" that must be given to buyers and

sellers. The requirements for this "Consumer Guide"

and the procedures for providing it to buyers and sell-

ers are discussed beginning on page 28. The "Consumer

Guide" that a brokerage develops must explain the bro-

kerage company policy the brokerage has selected.

Samples of the "Consumer Guide" for each option are

found along with the corresponding brokerage compa-

ny policy.

These sample "Consumer Guides" comply with the

license law requirements, but are merely examples.

Again brokerages are free to modify these if they wish.

The examples provided are in an 8 ½ x 11-inch

traditional document. This version, as well as a tri-fold

pamphlet format are available in an interactive format

on OAR's website: www

.ohiorealtors.org.

Note: The Ohio Association of REALTORS is not responsible

for the use or misuse of the brokerage company policies and

"Consumer Guide" samples provided.

Brokerage Policies & ‘Consumer Guide’ Samples

As its name implies, under this policy a brokerage choos-

es to always act as a seller's agent and still practice sub-

agency.

Brokerages who practice this way do not allow their

agents to act as buyer's agents except in very rare circum-

stances. These would probably include where the agent is

purchasing property for himself, or working with a close

family member or business associate who is purchasing

property.

Except in these rare instances, the buyer is always treated

as a customer--not a client. This is even true on properties

the brokerage has listed. On properties listed with anoth-

er brokerage, the salesperson acts as a subagent repre-

senting the seller and again the buyers are treated as cus-

tomers.

Ohio license law requires brokers to take a few steps in

order to follow this policy. Under Ohio law, when a list-

ing is taken agents in the brokerage will not be consid-

ered the seller's agent unless: they personally have the

listing; are a management-level licensee; were appointed

to represent the seller; helped establish the listing; or

receive confidential information from the seller's agent.

What this means is that in most cases, the other agents in

your brokerage will not be considered to be the seller's

agent. Therefore, in order for one agent in the brokerage

to act as the seller's agent on property listed with another

agent in the firm, that selling agent needs to be appointed

to represent the seller and the seller needs to agree to

that.

While this may sound complicated at first, it can be easily

addressed upfront in a brokerage listing agreement by

including language appointing all licensees in the broker-

age to represent the seller. By doing this in your listing

agreement, the seller's consent is obtained at the begin-

ning of the listing and the other agents in the brokerage

will be considered seller's agents when showing and

writing offers on any property listed with the brokerage.

As with each of the policies discussed in this manual,

there are pros and cons to adopting the seller-only

option. These are outlined below:

Pros:

• It is less complicated to explain to sellers.

• Because the brokerage does not represent buyers, it

does not need to worry about dual agency or the problem

of confidentiality on in-company transactions.

• Sellers may prefer to be represented by a brokerage

whose agents will never act as a buyer's agent or dual

agent.

Cons:

• Brokers in the area may not offer subagency on their

listings.

• It may be difficult to explain subagency to buyers.

• The brokerage is exposed to possible liability if an

agent implies an agency relationship with a buyer who

the agent doesn't truly represent.

• Buyers who want representation may choose to go to

another brokerage that practices buyer agency.

• If other brokers in your area offer buyer representation,

it may place you at a competitive disadvantage.

• You must still address the situation of buyer agency

and dual agency when your agents are working with

family members or buying for themselves.

Company Policy A: Exclusive Seller Agency

Sample Policy A: Exclusive Seller Agency

(Note: This policy is available online at www.ohiorealtors.org

in the Legal Issues section)

SECTION A: GENERAL POLICY ON AGENCY

1) It is the policy of (brokerage name

) to only represent sellers. Affiliated licensees may only act as a seller's agent when

they list property or sell property listed with our brokerage to buyers. On properties listed with another brokerage, all

licensees affiliated with (brokerage name

) must act as subagents.

2) (Brokerage name

) does not represent buyers or act as a dual agent except as provided in Sections D and E.

3) When representing a seller, (brokerage name

) and its agents owe the seller the duties of loyalty, obedience, confiden-

tiality, accounting and reasonable skill and care in performing our duties, and any other duties contained in our listing

agreement. We are required to act solely on behalf of the seller's interest to seek the best price and terms for the seller.

Finally, as a seller's agent, we also have a duty to disclose to the seller all material information obtained from the buyer

or from any other source.

