On June 12, Judge Donald E. Oda II of the Warren County Court of Common Pleas ruled in favor of the sellers of a home, represented by attorneys Andrew Gray and Christopher Finney, dismissing claims for breach of contract and fraud made by their realtor. The sellers, a couple moving from their home in Warren County, had terminated their contract with the original realtor and eventually successfully sold their home with a new realtor. The original realtor was not paid a commission by the brokers in the transaction, and filed suit against his employer and the sellers.
Under Ohio Revised Code 4735.21, only a licensed real estate broker may file a lawsuit to collect commission or other compensation in connection with a real estate transaction, and a real estate sales person can only collect money in the name of their broker. In the lawsuit, however, the realtor, who was only a licensed real estate salesperson, only alleged his status as a realtor in the complaint.
After the Finney Law Firm and the attorneys for the broker both filed motions to dismiss the plaintiff realtor’s claims, the Court – only three days after the motion was fully briefed – dismissed the complaint in its entirety. First, all claims for breach of contract against the sellers were dismissed because seller’s contracts were with the broker alone, who brought no claims against the seller; additionally, the plaintiff realtor had no claims against sellers under R.C. 4735.21. Finally, all claims for fraud were dismissed because they were duplicates of the contractual claims.
This brings up several important points:
- Being a “realtor” is not a status of licensure under Ohio law – it is only membership in the National Association of Realtors, or one of its local branches.
- Licensure as a “real estate salesperson” or “real estate broker” is entirely separate from status as a realtor.
- Any contracts that a consumer may have with a realtor or real estate salesperson are actually with the real estate broker; the real estate salesperson or realtor is only the “agent” of the broker.
The result may seem unfair at first but, upon reflection, the policy reasons for R.C. 4735.21 are relatively simple. Real estate brokers have a variety of salespersons in the field, showing, selling, leasing real estate. However, all of those funds are ultimately the responsibility of the broker themselves. In a real estate transaction, all funds are transmitted through the brokers; so, when a real estate salesperson is entitled to a commission, the payment of that commission is truly a matter between the broker and the salesperson, not between the salesperson and the parties to the transaction. R.C. 4735.21 is intended to prevent the employment compensation disputes between the brokers and salespersons from involving the parties to the transactions, which can range from large companies to individuals buying, selling, or renting a home.
Regardless of the reasoning, the case represents another victory and successful result for our clients.
