Real Estate News
Code of Ethics
and Standards of Practice
of the NATIONAL ASSOCIATION OF REALTORS®
Effective January 1, 2006
Where the word REALTORS® is used in this Code
and Preamble, it shall be deemed to include REALTOR-ASSOCIATE®s.
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.
Preamble
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.
REALTORS®, therefore, are zealous to maintain and improve the
standards of their calling and share with their fellow REALTORS®
a common responsibility for its integrity and honor.
In recognition and appreciation of their obligations to clients,
customers, the public, and each other, REALTORS® continuously
strive to become and remain informed on issues affecting real
estate and, as knowledgeable professionals, they willingly share
the fruit of their experience and study with others. They
identify and take steps, through enforcement of this Code of
Ethics and by assisting appropriate regulatory bodies, to
eliminate practices which may damage the public or which might
discredit or bring dishonor to the real estate profession.
REALTORS® having direct personal knowledge of conduct that may
violate the Code of Ethics involving misappropriation of client
or customer funds or property, willful discrimination, or fraud
resulting in substantial economic harm, bring such matters to
the attention of the appropriate Board or Association of
REALTORS®. (Amended 1/00)
Realizing that cooperation with other real estate professionals
promotes the best interests of those who utilize their services,
REALTORS® urge exclusive representation of clients; do not
attempt to gain any unfair advantage over their competitors; and
they refrain from making unsolicited comments about other
practitioners. In instances where their opinion is sought, or
where REALTORS® believe that comment is necessary, their opinion
is offered in an objective, professional manner, uninfluenced by
any personal motivation or potential advantage or gain.
The term REALTOR® has come to connote competency, fairness, and
high integrity resulting from adherence to a lofty ideal of
moral conduct in business relations. No inducement of profit and
no instruction from clients ever can justify departure from this
ideal.
In the interpretation of this obligation, REALTORS® can take no
safer guide than that which has been handed down through the
centuries, embodied in the Golden Rule, “Whatsoever ye would
that others should do to you, do ye even so to them.”
Accepting this standard as their own, REALTORS® pledge to
observe its spirit in all of their activities and to conduct
their business in accordance with the tenets set forth below.
Duties to Clients and Customers
Article 1
When representing a buyer, seller, landlord, tenant, or other
client as an agent, REALTORS® pledge themselves to protect and
promote the interests of their client. This obligation to the
client is primary, but it does not relieve REALTORS® of their
obligation to treat all parties honestly. When serving a buyer,
seller, landlord, tenant or other party in a non-agency
capacity, REALTORS® remain obligated to treat all parties
honestly. (Amended 1/01)
• Standard of Practice 1-1
REALTORS®, when acting as principals in a real estate
transaction, remain obligated by the duties imposed by the Code
of Ethics. (Amended 1/93)
• Standard of Practice 1-2
The duties the Code of Ethics imposes are applicable whether
REALTORS® are acting as agents or in legally recognized
non-agency capacities except that any duty imposed exclusively
on agents by law or regulation shall not be imposed by this Code
of Ethics on REALTORS® acting in non-agency capacities.
As used in this Code of Ethics, “client” means the person(s) or
entity(ies) with whom a REALTOR® or a REALTOR®’s firm has an
agency or legally recognized non-agency relationship; “customer”
means a party to a real estate transaction who receives
information, services, or benefits but has no contractual
relationship with the REALTOR® or the REALTOR®’s firm;
“prospect” means a purchaser, seller, tenant, or landlord who is
not subject to a representation relationship with the REALTOR®
or REALTOR®’s firm; “agent” means a real estate licensee
(including brokers and sales ASSOCIATEs) acting in an agency
relationship as defined by state law or regulation; and “broker”
means a real estate licensee (including brokers and sales
ASSOCIATEs) acting as an agent or in a legally recognized
non-agency capacity. (Adopted 1/95, Amended 1/04)
• Standard of Practice 1-3
REALTORS®, in attempting to secure a listing, shall not
deliberately mislead the owner as to market value.
