In September 2018, the Ohio Supreme Court held that independent landmen must be licensed real estate brokers to obtain leases or perform landwork in the state of Ohio.
Then, in December, the Ohio legislature enacted an amendment into law specifically exempting landmen from the definition of real estate broker, freeing them from the Supreme Court requirement that land professionals become licensed real estate brokers. However, the law has a new requirement for landmen in the state of Ohio requiring annual “registration” with the superintendent of real estate.
How Did We Get Here?
Back in 2006 I interviewed Jack Richards, then president of the AAPL. I asked a simple question, “Why should landmen join the AAPL?” His answer was that in order to protect the reputation of landmen, the AAPL sets out standards of ethics that members pledge to follow.
He then gave me an example where the integrity of landmen was being questioned in the state of Ohio. A mineral owner found a document in their driveway which appeared to be notes from landmen discussing different ways to trick the mineral owner into signing a lease. The document got into the public sphere, casting a shadow on the honesty and transparency of landmen in general. Many people didn’t trust landmen, and it was devastating to the profession.
This was dubbed Ohiogate because of the public relations nightmare it caused for our industry. The Ohio legislature reacted to the public outrage and began discussing laws that would require landmen to be regulated. Jack Richards himself went to the state of Ohio and implored their legislature not to do this, that no regulations or requirements were necessary as landmen were already regulated pursuant to the Code of Ethics of the AAPL.
Ohio Supreme Court + Ohio Legislature = Registration Requirement
Fast forward to October, 2018 and the case of Dundics v. Eric Petroleum Corp., 2018-Ohio-286. Filed by Eric Petroleum, the suit argued that even though the landman Dundics completed the work, Eric Petroleum was under no obligation to compensate Dundics because he was dealing in land without a a real estate license. The lower court ruled in favor of Eric Petroleum.
The case then went to the Ohio Supreme Court which agreed with the lower court’s ruling requiring landmen to be real estate agents in order to expect compensation and that was to be the law of the land within 90 days of the ruling.
In December 2018, the Ohio legislature carved out an exception for landmen that said they were specifically exempted from the real estate statutes which required anyone dealing with “any interest in land” to be real estate agents.
The new amendment did require landmen to register annually with the state superintendent of real estate.
Registration is accomplished via a form provided by the superintendent of real estate which includes:
1) Name and address of the oil and gas professional
2) Evidence of professional’s membership in a national, state or local association which maintains a set of standards and ethics for oil and gas land professionals
(e.g., the AAPL.)
Note: As of this newsletter, no form is found on the superintendent’s website.
Here is the link to the oral arguments heard by the Supreme Court. Of note, one member of the Supreme Court asked “Are there any qualifications to be a landman?” Check it out for yourself (8 min. 32 sec).
Perception and Reputation
Take this as a cautionary tale. Your reputation, and the perception people hold of landmen as a group, is more than just personal branding. Adhering to a posted code of ethics, such as those of the AAPL, could prevent your state from mandating that you become a real estate broker to do your job.