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Deborah is a licensed Real Estate Broker. She has a Post Master's Certificate in college teaching with all but the dissertation of her doctorate in philosophy complete.
The real estate industry encourages the highest level of ethics in business practice to promote and preserve the right to own, use, exchange, and transfer real property. It's imperative that practitioners within the industry know ethical standards, understand why they're important, and abide by them. It's essential that practitioners avoid discrimination in real estate transactions as well as any act of misrepresentation, exaggeration, or intentional act of deception, also known as fraud. Unethical practice is prohibited in all aspects of real estate practice, including advertising, property disclosure, listing agreements, inducements, the holding of earnest money, and contract facilitation.
The legal duty of the realtor and licensed real estate practitioner is to promote and protect the rights and interests of the buying and selling public. Agency laws also mandate respect for agency relationships. A practitioner has duties that discourage unscrupulous and corrupt practices that dishonor the real estate profession or create unfair advantage over competitors.
In a time when there were no license laws, buyers, sellers, and real estate professionals were unprotected from speculation, exploitation, and disorder. In 1913, the National Association of Realtors (NAR) Code of Ethics was adopted in the U.S. to establish a professional standard of conduct in the real estate industry. The Code of Ethics, which is updated on a regular basis, continues to form the model of ethical practice today. Each state in the union has its own real estate association with a unique canon of ethics which adopts many of the same professional standards of the NAR Code of Ethics. All real estate professionals should abide by the most current version of the code, the canon of ethics in the states in which they work, as well as any agency regulations and relevant state and federal laws.
The Code of Ethics includes articles and standards of practice. Articles are broad statements of ethical principles, whereas standards of practice interpret and support the articles. A violation of the articles of the Code of Ethics is determined by the National Association of Realtors. Local real estate association canon of ethics violations are determined by the local association or investigators of the state licensing authority.
Although many real estate professionals have initial training and continuing education in ethics, many practitioners sadly learn from trial and error. For example, it's a violation of Article 1, Standard of Practice 1-5 of the NAR Code of Ethics when a seller's agent acts as the buyer's agent in the same real estate transaction without disclosing such to both parties. Because this can be considered a conflict of interest, dual agency was at one time a debatable issue that ultimately generated complaints, which led to rules regarding the practice in the code.
Ethics complaints are first filed with a local licensing authority or professional organization which will handle the complaint according to their own processes. If the complaint reaches NAR, it's screened for possible violations by the Grievance Committee, which is made up of appointed members of the local realtor association. The Hearing Panel, appointed members of the Professional Standards Committee, will then conduct a full due process hearing that involves sworn testimony, witnesses, and evidence to decide whether a violation has occurred. If a violation is found, the panel will impose discipline. Penalties for a violation may involve suspension or loss of license to practice.
Arbitration is only recommended for cases involving monetary disputes and contractual or specific non-contractual disputes that occur between real estate licensees. Otherwise, mediation between parties by a neutral third party is recommended. If the dispute is resolved in mediation, the parties will sign an agreement to the terms of a settlement and arbitration hearings will be set aside. If a dispute between licensees involves an award that is settled by arbitration, the award will be judicially enforced, if not paid.
Let's review. In this lesson, we discussed the importance of ethics in real estate practice. Real estate professionals are guided by NAR's Code of Ethics, the ethical canons of state real estate organizations, agency regulations, and applicable state and federal laws. It is the duty of all licensed real estate practitioners to protect and promote the rights and interests of the buying and selling public from fraud, or intentional deception regarding property transactions, discrimination, or any other form of unethical practice, as well as honoring agency relationships. Violations of ethical standards can result in discipline up to and including loss of license to practice.
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Real Estate Exam Prep21 chapters | 212 lessons | 16 flashcard sets
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