Ohio Real Estate Broker Exam — All Questions

Ohio's advertising rules require that a salesperson's advertisement:

• a.Show the brokerage name in at least equal prominence with the salesperson's name✓
• b.Carry the salesperson's license number and the brokerage's license number
• c.Be submitted to the Division of Real Estate for written approval before publication
• d.List the names of all licensees affiliated with the brokerage

ORC 4735.16(B)(3) states that "the name of the brokerage shall be displayed in equal prominence with the name of the salesperson in the advertisement," and OAC 1301:5-1-02(B) extends that to "all advertising, including internet websites, that are within the ownership or direct control of the licensee or the brokerage." What the statute requires is identification by name, not by number: ORC 4735.16(B)(1) says the licensee "shall be identified in the advertisement by name and indicate the name of the brokerage," and no license number is called for. There is no pre-approval process either; the Division polices advertising after the fact, and ORC 4735.16(B)(5) makes a non-conforming advertisement prima-facie evidence of a violation of ORC 4735.18(A)(21). And naming every affiliated licensee is not required, as OAC 1301:5-1-21(B)(1) confirms even for team advertising, where "the licensee is not required to include in the advertisement the names of every member of the team."

A group of Ohio licensees in one brokerage advertises under a group name. What must their advertising do?

• a.Obtain a separate brokerage license for the team from the superintendent of real estate
• b.Name every member of the team in each advertisement
• c.Use the word "Realty" or "Associates" in the team name to show that it is licensed
• d.Include "team" or "group" in the name and show the brokerage at least as prominently✓

OAC 1301:5-1-21(B) requires a licensee advertising as part of a team to "include the term 'group' or 'team' in the team name" and to include the brokerage name "displayed in equal or greater prominence with the team name and with the name of the salesperson." A team is by definition unlicensed — paragraph (A) describes a group name "that name is not licensed pursuant to Chapter 4735" — so no separate brokerage license is sought or issued for it, and any unlicensed team member named in the advertising must be identified as unlicensed under (B)(3). Listing everyone is expressly unnecessary, since (B)(1) requires the name of "at least one of the licensees." And the two words offered as required are the two the rule forbids: (B)(5) says the team shall "not use the terms 'realty' or 'associates' in the team name."

An Ohio salesperson closes a sale. How may the salesperson collect the commission?

• a.Directly from the seller at the closing table
• b.Only in the broker's name and with the broker's consent✓
• c.From the cooperating brokerage if the salesperson's own broker refuses to pay
• d.From any party named in the purchase agreement

ORC 4735.21 provides that no salesperson "shall collect any money in connection with any real estate... transaction, whether as a commission, deposit, payment, rental, or otherwise, except in the name of and with the consent of the licensed real estate broker... under whom the salesperson is licensed at the time the salesperson earned the commission," and bars the salesperson from suing anyone other than that broker for it. Collecting from the seller at the table would be exactly that prohibited direct collection, whatever the seller agreed to. A cooperating brokerage is no substitute either, because the same section limits the salesperson's cause of action to the broker under whom the salesperson is licensed. And being named in the purchase agreement gives no one a claim against a salesperson's principal broker's obligation; ORC 4735.18(A)(31) instead makes it a disciplinary matter for the broker to fail to account and pay the salesperson's earned share after receiving the commission.

How long must an Ohio broker keep complete and accurate records of a transaction?

• a.One year from the date of the transaction
• b.Three years from the date of the transaction✓
• c.Five years from the closing, or seven if litigation is threatened
• d.Until the parties' rights under the purchase agreement have expired

ORC 4735.18(A)(24) makes it a disciplinary violation to have "failed to keep complete and accurate records of all transactions for a period of three years from the date of the transaction," and it spells out what those records include: "copies of listing forms, earnest money receipts, offers to purchase and acceptances of them, records of receipts and disbursements of all funds received by the licensee as broker." One year is shorter than any retention period in the chapter. Five or seven years is a longer duty than Ohio imposes, and no provision lengthens the period because a suit is threatened. And a period that ends when the parties' contract rights expire would defeat the purpose of the rule, which is to leave an auditable trail the Division's investigators can inspect under ORC 4735.05(B)(4) after the deal is over; the same three-year clock is used for the broker's records of payments under ORC 4735.20(C)(4) and (5).

