The Professional Standards Committee of the National Association of REALTORS® will once again consider changes to the Code of Ethics at its meeting on November 14, 2009, during the NAR Annual Convention. Comprised of REALTORS® and REALTOR® staff specialists from across the country, the Committee is charged with the continuous review of the Code to ensure that it remains meaningful and accurate.
Proposed Changes
- Article 3: Is it a violation of the Code of Ethics for a REALTOR® to allow a prospective buyer to have access to a listed property unaccompanied by the REALTOR®? It’s true, unauthorized and unaccompanied access may constitute trespass. Additionally, lockbox policies may provide for enforcement procedures for unauthorized access. (But what if a lockbox is not used?) Regardless, should this practice also be prohibited by the Code?
Under Article 3, REALTORS® agree to cooperate with other brokers. However, cooperation does not mean that REALTORS® and consumers have an “all-access pass” to listed property. The Professional Standards Committee will consider a new Standard of Practice to Article 3. (Standards of Practice serve to clarify the obligations imposed by the Articles of the Code.) The proposed new Standard will affirmatively prohibit REALTORS® from providing access to listed property on terms other than those established by the owner or listing broker.
- Article 12 (Part I): One of the questions raised from time to time concerns the right of an agent to advertise sold listings when the sales took place while the agent was affiliated with another firm. Does the right to advertise such sales end when the agent is no longer affiliated with that broker? Would it make any difference if the agent mentioned the other firm in the advertisement now made under his or her new broker?
Article 12 of the Code states, in part, that, “REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing and other representations.” Standard of Practice 12-7 to Article 12 provides, “Only REALTORS® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have ‘sold’ the property.” So what does this mean?
The Committee will be asked to approve a new Case Interpretation to Article 12 (Case Interpretations are specific examples involving charges of unethical conduct in which decisions are reached) that will provide that an agent may advertise sales of properties that he or she participated in, even though those sales took place while the agent was affiliated with another firm. The key test will be whether such advertisements meet the true-picture test of Article 12 – would consumers understand that some of the sales had occurred while the agent was licensed under another broker, rather than all occurring under the new broker?
- Article 12 (Part II): The second half of Article 12 says, “REALTORS® shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional.” Standard of Practice 12-5 to Article 12 now reads, “REALTORS® shall not advertise nor permit any person employed by or affiliated with them to advertise listed property in any medium (e.g., electronically, print, radio, television, etc.) without disclosing the name of the REALTOR®’s firm in a reasonable and readily apparent manner.”
The Committee will consider whether Standard of Practice 12-5 is too narrow in its current form and whether it should be amended to provide that the duty to disclose the name of the REALTOR®’s firm not only applies when advertising listed property but also when advertising “real estate-related services” in any medium. One of the concerns that has been raised is that certain examples of advertising by real estate “teams” have created a false impression that the teams are actually separate real estate firms.
Earlier this year, the NAR Board of Directors approved several recommended Code changes from the Committee including:
- An amendment to Standard of Practice 3-2 to Article 3 (“REALTORS® shall cooperate with other brokers…”) to clarify the point in time at which the listing broker’s offer of compensation to cooperating brokers may be unilaterally changed by the listing broker (underscoring indicates additions; strikeouts indicate deletions).
“REALTORS® shall, with respect to offers of compensation to another REALTOR®, timely communicate To be effective, any change of in compensation offered for cooperative services must be communicated to the other REALTOR® prior to the time such that REALTOR® produces submits an offer to purchase/lease the property.”
- A new Standard of Practice to Article 15 (“REALTORS® shall not knowingly or recklessly make false or misleading statements about competitors, their businesses or their business practices”) that places an affirmative duty on REALTORS® “to publish a clarification about or to remove statements made by others on electronic media the REALTOR® controls once the REALTOR® knows the statement to be false or misleading,” for example, a REALTOR®’s blog.
- An amendment to Standard of Practice 16-20 to Article 16 (“REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients”) to clarify that the duty to refrain from inducing clients to cancel existing exclusive agreements applies regardless of which party – the firm or the agent – terminates their relationship.
“REALTORS®, prior to or after terminating their relationship with their current firm is terminated, shall not induce clients of their current firm to cancel exclusive contractual agreements between the client and that firm. This does not preclude REALTORS® (principals) from establishing agreements with their associated licensees governing assignability of exclusive agreements.”
All changes approved by the Board of Directors shall become effective January 1, 2010. We will provide an update in a future WRE article. In the meantime, please contact Kevin King at kking@wra.org with any questions or comments.
Kevin King is General Counsel for the WRA.
Published: 11/8/2009
