New Ohio Law for Oil and Gas Land Professionals

On December 19, 2018, Governor Kasich signed S.B. 263, which among other things, created an exemption for oil and gas land professionals from obtaining an Ohio real estate broker or salesperson license. The exemption was to address the Ohio Supreme Court’s recent ruling in Dundics v. Eric Petro. Corp. In that case, the Ohio Supreme Court ruled that oil and gas land professionals deal in an interest in real estate when negotiating oil and gas leases. Thus, the Court held that these professionals must obtain licensure as a real estate broker or salesperson through the Division of Real Estate. (An analysis of the Court’s decision is the subject of a previous article).

The law, which will become effective in 90 days, defines oil and gas land professionals as those who are regularly engaged in the preparation and negotiations of agreements for the purpose of exploring for, transporting, producing, or developing oil and gas mineral interests, including but not limited to, oil and gas leases and pipeline easements.

To be eligible for exemption, the oil and gas land professional must register on an annual basis with the Ohio Division of Real Estate and with the registration supply evidence the professional is a member in good standing of a national, state or local professional organization that has developed a set of standards of performance and ethics for oil and gas land professionals. The organization must have been in existence for at least three years.

Once registered, the new law requires the oil and gas land professional make certain disclosures prior to entering into any oil and gas agreements with landowners or discussing such agreements with a landowner. The mandatory disclosures must be on a form designed by the Division of Real Estate and will include:

• The professional’s name/address on file with the Division of Real Estate,
• That the professional has registered with the Division of Real Estate and is a member in good standing of a professional oil and gas land organization,
• That the professional is not a licensed real estate salesperson or broker,
• That the landowner may seek assistance of legal counsel in connection with any transaction with the professional, and
• That the professional is not representing the landowner in an agency relationship.

Any registered oil and gas land professional is required to self-report to the Division any change in standing with the professional oil and gas organization included with the professional’s registration. Failure to notify the Division may result in suspension of the registration and penalties for unlicensed activity. Additionally, any oil and gas land professional that fails to register as provided in the new law, could face sanction for engaging in unlicensed activity.

The option to register rather than obtain licensure as a real estate salesperson or broker, will likely be welcomed by Ohio’s oil and gas land professionals. The full legislation can be viewed at: S.B. 263.