Code of Ethics
National Association of REALTORS®
REALTOR® Code of Ethics New Member Orientation Course
REALTORS® are required to complete ethics training of not less than 2 hours, 30 minutes of instructional time within four-year cycle. The training must meet specific learning objectives and criteria established by the National Association of REALTORS®.
The current three-year cycle will end Dec. 31, 2021.
Training may be completed through local REALTOR® associations or through another method, such as home study, correspondence, classroom courses, or online courses.
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BACKGROUND ON THE CODE OF ETHICS
INTRODUCTION
The term, "Ethics" refers to systems of moral principles, rules, and standards of conduct. Such a system of principles, rules, and standards has been developed as a "Code of Ethics" for members of the National Association of REALTORS®.
Written more than a half century ago, the Code remains essentially in its original form today. It is still relevant and useful despite unprecedented social, political, economic, and legal change in America. The Code will continue to meet the needs of a real estate industry in constant turmoil of growth for many reasons, but principally for two major considerations:
First, the Code is great deal more than simply a set rules for the conduct of real estate transactions. The Code provides also a criterion of excellence which is founded upon realistic standards of performance. The single underlying concept of the Code is SERVICE TO THE PUBLIC.
Second, as a new member seeking to join the ranks of the REALTOR® family, one must appreciate that the Membership looks upon the Code as a binding professional agreement between themselves and the new member. Typically, a REALTOR® is deadly earnest concerning ethical behavior. Members of our local Board support and enforce the Code of Ethics, and expect new members to be serious about such matters from the beginning of membership.
THE CODE AND THE LAW
The Code of Ethics is never opposed to the law. In instances where a provision of the Code must be applied to a situation and there appears to be a conflict with the law, the Code always must be interpreted harmoniously and consistently with the law. But the Code is not the law. Laws are supported by the coercive power of the state. The Code is supported only by the principles of contract: the terms of which are spelled out in the Code. The principles defined by the Code also often appear in the law. In 1913, when the Code was first adopted, the law was silent as to almost all of the professional responsibilities necessary to protect the interests of the public. Many of the principles contained in the Code of Ethics have been incorporated into the law. Even though the mandates of the Code may appear to be duplicates of the dictates of the laws, the difference between them is fundamental and unavoidable.
THE CODE AND ITS USE
The Code defines those duties and obligations necessary in the public interest which are beyond the power or capacity of the laws to mandate. This permits the Code to identify and anticipate needs for professional development as the needs of the public evolve.
The Code also directly supports the laws by requiring members to exercise a higher sensitivity to the duties and obligations imposed by the laws. In this regard, the Code is concerned with the refinement and specific application of legal principles to real estate transactions. There is no idea which cannot be misapplied; no faith which cannot be exploited; no concept which cannot be abused; and no principle which cannot be perverted. For this reason, the integrity of the Code and the value of its great vision depends ultimately upon how you and all of the membership use and apply the Code in daily business. And perhaps, this obligation to exercise personal judgment and integrity is the greatest of the obligations imposed upon yourself when you take the REALTOR®'S oath.
If the Code is applied inconsistently, it becomes arbitrary and hence oppressive. If it is applied without understanding, it becomes unreasonable and hence dogmatic. If it is used in ignorance, it becomes meaningless; if it is used inappropriately, it becomes irrelevant; and if it is used without moderation, it becomes irrational. No Code of Ethics can long survive its misuse or misapplication. It is for these many reasons that each REALTOR® must make of the Code of Ethics a personal commitment and an article of his or her business faith.
DUE PROCESS
Each local Board of REALTORS® is charged to establish and maintain an impartial and Fair tribunal to hear and settle complaints against members concerning alleged Ethics violations and to arbitrate disputes concerning contracts between members. This is established in the Yancey-Mitchell Board of REALTORS® in conjunction with the Asheville Board of REALTORS® as the PROFESSIONAL STANDARDS ENFORCEMENT AGREEMENT. It is operated under the guidelines of Article VII of the bylaws, " Professional Standards and Arbitration". A Copy of the Bylaws is provided elsewhere in this course material.
