Do's and don'ts of working with out-of-state commercial REALTORS

By Peg Ritenour

Ohio REALTORS are being contacted more and more by out-of-state agents with a client interested in buying or leasing commercial real estate located in Ohio. Obviously this could be a referral situation, but could the out-of state REALTOR actually represent the buyer or tenant — showing property and negotiating a lease or purchase contract — if he's not licensed in Ohio? The answer is yes, but specific requirements have to be followed so you and the out-of-state REALTOR don't find yourself in hot water with the Division of Real Estate.

Legislation permitting such out-of state licensees to practice commercial real estate in Ohio was spearheaded by OAR and became effective in 2002. Commercial real estate is defined as any property other than real estate with one to four family units. Thus, this legislation applies to unimproved land or property with five units or more. If a property has 1-4 residential units, an Ohio license is required to participate in the transaction beyond a referral.
To make sure that the out-of-state broker followed Ohio law and that Ohio brokers and consumers weren't put at risk, certain requirements were included in the legislation. Under Ohio's law a broker licensed in another state is permitted to fully represent a client in an Ohio commercial/industrial transaction as long as several requirements are met. The out-of-state broker must:

Work in cooperation with an Ohio real estate broker
Enter into a written agreement with the Ohio broker that includes the terms of cooperation and compensation and a statement that the out-of-state commercial broker and its agents will agree to adhere to the laws of Ohio
Furnish the Ohio broker with a current certificate of good standing from any jurisdiction where the out-of-state commercial broker maintains an active real estate license
Sign an irrevocable written consent that legal actions arising out of their conduct may be commenced against them in Ohio
Include the name of the Ohio broker on all advertising
Deposit all escrow funds, security deposits, and other money received by either the out-of-state commercial broker or the Ohio broker in the trust or special accounts maintained by the Ohio broker
Deposit records and documents related to the transaction with the Ohio broker
To assist our members who want to work with an out-of-state broker under this law, OAR has prepared sample cooperative agreements and a "Consent to Jurisdiction" form.

A Cooperative Agreement (pdf document) setting forth the terms of cooperation and compensation and a statement that the out-of-state broker and its agents agree to adhere to Ohio law.
An Irrevocable Consent to Jurisdiction (pdf document) signed by the out-of-state broker.
It is important for Ohio REALTORS to recognize that the above provisions apply when an out-of-state broker agent seeks to participate in the sale of commercial property located in Ohio beyond a mere referral. If an Ohio licensee wishes to sell or lease real estate located outside of Ohio, it is necessary that they contact the Real Estate Commission of the state where the property is located to determine what requirements must be met in order to do so