• Ohio Supreme Court Now Requires Real Estate Broker License for Landmen Negotiating Leases / Filing Claims for Compensation
  • October 3, 2018 | Author: Amanda Leigh Fitzhugh Porter
  • Law Firm: Leech Tishman Fuscaldo & Lampl, LLC - Pittsburgh Office
  • On September 25, 2018, the Ohio Supreme Court rendered its opinion in Dundics v. Eric Petroleum Corp., Slip Opinion No. 2018-Ohio-3826, and ruled that oil and gas land professionals who negotiate leases and seek to file a claim for compensation of such services must have a real estate broker’s license pursuant to Ohio Revised Code 4735.01(A), 4735.02(A), and 4735.21 to recover damages for compensation.

    Dundics was hired by Eric Petroleum Corporation to negotiate gas leases with property owners in exchange for “a fixed payment for every leased acre and a percentage of the proceeds from working wells placed on the leased land.”[1] Dundics was not properly compensated for his services and he filed suit for compensatory and punitive damages for claims in breach of contract, conversion, fraud, unjust enrichment, and quantum meruit.[2]

    Pursuant to O.R.C. 4735.01(A) a real estate broker is defined “as any person or entity who, for compensation or other valuable consideration, performs certain activities, including negotiating the lease of real estate, holding one’s self out as engaged in the business of leasing real estate, and ‘the procuring of prospects or the negotiation of any transaction . . . which does or is calculated to result in’ the lease of real estate.”[3]

    The Court notes that the statute broadly defines “real estate” under O.R.C. 4735.01(B), to include “leaseholds as well as any and every interest or estate in land situate in this state, whether corporeal or incorporeal, whether freehold or nonfreehold, and the improvements on the land, but does not include cemetery interment rights.”[4] Since the language of the statute is clear, not ambiguous, and does not specifically carve out an exception for oil and gas land professionals, the Court concluded that oil and gas land professionals fall within the purview of the statute and negotiating oil and gas leases requires a real estate broker’s license pursuant to O.R.C. 4735.01(A) and 4735.02(A).[5] Pursuant to O.R.C. 4735.21, oil and gas land professionals are required to have a real estate broker’s license at the time they are engaged in leasing activities, and without a real estate broker’s license, oil and gas land professionals cannot bring suit to recover compensatory and punitive damages.[6]