Real Estate Ethics
“Duties To REALTORS”
I have been quite surprised by the input and response I have received from the local community about the “Ethics Series” of articles over the past two months. When a long term resident suggested that I write about the topic, I figured the public would find the material to be very dry and even boring. It has been just the opposite with numerous questions and scenarios being bounced around from many local residents. I am happy to respond to your questions and appreciate the variety of stories many of you have shared with me over the past several weeks.
As in any business that replies on commission for remuneration, real estate is a highly competitive and fast moving career. The vast majority of real estate agents are very professional, hardworking people who work for the best interests of their clients and the general public. In the category of “Duties to Realtors”, topics are covered for those rare instances when it is necessary to hold a realtor or agency responsible for inappropriate or unprofessional behavior. Code fifteen states that REALTORS shall not knowingly or recklessly make false statements about their competitors, their business or their business practices, nor shall they make unfounded complaints against one another including verbal, in writing or through electronic means. Sadly, this facet of the code seems to be the one that is most commonly broken. This particular article seems to have more filings than all of the others combined as reported in annual statistics nationally.
Business practices and agency relationships are described in article sixteen including wholesale marketing to develop business in a given geographical area. Two specific unethical activities are covered here; first, the personal solicitation of property owners who have been identified by signing, MLS listing or other means as being represented by a competitor realtor or company while having an active client or listing. Secondly, mailings that are geared to recruit a listing currently held by another realtor while it is an active listing is prohibited. However, a separate service not categorized under an exclusive right is not a violation. REALTORS must also disclose the status of any agreement and the expiration thereof. Much of the rest of article sixteen deals with agency relationships and rules and responsibilities relating to that topic.
One of the most important standards of practice is 16-20. This rule prevents REALTORS from trying to lure clients working with a current designated broker to cancel their contract or induce them to move to another brokerage. Most brokers realize that individual relationships exist between agents and their clients, and that often times if an agent leaves the agents customers will decide to cancel their current listing to follow the agent. As long as the resigning agent does not “lead” clients to depart, there is no violation.
A client of a REALTOR who contacts another REALTOR to inquire as to how they would market or represent their property is entirely allowable, as long as the REALTOR was not instrumental in recruiting the meeting. Past client usage is irrelevant, but realtors must try to discover if the proposed client is currently under an enforceable agreement.
Article seventeen wraps up the code by stipulating how contractual disputes concerning a contract will be handled and how arbitration between REALTORS will be handled, including refusal to arbitrate during required situations. This article deals with compensation issues and challenges between cooperating and non-cooperating brokerages.
The “Code of Ethics” was adopted in 1913 and has been amended dozens of times, with the last update in 2010. Cases of indiscriminate filings where the “code” is used to injure or attempt to “injure” a REALTORS reputation or harm their ability to foster an income have been met with substantial penalties through both arbitration and ultimately civil court.
The best business building referral base a realtor can demonstrate is how they handle themselves in the public eye when interfacing with their counterparts and business associates. Integrity speaks for itself. With Integrity, no code of ethics is necessary.
If you have a specific question or would like to see a particular real estate area, practices or law covered in a future news article, please drop me a line at Bill.Spain@ProvidentAZ.com or call me at 602-622-1196. As always, Thank You for your business, your confidence and your trust is assisting you with your real estate needs in Munds Park, Northern Arizona and the Greater Metropolitan Phoenix Area. Provident Partners Realty & management is “Your Partner In Pinewood.”
By Bill Spain
Provident Partners Realty