When to Sit Out

In public service, beware conflicts of interest.

June 1, 2004

Q. Is it unethical or a conflict of interest for REALTORS® to be members of their town’s planning or zoning board?

A. One of the great things about REALTORS® is that they care about their communities. They strive to build strong residential neighborhoods and help ensure that commercial centers thrive. Being part of a town’s planning or zoning process is one way to accomplish these goals. The Preamble to the Code of Ethics, in fact, sets forth ideals that REALTORS® should follow to help enhance the places where they live. “REALTORS® should recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership. Such interests impose obligations beyond those of ordinary commerce. They impose grave social responsibility and a patriotic duty to which REALTORS® should dedicate themselves, and for which they should be diligent in preparing themselves.”

Your participation in your planning and zoning process fulfills your patriotic and social responsibility as long as there’s no conflict. A conflict would arise if you had an ownership interest in a project that you’re planning or zoning board was reviewing. An issue could also could arise if you represented a developer or builder who proposed a project to the planning or zoning board on which you sit. In such cases, you’d want to recuse yourself from the decisions.

But the potential for a conflict shouldn’t deter you from contributing your expertise at other times. You’ll be doing exactly what the Preamble’s ideals encourage: getting involved.

Q.Can a REALTOR® offer buyer representation services to a seller who’s subject to an exclusive listing agreement with another broker?

A. Article 16 of the Code of Ethics offers guidelines in answer to your question: “REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients.” Two of the Article’s Standards of Practice offer further explanation. Standard of Practice 16-18 provides that “REALTORS® shall not use information obtained from listing brokers through offers to cooperate made through MLSs or through other offers of cooperation to refer listing brokers’ clients to other brokers or to create buyer/tenant relationships with listing brokers’ clients, unless such use is authorized by listing brokers.”

In short, you’re not allowed to create buyer relationships with sellers who are exclusively listed with other brokers by using information you find in cooperative systems such as the MLS.

You’re free, however, to create a buyer relationship if you became aware of the seller’s needs through other avenues. Standard of Practice 16-3 doesn’t preclude you from contacting another broker’s client to offer to provide, or enter into a contract to provide, a different type of real estate service from the service currently being given by that broker. You could provide property management services if the other practitioner is offering brokerage services, for instance.

Consider another example. You meet a seller at a party at a mutual friend’s home and strike up a conversation about real estate. The seller tells you he’s selling his home and plans to buy a new one. If you ask if he has someone representing him in his future purchase, you’re not violating Article 16. You didn’t learn of the seller’s needs through information you received through the MLS or another offer of cooperation.

Just remember Article 16’s basic concept and you’ll be fine: Never interfere with other REALTORS®’ exclusive relationship agreements with their clients.

Bruce Aydt

Attorney Bruce Aydt, ABR, CRB, SRS, is a national real estate educator, a Missouri real estate broker, and past chair of the National Association of REALTORS® Professional Standards Committee.

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