• Standard of Practice 1-4
REALTORS®, when seeking to become a buyer/tenant representative,
shall not mislead buyers or tenants as to savings or other
benefits that might be realized through use of the REALTOR®’s
services. (Amended 1/93)
• Standard of Practice 1-5
REALTORS® may represent the seller/landlord and buyer/tenant in
the same transaction only after full disclosure to and with
informed consent of both parties. (Adopted 1/93)
• Standard of Practice 1-6
REALTORS® shall submit offers and counter-offers objectively and
as quickly as possible. (Adopted 1/93, Amended 1/95)
• Standard of Practice 1-7
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. 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. (Amended 1/93)
• Standard of Practice 1-8
REALTORS®, acting as agents or brokers of buyers/tenants, shall
submit to buyers/tenants all offers and counter-offers until
acceptance but have no obligation to continue to show properties
to their clients after an offer has been accepted unless
otherwise agreed in writing. REALTORS®, acting as agents or
brokers of buyers/tenants, shall recommend that buyers/tenants
obtain the advice of legal counsel if there is a question as to
whether a pre-existing contract has been terminated. (Adopted
1/93, Amended 1/99)
• Standard of Practice 1-9
The obligation of REALTORS® to preserve confidential information
(as defined by state law) provided by their clients in the
course of any agency relationship or non-agency relationship
recognized by law continues after termination of agency
relationships or any non-agency relationships recognized by law.
REALTORS® shall not knowingly, during or following the
termination of professional relationships with their clients:
1) reveal confidential information of clients; or
2) use confidential information of clients to the disadvantage
of clients; or
3) use confidential information of clients for the REALTOR®’s
advantage or the advantage of third parties unless:
a) clients consent after full disclosure; or
b) REALTORS® are required by court order; or
c) it is the intention of a client to commit a crime and the
information is necessary to prevent the crime; or
d) it is necessary to defend a REALTOR® or the REALTOR®’s
employees or ASSOCIATEs against an accusation of wrongful
conduct.
Information concerning latent material defects is not considered
confidential information under this Code of Ethics. (Adopted
1/93, Amended 1/01)
• Standard of Practice 1-10
REALTORS® shall, consistent with the terms and conditions of
their real estate licensure and their property management
agreement, competently manage the property of clients with due
regard for the rights, safety and health of tenants and others
lawfully on the premises. (Adopted 1/95, Amended 1/00)
• Standard of Practice 1-11
REALTORS® who are employed to maintain or manage a client’s
property shall exercise due diligence and make reasonable
efforts to protect it against reasonably foreseeable
contingencies and losses. (Adopted 1/95)
• Standard of Practice 1-12
When entering into listing contracts, REALTORS® must advise
sellers/landlords of:
1) the REALTOR®’s company policies regarding cooperation and the
amount(s) of any compensation that will be offered to subagents,
buyer/tenant agents, and/or brokers acting in legally recognized
non-agency capacities;
2) the fact that buyer/tenant agents or brokers, even if
compensated by listing brokers, or by sellers/landlords may
represent the interests of buyers/tenants; and
3) any potential for listing brokers to act as disclosed dual
agents, e.g. buyer/tenant agents. (Adopted 1/93, Renumbered
1/98, Amended 1/03)
• Standard of Practice 1-13
When entering into buyer/tenant agreements, REALTORS® must
advise potential clients of:
1) the REALTOR®’s company policies regarding cooperation;
2) the amount of compensation to be paid by the client;
3) the potential for additional or offsetting compensation from
other brokers, from the seller or landlord, or from other
parties;
4) any potential for the buyer/tenant representative to act as a
disclosed dual agent, e.g. listing broker, subagent, landlord’s
agent, etc., and
5) the possibility that sellers or sellers’ representatives may
not treat the existence, terms, or conditions of offers as
confidential unless confidentiality is required by law,
regulation, or by any confidentiality agreement between the
parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06)
• Standard of Practice 1-14
Fees for preparing appraisals or other valuations shall not be
contingent upon the amount of the appraisal or valuation.
