Code of Ethics Training Requirements (Existing Members)

This learning objective can be accomplished by examination of aspirational concepts in the Preamble such as:

1. The concept of striving to become and remain informed on issues affecting real estate.

2. Willingly sharing the fruit of one’s experience and study with other REALTORS®.

3. The elimination of practices which may damage the public, or bring discredit or dishonor to the real estate profession through Code enforcement and assisting regulatory bodies.

4. Urging the exclusive representation of clients.

5. The concept of not attempting to gain any unfair advantage over competitors.

6. Refraining from unsolicited comments about other practitioners and offering any opinions about competitors in an objective and professional manner.

7. The concept of wide distribution of land ownership.

8. Highest and best use of the land.

9. Principles of competency, fairness and high integrity.

10. Adherence to the Code regardless of inducement of profit or instruction from the client to the contrary.

11. The Golden Rule.

The concept of general business ethics can be described by reference to values, morals, decisions and personal/business judgments which are beyond the minimum standards typically set by the legal system. Likewise, the Code of Ethics embodies many of the central principles of business ethics but focuses on the objective measurement of the conduct of members in the specific business environment of real estate transactions 

A synopsis of the concepts of the noted Articles and recommended Standards of Practice follows. The citing of "recommended" Standards of Practice does not preclude a board or association from using different Standards of Practice in the program.

Article 1: Basic concepts of the Article include the obligation to protect and promote the interests of the client and an explanation that this obligation is one of fidelity in the nature of a fiduciary relationship. The Article also specifies that this obligation of fidelity does not relieve the REALTOR® of the obligation to treat all parties honestly. Important Standards of Practice under Article 1 which are recommended to be discussed, as time allows, include:

Standard of Practice 1-5 defines the conditions under which a REALTOR® may engage in disclosed dual agency.

Standard of Practice 1-6 specifies the obligation to present all offers and counter-offers objectively and as quickly as possible.

Standards of Practice 1-7 and 1-8 include the obligation to present all offers until closing and/or acceptance (depending on the party with whom the REALTOR® is working) and specify additional conditions as to how and when this obligation applies.

Standard of Practice 1-9 defines the obligation of confidentiality.

Standards of Practice 1-12 and 1-13 specify disclosure obligations of REALTORS® upon taking a listing or entering into a buyer/tenant agreement.

Standard of Practice 1-15 authorizes disclosure of the existence of offers on a property with a seller’s approval.

Standard of Practice 1-16 cautions REALTORS® not to access or use, or allow others to access or use, listed property on terms and conditions other than those authorized by the seller.

Article 2: Article 2 might be commonly termed the "property or transaction disclosure" article. Its principles include the obligation not to exaggerate, misrepresent or conceal pertinent facts about the property or the transaction. Article 2 is limited, however, in that it does not include an obligation to discover latent defects, advise on matters outside the scope on one’s real estate license or to disclose facts which are confidential under the scope of agency duties. Standards of Practice 2-1 should be discussed in that it further clarifies the obligation to discover and disclose adverse factors. The discovery obligation extends only to those factors which would be within the expertise required by the real estate licensing authority and does not impose an obligation of expertise in other professional or technical disciplines.

Article 3: Article 3 is the "cooperation" article. The concepts of cooperation and compensation should be distinguished. In particular, the article’s admonition that the obligation of cooperation does not include the obligation to share commissions should be noted. Standards of Practice under Article 3 which are recommended include Standards of Practice 3-1, 3-2 and 3-4.

Standard of Practice 3-1 affirms the distinction between cooperation and compensation. Listing agents/brokers establish the terms and conditions of offers to cooperate. Cooperating brokers may not assume that cooperation includes compensation. Cooperating brokers must ascertain the terms of compensation, if any, before beginning efforts to accept the offer of cooperation.

Standard of Practice 3-1 obligates the REALTOR® making an offer of compensation to timely communicate any change in that offered compensation prior to the time a cooperating REALTOR® submits an offer to purchase/lease the property.

Standard of Practice 3-4 defines the disclosure obligations of listing agents/brokers to disclose dual or variable rate commission arrangements and the obligation of buyer/tenant representatives to disclose such information to their client.

Article 9: Article 9’s primary concept is to require REALTORS® to assure, whenever possible, that agreements be in writing, expressing the specific terms and obligations of the parties. In addition, Standard of Practice 9-1 amplifies this obligation by requiring REALTORS® to use reasonable care to ensure that these documents are kept current through the use of written extensions or amendments.

Article 11: Article 11 deals with the standard of competence a REALTOR® must maintain for the discipline in which the REALTOR® engages. In addition, the Article sets forth the principle that a REALTOR® who works outside the field of competence in which the REALTOR® typically engages must either engage the assistance of one who is competent in that field or fully disclose the facts to the client.

Article 12: Article 12 might be called the "truth in advertising" article. Its call is for REALTORS® to present a "true picture" in real estate related advertising and representations to the public, including those online and in social media. Standard of Practice 12-7 should be included for discussion. This Standard of Practice covers the use of the term "sold" in signs and advertising.

