2019 Summary of Key Professional Standards Changes

This summary highlights substantive issues and changes, but is not all-inclusive. For complete information detailing all the changes, see the 2018 Professional Standards Committee Actions for the REALTORS® Legislative Meetings and Trade Expo and the REALTORS® Conference and Expo here. Also, review the shaded portions of the 2019 Code of Ethics and Arbitration Manual which highlights all the changes.

View summaries of policy changes that occurred in previous years.

One Change to the Code of Ethics and Standards of Practice

(underscoring indicates additions, ~~strikeouts~~ indicate deletions)

Standard of Practice 1-7 is amended as follows:

When acting as listing brokers, REALTORS^® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/landlord has waived the obligation to have the offer presented. REALTORS^® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS^® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease.

Changes to the Code of Ethics and Arbitration Manual (Manual)

(underscoring indicates additions, ~~strikeouts~~ indicate deletions)

45. Publishing the Names of Code of Ethics Violators

~~Boards and~~ Associations may, as a matter of local discretion, adopt one of the following ~~procedures~~ options authorizing the publication of the names of ethics violators, subject to the following qualifications:

Publication Option #1:

Publication can only occur after a second violation occurs within three (3) years.
Ethics citation discipline is not included in the violation count unless the association has affirmatively authorized publication within their citation policy.
Publication can only be made in an official communication vehicle intended primarily for members of the Board Association (or ~~Boards~~s) in which the violator holds (held) membership. Where the official communication vehicle is electronic or Internet-based, access must be limited to ~~Board~~ Association members.
The name of the firm the violator is (or was) licensed with cannot be published.
Publication must be consistent and uniform. This means that publication may not occur selectively but must be used in each instance where a second violation is determined within three (3) years.
Other than the violator’s name, the only additional information that may be published is the Article(~~or Article~~s) violated, and the discipline imposed, except that in cases where the violator’s name is similar to another member’s name, the violator’s license number or office address (or both) may also be published.
At least one of the violations must be based on conduct which occurs after the adoption of ~~these~~ the Association’s publication procedures.

Associations may adopt Publication Option #1 and may increase the timeframe with which publication occurs for certain discipline, the content of the publication to include photos or a description of the violation(s), or any combination thereof, only to the extent that is permissible under Publication Option #2. Any program that exceeds the scope of Publication Option #1, as defined above, must include local or state association legal counsel review of the decision, discipline, and information to be published.

Publication Option #2:

Publication can occur in all instances in which violators are disciplined with a letter of reprimand, a fine (ethics citation fines are not included in publications unless the association has affirmatively adopted policy to include them), a suspension, and/or an expulsion.

Prior to publication, local or state association legal counsel must review the decision, discipline, and information to be published.

Publication can only be made in an official communication vehicle intended primarily for members of the Association(s) in which the violator holds (held) membership. Where the official communication vehicle is electronic or internet-based, access must be limited to Association members.

The name of the firm the violator is (or was) licensed with cannot be published.

Publication must be consistent and uniform. This means that publication may not occur selectively but must be used in each instance where the discipline imposed meets the Association’s publication criteria.

Other than the violator’s name and a photo of the violator, the only additional information that may be published is the Article(s) violated, a description of the violation(s) with all names redacted except for the name of the violator, and the discipline imposed, except that in cases where the violator’s name is similar to another member’s name, the violator’s license number or office address (or both) may also be published.

Publication must be based on conduct which occurs after the adoption of the Association’s publication procedures.

Section 13(d), Power to Take Disciplinary Action

(d) For any act of another who is also a member, but is employed by or affiliated with the member as an independent contractor. In such an instance, the Realtor® principal may be joined as a respondent by action of the complainant, by review of the Grievance Committee, or by determination of the Hearing Panel prior to commencement of the hearing based upon the facts of the complaint. If, however, the complaint is amended after the hearing has commenced, pursuant to Part Four, Section 21(f)(2), the Realtor® principal who has been added to the complaint has the right to have the hearing reheard from the beginning by the same Hearing Panel or may waive this right. The finding of the Hearing Panel with respect to any violation of the Realtor® principal and the other member employed by or affiliated with the Realtor® principal as an independent contractor may be the same or different; and in the event both are found in violation, the sanctions, if any, may be the same or different.