(Adopted 1/02)
• Standard of Practice 1-15
REALTORS®, in response to inquiries from buyers or cooperating
brokers shall, with the sellers’ approval, disclose the
existence of offers on the property. Where disclosure is
authorized, REALTORS® shall also disclose whether offers were
obtained by the listing licensee, another licensee in the
listing firm, or by a cooperating broker. (Adopted 1/03, Amended
1/06)
Article 2
REALTORS® shall avoid exaggeration, misrepresentation, or
concealment of pertinent facts relating to the property or the
transaction. REALTORS® shall not, however, be obligated to
discover latent defects in the property, to advise on matters
outside the scope of their real estate license, or to disclose
facts which are confidential under the scope of agency or
non-agency relationships as defined by state law. (Amended 1/00)
• Standard of Practice 2-1
REALTORS® shall only be obligated to discover and disclose
adverse factors reasonably apparent to someone with expertise in
those areas required by their real estate licensing authority.
Article 2 does not impose upon the REALTOR® the obligation of
expertise in other professional or technical disciplines.
(Amended 1/96)
• Standard of Practice 2-2
(Renumbered as Standard of Practice 1-12 1/98)
• Standard of Practice 2-3
(Renumbered as Standard of Practice 1-13 1/98)
• Standard of Practice 2-4
REALTORS® shall not be parties to the naming of a false
consideration in any document, unless it be the naming of an
obviously nominal consideration.
• Standard of Practice 2-5
Factors defined as “non-material” by law or regulation or which
are expressly referenced in law or regulation as not being
subject to disclosure are considered not “pertinent” for
purposes of Article 2. (Adopted 1/93)
Article 3
REALTORS® shall cooperate with other brokers except when
cooperation is not in the client’s best interest. The obligation
to cooperate does not include the obligation to share
commissions, fees, or to otherwise compensate another broker.
(Amended 1/95)
• Standard of Practice 3-1
REALTORS®, acting as exclusive agents or brokers of sellers/
landlords, establish the terms and conditions of offers to
cooperate. Unless expressly indicated in offers to cooperate,
cooperating brokers may not assume that the offer of cooperation
includes an offer of compensation. Terms of compensation, if
any, shall be ascertained by cooperating brokers before
beginning efforts to accept the offer of cooperation. (Amended
1/99)
• Standard of Practice 3-2
REALTORS® shall, with respect to offers of compensation to
another REALTOR®, timely communicate any change of compensation
for cooperative services to the other REALTOR® prior to the time
such REALTOR® produces an offer to purchase/lease the property.
(Amended 1/94)
• Standard of Practice 3-3
Standard of Practice 3-2 does not preclude the listing broker
and cooperating broker from entering into an agreement to change
cooperative compensation. (Adopted 1/94)
• Standard of Practice 3-4
REALTORS®, acting as listing brokers, have an affirmative
obligation to disclose the existence of dual or variable rate
commission arrangements (i.e., listings where one amount of
commission is payable if the listing broker’s firm is the
procuring cause of sale/lease and a different amount of
commission is payable if the sale/lease results through the
efforts of the seller/landlord or a cooperating broker). The
listing broker shall, as soon as practical, disclose the
existence of such arrangements to potential cooperating brokers
and shall, in response to inquiries from cooperating brokers,
disclose the differential that would result in a cooperative
transaction or in a sale/lease that results through the efforts
of the seller/landlord. If the cooperating broker is a
buyer/tenant representative, the buyer/tenant representative
must disclose such information to their client before the client
makes an offer to purchase or lease. (Amended 1/02)
• Standard of Practice 3-5
It is the obligation of subagents to promptly disclose all
pertinent facts to the principal’s agent prior to as well as
after a purchase or lease agreement is executed. (Amended 1/93)
• Standard of Practice 3-6
REALTORS® shall disclose the existence of accepted offers,
including offers with unresolved contingencies, to any broker
seeking cooperation. (Adopted 5/86, Amended 1/04)
• Standard of Practice 3-7
When seeking information from another REALTOR® concerning
property under a management or listing agreement, REALTORS®
shall disclose their REALTOR® status and whether their interest
is personal or on behalf of a client and, if on behalf of a
client, their representational status. (Amended 1/95)
• Standard of Practice 3-8
REALTORS® shall not misrepresent the availability of access to
show or inspect a listed property. (Amended 11/87)
Article 4
REALTORS® shall not acquire an interest in or buy or present
offers from themselves, any member of their immediate families,
their firms or any member thereof, or any entities in which they
have any ownership interest, any real property without making
their true position known to the owner or the owner’s agent or
broker. In selling property they own, or in which they have any
interest, REALTORS® shall reveal their ownership or interest in
writing to the purchaser or the purchaser’s representative.