4) When salespersons are functioning as a subagent on another broker's listing, (brokerage name

) and its salespersons

represent the seller. As a subagent, they have all of the same duties as the seller's agent, including a duty of confidential-

ity and a duty to disclose material facts to the seller. In subagency, the buyer is not represented in any agency capacity.

5) Agents shall consider buyers with whom they are working to be customers. Although they are customers, buyers

should be treated by agents with honesty and agents should disclose all material facts pertaining to the physical condi-

tion of the property that the buyers could not discover on their own. The agent can also provide buyers with informa-

tion concerning lenders, inspectors, attorneys and the like, as well as market information that is from a public source.

Agents cannot disclose to the buyer confidential information about the seller without the seller's permission.

SECTION B: MANAGEMENT-LEVEL POSITIONS

The following positions in the brokerage are considered to be management level: (Name positions or titles that fall

under the definition of a management-level licensee.)

SECTION C: APPOINTMENT OF LICENSEES

The listing contract used by agents contains language that appoints all agents in the brokerage to represent that seller.

Thus, no further appointment is necessary in the event an agent wants to sell a property listed with another agent in our

brokerage.

SECTION D: WORKING WITH RELATIVES, BUSINESS ASSOCIATES, ETC.

1) If a family member, business associate or other person with whom an agent has a personal relationship wants to sell

property, that agent shall act as a listing agent. Any family, business or personal relationship shall be disclosed in writing

to the buyer, or to any agent with whom the buyer is working, prior to entering into a purchase contract. (Note: This is

required by Article 4 of the National Association of REALTORS

Code of Ethics.)

2) If a relative, business associate or other person with whom an agent has a personal relationship wishes to purchase

property through the agent, that agent shall immediately notify (broker or another management-lev

licensee

3) a) If (brokerage name

) deems it appropriate, the agent, in that limited instance, can act as a buyer's agent. (Note:

This sample policy is written based on the assumption that if the buyer eventually purchases property listed with our brokerage, the

brokerage will want both agents to function as dual agents. It would be feasible, however, for a brokerage choosing policy A to allow

the listing agent in this instance to solely represent the seller without being a dual agent. The buyer's agent would have to be a dual

agent, unless the seller agreed otherwise.)

b) The buyers must acknowledge receiving a “Consumer Guide to Agency Relationships” before the agent can

show them property, pre-qualify them or perform other typical agent duties. The buyers must also sign a buyer agency

agreement. (Note: A brokerage is not required to use a buyer agency agreement. However, in the rare situation where a buyer is

represented, if the brokerage adopts a policy that the buyer agency relationship is binding on all licensees in the brokerage, a buyer

agency agreement should be used which includes language appointing all licensees in the brokerage to represent the buyer.)

4) On properties listed with other brokerages, the agent shall notify them on first contact that they are representing the

buyers. If an offer is made, the Agency Disclosure Statement must accompany that offer when it is delivered to the list-

ing agent. The nature of any family, business or personal relationship shall be indicated in the offer.

5) On properties listed with our brokerage, the buyers must be notified immediately that this is a dual agency situation.

If it is the agent's own listing, the sellers must be notified immediately of the dual agency and of the nature of the

agent's relationship with the buyers. If it is listed with another agent in our brokerage, that agent shall be notified of

these facts before showing.

6) If the buyers want to make an offer on the agent's own listing, Section III on the Agency Disclosure Statement must be

completed and signed by both buyers and sellers. If two agents are involved they are both dual agents and Section II on

the Agency Disclosure Statement must be completed and signed. The personal, family or business nature of the rela-

tionship with the buyers shall be disclosed on the form.

7) Any agent acting as a dual agent must remain neutral, objective, unbiased and must maintain the confidential infor-

mation of both the buyers and sellers.

8) If an agent has a personal, family or business relationship with another agent involved in a transaction, that fact must

be disclosed to the parties. This disclosure must be made prior to entering into a contract. (Here brokers may want to indi-

cate that agents are required to notify them that such a situation exists so the broker can determine if any policy change is

necessary.)

SECTION E: AGENTS BUYING OR SELLING THEIR OWN PROPERTY

(Note: License law does not require licensees to list or buy property through their brokerage, but this requirement can be imposed by

the brokerage. This must be addressed in the policy. Below is sample language if it is to be handled through the brokerage.)

1) An agent selling his own property must list it with (brokerage name

). His ownership interest must be disclosed to the

buyer or his agent in writing prior to entering into a purchase contract.

