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On Tuesday, May 8, 2018, the Ohio Supreme Court will hear arguments concerning this question.

Thomas Dundics and his company, Ibis Land Group, were hired by Eric Petroleum Corp. to secure leases from property owners for oil and gas drilling. Dundics filed a breach of contract claim against Eric Petroleum in November 2014. The common pleas court dismissed the mater, stating Dundics needed a real estate license to perform the job in question. The Court of Appeals agreed with the common pleas court.

Dundics argues oil and gas leases are specialized instruments that the state legislature didn’t intend to be subject to licensing requirements. In addition, oil and gas land professionals who secure these leases for third parties perform substantially different services than residential and commercial real estate agents. Further, the legislature chose to regulate the oil and gas industry exclusively under Chapter 1509. and expressed a public policy in favor of facilitating oil and gas development. In support of his argument, Dundics cites to a Federal case that concluded oil and gas leases aren’t real estate under Ohio law.

Eric Petroleum argues oil and gas leases fall within the definition of real estate, which includes any and every interest or estate in land. Eric Petroleum disagrees with the Federal case, and cites to an Ohio Supreme Court case that determined oil and gas leases create some effect on the surface property and further states that the legislature made clear that both licenses and leases of oil and gas rights create an interest in real estate. Unlike several other states, Ohio has not specifically excluded oil and gas leases from real estate law. In addition, the Division of Real Estate stated in a 2011 newsletter that an Ohio real estate license is required to engage in activities as a buyer’s agent when facilitating the negotiations of the purchase or lease of any aspect of the real property on which exploration, drilling or any component of fracking will take place. Therefore, an independent oil and gas professional who obtains leases for third-party companies must be licensed as a real estate broker.

If you have questions about the Ohio Department of Commerce, the Division of Real Estate and Professional Licensing, or real estate licensing in general, you need to talk with a real estate license defense attorney at Graff & McGovern. Attorney John Izzo can be reached at johnizzo@grafflaw.com, or 614-228-5800, extension 5.