Omar Bennett
A Realtor is a real estate licensee who voluntarily subscribes to a strict Code of Ethics by joining local, state, and national associations. If a Realtor violates the Code of Ethics, a complaint can be filed with the local association, which may result in sanctions, fines, or membership termination. The complaint process involves submitting a formal complaint form, citing the violated Article(s) of the Code, and providing supporting documentation and a narrative of the events. The Grievance Committee reviews the complaint and, if deemed valid, forwards it for a hearing. The arbitration process can take up to three months, and the outcome may include disciplinary actions such as requiring the Realtor to attend educational courses. Understanding and adhering to the Code of Ethics are essential for Realtors to maintain their professionalism and uphold ethical standards in their practice.
| Characteristics | Values |
|---|---|
| Misleading owners as to market value | Misrepresentation |
| Nondisclosure of defects in real estate property | Misrepresentation |
| Spending a client's money for the broker's benefit | Stealing |
| Failure to ensure that all transaction details are in writing | Non-compliance |
| Failure to make reasonable efforts to explain the nature and specific terms of agreements when using electronic documents | Non-compliance |
| Denying equal professional services, or employment, to any person on the basis of being a member of one of the following nine protected classes of individuals: race, colour, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity | Discrimination |
| Providing access to listed property on terms other than those established by the owner or seller | Non-compliance |
| Refusing to cooperate with a broker based on their race, colour, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity | Discrimination |
| Being a party to any plan or agreement to discriminate against a person or persons on the basis of race, colour, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity | Discrimination |
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What You'll Learn
Misleading owners about market value
If a realtor violates the Code of Ethics, there can be significant consequences. A formal complaint can be filed using the Ethics Complaint Form E-1, referring to the specific Article(s) that have been violated and providing a supporting narrative or summary of events. The complaint is then sent to the respondent, who has 14 days to reply. If the complainant wishes to proceed, the complaint is forwarded to the Grievance Committee for review, which may result in an ethics hearing. The local association of the realtor may issue sanctions, fines, or even suspend or terminate the realtor's membership.
To avoid misleading owners about market value, realtors must be transparent and honest in their dealings. They should provide accurate information about property details and market conditions and disclose any known defects or issues. By adhering to the Code of Ethics, realtors can maintain their professionalism and integrity in their dealings with clients.
Overall, misleading owners about market value is a serious breach of trust and a violation of the REALTOR® Code of Ethics. Realtors must uphold their ethical obligations to protect their clients' interests and provide honest and accurate information. Homeowners can file a grievance or complaint if they believe a realtor has misled them about market value, which can lead to disciplinary actions and consequences for the realtor.
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Nondisclosure of defects in property
If a realtor fails to disclose known defects in a property, it may constitute a violation of the Code of Ethics, specifically Article 2, which states that realtors should avoid "exaggeration, misrepresentation, and concealment of pertinent facts" and should not reveal confidential facts. Standard of Practice 2-1 addresses nondisclosure of defects in real estate property.
If a client believes that a realtor has violated the Code of Ethics by failing to disclose property defects, they can file an ethics complaint. The process typically involves submitting a formal complaint using a specific form, such as the Ethics Complaint Form E-1, which requires a narrative or summary of the events leading to the complaint. This form is then submitted to the local realtor association, which will forward a copy to the respondent. The respondent will have a set amount of time, such as 14 days, to submit a reply. After receiving the reply, the complaint and all related materials will be reviewed by a grievance committee.
The consequences for violating the Code of Ethics can vary. The local association of the realtor may issue sanctions, fines, or even suspend or terminate the realtor's membership in the local and state associations. Fines may be established in advance by local associations and can be based on an escalating schedule for repeat offenses. Additionally, alternative dispute resolution methods, such as mediation, may be available to resolve the issue.
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Discrimination against protected classes
The National Association of Realtors (NAR) has a Code of Ethics that its members must follow. This code outlines the duties that realtors have to their clients, customers, and the general public. If a realtor violates the Code of Ethics, they may face sanctions, fines, or even termination of their membership in the local, state, and national associations.
Article 10 of the Code of Ethics specifically addresses discrimination against protected classes. It states that realtors must not deny equal professional services or employment to any person based on their membership in one of the following nine protected classes: race, colour, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity. Local, state, and federal laws may have additional protected classes that realtors must legally comply with.
Standard of Practice 10-3 further clarifies that realtors must not indicate any preference, limitation, or discrimination in advertising based on these protected classes. They must also refrain from using harassing speech, hate speech, epithets, or slurs involving these protected classes, as outlined in Standard of Practice 10-5.