(Amended 1/00)
• Standard of Practice 4-1
For the protection of all parties, the disclosures required by
Article 4 shall be in writing and provided by REALTORS® prior to
the signing of any contract. (Adopted 2/86)
Article 5
REALTORS® shall not undertake to provide professional services
concerning a property or its value where they have a present or
contemplated interest unless such interest is specifically
disclosed to all affected parties.
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)
Article 7
In a transaction, REALTORS® shall not accept compensation from
more than one party, even if permitted by law, without
disclosure to all parties and the informed consent of the
REALTOR®’s client or clients. (Amended 1/93)
Article 8
REALTORS® shall keep in a special account in an appropriate
financial institution, separated from their own funds, monies
coming into their possession in trust for other persons, such as
escrows, trust funds, clients’ monies, and other like items.
Article 9
REALTORS®, for the protection of all parties, shall assure
whenever possible that all agreements related to real estate
transactions including, but not limited to, listing and
representation agreements, purchase contracts, and leases are in
writing in clear and understandable language expressing the
specific terms, conditions, obligations and commitments of the
parties. A copy of each agreement shall be furnished to each
party to such agreements upon their signing or initialing.
(Amended 1/04)
• Standard of Practice 9-1
For the protection of all parties, REALTORS® shall use
reasonable care to ensure that documents pertaining to the
purchase, sale, or lease of real estate are kept current through
the use of written extensions or amendments. (Amended 1/93)
Duties to the Public
Article 10
REALTORS® shall not deny equal professional services to any
person for reasons of race, color, religion, sex, handicap,
familial status, or national origin. REALTORS® shall not be
parties to any plan or agreement to discriminate against a
person or persons on the basis of race, color, religion, sex,
handicap, familial status, or national origin. (Amended 1/90)
REALTORS®, in their real estate employment practices, shall not
discriminate against any person or persons on the basis of race,
color, religion, sex, handicap, familial status, or national
origin. (Amended 1/00)
• Standard of Practice 10-1
When involved in the sale or lease of a residence, REALTORS®
shall not volunteer information regarding the racial, religious
or ethnic composition of any neighborhood nor shall they engage
in any activity which may result in panic selling, however,
REALTORS® may provide other demographic information. (Adopted
1/94, Amended 1/06)
• Standard of Practice 10-2
When not involved in the sale or lease of a residence, REALTORS®
may provide demographic information related to a property,
transaction or professional assignment to a party if such
demographic information is (a) deemed by the REALTOR® to be
needed to assist with or complete, in a manner consistent with
Article 10, a real estate transaction or professional assignment
and (b) is obtained or derived from
a recognized, reliable, independent, and
impartial source. The source of such information and any
additions, deletions, modifications, interpretations, or other
changes shall be disclosed in reasonable detail. (Adopted 1/05,
Renumbered 1/06)
• Standard of Practice 10-3
REALTORS® shall not print, display or circulate any statement or
advertisement with respect to selling or renting of a property
that indicates any preference, limitations or discrimination
based on race, color, religion, sex, handicap, familial status,
or national origin. (Adopted 1/94, Renumbered 1/05 and 1/06)
• Standard of Practice 10-4
As used in Article 10 “real estate employment practices” relates
to employees and independent contractors providing real
estate-related services and the administrative and clerical
staff directly supporting those individuals. (Adopted 1/00,
Renumbered 1/05 and 1/06)
Article 11
The services which REALTORS® provide to their clients and
customers shall conform to the standards of practice and
competence which are reasonably expected in the specific real
estate disciplines in which they engage; specifically,
residential real estate brokerage, real property management,
commercial and industrial real estate brokerage, real estate
appraisal, real estate counseling, real estate syndication, real
estate auction, and international real estate.
