In order to sell real estate in the State of Ohio, agreements must be in writing. Section 1335.05 of the Ohio Revised Code requires a “contract or sale of lands, tenements or hereditaments, or interest in or concerning them” to be in writing and signed by the party to be charged. In the case of the listing agreement, (which is a contract between the owners of the real estate and the listing broker) the agreement must be signed by the party against whom the contract is sought to be enforced in order for that party to be bound by its terms.
So, how many people does it take to sign a listing agreement in the State of Ohio? That depends. A competent listing broker will sign the listing agreement and demand that anyone who has an interest in real estate as the owner sign the listing agreement. Obvious examples would include anyone “of record” as an owner of the property and likely are the people on the instrument of ownership, i.e., the deed. Husband and wife whether or not they are currently together and whether or not they are both on the deed is the most common example.
As a good course of practice, ask for the authority document or resolution identifying the person(s) with authority to sign on behalf of the entity. One party may designate another to act on his/her behalf. The most obvious example is the limited power of attorney signed by the person granting power to another person. You should always confirm that this document was signed in the presence of a notary. Generally, real estate held in a trust requires the owner to sign as trustee on behalf of the trust. Other examples include general partner in a general partnership, general partner in a limited partnership, managing member in a limited liability company, and officer in a corporation.
The most common example in residential real estate is property owned by a husband and wife. What is the effect of only one spouse’s signature on a listing agreement when both spouses own the property? Well, the answer could be no effect. The non-signing spouse might later consent through words or actions, attend the closing, sign the deed to transfer his/her ownership interest, pay a commission—life is good and you as agent are very fortunate that you were not penalized for not paying attention to important details.
Or the answer could be very bad and any or all of the following could occur. The non-signing spouse files an action at the Ohio Division of Real Estate and/or the Cincinnati Area Board of REALTORS® claiming, among other things, the violation of Articles 1 and/or 9 and/or 12 of the Code of Ethics and Standards of Practice of the National Association of REALTORS® by failing to protect and promote their interests as a client and/or by failing to provide copies of signed documents expressing the specific terms, conditions, obligations and commitments of the parties and/or by failing to obtain the proper authority to sell or advertise property for sale.
In addition, the non-signing spouse may refuse to sell his/her interest in the property. Since all fee owners must be parties to a contract, the non-signing spouse is not bound by the contract. The lack of signature constitutes a valid defense to the enforcement of the terms of a real estate purchase agreement by the buyer. The buyer may have different causes of action against the seller(s), the listing broker, and/or the selling broker. The selling broker may have a cause of action against the listing broker for the payment of the cooperative portion of the real estate commission as offered by the listing broker to the selling broker through the multiple listing service.
My recommendation to avoid potentially big messes and wasted time and expenses for the careless listing broker is simple; ask the right questions at the time of listing and have all parties who have an interest in the real estate sign the listing agreement.
1 The information presented in this article is not intended to be—and should not be construed as—legal advice. Greg Tassone is a Realtor® in Cincinnati, Ohio who also happens to be a licensed real estate attorney and member of the CABR/CBA REALTOR®/Lawyer Committee.