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Interpretations of the Code of Ethics 31St Edition Table of Contents— Interpretations of the Code of Ethics Preface

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Interpretations of the Code of Ethics 31St Edition Table of Contents— Interpretations of the Code of Ethics Preface Interpretations of the Code of Ethics 31st Edition Table of Contents— Interpretations of the Code of Ethics Preface .......................................................................... 1 Article 10 Provide Equal Service to All Clients Article 1 and Customers ......................................................... 53 Protect and Promote Your Client’s Interests, But be Honest with All Parties ..................... 2 Article 11 Be Knowledgeable and Competent in the Article 2 Fields of Practice in Which You Ordinarily Avoid Exaggeration, Misrepresentation, and Engage. Obtain Assistance or Disclose Lack Concealment of Pertinent Facts. Do Not of Experience if Necessary ....................................... 57 Reveal Facts that are Confidential Under the Scope of Your Agency Relationship ................... 22 Article 12 Present a True Picture in Your Advertising Article 3 and Other Public Representations ............................ 61 Cooperate with Other Real Estate Professionals to Advance Client’s Article 13 Best Interests ............................................................ 34 Do Not Engage in the Unauthorized Practice of Law ......................................................... 76 Article 4 When Buying or Selling, Make Article 14 Your Position in the Transaction or Be a Willing Participant in Code Interest Known .......................................................... 42 Enforcement Procedures .......................................... 78 Article 5 Article 15 Disclose Present or Contemplated Ensure that Your Comments about Interest in Any Property to All Parties ....................... 45 Other Real Estate Professionals are Truthful, and Not Misleading ............................... 80 Article 6 Avoid Side Deals without Client’s Article 16 Informed Consent ..................................................... 46 Respect the Exclusive Representation or Exclusive Brokerage Relationship Article 7 Agreements that Other REALTORS® have Accept Compensation from Only One with their Clients........................................................ 81 Party, Except with Full Disclosure and Informed Consent ..................................................... 50 Article 17 Arbitrate and Mediate Contractual and Specific Article 8 Non-Contractual Disputes with Keep the Funds of Clients and Customers Other REALTORS® and with Your Clients .................... 95 in Escrow .................................................................. 51 Article 9 Assure, Whenever Possible, that Transactional Details are in Writing .......................... 52 NOTE: All new and amended Case Interpretations become effective upon approval by the National Association’s Professional Standards Committee and publication on www.nar.realtor. Code of Ethics and Arbitration Manual Preface to the Thirty First Edition of Interpretations of the Code of Ethics The Code of Ethics of the NATIONAL ASSOCIATION OF REALTORS® While Associations of REALTORS® have wide latitude in the establishes a public and professional consensus against which the sanctions which may be imposed for violations of the Code practice and conduct of REALTORS® and REALTOR-ASSOCIATE®s of Ethics, they must always act responsibly in the application may be judged. Where the word REALTORS® is used in this of these sanctions, attempting to make the punishment Code and Preamble, it shall be deemed to include REALTOR- commensurate with the offense. The mildest forms of sanction, ASSOCIATE®s. In joining an Association of REALTORS®, REALTORS® a Letter of Warning or a Letter of Reprimand, would generally signify their intention to abide by the Code and thereby enhance be the appropriate sanction for first offenses, except in cases the public and professional image of themselves and all other involving gross or willful misconduct. Where ignorance of the REALTORS®. Adherence to the Code is the first great bond between Code of Ethics is involved, the Board may find that requiring REALTORS® throughout the country. the Member to attend a course or seminar reviewing the Code of Ethics and its interpretations to be the most appropriate sanction. Interpretations of the Code of Ethics has been developed by the Professional Standards Committee of the NATIONAL Interpretations of the Code of Ethics is formatted to provide ASSOCIATION OF REALTORS® to help REALTORS® understand the reader with information on each Article of the Code of the ethical obligations created by the Code of Ethics, and Ethics and its interpretations in sequence. Interpretations of as a reference work for Grievance Committees, ethics and the Code of Ethics contains citations