OH Supreme Court Rules Independent Landmen Need Real Estate License

Sometimes the law, and justice, is mysterious to us. Last November we told you about an Ohio Supreme Court case with profound implications for both landmen and for the drillers who employ and use them (see OH Supreme Crt Considers Whether Landmen Need Real Estate License). The case, Dundics v. Eric Petroleum Corp., was appealed to the Ohio Supreme Court by Dundics who was not happy with the outcome in lower courts that ruled landmen must have a real estate license in order to get paid for their valuable services. Even more to the point, if you don’t have a real estate licence, the company hiring you (like Eric Petroleum) can decide to not pay you–and it’s OK! The Supremes ruled at the end of August to uphold that principle. That is, if a landman is compensated via a commission and/or royalties for the deals he or she brokers, that person needs to have a real estate license. And if they don’t have such a license, they are considered (under the law) to be committing fraud. (It is our understanding that if the landman is paid a “day rate,” that is, paid a flat rate by the day, or if the landman is an employee of the drilling company, someone whose compensation is not directly tied to the number and value of deals, that landman does not need a real estate license. Please verify that!) The Ohio Supremes decided, in essence, that when you accept a commission or are paid a percentage of each deal, you must have a real estate license. In the case of Dundics v. Eric Petroleum, Mr. Dundics was repeatedly assured (according to the court documents we read) by Eric Petroleum that he (Dundics) would be compensated according to an agreed-on formula. But Dundics didn’t have a real estate license, so Eric Petroleum abrogated the agreement–with the court’s blessing…

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