A seller signs an exclusive agency agreement rather than an exclusive right to sell listing. The difference is that the seller:

• a.May cancel the agreement at any time without notice or further obligation
• b.May list the same property with several brokerages at the same time
• c.Owes no commission if the property sells solely through the seller's efforts✓
• d.Owes a commission only if the broker personally produces the purchaser or tenant

The two are defined side by side in ORC 4735.01. Under (V), an exclusive agency agreement provides that the broker is compensated if the broker "or any other person or entity produces a purchaser or tenant... unless the property is sold or leased solely through the efforts of the seller." Under (U), an exclusive right to sell or lease listing agreement drops that carve-out and pays the broker "if the broker, the seller, or any other person or entity produces a purchaser or tenant." Both forms still "grant the broker the exclusive right to represent the seller," so neither allows simultaneous listings with several brokerages; that describes the nonexclusive agency agreement defined in division (JJ). Neither is cancellable at will either, which is why ORC 4735.55(C)(1) requires an expiration date and ORC 4735.18(A)(28) disciplines a broker for omitting one. And limiting compensation to a purchaser the broker personally produces is narrower than either definition, since both pay the broker when any other person produces the buyer.

Ohio license law makes it a disciplinary violation for a licensee to fail to:

• a.Recommend that the client accept the highest offer the licensee has received
• b.Submit every offer to the client's attorney for review before presenting it
• c.Inform the client of an offer or counteroffer and present it in a timely manner✓
• d.Withdraw an earlier offer from the seller before presenting a later one

ORC 4735.18(A)(36) reaches a licensee "having failed to inform the licensee's client of the existence of an offer or counteroffer or having failed to present an offer or counteroffer in a timely manner, unless otherwise instructed by the client." ORC 4735.63(A)(2) says the same thing as an affirmative duty to a seller: accept delivery of and present any purchase offer "in a timely manner, even if the property is subject to a contract of sale, lease, or letter of intent to lease." Recommending the highest offer is not a duty and could be poor advice, since price is only one term; the licensee's job under ORC 4735.63(A)(3) and (4) is to answer questions and help the seller develop and communicate offers and counteroffers. Routing offers through the client's attorney first is nowhere required and would delay the presentation the statute wants prompt. And earlier offers are not withdrawn to make room for later ones; every offer goes to the client, which is precisely what the duty of presentation means.

Ohio's broker lien law gives a licensed broker a lien on:

• a.Any property the broker has listed, once the listing is recorded
• b.A residence, if the seller signed an exclusive right to sell listing
• c.Commercial real estate, under a written contract signed by the owner✓
• d.Any property on which the broker's client has defaulted on a mortgage

ORC 1311.86(A) provides that "any broker that enters into a written contract for services related to selling, leasing, or conveying any interest in commercial real estate has a lien on that commercial real estate," and that "the lien is effective only if the contract for services is in writing and is signed by the broker or the broker's agent and the owner of the lien property or the owner's agent." ORC 1311.85(B) then defines commercial real estate as "any parcel of real estate in this state other than real estate containing one to four residential units," expressly excluding condominiums, townhouses and subdivision homes conveyed unit by unit. So the lien does not reach residential listings, however exclusive the listing agreement is, and recording a listing does not create one where the statute gives none. Nor does it follow a client's mortgage default: ORC 1311.86(C)(1) limits the lien to "the broker named in the contract," for the amount due under that contract, and only against the interest that is the subject of it.

Which of these is prohibited to an Ohio licensee as an unlawful inducement?

• a.Advertising a reduced commission rate to attract new listings
• b.Paying a referral fee to a broker licensed in another state
• c.Giving a prospective seller a written market analysis without charge
• d.Offering value not recited in the sales contract to induce a purchase✓

ORC 4735.18(A)(14) disciplines a licensee for "having offered anything of value other than the consideration recited in the sales contract as an inducement to a person to enter into a contract for the purchase or sale of real estate," and in the same breath for "having offered real estate or the improvements on real estate as a prize in a lottery or scheme of chance." Advertising a lower commission is not an inducement of that kind; ORC 4735.55(C)(7) in fact requires every written agency agreement to state conspicuously that "broker fees and commissions are not set by law, are fully negotiable." Paying an out-of-state broker is permitted by ORC 4735.20(B), which lets an Ohio broker pay or receive a commission from "a licensed real estate broker... of another state or country" under commission rules. And a free market analysis is ordinary licensed service to a prospective client rather than value offered outside the sales contract to close a purchase.

