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AAREKnowledge Base

Section 10

Regulation, Ethics, Misrepresentation

63 policies

  1. 10.1State, Federal, & Regulatory AgenciesThe basis for ethical conduct and practice in the real estate industry often has its roots in laws passed at the federal and state levels or rules created by regulatory…
  2. 10.2Department of Real Estate Commissions & State RegulatorsThe Company is regulated by various State Real Estate Commissions and State regulators. The primary mission of the State Real Estate Commissions and State Regulators is…
  3. 10.3Professional Organizations – NAR, State Board, and Local BoardCompany policy is that every active licensed associate becomes a member of the National Association of REALTORS® and several State and local Associations of REALTORS®…
  4. 10.4Code of EthicsEthics are governing moral values. Ethics comes down to what is considered as being fair and right. Most ethics systems are based upon the principle that one should…
  5. 10.5Standards of Ethical Conduct & BehaviorEthical conduct is good business. Ethical conduct is also legal conduct. Conversely, unethical conduct is bad business and unethical conduct is usually illegal. State…
  6. 10.6Protecting the Interest of the ClientA licensee must protect and promote the interests of the client. The REALTOR® Code of Ethics Standard of Practice 1-1 states that the duties imposed by the Code of…
  7. 10.7Client vs. CustomerClient The REALTOR® Code of Ethics Standard of Practice 1-2 defines a client as the person or entity with whom the licensee has a legally recognized agency relationship…
  8. 10.8Duties Owed To A Third PartyHonest and fair dealing and good faith requires honesty and good faith to form the foundation for all dealings with the third party. No attempt should be made by the…
  9. 10.9Compensation and the Creation of Agency RelationshipsThe sole act of compensating a real estate licensee does not create an agency relationship. For example, with the buyer’s consent, the selling agent can agree to act as…
  10. 10.10Agency Disclosure LawThe listing and selling brokers must orally inform the buyer and seller and in writing using the Agency Disclosure form whether they are acting exclusively as agents of…
  11. 10.11Refusal of Seller or Buyer to sign the Acknowledgement of ReceiptIn the event of a refusal to sign the Agency Disclosure Form Acknowledgment, the Associate shall set forth, sign, and date a written declaration of the facts of the…
  12. 10.12Undisclosed Dual AgencyUndisclosed dual agency is always illegal. The dual agent must always disclose and obtain the consent of both parties.
  13. 10.13Dual Agency Considerations (if permitted in your State)Company policy recommends that any Associates proceed very carefully in any dual agency situation. If the Associate does not have significant experience representing…
  14. 10.14Terminating an Agency RelationshipCompany policy is to discuss the termination of any agency relationships with the Broker or Manager before doing so orally or in writing. Agency relationships are…
  15. 10.15Breach of DutiesCommon law fiduciary duties and statutory duties become the affirmative obligations of the agent at the very moment the agency relationship is created. If the agent…
  16. 10.16MisrepresentationCompany policy is to never misrepresent any facts to anyone at any time. The courts have traditionally defined misrepresentation as knowingly making a false statement…
  17. 10.17Non-DisclosureRelated to misrepresentation is the concept of disclosure or non-disclosure of a material fact. As a rule, the real estate licensee has a duty to disclose facts that are…
  18. 10.18Conflict of InterestCompany policy prohibits any conduct in which a conflict of interest exists or could arise. Examples of these situations are as follows: - Information relating to…
  19. 10.19Prohibited Conduct With Respect to Clients and CustomersThe following policies are prohibited activities for any Company Associates at any time.
  20. 10.20Misrepresenting Market ValueCompany policy is to never misrepresent market value to anyone. (REALTOR® Code Standard of Practice 1-3) A licensee is not permitted to knowingly make a false…
  21. 10.21Misrepresentation of Savings or Benefits that might be realized through the use of a REALTOR®A licensee is not permitted to knowingly make a false representation that savings or benefits might be realized through the use of a REALTOR®.
  22. 10.22Misrepresentation vs. PuffingThe Company recognizes that sales-speak (puffing) is a common practice within the real estate industry. When using sales-speak (puffing), Associates should never…
  23. 10.23Misrepresenting Presentation of OffersCompany policy is to never represent the existence of offers when in fact there are none. It is an ethical violation to represent that there are offers to purchase a…
  24. 10.24Disclosure of Terms or Price on Existing OffersCompany policy is to never discuss the exact price or terms of any existing offer with any third party without written consent of the parties involved. It is an ethical…
  25. 10.25Disclosure of Company Policies Relating to CommissionsCompany policy is to always disclose the terms of how a commission will be offered to other agents and the possibility of dual agency (if dual agency is allowed in your…
  26. 10.26Misrepresenting that Commissions Are Not NegotiableCompany policy is to always disclose that commissions are negotiable. While the Company may have specific fee requirements, brokerages cannot agree among each other to a…
  27. 10.27Misrepresenting Relationships with Individual BrokerCompany policy is that Associates may not represent to a seller, a buyer, or to the public that he/she is associated with another broker when that association does not…
  28. 10.28Misrepresentation of Closing CostsCompany policy is to never misrepresent or avoid the discussion of closing costs. A licensee cannot underestimate or understate the probable closing costs for either a…
  29. 10.29Misrepresentation of Buyer QualificationCompany policy is to never misrepresent the qualification of a buyer. This situation would be where a licensee represents to a seller that the buyer is a pre-qualified…
  30. 10.30Altering a Document by Adding Unauthorized ChangesCompany policy is to NEVER ALTER a document by making additions or modifications to a previously signed or initialed document without the consent of the party that the…
  31. 10.31Misrepresenting the Form, Amount, or Treatment of DepositsCompany policy is to never misrepresent the amount or form of any deposit. This situation would be where a licensee represents to a seller that the buyer has the ability…
