This is the latest in a series of occasional articles on “Professional Standards” for NSDCAR members from Rick Snyder, NSDCAR Professional Standards Committee 2018 chairman.
By Rick Snyder
Do you know the REALTOR® “Code of Ethics?” Every REALTOR® is required to complete Code of Ethics Training from the National Association of REALTORS® (NAR). REALTORS® are required to complete ethics training of not less than 2 hours, 30 minutes, of instructional time within a two-year cycle. The training must meet specific learning objectives and criteria established by NAR. There is an intersection between the Code, Professional Standards, Risk Management and professionalism in the industry. Regardless of real estate business specialty, such as appraisal, property management or sales, all REALTORS® share one common characteristic: We are all bound by the Code of Ethics.
The REALTORS® Code of Ethics protects the buying and selling public, promotes a competitive real estate marketplace and enhances the integrity of the industry. It is our promise of performance and our promise of professionalism.
The Code, originally adopted by NAR in 1913 (back then, NAR was known as the National Association of Real Estate Exchanges), established professional standards for conduct and focused on service to the public and commitment to professionalism. It also included “Duties to Clients” as well as “Duties to Other Brokers.”
Since its inception, the Code has required arbitration of contractual disputes between and among REALTORS®, respect for other brokers’ exclusive relationships with clients and cooperation between and among REALTORS®. The Code actually became the basis for later-adopted license laws and preceded the adoption of many of the laws that regulate today’s real estate industry in California. Prior to the Code, there was no licensing of real estate practitioners, resulting in speculation, exploitation and disorder. Simply put, “Caveat emptor” governed transactions.
Today’s industry is more complex than ever and every transaction has the potential for liability. Adherence to the Code can not only reduce risk exposure but also enhance your own professionalism and exceeding the expectations of your fellow practitioners and clients. In fact, the class is titled “The Code of Ethics: Our Promise of Professionalism.”
There are three sections to the Code of Ethics: Duties to Clients and Customers; Duties to the Public; Duties to other REALTORS®. There are 17 Articles, which are broad statements of ethical principles.
For example, Article 1 says, “Protect and promote your clients’ interest” and “Treat all parties honestly.” Article 2 says, “Avoid exaggeration, misrepresentation and concealment of pertinent facts about the property or the transaction.” Article 12 says, “Be honest and truth in all real estate communications” and “Present a true picture in advertising, marketing and other representations.”
Over the years, the Code has evolved with amendments made during REALTORS® legislative meetings and Trade Expo, revisions from the NAR Professional Standards Committee and Board of Directors and changes from the Procedures Subcommittee of the Professional Standards Advisory Board. Any change to an Article of the Code also must be approved by the NAR delegate body.
Every Association is responsible for enforcing the Code. This includes providing mediation and conducting ethics and arbitration hearings. Only REALTORS® and REALTOR-ASSOCIATES are subject to the code.
The class the covers the Code has several objectives, including: Key aspirational concepts in the Preamble to the NAR Code of Ethics (The Golden Rule); Comparison and contrasting of “general business” ethics with the REALTORS® Code of Ethics; The professional standards process for enforcing the Code of Ethics, including the duty to arbitrate; Critical elements of due process as they relate to Code Enforcement; Factors considered by hearing panels in procuring cause disputes.
For example, the class discusses two available options for dispute resolution: (1) Informal with an ombudsman and mediation; (2) Formal with ethics complaints and arbitration requests. Mediation is the preferred dispute resolution tool. It can be offered before or after a grievance committee’s review. The primary emphasis of discipline is educational, to create a heightened awareness of and appreciation for the Code of Ethics.
The class also discusses concepts of procuring cause in arbitration, including hearing panels for resolving arbitrable issues and procuring cause factors. The class also discusses summaries and case studies of selected Articles of the Code of Ethics.
The following Code of Ethics classes have been scheduled from 10 a.m. to 1 p.m.: Wednesday, June 20, Escondido Service Center; Wednesday, Aug. 15, Carmel Valley Service Center; Monday, Oct. 1, Escondido Service Center; Wednesday, Dec. 5, Vista Service Center. If NSDCAR brokers or office managers would like to have the ethics training at their office, then NSDCAR can provide an instructor (must guarantee a minimum of 30 in attendance). The NSDCAR Professional Standards Department has limited instructors but will make every effort to accommodate all requests that meet the criteria. For more information, visit www.nsdcarethics.com