A sole Ohio principal broker dies and no other broker is affiliated with the brokerage. The superintendent may:

• a.Recommend an ancillary trustee to conclude the existing business✓
• b.Transfer the brokerage's listings to the nearest licensed brokerage
• c.Allow the most senior salesperson to run the brokerage for one year
• d.Order the Commission to appoint a receiver from among its five members

ORC 4735.05(C)(3)(a) lets the superintendent recommend the appointment of a qualified ancillary trustee "upon the death of a licensed broker, if there is no other licensed broker within the brokerage, upon application by any interested party, subject to the approval by the appropriate probate court, to conclude the business transactions of the deceased broker." OAC 1301:5-3-02(B)(1) limits that trustee to "the supervision and completion of existing contracts and obligations" and forbids initiating new ventures. Listings are not reassigned by the Division to a neighboring firm, because a listing is a contract between the client and that brokerage. A salesperson cannot step up, since ORC 4735.13(A) requires the brokerage to be maintained by a broker and ORC 4735.02(A) bars unlicensed brokerage activity. And the Commission does not supply receivers from its own membership; its five members serve the functions listed in ORC 4735.03, and the ancillary trustee route is the mechanism the chapter provides.

Ohio license law requires a brokerage to maintain:

• a.A minimum of five affiliated salespersons
• b.A definite place of business in Ohio✓
• c.A membership in the local board of Realtors
• d.A physical office in every county where it lists property

ORC 4735.13(A) provides that "every real estate broker licensed under this chapter shall have and maintain a definite place of business in this state," that "a post office box address is not a definite place of business," and that "the license of a real estate broker shall be prominently displayed in the office or place of business of the broker." ORC 4735.16(A) adds a sign at the premises stating that the licensee is a real estate broker. No minimum headcount attaches to that; a brokerage is defined in ORC 4735.01(BB) by its broker's license, not by how many salespersons are affiliated with it. Membership in a local Realtor board is voluntary participation in a private trade organization and is not a condition of licensure. And the requirement is one definite place of business, not an office in every county: ORC 4735.13(A) asks only that a broker who does keep additional locations "apply for and procure a duplicate license for each branch office," each in the charge of a licensed broker or salesperson.

Earnest money and other client funds received by an Ohio brokerage must be:

• a.Held in cash in the office safe
• b.Deposited into the brokerage's trust or special account✓
• c.Sent immediately to the county recorder
• d.Deposited into the broker's personal account until closing

ORC 4735.18(A)(26) requires the broker to maintain at all times "a special or trust bank account in a depository of a state or federally chartered institution located in this state," which "shall be noninterest-bearing, separate and distinct from any personal or other account of the broker," and which is used "for the deposit and maintenance of all escrow funds, security deposits, and other moneys received by the broker in a fiduciary capacity." OAC 1301:5-5-08(B) adds that the deposit tickets and checks must bear the words "trust account" or "special account." Holding the deposit as cash in an office safe leaves no bank record and no trail showing the funds were kept apart. The broker's personal account is the commingling the statute names, whatever the intention, and the same rule lets the broker's own money sit in the trust account only to meet a minimum balance or a service charge. And the county recorder records documents affecting title; it is not a depository for a buyer's earnest money.

Buyer and seller dispute who is entitled to the earnest money. What must the Ohio broker do?

• a.Apply the disputed funds to the commission the brokerage has earned
• b.Hold the disputed funds in the trust account✓
• c.Release the funds to whichever party asks for them first
• d.Let the salesperson who wrote the contract decide who receives them

ORC 4735.24(A) requires the broker to "maintain that money in the account in accordance with the terms of the purchase agreement" until one of the listed events occurs: the transaction closes and the money is disbursed under the agreement, both parties give the broker separate signed written instructions, the broker receives a copy of a final court order, the sale is canceled by a record owner under ORC 5301.95(C)(1), or the money becomes unclaimed funds and is remitted to the director of commerce. Applying contested money to a claimed commission converts funds whose ownership is still unsettled, which ORC 4735.18(A)(5) reaches as a failure to account for money belonging to others. Releasing to whichever party asks first substitutes speed for entitlement and matches none of the statutory triggers. And the decision is not the salesperson's: the account, and the duty that runs with it, belong to the broker under ORC 4735.18(A)(26).

