2.3 Ohio Agency Agreement Requirements
Key Takeaways
- All Ohio brokerage agreements must be in writing, dated, and signed to create an agency relationship (ORC 4735.55).
- Listing agreements need a property description, price, commission terms, and a definite expiration date.
- Ohio prohibits automatic renewal and indefinite-duration clauses in agency agreements.
- Buyer representation agreements must state the property type, geographic area, compensation, and a definite end date.
- Brokers must retain transaction records, agreements, and trust-account records for three years (ORC 4735.18(A)(24)).
Elements Every Brokerage Agreement Needs
Under ORC 4735.55, an Ohio brokerage agreement is valid only if it is in writing and contains the required elements. Missing pieces can void the agreement and expose the licensee to discipline.
| Element | Why it matters |
|---|---|
| Names of broker and client | Identifies the parties bound |
| Date of execution | Starts the term and the record clock |
| Property or transaction type | Defines the scope of representation |
| Compensation | States how and how much the broker is paid |
| Definite expiration date | Required by ORC 4735.55; no auto-renewal |
| Signatures of all parties | An unsigned agreement creates no agency |
Listing Agreements and Their Types
The exam tests who owes commission under each listing type:
| Listing type | Exclusivity | Commission owed when... |
|---|---|---|
| Exclusive right to sell | Highest | Anyone sells during the term, even the owner |
| Exclusive agency | Medium | Broker procures the buyer; owner owes nothing if owner sells |
| Open listing | None | Only the broker who finds the buyer is paid |
Net listings are legal in Ohio but disfavored because the broker keeps everything above a set net price, creating a conflict of interest. The exam may flag them as the "discouraged but not prohibited" answer.
The Definite-Termination Rule
ORC 4735.55 requires a definite expiration date and bans automatic renewal. A listing that says "this listing renews monthly until canceled" is illegal in Ohio.
| Prohibited clause | Required instead |
|---|---|
| Automatic renewal | A specific calendar end date |
| Indefinite duration | A fixed term, e.g., 90 days |
| Self-extending term | A new signed agreement to extend |
Worked example: A seller signs a 90-day exclusive right to sell on March 1. The listing must expire by a stated date (about May 30). To continue, the broker and seller must sign a new written extension; the term cannot roll over on its own.
Buyer Representation Agreements
Buyer-agency agreements follow the same writing rule and must spell out the search and pay terms:
| Element | Detail |
|---|---|
| Property type | Residential, commercial, land, etc. |
| Geographic area | Counties, cities, or districts |
| Price range | Buyer's budget parameters |
| Compensation | Buyer-paid, seller/MLS-paid, or a blend |
| Definite end date | No automatic renewal |
After 2024 changes to cooperative-compensation practices nationwide, buyer-agency agreements increasingly state the buyer's own fee obligation, with any seller or listing-broker contribution credited against it. Ohio still requires the compensation source be disclosed in the agreement.
Amending and Terminating Agreements
To change an existing agreement, use a written, dated amendment signed by all parties and attach it to the original. Common grounds for termination:
| Reason | Process |
|---|---|
| Expiration | Automatic on the stated end date |
| Mutual rescission | Both parties agree in writing |
| Breach | Non-breaching party may terminate |
| Death/incapacity | Generally ends a personal-service agency |
| Destruction of the property | Ends a listing on that specific property |
Three-Year Record Retention (ORC 4735.18)
Under ORC 4735.18(A)(24), a licensee can be disciplined for failing to keep complete and accurate records for three years from the date of the transaction. Records include listing forms, earnest-money receipts, offers and acceptances, and trust-account ledgers.
| Document | Retention period |
|---|---|
| Brokerage and listing agreements | 3 years |
| Offers, acceptances, closing documents | 3 years from the transaction |
| Trust/escrow account records | 3 years |
| Related correspondence | 3 years |
Exam trap: The answer is three years, not one, two, or five. Memorize this number; it appears verbatim on the state portion.
Property Management Agreements
Brokers who manage rental property for owners need a written property management agreement, and the rents collected belong in a separate trust account (commingling with operating funds violates ORC 4735.18 and 4735.24).
| Required element | Purpose |
|---|---|
| Property description and units | Defines what is managed |
| Management duties | Repairs, leasing, rent collection |
| Authority level | Spending and decision limits |
| Compensation | Percentage of rents or flat fee |
| Trust-account handling | Where rents and deposits are held |
| Definite term | No automatic renewal |
Trust-Account and Earnest-Money Handling
Agency agreements interlock with Ohio's trust-account rules. Earnest money and security deposits must be deposited into the broker's trust or special account within a reasonable time, and the broker keeps a ledger for each client. These ledgers are part of the three-year retention requirement.
Worked example: A managing broker collects $1,200 monthly rent on an owner's behalf. That rent goes into the property-management trust account, is recorded on the owner's ledger, and the broker is paid the agreed management fee from those funds. The broker may never deposit client rents into the brokerage's own operating account.
Common Agreement Mistakes That Fail the Exam
Watch for these distractors:
| Mistake | Correct Ohio rule |
|---|---|
| Oral listing is enforceable | Must be written and signed |
| Listing auto-renews until canceled | Must have a definite end date |
| Records kept five years | Three years from the transaction |
| Salesperson signs the listing as the contracting party | The broker is the contracting party; the salesperson signs on the broker's behalf |
| Net listings are illegal in Ohio | They are legal but discouraged |
The contracting party on any Ohio brokerage agreement is the broker, not the individual salesperson. A salesperson works only on behalf of the affiliated broker, who holds the listing and is ultimately responsible for compliance, record retention, and supervision of the agreement.
Which clause is prohibited in an Ohio listing agreement?
How long must an Ohio broker retain transaction records under ORC 4735.18?