REALTORS® shall not undertake to provide specialized
professional services concerning a type of property or service
that is outside their field of competence unless they engage the
assistance of one who is competent on such types of property or
service, or unless the facts are fully disclosed to the client.
Any persons engaged to provide such assistance shall be so
identified to the client and their contribution to the
assignment should be set forth. (Amended 1/95)
• Standard of Practice 11-1
When REALTORS® prepare opinions of real property value or price,
other than in pursuit of a listing or to assist a potential
purchaser in formulating a purchase offer, such opinions shall
include the following:
1) identification of the subject property
2) date prepared
3) defined value or price
4) limiting conditions, including statements of purpose(s) and
intended user(s)
5) any present or contemplated interest, including the
possibility of representing the seller/landlord or
buyers/tenants
6) basis for the opinion, including applicable market data
7) if the opinion is not an appraisal, a statement to that
effect (Amended 1/01)
• Standard of Practice 11-2
The obligations of the Code of Ethics in respect of real estate
disciplines other than appraisal shall be interpreted and
applied in accordance with the standards of competence and
practice which clients and the public reasonably require to
protect their rights and interests considering the complexity of
the transaction, the availability of expert assistance, and,
where the REALTOR® is an agent or subagent, the obligations of a
fiduciary. (Adopted 1/95)
• Standard of Practice 11-3
When REALTORS® provide consultive services to clients which
involve advice or counsel for a fee (not a commission), such
advice shall be rendered in an objective manner and the fee
shall not be contingent on the substance of the advice or
counsel given. If brokerage or transaction services are to be
provided in addition to consultive services, a separate
compensation may be paid with prior agreement between the client
and REALTOR®. (Adopted 1/96)
• Standard of Practice 11-4
The competency required by Article 11 relates to services
contracted for between REALTORS® and their clients or customers;
the duties expressly imposed by the Code of Ethics; and the
duties imposed by law or regulation. (Adopted 1/02)
Article 12
REALTORS® shall be careful at all times to present a true
picture in their advertising and representations to the public.
REALTORS® shall also ensure that their professional status
(e.g., broker, appraiser, property manager, etc.) or status as
REALTORS® is clearly identifiable in any such advertising.