2) An agent buying property must also handle these transactions through the brokerage.

3) If the property the agent wishes to purchase is listed with another brokerage, that agent shall act as a buyer's agent

representing himself. The listing brokerage must be notified at first contact of the fact the licensee is acting for himself

and confirmed in any subsequent purchase contract.

4) If the property the agent desires to purchase is listed with him or with another agent in the brokerage, the circum-

stances must be disclosed to the listing agent or seller immediately and the seller must consent to the agent(s) acting as

dual agents. The Agency Disclosure Statement must indicate as a "material relationship" that the buyer is an agent affili-

ated with (brokerage name

) and must be given to the seller before any offer to purchase is presented to the seller.

5)If the property is not listed (a FSBO), the agent shall represent himself as a buyer's agent. The agent shall disclose at

first contact his status as a licensed real estate agent, his intention to purchase for himself and any intention to seek com-

pensation from the seller. The agent shall not list the property as this would result in dual agency. It shall be noted that

the buyer is a licensed agent on any subsequent purchase contract that is entered into.

SECTION F: DUAL AGENCY

1) (brokerage name

) and its agents shall only act as a dual agent in those situations described in Sections D and E.

2) When this occurs, all agents involved are considered dual agents and therefore must all maintain confidential

information of both parties.

3) Agents acting as a dual agent in this situation shall disclose to the parties all relevant information necessary for them

to make an informed decision about whether to consent to the dual agency. This would include, but not be limited to,

Policy A continues on page 54

the nature of the personal, business or family relationship the agent(s) have with a party to the transaction. This must be

done on the Agency Disclosure Statement. If this information later changes, this change must be provided in writing to

the parties as soon as possible and they must be given an opportunity to revoke their consent to the dual agency.

4) In the event a party refuses to consent to the dual agency, or seeks to terminate any agency relationship as a result of

the proposed dual agency, (broker/manager

) shall be notified immediately. If the client's consent cannot be obtained,

(brokerage name

) and its agents shall not act as dual agents. Depending on the circumstances, (broker/manager) shall

determine which agency relationship shall be terminated.

SECTION G: CHANGING AGENCY RELATIONSHIPS

1) As discussed in Section A, all agents shall represent the seller, unless approved by (broker/manager

2) Agents shall not change agency relationships once they have been established, unless approved by (broker/manager

If such a change is approved, the client whose agency relationship is being terminated must consent in writing and any

persons who know of the previous relationship must be notified in writing as well. (Note: Brokers may want to indicate here

if there is a specific form they want agents to use in this situation.)

SECTION H: CONFIDENTIAL INFORMATION

1) Since all licensees in (brokerage name

) represent the seller, all information can be shared within the office, including

confidential information. All licensees must keep such information confidential.

2) For this reason, it is not necessary to establish procedures to protect confidential information within the office.

3) Agents, of course, must recognize their obligation not to disclose such information to buyers or to licensees affiliated

with other brokerages.

SECTION I: POLICY ON COOPERATION AND COMPENSATION

1) It is the policy of (brokerage name

) to cooperate with all other brokerages on an equal and consistent basis. This

means (brokerage name

) and its agents will make its listings available to other brokerages to show, provide information

that is not confidential, and present all offers written by other brokerages in a timely and objective manner. (Note: If a

broker does not offer such cooperation to all brokerages on an equal and consistent basis, the brokerage must indicate that fact.)

2) Unless the seller does not authorize it, (brokerage name

) will offer compensation to the following other brokerages:

(Here, the broker must indicate whether they will offer compensation to subagents only, to buyer brokers only, to both

or neither. The broker should also indicate what compensation the brokerage will offer.)

3) Unless approved by (broker/manager

), only subagency compensation shall be accepted from another brokerage.

4) (Brokerage name

) does reserve the right, in some instances, to vary the compensation it offers to other brokerages,

whether as subagency or buyer agency compensation. Therefore, the compensation it offers cooperating brokers may not

always be equal or consistent.

Policy A • Continued from page 53

The following two sections are not required to be included in your brokerage company policy but may be helpful to your agents to

understand the procedures you want them to follow and to assure compliance with license law requirements.