Article 16: Article 16 encompasses the idea of non-interference with agency and other exclusive relationships of other REALTORS®. Its central premise is that a REALTOR® shall not engage in any practice or take any action which is inconsistent with the agency or other exclusive relationship that other REALTORS® have with clients. While Article 16 is a relatively short Article, it has many Standards of Practice which have been established to support it. Discussion of the following Standards of Practice is recommended as time allows:

Standard of Practice 16-2: This Standard of Practice clarifies the types of personal, mail and other forms of written solicitations which are ethical and unethical. Explanation should be given that "general" types of solicitation, as defined in the Standard of Practice, are not unethical and that the Standard of Practice is narrow and specific as to the types of solicitations which are recognized as unethical under Article 16.

Standard of Practice 16-4 and 16-6: These two companion Standards of Practice specify the appropriate conduct of a REALTOR® when confronted with issues regarding solicitation of a listed property. While the basic premise of Standard of Practice 16-4 is that solicitation of a listing which is currently listed exclusively with another REALTOR® is unethical, procedures are set out in Standard of Practice 16-4 and 16-6 which modify this basic premise under certain limited conditions. Standard of Practice 16-5 deals with parallel issues in the solicitation of buyers/tenants subject to exclusive buyer/tenant agreements.

Standard of Practice 16-9: This Standard of Practice specifies the conditions under which a REALTOR® is required to inquire of a prospective client as to the client being subject to another exclusive agreement. The Standard of Practice requires REALTORS® to make reasonable efforts to determine whether the client is subject to another current, valid, exclusive agreement prior to the REALTOR® entering into an agency agreement or other exclusive relationship with the client.

Standard of Practice 16-13: Standard of Practice 16-13 sets out the obligation not to deal with another REALTOR®’s client who is subject to an exclusive agreement unless the client’s agent or broker gives consent or unless the client initiates such dealings.

Article 17: Article 17 is the REALTOR®’s obligation to arbitrate (and mediate, if required by the association) certain monetary disputes rather than litigate them. The conditions on mandatory arbitration are that the dispute must be a contractual or specific non-contractual dispute defined by Standard of Practice 17-4, be between REALTORS® associated with different firms and be arising out the their relationship as REALTORS®. Standard of Practice 17-4 defines the types of non-contractual disputes which are required to be arbitrated. Of the four non-contractual disputes in Standard of Practice 17-4, the first subparagraph is likely the most common occurrence, representing disputes between two co-brokers. 

Minimum content for this Learning Objective includes at least one interactive exercise which demonstrates some of the principles of the Articles and Standards of Practice discussed under Learning Objective #2. Boards and Associations may use interactive methods to accomplish Learning Objectives #2 and #3 together.

This Learning Objective is not intended to require a complete "course" on Professional Standards Enforcement Procedures. The minimum content required by this Objective is a brief description of the Professional Standards enforcement process. Included would be one or more of the following concepts:

1.The basic steps in processing an ethics complaint and an arbitration request; that is, a written submission to the Grievance Committee, and if the complaint/request meets the standards set out by the procedures, the forwarding of the complaint/request to the Professional Standards Committee for a full hearing.

2. The difference between the Grievance Committee as an initial screening committee and the Professional Standards Committee as the decision- making committee.

3. The difference between an ethics complaint which deals with a member’s conduct and an arbitration request which deals with a money dispute between REALTORS®.

4. The types of discipline which may be imposed for a violation of the Code of Ethics.

5. How the Ombudsman and Mediation processes offer valuable alternative dispute resolution options for members.

Minimum content for this Learning Objective shall include instruction and exercises to teach the following.

That professional conduct, courtesies and business etiquette are local customs and practices that may be adopted locally to supplement the Code of Ethics. Whether developed by NAR or locally, these additional conduct standards are intended to be adopted by REALTOR® Associations, and then adhered to, on a voluntary basis. Additionally, failure by a REALTOR® to adhere to these optional conduct standards cannot form the basis for a professional standards complaint. NAR’s additional conduct standards/professional courtesies are set forth in Pathways to Professionalism.

That the Code of Ethics establishes a public and professional consensus against which the practice and conduct of REALTORS® may be judged, while the Interpretations of the Code of Ethics presents specific situations to help REALTORS® understand the ethical obligations created by the Code of Ethics. The Interpretations of the Code of Ethics has been developed by the Professional Standards Committee of the National Association of REALTORS® and can be a reference for Grievance Committees, ethics and arbitration Hearing Panels, and Boards of Directors. Instructors will find a host of real-life scenarios described in these Interpretations from which several Cases can be covered or discussed.

Accomplishment of this learning objective follows the same pattern as Required Learning Objective #1.

This learning objective is also accomplished as in Required Learning Objective #2.