A brokerage that manages rental property for owners must:

• a.Deposit rents in the same trust account it uses for earnest money
• b.Hold tenants' security deposits in the brokerage's operating account
• c.Keep rents in a noninterest-bearing account, as it does earnest money
• d.Keep a separate property management trust account✓

ORC 4735.18(A)(27) requires a separate trust account "to be used exclusively for the deposit and maintenance of all rents, security deposits, escrow funds, and other moneys received by the broker in a fiduciary capacity in the course of managing real property," and adds that "this account may earn interest, which shall be paid to the property owners on a pro rata basis." OAC 1301:5-5-11(A) says the same and requires a separate ledger sheet for each owner, with paragraph (E) requiring an accounting to each owner at least quarterly. So rents do not share the earnest-money account: paragraph (G) of that rule confirms the two are separate by exempting brokers engaged only in property management from ORC 4735.18(A)(26). Security deposits in an operating account would be the commingling both divisions forbid; OAC 1301:5-5-11(D) requires them in the property management trust account, clearly identified and credited to the tenant. And the noninterest-bearing rule belongs to the earnest-money account alone.

A licensee who charges prospective tenants a fee for referrals to rental units must:

• a.Refund the entire fee if the tenant does not sign a lease within thirty days
• b.Collect no more than ten dollars in total from any prospective tenant
• c.Register the rental list with the county recorder before charging any fee
• d.Use a written contract that discloses how the listings were obtained✓

ORC 4735.021(A) requires a licensee in that business to "enter into a written contract with any prospective tenant," to give the tenant a copy, and to "disclose in the contract the manner in which the listings of units have been obtained." The refund term is narrower than a flat thirty-day rule: the contract must stipulate that any fee above ten dollars is repaid on demand, "no sooner than thirty days after the contract has been entered into and no later than sixty days after," if the tenant does not obtain a rental conforming to the stated specifications, and the whole fee is refunded if the information supplied was not current or accurate. Ten dollars is that refund threshold, not a ceiling on what may be charged. And no recorder filing is involved; the companion duty in division (B) is substantive instead — no licensee shall refer a tenant "to any property without the consent of the owner or to any nonexistent address."

Every Ohio brokerage must designate a principal broker. That principal broker's statutory duties include the duty to:

• a.Generally oversee the licensed activity of affiliated licensees✓
• b.Review only those transactions that have already produced a written complaint
• c.Guarantee that each listing the brokerage takes will sell within its term
• d.Personally attend every showing and open house an affiliated licensee conducts

ORC 4735.081(A) requires each brokerage to "designate at least one affiliated broker to act as the principal broker," and division (C)(14) makes that broker responsible to "generally oversee the licensed activity of affiliated licensees and to assure that affiliated licensees are providing real estate services within their area of competency." The rest of division (C) is the specific list: office and sign requirements, the fair housing display, license maintenance and renewal, the trust account and its records, the written company policy on agency, and paying affiliated licensees. Nothing in that list asks the principal broker to attend showings and open houses, and division (D) allows any of these duties to be assigned to a management level licensee. Waiting for a complaint inverts the duty, which is ongoing oversight of licensed activity. And no broker can guarantee that a listing sells; market outcomes are absent from the statutory list precisely because they are not within a broker's control.

What must every Ohio broker's office display in the same immediate area as the licenses?

• a.A schedule of the brokerage's commission rates
• b.The Ohio Real Estate Commission's canons of ethics
• c.A copy of the brokerage's written policy on agency relationships
• d.A fair housing statement bearing the HUD equal housing logo✓

ORC 4735.16(D) requires that "every broker's office shall prominently display in the same immediate area as licenses are displayed a statement that it is illegal to discriminate against any person because of race, color, religion, sex, familial status..., national origin, military status..., disability... or ancestry" in housing, "and that blockbusting also is illegal." The same sentence requires that the statement "bear the United States department of housing and urban development equal housing logo" and give the Division's address, telephone number and role in consumer complaints. A commission schedule is the opposite of what the law contemplates, since ORC 4735.55(C)(7) requires each agency agreement to state that fees are fully negotiable. The canons of ethics are adopted and published by the Commission under ORC 4735.03(A) but are not the posted notice. And the written brokerage policy on agency is a document delivered to clients under ORC 4735.56, and supplied on request under ORC 4735.54, rather than posted on the wall.