In any proceeding where the Realtor® principal is not joined in the complaint as a respondent, the respondent’s Realtor® principal ~~nonetheless retains~~ has the right to be present during the proceeding without providing notice or may be required by the Hearing Panel to attend the hearing. ~~At the request of the respondent,~~ tThe Realtor® principal may make opening and closing statements on behalf of the respondent, examine and cross-examine parties and witnesses, introduce affidavits, documents, and other admissible relevant evidence, consult with or testify on behalf of the respondent, and respond directly to questions from the Hearing Panel. In all instances, the respondent’s Realtor® principal shall receive copies of the complaint and response, be provided with notice of the hearing, may be called by the parties or the Hearing Panel as a witness, and shall receive copies of the Hearing Panel’s decision and recommendation for sanction, if any. If an appeal is required, the respondent’s Realtor® principal shall receive copies of the request(s), be provided with notice of the hearing, have the opportunity to be present, and receive a copy of the final action by the Directors. Such rights shall accrue to both the former Realtor® principal and the current Realtor® principal if the respondent Realtor® or Realtor-Associate® changes his firm affiliation either before or after a complaint is filed but before the Hearing Panel reaches its decision.

In any proceeding where a Realtor® principal is not joined in the complaint as a co-complainant, the complainant may, at their sole discretion, allow their Realtor® principal to receive documentation related to the complaint and participate in the hearing as a witness or as counsel (consistent with Part One, Section 4 of this Manual).

Question and Answer 20, A Principal Broker has not been Named as a Respondent in an Ethics Complaint but wants to Attend the Hearing in Which His Sales Associate is a Respondent. Can he do so?

A principal who has not joined in an ethics complaint as a respondent may be present and participate during the hearing and may even be required by the Hearing Panel to attend the hearing, consistent with the provisions of Section 13 (d, Code of Ethics and Arbitration Manual. Whether the principal attends the hearing or not, the principal should receive copies of the complaint and response and be provided with notice of hearing.

Section 13(e), Power to Take Disciplinary Action

(e) In the event the respondent named in any complaint alleging a violation of the Code of Ethics is involved in any criminal litigation arising out of the same facts and circumstances giving rise to the complaint alleging unethical conduct, the complaint shall not proceed to a hearing before the Professional Standards Committee but rather shall be held in abeyance until the pending criminal proceedings have been concluded.

In the event the respondent named in any complaint alleging a violation of the Code of Ethics is involved in criminal or civil litigation or in any proceeding before the state real estate licensing authority or any other state or federal regulatory or administrative agency in a matter arising out of the same facts and circumstances giving rise to the complaint alleging unethical conduct, the complaint may, at the discretion of the Grievance Committee, or on appeal, at the discretion of the Board of Directors, proceed to a hearing before a Hearing Panel of the Board’s Professional Standards Committee. Board legal counsel should be consulted and the following factors shall be taken into consideration in determining whether the matter should proceed to a hearing or should be held in abeyance pending the conclusion of criminal or civil litigation or a proceeding before the state real estate licensing authority or any other state or federal regulatory or administrative agency:

(1) the degree of similarity of factors giving rise to the pending litigation or regulatory or administrative proceeding and the ethics complaint

(2) the degree to which resolution of the ~~civil~~ litigation or regulatory or administrative proceeding may make consideration of the ethics complaint unnecessary

(3) the degree to which pending ~~civil~~ litigation or regulatory or administrative proceeding would delay prompt disposition of the ethics complaint

(4) the nature of the alleged violation and the extent to which it impacts on cooperation with other Board Members

(5) the assurance of Board legal counsel that consideration of the ethics complaint will not deprive the respondent of essential due process

If after review of an ethics complaint by the Grievance Committee and referral of the complaint for hearing, it is subsequently discovered that criminal or civil litigation or regulatory or administrative proceedings related to the same ~~transaction or event~~ facts and circumstances giving rise to the complaint alleging unethical conduct are pending, the Hearing Panel Chair, in consultation with association legal counsel, will determine whether the hearing will proceed or, alternatively, whether the complaint will be held in abeyance pending resolution of the litigation or regulatory or administrative proceedings. If after review of an ethics complaint by the Grievance Committee and referral of the complaint for hearing it is discovered that criminal proceedings related to the same transaction or event are pending, the complaint will be held in abeyance pending conclusion of the criminal proceedings.