SECTION J: GENERAL LISTING PROCEDURES

1) When securing a listing, inform the seller of our policy to only represent the seller. Use the “Consumer Guide to

Agency Relationships” to explain how other brokerages may function. Explain to the seller that we do not represent

buyers and instead will only act as his agent. Show the seller the language in the listing agreement that states that all

licensees in our brokerage are appointed to represent him.

2) Explain the two instances where you and the brokerage would be a dual agent. These would include where you or

another agent in our brokerage have a personal, family or business relationship with the buyer, or if you or another

agent in our brokerage buys his listing.

3) Have the seller sign and date acknowledging receipt of the “Consumer Guide to Agency Relationships.”

4) The agent shall have the seller check on the listing agreement whether he authorizes (brokerage name

) to offer sub-

agency and/or compensation to buyer brokerages. Have the seller sign and date the listing agreement.

5) Unless exempt, on property built before 1978, have the seller complete the lead-based paint disclosure and acknowl-

edgement form, sign and date it.

6) Unless exempt, on residential property, have the seller complete the residential property disclosure form, sign and

date it.

SECTION K: GENERAL PROCEDURES WHEN WORKING WITH BUYERS

1) Unless you have a family, business or personal relationship with the buyer and are authorized to act as a buyer's

agent, explain our company policy of always representing the seller. Review the services you can provide to the buyer as

a customer.

2) The buyer must be provided with the “Consumer Guide to Agency Relationships” before the earliest of the following

events:

• Showing the buyer property;

• Pre-qualifing the buyer;

• Asking the buyer for specific information about his financial ability to purchase property;

• Discussing an offer; or

• Submitting an offer.

3) Have the buyer sign and date acknowledging receipt of the “Consumer Guide to Agency Relationships.”

4) On any properties you show the buyer, provide the buyer with a copy of the residential property disclosure form, the

lead-based paint disclosure and acknowledgement form, and the EPA lead paint pamphlet if these are required on the

property. Have the buyer sign these forms before signing the offer.

5) Have the buyer sign the Agency Disclosure Statement prior to signing the offer and deliver this form along with the

offer.

Brokerage Name

We are pleased you have selected (brokerage

) to help you with your real estate needs. Whether you are sell-

ing, buying or leasing real estate, (brokerage

) can provide you with expertise and assistance. Because this

may be the largest financial transaction you will enter into, it is important to understand the role of the

agents and brokers with whom you are working. Below is some information that explains the various servic-

es agents can offer and their options for working with you.

For more information on agency law in Ohio you can also contact the Ohio Division of Real Estate &

Professional Licensing at (614) 466-4100, or on its website www

.com.state.oh.us.

Representing Sellers

Most sellers of real estate choose to list their home for sale with a real estate brokerage. When they do so,

they sign a listing agreement that authorizes the brokerage and the listing agent to represent their interests.

As the seller's agent, the brokerage and listing agent must: follow the seller's lawful instructions, be loyal to

the seller, promote the seller's best interests, disclose material facts to the seller, maintain confidential infor-

mation, act with reasonable skill and care and, account for any money they handle in the transaction. In rare

circumstances, a listing broker may offer "subagency" to other brokerages which would also represent the

seller's interests and owe the seller these same duties.

Representing Buyers

When purchasing real estate, buyers usually choose to work with a real estate agent as well. Often the buyers

want to be represented in the transaction. This is referred to as buyer's agency. A brokerage and agent that

agree to represent a buyer's interest in a transaction must: follow the buyer's lawful instructions, be loyal to

the buyer, promote the buyer's best interests, disclose material facts to the buyer, maintain confidential infor-

mation and, account for any money they handle in the transaction.

Dual Agency

Occasionally the same agent and brokerage who represents the seller also represents the buyer. This is

referred to as dual agency. When a brokerage and its agents become "dual agents," they must maintain a

neutral position between the buyer and the seller. They may not advocate the position of one client over the

best interests of the other client, or disclose any personal or confidential information to the other party with-

out written consent.

Representing Both the Buyer & Seller

On occasion, the buyer and seller will each be represented by two different agents from the same brokerage.

In this case the agents may each represent the best interest of their respective clients. Or, depending on com-

pany policy, the agents may both act as dual agents and remain neutral in the transaction. When either of the

above occurs, the brokerage will be considered a dual agent. As a dual agent the brokerage and its managers

will maintain a neutral position and cannot advocate for the position of one client over another. The broker-

age will also protect the confidential information of both parties.

