The Preamble to the National Association of Realtors’ (NAR) Code of Ethics and Standards of Practice begins with:
Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization. [Realtors] should recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership. They require the creation of adequate housing, the building of functioning cities, the development of productive industries and farms, and the preservation of a healthful environment.
Such interests impose obligations beyond those of ordinary commerce. They impose grave social responsibility and a patriotic duty to which [Realtors] should dedicate themselves, and for which they should be diligent in preparing themselves.
The Preamble, which reads like a mission statement or anthem, is written to inspire Realtors with a sense of duty to abide by the Code of Ethics and Standards for Practice (also referred to as the “Code of Ethics”). What follows the Preamble are a number of duties that all Realtors are required to abide by.
Before diving any deeper into the Code of Ethics, it is important to discuss who exactly the Code of Ethics actually applies to. Many consumers commonly think of all “real estate agents” as holding the title of “Realtor”. This is, however, a common misconception. To earn the title of Realtor, a real estate licensee must first go through the process to join the NAR. While not discussed in greater detail here, the steps that a real estate licensee must take to join the NAR and earn the title of Realtor may be found on the NAR’s website.
The duties imposed by the Code of Ethics are articulated in 17 Articles, which are broken up into the following three categories: Duties to Clients and Customers; Duties to the Public; Duties to Realtors. Each Article outlines the requirements of the Article and includes various Standards of Practice. Each Article is summarized below:
Duties to Clients and Customers:
Article 1: Realtors must protect and promote the interests of their client while also dealing with all parties to the transaction honestly.
Article 2: Realtors cannot exaggerate, misrepresent, or conceal relevant facts about the property or transaction.
Article 3: Realtors must cooperate with other brokers unless such cooperation is not in the client’s best interest.
Article 4: Realtors must disclose any ownership or interest in a particular property to a purchaser or the purchaser’s representative.
Article 5: Realtors must not provide their professional services on a property where the Realtor has an interest unless that interest is disclosed to all appropriate parties.
Article 6: Realtors cannot accept any commission, rebate, or other profit on expenditures made for a client without first obtaining the client’s consent.
Article 7: Realtors cannot accept compensation from more than one party, even where permitted by law, without disclosing the compensation to all parties and without receiving the informed consent of the Realtor’s clients.
Article 8: All client funds must be separate from the Realtor’s own funds.
Article 9: All transaction documents must be in understandable terms.
Duties to the Public:
Article 10: Realtors are prohibited from discrimination in their services and in their employment practices.
Article 11: Realtors are required to provide clients and customers with competent services.
Article 12: Realtors must be honest and truthful in their advertisements.
Article 13: Realtors may not perform work that may be classified as the practice of law and must recommend that legal counsel be obtained when such a recommendation will serve the best interests of any party to the transaction.
Article 14: If a Realtor is charged with a violation of the Code of Ethics, the Realtor must cooperate with any related investigation.
Duties to Realtors:
Article 15: Realtors cannot make any false or misleading statements about other real estate professionals.
Article 16: Realtors are prohibited from soliciting clients that already have exclusive representation with another Realtor.
Article 17: Any contractual disputes must be mediated or arbitrated by the Realtor Board.
While this article summarizes the duties of Realtors under the Code of Ethics, it is not meant to substitute for a full reading of the Code of Ethics. Furthermore, we recommend that all Realtors to study the Standards of Practice contained in the Code of Ethics – understanding and applying the Standards are essential guides to the activities performed by Realtors and to understanding how to address certain nuances in the Articles. You can find the full text of the Code of Ethics and the Standards of Practice here.
Violations of the Code of Ethics
Interestingly, the NAR holds disciplinary authority for violations of the Code of Ethics. While those disciplinary actions do not include penalties such as suspension or revocation of a real estate license, members of the NAR who are found in violation of the Code of Ethics may be fined, received a reprimand letter, or face suspension or revocation of membership in the NAR.