Broker Licensing and Property Management
As the real estate market makes a slow recovery there has been a renewed interest in real estate brokerage and property management careers. In Ohio, Kentucky and Indiana you may only perform real estate sales or brokerage services if you hold a valid broker’s or salesperson’s license in the state in which you are performing such services, unless one of the limited exceptions apply - such as being licensed to practice law in that state. If you hold a valid real estate license you may be able to work in cooperation with a licensed broker or salesperson in another state if there is a reciprocity agreement in place between the states. Indiana, Kentucky and Ohio permit reciprocity among licensed brokers and salespersons from those states and others in the central United States.
Who May Hold a Real Estate License? A person meeting the educational, experience, character, testing and other requirements may apply for a broker’s or salesperson’s license in the state where he or she resides. A company (partnership, LLC or corporation) may also apply for a license as long as it has at least one broker affiliated with it (i.e. a member, partner, officer, employee, etc.) and all brokerage services being performed by such company are being performed by, or in the case of salespersons supervised by, such affiliated licensed broker.
What Services May be Provided? The term “brokerage services” not only includes the buying, selling and leasing of real estate (and any related activities), but it also includes property management. All three states require property managers to follow certain procedures (e.g., regarding bank accounts, ledgers and other record keeping) as part of performing property management services. All property management/brokerage services being performed by a property management company must be performed by (or supervised by) its licensed broker(s). Certain collateral services typically performed by a property manager, however, do not require a broker license, allowing such services to be performed by non-licensed employees within the property management company. The State of Ohio Department of Commerce website describes property management services and other related services. The Kentucky Real Estate Commission also as helpful information on their website. Information about Indiana property management and real estate licensure may be found here.
Who May Manage a Real Estate Brokerage Office? With respect to a brokerage company, the affiliated licensed broker must personally oversee and direct the operations of the company if he/she is the only licensed broker. A broker may affiliate with only one company. Non-brokers may own or hold officer positions in a brokerage company as long as they do not perform brokerage services (and, in Ohio, all non-broker officers and owners must file an affidavit to that effect). Since a licensed broker may affiliate with only one company, a broker cannot perform different brokerage services (residential, commercial, property management, etc.) on behalf of different brokerage companies.
Is the Content of Brokerage Agreements Regulated? All three states also regulate the content (to some extent) of certain agreements utilized by brokers (such as listing agreement), require certain disclosures during performance of the brokerage services and provide other general rules a broker must follow. Penalties as the punishment may be harsh for failing to comply with broker licensing laws, we advise that you familiarize yourself with the rules and seek assistance when necessary when structuring brokerage companies, relationships with other brokers or any other kind of complex brokerage transaction.
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