to Case Interpretations arbitration Hearing Panels, and Boards of Directors. which were deleted, amended, or adopted as a result of the work of the Professional Standards Committee, providing a Professional Standards Policy Statement 57, Code of Ethics and complete historical record for the reader. All new and amended Arbitration Manual, provides as follows: Case Interpretations become effective upon approval by the National Association’s Professional Standards Committee and 57. Case Interpretations are Official Policy publication on www.nar.realtor. (Revised 5/17) The Case Interpretation of the Code of Ethics approved by the National Association’s Professional Standards Committee and published in Interpretation of the Code of Ethics illustrate and explain the principles articulated in the Articles and Standards of Practice. While a REALTOR® cannot be found in violation of a Standards of Practice or a Case Interpretation, both are official statements of National Association policy and are not merely advisory. Both can be cited by complainants in support of alleged violations of Articles and by hearing panels in support of decisions that an Article(s) has been violated. (Adopted 11/10) Interpretations of the Code of Ethics presents specific situations involving charges of alleged unethical conduct by REALTORS® which are reviewed by a peer panel of Association Members and in which decisions as to ethical conduct are reached. Each case provides the Hearing Panel’s decision based on the facts and the rationale for the decision, but does not specify a specific sanction or discipline to be imposed. There are two reasons for this. First, any sanction imposed must always fit the offense and must involve every consideration of justice, equity, and propriety. Second, a Hearing Panel may base its recommendation for discipline on a Member’s past record of ethics violations. For this reason, the Code of Ethics and Arbitration Manual establishes that a Member Association may utilize a wide range of sanctions for ethics violations. 1 Code of Ethics and Arbitration Manual Interpretations of the Code of Ethics CASE INTERPRETATIONS Case #1-2: Honest Treatment of All Parties (Originally Case #7-2. Revised May, 1988. Transferred to Article RELATED TO ARTICLE 1: 1 November, 1994. Cross-reference Case #2-18.) Case #1-1: Fidelity to Client (Originally Case #7-1. As the exclusive agent of Client A, REALTOR® B offered Client Revised May, 1988. Transferred to Article 1 November, 1994.) A’s house for sale, advertising it as being located near a bus stop. Prospect C, who explained that his daily schedule made it Client A complained to a Board of REALTORS® that two necessary for him to have a house near the bus stop, was shown of its members, REALTORS® B and his sales associate, Client A’s property, liked it, and made a deposit. Two days later, REALTOR-ASSOCIATE® C, had failed to represent the client’s REALTOR® B read a notice that the bus line running near Client interests faithfully by proposing to various prospective buyers A’s house was being discontinued. He informed Prospect C of that a price less than the listed price of a house be offered. His this, and Prospect C responded that he was no longer interested in complaint specified thatR EALTOR® B, in consultation with him, had Client A’s house since the availability of bus transportation was agreed that $137,900 would be a fair price for the house, and it had essential to him. REALTOR® B informed Client A and recommended been listed at that figure. The complaint also named three different that Prospect C’s deposit be returned. prospective buyers who had told Client A that while looking at the property, REALTOR-ASSOCIATE® C, representing REALTOR® B, Client A reluctantly complied with REALTOR® B’s recommendation, when asked the price had said, “It’s listed at $137,900, but I’m but then complained to the Board of REALTORS® that REALTOR® B pretty sure that an offer of $130,000 will be accepted.” had not faithfully protected and promoted his interests; that after Prospect C had expressed his willingness to buy, REALTOR® B REALTOR® B and REALTOR-ASSOCIATE® C were notified of the should not have made a disclosure that killed the sale since the complaint and requested to be present at a hearing on the matter point actually was not of major importance. The new bus route, scheduled before a Hearing Panel of the Board’s Professional he showed, would put a stop within six blocks of the property. Standards Committee. In a hearing before a Hearing Panel of the Board’s Professional During the hearing, REALTOR® B confirmed that he had agreed with Standards Committee, REALTOR® B explained that in advertising Client A that $137,900 was a fair price for the house, and that it Client A’s property, the fact that a bus stop was less than a block was listed at that figure. He added that he had asked for a 90 day from the property had been prominently
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