If a realtor engages in discrimination against protected classes, an individual can file an ethics complaint through the local association of realtors. The complaint must be submitted using a formal Ethics Complaint Form E-1, which includes a supporting narrative or summary of the events giving rise to the complaint. The respondent will have the opportunity to reply, and if the complainant chooses to continue, the complaint will be forwarded to the association's Grievance Committee for review. This process may take between two and three months, including time for responses, review, scheduling of a hearing, and adoption of any recommendations by the Board of Directors.
It is important to note that the Code of Ethics has evolved over time. For example, between 1924 and 1950, Article 34 of the Code of Ethics stated that realtors should not introduce individuals of certain races or nationalities into neighbourhoods if their presence would be detrimental to property values. However, due to the 1950 Supreme Court decision in Shelley v. Kraemer, which struck down such protective covenants, the Code of Ethics was amended to remove explicit references to race and nationality. Despite these changes, fair housing remained a challenge, as seen with the passage of Proposition 14 in California, which protected property owners' ability to deny minorities equal access to housing. It was not until the federal Fair Housing Act of 1968 that more comprehensive protections were put in place to promote equality in housing.
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Spending a client's money for the broker's benefit
Article 9 of the REALTOR® Code of Ethics outlines the responsibility of brokers to ensure that all transaction details are in writing. Standard Practice 9-2 further emphasises the importance of transparency, stating that REALTORS® should make reasonable efforts to explain the terms of agreements, especially when using electronic documents.
The Code of Ethics provides clear guidelines to protect clients' interests and promote honest and fair practices. Article 1, for instance, mandates that REALTORS® must treat their clients honestly and not mislead owners about market value. Article 2 prohibits exaggeration, misrepresentation, and concealment of pertinent facts.
In the event that a client believes their REALTOR® has violated the Code of Ethics, they can file an ethics complaint through the local association of REALTORS® where the REALTOR® holds membership. This typically involves submitting a formal complaint using an Ethics Complaint Form, which requires a detailed narrative or summary of the events giving rise to the complaint.
The ethics complaint process can take between two and three months, allowing time for responses, review by the Grievance Committee, and scheduling of a hearing. During this process, the respondent has the opportunity to submit a reply, and the complainant can confirm their desire to proceed. If the complaint is upheld, the local association can issue sanctions, fines, or even terminate the membership of the REALTOR® in question.
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Failure to explain terms of agreements
The National Association of Realtors (NAR) has a Code of Ethics that outlines the rules and standards that Realtors must follow. Realtors are different from non-member licensees in that they voluntarily subscribe to this strict code. The Code of Ethics outlines the duties that Realtors have to their clients, customers, and the general public.
Standard of Practice 9-2 in the Code of Ethics states that Realtors should make reasonable efforts to explain the nature and specific terms of agreements when using electronic documents. This means that Realtors have a responsibility to ensure that their clients fully understand the terms of any agreements they are entering into.
If a Realtor fails to explain the terms of an agreement, it could constitute a violation of the Code of Ethics. Such a violation could result in sanctions, fines, or even suspension or termination of membership in the local, state, and national associations of Realtors.
If a client believes that a Realtor has violated the Code of Ethics by failing to explain the terms of an agreement, they can file an ethics complaint through the local association of Realtors. The complaint must be submitted using the Ethics Complaint Form E-1, and it should include a supporting narrative or summary of the events giving rise to the complaint.
The arbitration process for ethics complaints can take between two and three months, including time for responses, review by the Grievance Committee, and scheduling of a hearing. Mediation is also an option for resolving disputes, and it can be a faster and more informal way to reach a mutually acceptable resolution.
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Frequently asked questions
To file a grievance, you must first fill out a formal complaint using the Ethics Complaint Form E-1. This form must cite one or more of the 17 Articles of the Code of Ethics that you allege have been violated. The complaint should include a supporting typewritten narrative or chronological summary of the events leading to your complaint. Once the form is complete, submit it to the local association of REALTORS® where the REALTOR® holds membership.
Once received, a copy of the complaint and all related materials will be sent to the respondent, who will have 14 days to submit a reply. After receiving this reply, a complete copy is forwarded to the complainant. When confirmation that the complainant desires to continue with their complaint is received, all materials related to the complaint are forwarded to the Grievance Committee for review. The Grievance Committee will review the complaint to determine if the allegations made, if taken as true, might support a violation of the Article(s) cited in the complaint. If the Grievance Committee forwards the complaint for hearing, this does not mean they have decided that a violation has occurred, but rather that if what is alleged in the complaint is found to be true, there may be reason to find a violation. The ethics complaint process may take between two and three months, allowing a reasonable time for responses, review by the Grievance Committee, scheduling of the hearing, and for adoption of the hearing panel recommendations.
There are 17 Articles that constitute the rules that REALTORS® must follow, and approximately 90 "Standards of Practice" that clarify those 17 Articles. Some examples of violations include misleading owners as to market value, nondisclosure of defects in real estate property, and refusing to cooperate with a broker on the basis of their race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity.
