1.3 Ohio License Types and Broker Supervision

Ohio License Types and Broker Supervision

Ohio recognizes distinct license types, and the relationship between a broker and the salespersons affiliated with that broker drives a large share of state-portion questions.

The License Types

Salesperson

A salesperson may show property, solicit listings, negotiate, and present offers — but always in the name of and under the supervision of a sponsoring broker. A salesperson may not:

• Operate independently or run a brokerage;
• Accept compensation directly from the public or from any broker other than the sponsoring broker;
• Supervise other licensees;
• Hold trust funds or maintain a trust account.

Broker

A broker may own and operate a brokerage, supervise affiliated licensees, maintain the trust (earnest-money) account, and operate branch offices (each branch reported to the Division). Every brokerage has one principal broker who carries ultimate legal responsibility, even when a branch manager handles daily operations.

Sponsorship Is Mandatory

In Ohio, a salesperson license cannot exist in an active state without a sponsoring broker.

How Sponsorship Works

1. A licensed broker agrees to sponsor the salesperson.
2. The broker submits the activation/transfer in the eLicense system.
3. The license becomes active upon Division approval.
4. The broker is then responsible for supervising all of that salesperson's licensed activity.

Losing the Broker

Trap: When a broker terminates a salesperson, the license is not revoked and there is no 30-day grace period to keep working. It simply becomes inactive, and the salesperson must stop all brokerage activity until a new broker reactivates it.

Broker Supervision Duties

Ohio law makes the broker accountable for the conduct of affiliated licensees. The principal broker must maintain written brokerage policies and actively oversee the firm.

Required Written Policies

• Supervision of all licensed activity;
• Trust-fund handling and the timing of deposits;
• Advertising and marketing standards;
• Review of contracts and transactions;
• Record retention — brokers must keep transaction records for 3 years.

Broker Liability

Key Point: A broker can be sanctioned for failure to supervise even without knowing about the misconduct, if reasonable oversight would have caught it. "I didn't know" is not a defense when policies and review were absent.

The Cardinal Commission Rule

A salesperson may be paid only by their own sponsoring broker. Money for a deal flows from the client to the brokerage, and the broker pays the salesperson.

A salesperson who takes pay from anyone other than the sponsoring broker — and a broker who pays an unaffiliated licensee — both violate ORC 4735 and risk suspension or revocation. A brokerage may pay a referral fee to a properly licensed out-of-state broker, but never directly to an unaffiliated salesperson.

Advertising in the Broker's Name

All advertising must run in the name of the brokerage, not the individual salesperson alone. A salesperson cannot advertise property as if it were their own independent listing. This protects the public's ability to identify which licensed brokerage stands behind a transaction. "For sale by [Salesperson Name]" without the firm name is a violation.

Transferring Brokers

1. The salesperson notifies the current broker.
2. The current broker releases the license in eLicense.
3. The new broker submits the activation.
4. During the gap the license is inactive — no brokerage activity.
5. Pending transactions should be assigned before the move; the original broker generally retains the listing/commission relationship unless the parties agree otherwise.

Worked Scenario

A salesperson at Firm A negotiates a sale. At closing the grateful seller writes the salesperson a personal $1,000 "thank-you" check. May the salesperson cash it? No — compensation for brokerage services may come only from the sponsoring broker (Firm A). Taking the check directly from the client violates ORC 4735 and exposes both the salesperson and, potentially, the broker (for supervision) to discipline. The correct path: the funds flow to Firm A, which pays the salesperson per the commission agreement.