  32. 10.32Misrepresenting the Size of the PropertyCompany policy is to never misrepresent the size of any property. A licensee should not make any representations about property size (parcel or structure) or a boundary…
  33. 10.33Failure to Disclose Dual AgencyCompany policy is to always disclose dual agency. Failure to disclose dual agency is unethical and illegal. The dual agent must always make disclosure and obtain the…
  34. 10.34Failure to Submit Offers In A Timely MannerCompany policy is to always submit offers in a timely manner. A licensee must present all written offers to the owner of a property prior to the closing of a sale on the…
  35. 10.35Presentation of Competing OffersCompany policy is to always submit offers in the order they are received by the actual date and time. When practicing real estate, a licensee is often faced with how to…
  36. 10.36Failure to Submit Additional Offers after Seller Has Accepted an OfferCompany policy is to continue to submit ALL offers even after the seller has accepted an offer until the home is sold or unless the seller instructs the Associate in…
  37. 10.37Disclosure of Existence of Other OffersCompany policy is to disclose the existence of offers on a property and any unresolved contingencies. Under this standard a licensee is required to disclose the…
  38. 10.38Preserving Confidential InformationCompany policy is to preserve confidential information about our clients. As a part of the agency relationship, every licensee has an obligation to respect the…
  39. 10.39Material Facts Must Be DisclosedMaterial facts or information about a property must be disclosed. If the seller knows the roof leaks, informs the agent of this fact, and asks the agent to keep the…
  40. 10.40Non Disclosure of Material FactsA major ethical obligation of the licensee is to make full disclosure of any material facts regarding a property. An agent must obey the instructions of his principal…
  41. 10.41Failure to Explain Offer ContingenciesLicensees are required to explain offer contingencies to clients. A licensee must explain to the client the meaning and probable significance or implications of…
  42. 10.42Explaining Agreements Generated by Electronic TransmissionToday, many contractual agreements are created through the use of electronic transmissions (email, Internet, fax, etc.). These agreements include listing agreements…
  43. 10.43Conflicts of InterestCompany policy is to avoid any situation where conflicts of interest could arise. Examples of conflicts of interest: - A licensee shows only those properties to…
  44. 10.44Referral Fees or Kickbacks Are ProhibitedCompany policy is to never accept or request any referral fee or kickback from lenders, escrow, title, or termite companies. Referral fees or kickbacks from lenders…
  45. 10.45Duty to the PublicCompany policy is to never deny equal professional services or discriminate against a person on the basis of race, color, religion, sex, handicap, familial status…
  46. 10.46Providing Competent ServicesCompany policy is to only claim to be competent in services the Associate has experience with (in almost all cases Associates should claim only Residential Brokerage)…
  47. 10.47Ethical AdvertisingCompany policy is to only practice ethical advertising. Any advertising that misleads is unethical. A few examples of practices that are considered unethical are: - Any…
  48. 10.48Sharing Information and iFraming on the InternetCompany policy is to only practice ethical advertising. Licensees are prohibited from selling or sharing consumer information gathered over the Internet without first…
  49. 10.49Offering Prizes, Inducements, and Free Services (if permitted by your State)Company policy is to offer prizes, inducement, and services in an ethical and honest way. Each State has different laws and requirements for offering prizes, inducements…
  50. 10.50Offering Property for Sale without AuthorityCompany policy is that Associates may not offer for sale or lease or advertise a property without the authority of the property owner. Also prohibited under this…
  51. 10.51Name of Firm Must Be Disclosed in AdvertisingCompany policy is that all property advertised for sale must disclose the name of the Company and its State license number. Certain States require the firm’s location or…
  52. 10.52Disclosure of License StatusCompany policy is to always disclose license status. For example, a licensee owns rental property or is a partner in rental property. The property is offered "for sale"…
  53. 10.53Unauthorized Practice of LawCompany policy is that Associates do not practice law. A common example is the drafting of non-standard or common conditions or contingencies. Agents should refer the…
  54. 10.54Cooperation in REALTOR® Professional Standards HearingsCompany policy is to cooperate in any REALTOR® Professional Standards hearings. As a member of a REALTOR® organization (either national, state, or local) a REALTOR® is…
  55. 10.55Duties to All REALTORS®Company policy is to treat all REALTORS® fairly and ethically.
  56. 10.56Making False or Misleading Statements about CompetitorsCompany policy is not to slander or make false or misleading statements about competitors to anyone. By making false, derogatory or misleading statements about…
  57. 10.57Interfering with Agency RelationshipsCompany policy is not to interfere with existing agency relationships. For example, a licensee cannot use the multiple listing service information of those sellers…
  58. 10.58Real Estate Commission ComplaintsAssociates agree to discuss with their Broker any previous or current complaints on record with any State, MLS, local Board, State regulation or any other governing…
  59. 10.59Restricted or Temporary Licenses (term varies by State)Any Associate with a “restricted” or “temporary” license requires extra supervision per the State Real Estate Commission. Associates are required to disclose any…
  60. 10.60Pending, Closed or Potential LawsuitsAny Associate that has been involved in any pending, closed or potential lawsuit must disclose the details of that lawsuit and provide a written explanation of the facts…
  61. 10.61Signing Agreements with Third PartiesAssociates will not sign any agreement with any third party that involves the practice of any real estate, or any duties or activities that may affect the Company…
  62. 10.62Continuing EducationAssociates agree to attend continuing education on a regular basis and share with the other Associates anything that may affect, benefit, or harm the Company.
  63. 10.63Written and Oral ExamsFrom time to time the Company may publish a written and oral exam to help Associates stay in touch with changing laws or rules that affect the real estate business…
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