This learning objective is directed to content of the following nature:

1. The Code of Ethics was adopted in 1913 as one of the first industry codes of ethics.

2. The Code of Ethics is a living document which is changed as necessary to meet the challenges of new business concepts which have developed during its history.

3. However, the Code of Ethics includes timeless concepts such as honesty, obligations to clients and avoidance of self-dealing.

4. The Code of Ethics was a precursor to state licensing of real estate practitioners.

5. The Code of Ethics was a model for many of the original state licensing laws.

6. The Code of Ethics has mandated the arbitration of money disputes between REALTORS® since its inception in 1913. REALTORS® have participated in this "Culture of Cooperation" for 100+ years and, as a result, have a unique system in which competitors cooperate and pay commissions to each other for such cooperation. This system is clearly to the public’s benefit in the efficient sale of real property. 

This learning objective begins the process of demonstrating the structure of the Code. Information to be included in this learning objective is a discussion of the way the Code is prioritized as to its categories, Articles and Standards of Practice. The instructor should discuss the fact that the Code is divided into three categories by design, with the idea that Duties to Clients and Customers is the first priority in the Code, Duties to the Public is the next priority, and Duties to REALTORS® is the final priority. The instructor should also then introduce the idea that the material within the categories is also prioritized. This introduction should lead into the next learning objective.

Within this learning objective, the material should describe the Articles of the Code as the broadest statements of ethical principles embodied by the Code. Discussion should then proceed to the concept that the Standards of Practice further define the Article under which they are placed. Then, the Case Interpretations should be presented as hypothetical factual situations which have been described by the NAR Professional Standards Committee in which a hypothetical REALTOR® has been found in violation of the Code of Ethics or in which a hypothetical REALTOR® has been exonerated of an allegation of a violation of the Code of Ethics. In addition, further discussion should be included which describes the prioritization of the Articles of the Code beginning with the duties of highest priority (i.e. Article 1 and its obligation to protect and promote the interests of the client).

This learning objective should identify the various committees of the board which deal with professional standards matters. Specifically, the roles of the Grievance Committee, Professional Standards Committee, and the Board of Directors should be discussed.

The concepts and elements of due process to be included in this learning objective are:

1. Due process is a basic right of the parties to a hearing.

2. The broadest statement of due process is the idea of conducting a hearing within the bounds of fundamental fairness.

3. Due process rights include the following rights:

a. Right to know nature of complaint/arbitration request in advance.
b. Opportunity to prepare an adequate defense.
c. Right to call witnesses.
d. Right to present evidence/testimony.
e. Right to cross-examine witnesses called by other side.
f. Right to have legal counsel present.
g. Right to a hearing before an impartial peer panel. 

Included in the interactive methods to demonstrate this learning objective could be mock hearings.

This Learning Objective is not intended to be a course on arbitration or procuring cause. However, the minimum content for this Objective should include a brief discussion of the concept of procuring cause as the standard by which REALTOR® to REALTOR® commission disputes are decided; that the concept of procuring cause is determined by the factors specified by the NAR Professional Standards Committee in the Code of Ethics and Arbitration Manual; that no one factor, such as who showed the property first, who wrote the successful offer to purchase, or who secured a written agency agreement with the buyer, will determine the outcome of the case.

Content for this learning objective would be derived from the Code of Ethics and Arbitration Manual’s Appendix as to Suggested Factors for Consideration by a Hearing Panel in Arbitration.

This learning objective is directed to the Grievance Committee process in determining whether a complaint should be forwarded for a hearing, the Professional Standards Hearing Panel process and the appeal process.

This information should parallel that of Objective #11 for arbitration claims.

This learning objective envisions a discussion of issues in a procuring cause case and possible outcomes. Information should be taken from the Appendix on Suggested Factors for Consideration by a Hearing Panel in Arbitration, including the Sample Fact Analyses of arbitration cases contained in that appendix.

The primary focus of this objective is to describe the mediation process as a voluntary dispute resolution process available to parties to an arbitration claim before and/or after the Grievance Committee processes the case.

While an extensive list could be developed, some of the benefits which might be discussed include:

1. The mediation process is voluntary and thus consensual. The parties decide the case only if they choose to settle.

2. The mediation process is "win-win" in the sense that each party comes away from a mediation agreement with something, as contrasted to an arbitration hearing in which there is a "winner" and "loser" and one party very well may leave the case with nothing.

3. If the parties reach an agreement in mediation, the deposits of the parties are returned.

4. Mediation is a much more informal process than an arbitration hearing.

5. While arbitration is confidential, mediation has fewer "outsiders" (e.g. panelists) involved and thus fewer persons will know of the dispute.

6. Because mediation is a consensual process rather than an adjudicative process, there is a greater likelihood of preserving relationships between the parties for future benefits and business of the parties. 

This learning objective might be accomplished by a mock mediation, group exercise on mediation or the like.

This learning objective might be accomplished by a discussion of the Pathways to Professionalism document and by giving examples of professionalism and courtesies through real-life scenarios.