Section 19(B)(5), Grievance Committee’s Review of an Ethics Complaint

(5) Is criminal or civil litigation or any government agency investigation or other action pending related to the same ~~transaction or event~~ facts and circumstances giving rise to the complaint alleging unethical conduct?

(a) If criminal litigation is pending related to the same transaction or event, the Grievance Committee shall cease its considerations and instruct the Professional Standards Administrator to hold the file pending until such time as the criminal litigation is concluded. A report shall be made to the Board President.

(ba)If criminal or civil litigation is pending related to the same ~~transaction or event~~ facts and circumstances giving rise to the complaint alleging unethical conduct, the Grievance Committee shall instruct the Professional Standards Administrator to have Board legal counsel review the complaint filed and advise if any hearing should proceed (presuming the matter would otherwise warrant a hearing), with counsel considering the following:

(1) similarity of factors giving rise to pending litigation or regulatory or administrative proceeding and the ethics complaint

(2) degree to which resolution of the pending ~~civil~~ litigation or regulatory or administrative proceeding could make consideration of the ethics complaint unnecessary

(3) degree to which pending litigation or regulatory or administrative proceeding would delay prompt disposition of the ethics complaint

(4) the nature of the alleged violation and the extent to which it could impact on cooperation with other Board Members

(5) the assurance of Board legal counsel that consideration of an ethics complaint would not deprive the respondent of due process

Section 19(D), Grievance Committee’s Review of an Ethics Complaint

D. Criminal or civil litigation or regulatory/administrative proceedings coming to light after an ethics complaint has been referred to an ethics Hearing Panel

If after review of an ethics complaint by the Grievance Committee and referral of the complaint for hearing, it is subsequently discovered that criminal or civil litigation or regulatory or administrative proceedings related to the same transaction or event are pending, the Hearing Panel Chair, in consultation with association legal counsel, will determine whether the hearing will proceed or, alternatively, whether the complaint will be held in abeyance pending resolution of the litigation or regulatory or administrative proceedings. If after review of an ethics complaint by the Grievance Committee and referral of the complaint for hearing it is discovered that criminal proceedings related to the same transaction or event are pending, the complaint will be held in abeyance pending conclusion of the criminal proceedings. If after review of an ethics complaint by the Grievance Committee and referral of the complaint for hearing it is discovered that criminal proceedings related to the same transaction or event are pending, the complaint will be held in abeyance pending conclusion of the criminal proceedings.

Section 23(j), Action of the Board of Directors

(j) Upon final action by the Directors, the President shall disseminate to the complainant, the respondent, the Chairperson and members of the Hearing Panel, ~~Board~~Association legal counsel, the President of any other ~~Board~~Association in which the respondent holds membership, and any governmental agency as directed by the Board of Directors such notice of the action as the President deems appropriate under the circumstances provided, however, that the nature, form, content, and extent of the notice shall be specifically approved by ~~Board~~Association legal counsel prior to dissemination.

~~Board~~Association Members, other than those specified, shall not be notified only in except with respect to suspension or expulsion of membership of the ~~Board~~Association Member, or unless the optional procedures established at the end of this Section have been adopted locally or one of the publication options in Professional Standards Policy Statement 45, Publishing the names of Code of Ethics violators, has been adopted, or unless notification is required to ensure compliance with the ~~Board~~Association’s bylaws (e.g., where a petition for removal of an officer or director must state the reason(s) an officer or director is deemed disqualified from further service).

Final ethics decisions holding Realtors® in violation of the Code of Ethics must be forwarded to the state real estate licensing authority in instances where there is reason to believe that the public trust may have been violated. The “public trust,” as used in this context, refers to demonstrated misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm.

NOTE: ~~Boards~~Associations are encouraged to publish periodic Code Enforcement Activity Reports specifying the number of complaints filed for the given period, the Articles of the Code of Ethics charged, the number of complaints dismissed by the Grievance Committee, the number of violations of particular Articles, the number of cases resulting in violations or, conversely, no violations, the number of cases in which sanctions were imposed, the range of sanctions imposed, and other appropriate information. (See Form #E-17, Ethics Activity Report).

