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Ohio Court Rules Landmen Need to be Licensed Real Estate Brokers to Receive Compensation

By Ilya Batikov

Ohio’s Seventh District Court of Appeals recently held that landmen are subject to the requirements of R.C. Chapter 4735 requiring real estate broker’s licenses in order to be entitled to compensation for brokering deals with landowners on behalf of oil and gas companies.

In Dundics v. Eric Petroleum Corp., plaintiff landmen alleged that they were not compensated by the defendant oil and gas company for their work in assisting the company with negotiating and obtaining oil and gas leases in Ohio.  The company moved to dismiss the lawsuit, asserting that the landmen were not licensed Ohio real estate brokers, and therefore, were barred from recovering under R.C. 4735.21, which precludes the recovery of compensation for “real estate. . . brokerage transaction[s]” unless the person brokering the transactions is a licensed estate broker.

Agreeing with the lower court’s ruling, the appellate court held that “real estate,” for purposes of the statute, was broadly defined to include “leaseholds as well as any and every interest or estate in land” ­ ­– which, under Ohio law, includes oil and gas rights.  And so, to be entitled to compensation for brokering in oil and gas rights, the landmen needed to be licensed.  The court rejected the landmens’ argument that R.C. 4735.21 was inapplicable because oil and gas was different from traditional real property, noting that “the fact that oil and gas rights are different does not excuse third parties who ask the courts to enforce their engagement with either owners of surface real estate or those who wish to extract subsurface oil and gas from the real estate broker’s license requirement at issue here.”   Also, based on its conclusion that the statute was unambiguous, the Court declined to consider “legislative intent, legislative history, public policy, [or] the consequences of [its] interpretation.”

Click here to read the full opinion.

Tags: landmen, Ohio, Oil and Gas, Energy, Utica

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