(Exclusive Seller Agency Policy “Consumer Guide” is available in interactive format at www

.ohiorealtors.org

Consumer Guide to Agency Relationships

Working With (brokerage)

(brokerage

) only represents sellers. It does not represent buyers of real estate. Therefore, (brokerage) will

never act as a dual agent representing both parties in a transaction. Instead it will only act as the seller's

agent in the sale of real estate. Even though (brokerage

) only lists properties for sellers, it can still work with

buyers as customers. (brokerage

) can provide such buyers with non-confidential information and write offers

at the buyer's direction, but will not act as the agent of these buyers. Instead such buyers will represent their

own best interests. It is also important for buyers to understand that because the listing agent has a duty of

full disclosure to the seller, buyers should not share any information with the listing agent that they would

not want the seller to know.

Working With Other Brokerages

When (brokerage

) lists property for sale it also cooperates with, and offers compensation to, other brokerages

that represent buyers. (brokerage

) does reserve the right, in some instances, to vary the compensation it offers

to other brokerages. As a seller, you should understand that just because (brokerage

) shares a fee with a bro-

kerage representing the buyer, it does not mean that you will be represented by that buyer's brokerage.

Instead that company will be looking out for the buyer and (brokerage

) will be representing your interests.

Fair Housing Statement

It is illegal, pursuant to the Ohio Fair Housing Law, division (H) of Section 4112.02 of the Revised Code and

the Federal Fair Housing Law, 42 U.S.C.A. 3601, to refuse to sell, transfer, assign, rent, lease, sublease or

finance housing accommodations, refuse to negotiate for the sale or rental of housing accommodations, or

otherwise deny or make unavailable housing accommodations because of race, color, religion, sex, familial

status as defined in Section 4112.01 of the Revised Code, ancestry, disability as defined in that section, or

national origin or to so discriminate in advertising the sale or rental of housing, in the financing of housing,

or in the provision of real estate brokerage services. It is also illegal, for profit, to induce or attempt to induce

a person to sell or rent a dwelling by representations regarding the entry into the neighborhood of a person

or persons belonging to one of the protected classes.

We hope you find this information to be helpful to you as you begin your real estate transaction. When you

are ready to enter into a transaction, you will be given an Agency Disclosure Statement that specifically iden-

tifies the role of the agents and brokerages. Please ask questions if there is anything you do not understand.

Because it is important that you have this information, Ohio law requires that we ask you to sign below,

acknowledging receipt of this Consumer Guide. Doing so will not obligate you to work with our company if

you do not choose to do so.

_______________________________________ _________________________________________

Name (Please Print) Name (Please Print)

_______________________________________ __________________________________________

Signature Date Signature Date

Although not common, some brokerages choose to exclu-

sively act as buyer's agents. Their brokerage does not list

property and never acts as a subagent of the seller or a

dual agent. Instead, licensees affiliated with these broker-

ages only act as a buyer's agent on properties listed with

other firms or for-sale-by-owner properties.

Although this buyer-exclusive brokerage does not prac-

tice dual agency, it must still establish procedures to pro-

tect confidential information within the office. This is

because agents in the brokerage could be representing

buyers who could be competing against one another for

the same property. Therefore, steps must be taken to pro-

tect each buyer's confidential information.

To avoid this the brokerage could adopt a policy that all

agents would be appointed to represent the buyers of

another agent in the brokerage and include language to

this effect in its buyer agency agreement. If this were

done, all affiliated agents in the brokerage would have a

fiduciary duty to all buyers represented by the brokerage,

including a duty of confidentiality. Thus it would not be

necessary to keep the confidential information of one

buyer from an agent within the brokerage working with

another buyer. They would all have a duty to maintain

such confidential information.

Many believe that this option will grow in popularity in

the future. The pros and cons of this policy are:

Pros:

• Buyers may prefer to work with a brokerage that spe-

cializes in the needs of buyers.

• Because it does not represent sellers, the brokerage will

not practice dual agency.

• Listing brokers may prefer to compensate buyer's

agents rather than assume the risk of liability for the acts

of subagents.

• You don't have the expense of advertising properties

for sale.

• You may be able to set yourself apart as unique and dif-

ferent from what the rest of the brokers are doing.

Cons:

• The brokerage will not take listings, and therefore will

have to refer sellers to another brokerage.

• You lose the name recognition that comes from for-sale

signs and other forms of advertising.