The purpose if the Professional Standards Enforcement Agreement is to insure that each member is afforded DUE PROCESS in the resolution of any complaints in which (s)he may become involved. Due Process means nothing more or less than a full and fair hearing before an impartial tribunal with a full and complete knowledge of the charges made and with an adequate opportunity to prepare a defense. Parties to the hearing have the right to due notice as to complaint and answer, time to prepare, right to legal counsel, right to continuances, right to challenge members of the Hearing Panel, right to testify, right to cross examine, right to know decision rendered and right to appeal, if any.
STANDARDS OF PRACTICE
Standards of Practice relating to the Code of Ethics follow in the text immediately after the section which details the Code. Each standard is identified by two numbers separated by a hyphen. The first number identifies the Article of the Code to which the standard principally applies. The second number is assigned sequentially as each new standard is added to the article. For example; Standards of Practice 9-2 identifies the second standard adopted which applies to Article 9 of the Code.
Standards of Practice are not a part of the Code. They are interpretation of the Article as applied to a specific practice or circumstance common in business practice. Therefore, a member is never charged with violation of a Standard of Practice; but rather, with violation of the basic Article to which the standard applies. The Standard of Practice; however, may be cited in support of the charge.
READ THE STANDARDS OF PRACTICE RELATING TO THE ARTICLES OF THE CODE OF ETHICS AND BE PREPARED TO DISCUSS THEM IN CLASS.
INTERPRETATIONS OF THE CODE OF ETHICS
The majority of the text presents numbered Case Studies of actual charges, hearings, and results of the hearings of alleged violations of the Code. Each numbered case presents the pertinent facts relating to the case, the decision of the Hearing Panel, and the reasons. Therefore, this section presents many of the situations to which a beginner is sure to be exposed, and therefore contains a wealth of information that every agent SHOULD BE EXPECTED TO KNOW. READ THE NUMBERED INTERPRETATIONS CASES and become familiar with the circumstances, decisions, and rationale. These, together with others of local significance will be discussed extensively in class.
REASONABLE CARE
The duty of reasonable care implies competence and expertise on the part of the broker. it is the broker's responsibility to disclose all knowledge and material facts concerning the property to his principal. Also, the broker must not become a party to any fraud or misrepresentation likely to affect the sound judgment of his principal. Although the broker must disclose all material facts of a transaction to his principal, he may not give legal interpretations but must recommend that legal counsel be sought when the interests of the principal require. The duty of "reasonable care" also requires an agent to take proper care of property entrusted to his by his principal such as keys, documents, or earnest money.
ACCOUNTING
The agent is accountable for anything and everything that is entrusted to him in his capacity as agent. North Carolina has established detailed requirements for trust accounts and the records that must be established and maintained for them. Details are contained in the License Law booklet from which you studied in your licensing course.
DUAL AGENCY
The role of an agent working for a seller is to obtain for him or her the highest possible price on the best terms for the seller. Conversely, the role of an agent working for a buyer is to obtain for him or her the lowest possible price on the best terms for the buyer. These are clearly adversarial positions. When the same broker represents both principals in the same transaction, it is a dual or divided agency, and a conflict of interest results. For whom should the greatest effort be extended? This unanswerable question has resulted in all states requiring that each principal be informed and agree to the agent representing both parties before the agent can proceed. In any event wherein an agent expects to be compensated by both the seller and buyer in the same transaction, the agent must take care to inform and gain consent in writing before any offer is made.
AGENT RELATIONSHIP WITH CUSTOMERS
The agent normally has no contract with buyers and accordingly will usually not owe them the legal obligations of agency. However, two overriding requirements mandate that customers have a right to fair play and competent service from agents.
