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Q: I know it’s a best practice to provide at least three names of vendors that clients might use in their real estate transaction, like attorneys and title insurance, home inspection and moving companies. I take it a step further and provide all my buyer and seller clients with a comprehensive list of many vendors.
My vendor list includes several cleaning companies, one of which I own. I tell clients they are not obligated to use any of the vendors. Do I have to disclose that I own one of the companies on the list?
A: Providing a comprehensive list of vendors is a great service to clients. I also have a several-page vendor list and let clients decide whom they’d like to use. However, Article 6 of the Code of Ethics states that if you or your company might receive a financial benefit from making a recommendation to a client for a product or service, you must disclose it to the client. Even if you don’t consider it a recommendation because you’re letting the client choose, it could be construed as a recommendation since you provided the list. It’s best to err on the side of caution and make that disclosure.
Article 6:
“REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent. When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation.” (Amended 1/99)
Standard of Practice 6-1:
“REALTORS® shall not recommend or suggest to a client or a customer the use of services of another organization or business entity in which they have a direct interest without disclosing such interest at the time of the recommendation or suggestion.” (Amended 5/88)
Note: While the Code of Ethics establishes obligations that may be higher than those mandated by law, in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence.
