Can I market a home for sale before the owner actually owns it?

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At the Akron Cleveland Association of REALTORS®, we receive an array questions from our members. This blog involves when you can begin marketing a property for sale, and commonly asked questions regarding the topic.

Q: I represent an investor who entered into a contract to purchase a foreclosure property that he plans to flip after making some repairs. Although he won’t be closing on it for a few weeks, my investor wants me to start marketing the property now. Can I do that since he doesn’t own it yet?

A: Ohio license law contains two specific provisions that address this scenario. First, Ohio Revised Code Section 4735.18 provides that it is a violation of the license law for a licensee to offer property for sale or lease without the knowledge and consent of the owner or the owner’s authorized agent. Further, this same section also specifically prohibits a licensee from placing a for sale sign on a property or otherwise marketing it without the consent of the owner or the owner’s agent.

Based upon these provisions, the Ohio Division of Real Estate and Professional Licensing takes the position that in order for you to begin marketing this property for your investor client before he acquires title, you would need the consent of the current owner of the property or his authorized agent. For your protection that consent should be obtained in writing.

Additionally, if the owner does give such consent for you to begin marketing the property for your investor client before closing, you should be clear in dealings with any interested buyers or their agents that your investor client does not yet have title to the property and any purchase contract he enters into should be contingent upon him acquiring such title.

By Peg Ritenour, OAR Vice President of Legal Services/Administration – See more at: http://ohiorealtors.org/2014/10/27/legally-speaking/#sthash.rzDQHJmJ.dpuf

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4 responses to “Can I market a home for sale before the owner actually owns it?

  1. Dwayne Helkowski says:

    This makes good common sense. No one has the right to go on a property and start modifying it state of condition until title has transferred. Things happen, like liens can’t be cleared, title exception can’t be cleared or someone get hurt on the property. Example: Investor sends a worker to tuck point the chimney and secure some loose shingles and he falls off the roof. Ouch! I wouldn’t want to be the agent that authorized or allowed those repairs.

  2. Tom McCombs says:

    The biggest area of concern is the Bank owned properties. Very often the bank does not have the deed to a property when it lists it for sale.
    What is OAR’s position on this? Is there an approved form for getting the deed holder’s authorization to start the marketing?

    • CECILIA "Cece" FOX says:

      I see that no one answered your question. Summit county sheriff deeds are still taking over 4 months to file. And my sellers are the banks and asset companies that work for them. Sometimes they jump the gun and list too soon.

  3. Ramona Fana says:

    BEWARE: Seminars That Teach Unlicensed Real Estate Activity
    The Division’s Enforcement section wants all licensees and the general public to be aware of individuals, groups, training
    seminars, coaching programs or otherwise, which may be providing instructions on how to circumvent real estate license
    law. (Please see R.C. 4735.01 for a list of activities which require licensure.)
    Beware of seminars that provide instructions on wholesaling and option purchase contracts. Language included in these
    schemes include: “tying up the real property,” putting the house in contract until a buyer is found, and placing the home
    in contract for the purpose of re-selling the property. Despite what is being taught at these seminars, a real estate license
    is required to engage in these activities.
    The seminar instructors advise attendees that they can place a property in contract or an option to purchase, at which time
    the attendee can then market and re-sell the property for a profi t. The instructors also advise attendees how to bring buyers
    and sellers together through the use of an “assignable contract” for a fee. It is the position of the Division that, pursuant
    to Ohio law, the aforementioned activities are those for which an Ohio real estate license is required. However, licensure
    requirements or the potential requirement for a license is not conveyed to attendees of these seminars, presentations or
    coaching programs.
    Pursuant to R.C. 4735.052, the Ohio Real Estate Commission may impose a civil penalty up to $1,000.00 a day for
    unlicensed activity. Each day a violation occurs or continues is a separate violation. For example, under most circumstances,
    if an individual is involved in unlicensed activity for one month, a civil penalty of $30,000 may be issued.
    You may ask, “I’m a licensed real estate broker (or salesperson), why are you telling me this?” R.C. 4735.18(A) (34)
    provides that discipline may be imposed on a licensed real estate broker or salesperson for authorizing or permitting a
    person to act as an agent in the capacity of a broker or salesperson who was not then licensed as a real estate broker or
    salesperson. Steer clear of any individual, group, organization or otherwise that is promoting unlicensed activity such as
    what is mentioned above. Be very careful you are not working with a person engaging in unlicensed activity, and if you witness this activity, feel free to notify the Division. Here is the link to this newletter from the Ohio Division of Real Estate. Having a buyer get in contract then ask yo to find a buyer for them prior to close is a real red flag. http://www.com.ohio.gov/documents/real_newsletterSpring2014.pdf

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