• You probably must still address confidentiality issues

within your office.

• Sellers who are selling their property as a for-sale-by-

owner may not agree to pay you, requiring the buyer to

do so. Buyers may not be willing to agree to this.

Company Policy B: Exclusive Buyer Agency

Sample Policy B: Exclusive Buyer Agency

(Note: This policy is available online at www

.ohiorealtors.org in the Legal Issues section)

SECTION A: GENERAL POLICY ON AGENCY

1) It is the policy of (brokerage name

) to only represent buyers. Affiliated licensees may not list property, act as a sub-

agent of the seller, or practice dual agency. On properties listed with another brokerage, licensees affiliated with (bro

kerage name) must act as buyer's agents. On properties that are not listed--for-sale-by-owner properties--the agents shall

represent buyers as well.

2) When representing a buyer, (brokerage name

) and its agent owe the buyer the duties of loyalty, obedience, confiden-

tiality, accounting and reasonable skill and care in performing our duties, and any other duties contained in our buyer

agency agreement. We are required to act solely on behalf of the buyer's interest to seek the best price and terms for the

buyer. Finally, as a buyer's agent, we also have a duty to disclose to the buyer all material information obtained from the

seller or from any other source.

3) At first contact with a listing agent or owner of a for-sale-by-owner property, the agent shall notify the listing office or

FSBO that they are a buyer's agent. To a FSBO, the agent shall also disclose their intent, if any, to seek compensation

from the seller.

SECTION B: MANAGEMENT-LEVEL POSITIONS

The following positions in the brokerage are considered to be management level: (Name positions or titles that fall

under the definition of a management-lev

el licensee).

SECTION C: APPOINTMENT OF LICENSEES

In the event an agent wants another agent in the brokerage to represent his client, that buyer must agree in writing to

this agent being appointed to represent him. Such written appointments must be maintained in the brokerage file. (Here

brokers should specify how appointments will be handled. A buyer can authorize his agent to make appointments in the buyer

agency agreement or appointments can be authorized by the buyer when needed on an appointment of agent form).

SECTION D: WORKING WITH RELATIVES, BUSINESS ASSOCIATES, ETC.

1) If a relative, business associate or other person with whom an agent has a personal relationship wishes to purchase

property through the agent, that agent shall act as a buyer's agent. When showing a property, the listing agent, or if

there is none, the seller, shall be notified of the family, business or personal relationship the agent has with the buyer.

This relationship shall be disclosed in writing before any offer that is made. (Note: This disclosure is required by Article 4 of

the National Association of REALTORS

Code of Ethics.)

2) Agents licensed with (brokerage name

) cannot list properties owned by relatives, personal friends or business associ-

ates. Such persons shall instead be referred to other brokerages.

3) If an agent has a personal, family or business relationship with another agent involved in a transaction, that fact must

be disclosed to the parties. This disclosure must be made prior to a contract being entered into. (Here brokers may want

to indicate that agents are required to notify them that such a situation exists so the broker can determine if any policy

change is necessary.)

SECTION E: AGENTS BUYING OR SELLING THEIR OWN PROPERTY

(Note: License law does not require licensees to buy or sell property through their brokerage, but this requirement can be imposed by

the brokerage. This must be addressed in the policy. Below is sample language.)

1) Agents selling their own property must either list it with another brokerage or sell it as a FSBO. It cannot be listed for

sale with (brokerage name

). If it is sold as a FSBO, the agent must advertise in his name and indicate his status as a real

estate agent, but not include the brokerage name. On any purchase contract that is entered into, the fact that the

agent/seller is a licensed agent must be noted.

2) Agents buying property for themselves must handle this transaction through the brokerage.

3) If the property the agent wishes to purchase is listed with another brokerage, the agent shall act as a buyer's agent

representing himself. The listing brokerage must be notified at first contact of the fact the agent is acting for himself as a

buyer's agent and this must be confirmed on any subsequent purchase contract.

4) If the property is not listed, the seller must be notified at first contact that the agent is representing himself as a

buyer's agent and of any intent to seek compensation from the seller. The agent must also indicate his status as a

licensed agent on any purchase contract.

SECTION F: DUAL AGENCY

Since it is the policy of (brokerage name

) to only represent buyers, it will not act as a dual agent in any situation.

