On September 25, 2018, the Supreme Court of Ohio issued a decision in Dundics v. Eric Petroleum Corporation which significantly impacts oil and gas land professionals who participate in the buying, selling, and negotiating of oil and gas leases and mineral interests. In Dundics, the Court held that an oil and gas lease falls within the definition of “real estate” under Ohio Revised Code Section 4735.01(B). Consequently, the negotiation of oil and gas leases requires a real estate broker’s license. This law may significantly impact oil and gas companies and brokers employing land professionals who participate in the leasing and acquisition of oil and gas and other mineral rights covered under Ohio Revised Code Section 4735.01.
In Dundics, Appellant Dundics brought suit for unpaid compensation owed under an agreement to find property owners, negotiate oil and gas leases, and obtain executed gas leases for Appellee Eric Petroleum. The issue presented was whether Dundics could recover compensation from obtaining oil and gas leases without a real estate broker’s license. Ohio Revised Code Section 4735.21 precludes a person from recovering compensation owed for certain real estate activities without a real estate broker’s license. Dundics argued that oil and gas leases are not covered by the statute because the statutory licensing requirements were not intended to cover oil and gas land professionals, and therefore oil and gas was not included within the statutory definition of “real estate.” The Court found, however, that the language of the statute was clear and that there was no exception within the meaning of “real estate” for oil and gas. Therefore, the Court held that oil and gas leases fall within the scope of “real estate” under the statute. As a result, these activities require a real estate broker’s license under Ohio Revised Code Section 4735.01. The Court, in discussing exceptions under the statute, noted that attorneys acting “in the performance of the attorney’s duties” are not covered under the statute. R.C. 4735.01(I)(1)(d).
Ohio Revised Code Section 4735 lists activities in which a real estate broker’s license is required to participate including: selling, exchanging, purchasing, renting, or leasing, or negotiating the same, of any real estate. As a result of this decision, these activities, as they relate to oil and gas, now require a real estate broker’s license if compensation is involved.