With respect to arbitration, such report could include the number of arbitration requests received, the number of arbitration requests dismissed without hearing, the number of mediations conducted, the number of arbitration hearings held, and other relevant information, provided that no Code Enforcement Activity Report shall include the names of individuals or firms.

Section 23(n), Action of the Board of Directors

NOTE: Adoption of the following optional procedures to permit publication of the names of Code of Ethics violators after a second violation occurs within a three (3) year period is at the discretion of each Member Board. These procedures may not be utilized unless the Member Board has adopted them.

(n) If the respondent is found in violation of the Code of Ethics a second time within three (3) years, the respondent’s name, the fact that the respondent has been found in violation of the Code of Ethics, the Article(s) violated, and the discipline imposed will be published in the official communication vehicle of the Board. Such publication shall not include the name of the firm the respondent is (or was) licensed or affiliated with. In cases where the violator’s name is similar to another member’s name, the violator’s license number or office address (or both) may also be published.

Question and Answer #24 , Code of Ethics and Arbitration Manual, be amended as follows (strikeouts indicate deletions, underscoring indicates additions):

Our ~~Board~~Association is considering publi~~shing the fact that a member has been suspended. What should be contained in such a~~ ~~notice~~cation of ethics violations. What do we need to do?

Ensure your Association has adopted one of the two Publication Options described in Policy Statement 45, Publishing the Names of Code of Ethics Violators, Code of Ethics and Arbitration Manual. Publication Option #2 builds on the authority provided in Publication Option #1 by authorizing publication in all instances in which violators are disciplined with a letter of reprimand, a fine, a suspension, and/or an expulsion, and by expanding the content of the publication notice. The nature, form, content, and extent of this notice should be reviewed by legal counsel prior to dissemination. However, such notice would not be expected to go beyond providing the following: 1) respondent’s name; 2) respondent’s license number or office address, or both, if necessary for identification purposes to distinguish the respondent from another member with the same or similar name; 3) length of suspension/ expulsion, when it becomes effective, and when, if suspension is imposed, the individual will have all withdrawn membership rights, services, and privileges automatically reinstated; and 4) the Article violated (or notification of what other duty of membership was breached) not exceed what is authorized by the Publication Option adopted by the Association as provided in Policy Statement 45, Publishing the Names of Code of Ethics Violators, Code of Ethics and Arbitration Manual.

Appendix V to Part Four (38), Ethics Hearing Checklist

Notice of final action. When the decision is final, a notice of the action shall be provided by the President to the following: (1) complainant, (2) respondent, (3) Board of Directors, (4) Hearing Panel, (5) ~~Board~~Association legal counsel, (6) the President of any other ~~Board~~Association in which the respondent holds membership, and (7) any government agency as may be directed by the Board of Directors, based on advice of legal counsel.

Such notice shall be provided as the President deems appropriate under the circumstances provided the proposed notice has been reviewed and approved by ~~Board~~Association legal counsel.

Other ~~Board~~Association Members shall be notified only of suspension or expulsion of a member, or unless one of the publication options in Professional Standards Policy Statement #45, Publishing the Names of Code of Ethics Violators, has been adopted, or unless notification is required to ensure compliance with the Association’s bylaws (e.g., where a petition for removal of an officer or director must state the reason(s) an officer or director is deemed disqualified from further service).

The following mediation and arbitration forms were amended as follows:

Mediation Resolution Agreement on page 185 of the Code of Ethics and Arbitration Manual is amended to delete the word “award” and instead insert the words “resolution agreement.”

Form #A-2, Request and Agreement to Arbitration (Nonmember) on page 210 of the Code of Ethics and Arbitration Manual is amended to add the following sentence: “In the event I do not comply with the arbitration award and it is necessary for any party to this arbitration to obtain judicial confirmation and enforcement of the arbitration award against me, I agree to pay the party obtaining such confirmation the costs and reasonable attorney’s fees incurred in obtaining such confirmation and enforcement.

Changes to Case Interpretations

Extensive changes have been made to NAR's Case Interpretations. These can be found within the Code of Ethics & Arbitration Manual.

Code of Ethics Training for New & Existing Members

View updated training requirements for both new members and existing members.