SECTION G: CHANGING AGENCY RELATIONSHIPS

As discussed in Section A, agents shall represent the buyer only. Therefore, agents are prohibited from changing that

relationship to represent the seller.

SECTION H: CONFIDENTIAL INFORMATION

(Note: The procedures outlined below are merely an example of how to address confidentiality issues. Brokers are free to modify these,

or adopt other procedures. If a brokerage includes language in its buyer agency agreement appointing all other agents in the broker-

age to represent the buyer, this section on confidentiality is not necessary.)

Since all agents within (brokerage name

) only act as buyer's agents, it is possible that one agent could potentially repre-

sent a buyer who is competing for a property against another buyer represented by a different agent in our brokerage.

Therefore, it is necessary for the following steps to be followed to protect the confidential information of one

buyer/client from being disclosed to another agent in our brokerage who could be representing a different, competing

buyer:

1) Office files. Each agent shall maintain in his file cabinet all documents relating to a purchaser he represents.

Correspondence, credit reports, offers, addendums, inspection reports and the like shall not be kept on desks or left out

where they could be viewed by other agents. Agents shall keep their file cabinets locked when they are not in the office.

The broker shall have keys to the agent's file cabinet in the event it is necessary for the broker to access this information.

2) Computerized records and messages. All computer documents maintained by agents shall be password-protected so

that other agents in the brokerage cannot retrieve or view this information. Agents shall not share their passwords with

one another for any reason.

3) Office meetings and discussions. Agents shall not share confidential information regarding their clients at office

meetings or discuss such information with others in the office unless the client specifically permits such disclosure. If the

client so authorizes, this authorization should be obtained in writing or noted by the agent in his file. Confidential infor-

mation includes, but is not limited to, the buyer's motivation to purchase, his reason for moving, his financial situation,

the amount of any offer or counter-offer the buyer has made or is considering making or the amount of any pending

contract. Office meetings involving such confidential information shall take place in private, so as not to be overheard by

others.

4) Facsimile transmissions. When faxing documents that contain confidential information such as offers and counter-

offers, agents must not leave the original documents on the fax machine where they could be viewed by others.

Incoming faxes shall only be retrieved by (name individuals such as the office manager or receptionist

). The fax shall

then be personally delivered to the agent, if the agent is in the office, or sealed in an envelope and placed in the agent's

mailbox. Clients and cooperating agents should be directed not to fax you confidential information during non-working

hours unless it is confirmed that you will be there to retrieve it.

5) Telephone and inter-office messages and conversations. Telephone and inter-office messages that contain confiden-

tial information shall be hand-delivered in writing to the appropriate agent or placed in an envelope on either the

agent's desk or in his mailbox. Conversations with management-level licensees or other staff concerning clients shall be

held in private if the conversation involves confidential information.

Policy B continues on page 62

6) Meetings and conversations with clients. All meetings with clients shall take place in (brokers should denote a private

meeting room or other similar space within the office). Telephone conversations with clients that involve confidential informa-

tion shall take place only in the agent's office. (Note: If the agent does not have a private office, the brokerage shall designate

some location within the office where the agent could have a private telephone conversation.) Agents shall not utilize the speaker

phone when having conversations of a confidential nature, unless the conversations take place in a closed office.

SECTION I: POLICY ON COOPERATION AND COMPENSATION

1) It is the policy of (brokerage name

) to cooperate with all other brokerages on an equal and consistent basis. This

means (brokerage name

) and its agents will provide non-confidential information and present all offers written by other

brokerages in a timely and objective manner. (Note: If a brokerage does not offer such cooperation to all brokerages on an equal

and consistent basis, the broker must indicate that fact.)

2) It is the policy of (brokerage name

) to accept the compensation offered in the multiple listing service to buyer broker-

ages.

3) (Here the broker should indicate how he wants agents to handle the situation where the property is a FSBO, is not in the MLS,

compensation is not offered to buyer brokers, or the compensation offered is deemed to be insufficient.)

The following section is not required to be included in your brokerage company policy but may be helpful to your agents to under-

stand the procedures you want them to follow and to assure compliance with license law requirements.

SECTION J: GENERAL PROCEDURES WHEN REPRESENTING BUYERS

1) Explain our policy of only representing buyers.

