We, as real estate professionals, can be torn between business relationships with service providers and our legal responsibilities to clients. Our clients deserve to know all material information about the transaction.
Self-dealing creates a negative impression in the minds of real estate consumers. Article 1 requires honesty to all parties in the transaction. Standard of Practice 1-6 requires offers to be presented objectively. Article 2 requires us to avoid exaggeration, misrepresentation, and concealment of pertinent facts about the transaction.
There’s no mandatory reporting rule for individual REALTORS® in the Code. NAR has considered a mandatory duty but hasn’t adopted it. But certainly the spirit of the NAR Code of Ethics is that violations of law should be reported.
As dual agents, you both represent the buyer and the seller. Unless the state specifies otherwise, a dual agent can legally contact either client, as the buyer and the seller are the clients of either agent.
Under the Model Rules and Regulations of MLS, the listing broker’s offer of compensation could be paraphrased as, “I, listing broker, promise to pay you, cooperating broker, x percent of cooperative compensation if you become the procuring cause of the sale.” The offer isn’t “I promise to pay you if I collect enough from the seller.”
The Standard says a REALTOR® should have no dealings with another REALTOR®‘s client--and this applies when the client is a relocation company--unless the other REALTORS® gives permission or the dealings are initiated by the client.
The Code of Ethics deal with associates who leave a company and assume they can take listings and buyers under exclusive agreements with them. The Code prohibits REALTORS® from inducing clients of their current company to cancel exclusive contractual agreements between clients and the company.
When we act in an agency capacity, sellers (and buyers, too) rely on us to protect and promote their interests. That’s the basis of Article 1 of our Code of Ethics. Moreover, Standard of Practice 1-3 of the Code prohibits us from “deliberately misleading the owner as to market value” when trying to secure a listing.
We've often heard the admonition "Don't talk to someone else's client! It's unethical! It's illegal!" Is it really accurate to say the Code of Ethics prohibits a REALTOR® from uttering even one word to the client of another REALTOR®?
Alternative dispute resolution has received a lot of press over the past several years as the “new way” to solve legal disputes. Yet, for decades, REALTORS® have quietly and effectively been using ADR in their daily business relations with one another.
Don't lose sight of the Code's teaching that “the term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations.” Today’s high-tech environment shouldn't mean yesterday's moral conduct is lost.