Ethics Violators in the Spotlight

California’s five-year pilot program could lead to expanded enforcement of the REALTORS® Code nationally.

July 16, 2014

The California Association of REALTORS® is set to dramatically expand the publication of information about its members found in violation of the National Association of REALTORS®’ Code of Ethics. The NAR Board of Directors approved in May a five-year pilot program that includes publishing names and photos of the members and a summary of the violations on a website accessible only to association members. The statewide database is expected to be up and running in August.

While NAR policy allows for publication of the names of REALTORS® found in violation of the Code under limited circumstances, the California Association’s pilot program would apply to all COE cases imposing reprimands and fines.

Disciplinary action for violation of the Code includes both an educational and a punitive component. “Fundamental to fair and consistent Code enforcement is reasonable and judicious use of discipline, as both an educational device and as punishment. . . . Where violations are determined, the hearing process and resulting discipline educates members about their professional obligations and serves as a meaningful deterrent to future violations.” (Appendix VII to Part Four, Sanctioning Guidelines, Code of Ethics and Arbitration Manual.)

Under the current policy, ethics cases are considered confidential and are not published to the general membership except in cases of suspension or expulsion from membership.

Broader Publication Criteria

An optional procedure that local or state associations can adopt allows for publication of the names of persons found in violation of the Code twice within the previous three years. Under these circumstances, the name of the violator, along with additional limited information, may be published only in the association’s official publication.

The pilot program approved for the California Association of REALTORS® expands both the types of cases that can be published and the nature of information that is to be published. The pilot program is the result of extensive research by an Ethics and Professionalism Task Force of the California Association.

All disciplinary actions to be published will be submitted to the California Association via special software called Ethics Check, designed for local associations to report cases to the state association, which will then create the summaries and review the information to be published.

The pilot program requires reporting of all disciplinary actions, with few exceptions, regardless of how many violations have occurred in the past three years.

Among the actions that will be published are letters of reprimand, fines, suspensions, and expulsions. Warning letters and discipline requiring only education will not be published (unless the education is not completed in the time given).

In addition to the name and photo of the member found in violation, publication will include a brief summary of the case (names other than that of the respondent will be removed), a short statement of the Articles of the Code violated along with any Standards of Practice considered, the effective date of the imposed discipline, and any rationale stated by the hearing panel in mitigation or aggravation of the discipline.

Brokerage Not Revealed

The name of the respondent’s brokerage will not be published. However, the name of the responsible broker will be published if the broker is also found in violation. A key requirement is that the decision and content of publication must be approved by legal counsel for the local and/or state association.

The Professional Standards Committee and staff of NAR will communicate regularly with the California Association of REALTORS® about the status and progress of the program. Depending on the effectiveness of the pilot program, California’s bold initiative could be expanded to allow other state and local associations to voluntarily adopt a similar publication program.

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.