2) Provide the buyer with the “Consumer Guide to Agency Relationships.” This must be given to the buyer before the

earliest of the following events:

• Showing property;

• Pre-qualifying the buyer;

• Asking the buyer for specific information about his financial ability to purchase property;

• Discussing an offer; or

• Submitting an offer.

3) Review the “Consumer Guide to Agency Relationships” with the buyer, including your policy on cooperation and

compensation. Explain that we accept compensation from listing brokers or sellers, but also explain how it will be han-

dled if the seller or listing broker won't pay us. Buyers must sign and date acknowledging receipt of the “Consumer

Guide to Agency Relationships.”

4) Have the buyer sign the buyer agency agreement.

5) Disclose your status as a buyer's agent to any listing office at first contact.

6) On FSBOs, disclose at first contact your status as a buyer's agent and also disclose any intention to seek compensation

from the seller.

7) On any properties you show the buyer, provide the buyer with a copy of the residential property disclosure form, the

lead-based paint disclosure and acknowledgement form, and the EPA lead paint pamphlet if these forms are required on

the property. Have the buyer sign these forms before signing the offer.

8) Have the buyer sign the Agency Disclosure Statement prior to signing the offer and deliver this form along with the

offer.

P olicy B • Continued from page 61

Brokerage Name

We are pleased you have selected (brokerage) to help you with your real estate needs. Whether you are buy-

ing or leasing real estate, (brokerage

) can provide you with expertise and assistance. Because this may be the

largest financial transaction you will enter into, it is important to understand the role of the agents and bro-

kers with whom you are working. Below is some information that explains the various services agents can

offer and their options for working with you.

For more information on agency law in Ohio you can also contact the Ohio Division of Real Estate &

Professional Licensing at (614) 466-4100, or on its website www

.com.state.oh.us

Representing Sellers

Most sellers of real estate choose to list their home for sale with a real estate brokerage. When they do so,

they sign a listing agreement that authorizes the brokerage and the listing agent to represent their interests.

As the seller's agent, the brokerage and listing agent must: follow the seller's lawful instructions, be loyal to

the seller, promote the seller's best interests, disclose material facts to the seller, maintain confidential infor-

mation, act with reasonable skill and care and, account for any money they handle in the transaction. In rare

circumstances a listing broker may offer "subagency" to other brokerages which would also represent the sell-

er's interests and owe the seller these same duties.

Representing Buyers

When purchasing real estate, buyers usually choose to work with a real estate agent as well. Often the buyers

want to be represented in the transaction. This is referred to as buyer's agency. A brokerage and agent that

agree to represent a buyer's interest in a transaction must: follow the buyer's lawful instructions, be loyal to

the buyer, promote the buyer's best interests, disclose material facts to the buyer, maintain confidential infor-

mation and, account for any money they handle in the transaction.

Dual Agency

Occasionally the same agent and brokerage who represents the seller also represents the buyer. This is

referred to as dual agency. When a brokerage and its agents become "dual agents," they must maintain a neu-

tral position between the buyer and the seller. They may not advocate the position of one client over the best

interests of the other client, or disclose any personal or confidential information to the other party without

written consent.

Representing Both the Buyer & Seller

On occasion, the buyer and seller will each be represented by two different agents from the same brokerage.

In this case the agents may each represent the best interest of their respective clients. Or, depending on com-

pany policy, the agents may both act as dual agents and remain neutral in the transaction. When either of the

above occurs, the brokerage will be considered a dual agent. As a dual agent the brokerage and its managers

will maintain a neutral position and cannot advocate for the position of one client over another. The broker-

age will also protect the confidential information of both parties.

Consumer Guide continues on page 64

(Exclusive Buyer Agency Policy “Consumer Guide” is available in interactive format at www.ohiorealtors.org.)

Consumer Guide to Agency Relationships

Working With (brokerage)

(brokerage

) only represents buyers. It does not represent sellers or list property for sale. Therefore,

(brokerage

) will never act as a dual agent representing both parties in a transaction. Instead it will only act as

the buyer's agent in the purchase of real estate.

When acting as a buyer's agent, (brokerage

) will seek its compensation from the listing broker. If the property

is not listed with any broker, or the listing broker does not offer compensation, we will attempt to negotiate

for a seller-paid fee. However, even if the listing broker or seller pays us, (brokerage

) still represents only the

buyer. If (brokerage

) is not compensated by the listing broker or the seller, its compensation will be paid by

the buyer, pursuant to a written agreement with the buyer.