Update: Do landmen need to be licensed real estate brokers? A decision by Ohio Supreme Court

Blog Post

I wrote a blog last year called “Do Oil and Gas Landmen Need to be Licensed Real Estate Brokers?" The case on which it was based has just been decided by the Ohio Supreme Court.

Here's the update:

Relying on the same reasoning as the Seventh District Court of Appeals, the Ohio Supreme Court has affirmed the decision in Dundics. A full copy of the slip opinion can be found here.

In a passage that squares well with our previous analysis above, Chief Justice Maureen O’Connor, writing for the unanimous court, indicated that “whether [applying licensure requirements to oil and gas landmen] makes sense is a policy question for the General Assembly to decide. Our task is to interpret and apply the statutory language….There is simply no exception in the statutes governing real-estate-broker’s licenses for oil and gas leases or oil-and-gas land professionals.” Such an exception would solve the problem if and when the General Assembly carves it out.

However, R.C. 4735.01(I)(1)(a) excepts the “regular employees” of companies acquiring interests in real estate “in the regular course of, or as an incident to the management of the property and the investment in it” from the broker’s licensure requirements. Since the initial ruling by the Seventh District Court of Appeals, some brokers have responded by bringing their formerly-independent landmen in-house as W-2 employees. While different employment types and compensation regimes each carry their own benefits and burdens, for both the employer and employee, it seems that the primary structure for landmen and brokers established by decades of market forces will be unavailable unless and until the General Assembly acts.
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