(Amended 1/93)
• Standard of Practice 12-1
REALTORS® may use the term “free” and similar terms in their
advertising and in other representations provided that all terms
governing availability of the offered product or service are
clearly disclosed at the same time. (Amended 1/97)
• Standard of Practice 12-2
REALTORS® may represent their services as “free” or without cost
even if they expect to receive compensation from a source other
than their client provided that the potential for the REALTOR®
to obtain a benefit from a third party is clearly disclosed at
the same time. (Amended 1/97)
• Standard of Practice 12-3
The offering of premiums, prizes, merchandise discounts or other
inducements to list, sell, purchase, or lease is not, in itself,
unethical even if receipt of the benefit is contingent on
listing, selling, purchasing, or leasing through the REALTOR®
making the offer. However, REALTORS® must exercise care and
candor in any such advertising or other public or private
representations so that any party interested in receiving or
otherwise benefiting from the REALTOR®’s offer will have clear,
thorough, advance understanding of all the terms and conditions
of the offer. The offering of any inducements to do business is
subject to the limitations and restrictions of state law and the
ethical obligations established by any applicable Standard of
Practice. (Amended 1/95)
• Standard of Practice 12-4
REALTORS® shall not offer for sale/lease or advertise property
without authority. When acting as listing brokers or as
subagents, REALTORS® shall not quote a price different from that
agreed upon with the seller/landlord. (Amended 1/93)
• Standard of Practice 12-5
REALTORS® shall not advertise nor permit any person employed by
or affiliated with them to advertise listed property without
disclosing the name of the firm. (Adopted 11/86)
• Standard of Practice 12-6
REALTORS®, when advertising unlisted real property for
sale/lease in which they have an ownership interest, shall
disclose their status as both owners/landlords and as REALTORS®
or real estate licensees. (Amended 1/93)
• Standard of Practice 12-7
Only REALTORS® who participated in the transaction as the
listing broker or cooperating broker (selling broker) may claim
to have “sold” the property. Prior to closing, a cooperating
broker may post a “sold” sign only with the consent of the
listing broker. (Amended 1/96)
Article 13
REALTORS® shall not engage in activities that constitute the
unauthorized practice of law and shall recommend that legal
counsel be obtained when the interest of any party to the
transaction requires it.
Article 14
If charged with unethical practice or asked to present evidence
or to cooperate in any other way, in any professional standards
proceeding or investigation, REALTORS® shall place all pertinent
facts before the proper tribunals of the Member Board or
affiliated institute, society, or council in which membership is
held and shall take no action to disrupt or obstruct such
processes. (Amended 1/99)
• Standard of Practice 14-1
REALTORS® shall not be subject to disciplinary proceedings in
more than one Board of REALTORS® or affiliated institute,
society or council in which they hold membership with respect to
alleged violations of the Code of Ethics relating to the same
transaction or event. (Amended 1/95)
• Standard of Practice 14-2
REALTORS® shall not make any unauthorized disclosure or
dissemination of the allegations, findings, or decision
developed in connection with an ethics hearing or appeal or in
connection with an arbitration hearing or procedural review.
(Amended 1/92)
• Standard of Practice 14-3
REALTORS® shall not obstruct the Board’s investigative or
professional standards proceedings by instituting or threatening
to institute actions for libel, slander or defamation against
any party to a professional standards proceeding or their
witnesses based on the filing of an arbitration request, an
ethics complaint, or testimony given before any tribunal.
(Adopted 11/87, Amended 1/99)
• Standard of Practice 14-4
REALTORS® shall not intentionally impede the Board’s
investigative or disciplinary proceedings by filing multiple
ethics complaints based on the same event or transaction.
(Adopted 11/88)
Duties to REALTORS®
Duties to the REALTORS®
Article 15
REALTORS® shall not knowingly or recklessly make false or
misleading statements about competitors, their businesses, or
their business practices. (Amended 1/92)
• Standard of Practice 15-1
REALTORS® shall not knowingly or recklessly file false or
unfounded ethics complaints. (Adopted 1/00)
Article 16
REALTORS® shall not engage in any practice or take any action
inconsistent with exclusive representation or exclusive
brokerage relationship agreements that other REALTORS® have with
clients. (Amended 1/04)
• Standard of Practice 16-1
Article 16 is not intended to prohibit aggressive or innovative
business practices which are otherwise ethical and does not
prohibit disagreements with other REALTORS® involving
commission, fees, compensation or other forms of payment or
expenses. (Adopted 1/93, Amended 1/95)
• Standard of Practice 16-2
Article 16 does not preclude REALTORS® from making general
announcements to prospects describing their services and the
terms of their availability even though some recipients may have
entered into agency agreements or other exclusive relationships
with another REALTOR®. A general telephone canvass, general
mailing or distribution addressed to all prospects in a given
geographical area or in a given profession, business, club, or
organization, or other classification or group is deemed
“general” for purposes of this standard. (Amended 1/04)
Article 16 is intended to recognize as unethical two basic types
of solicitations:
First, telephone or personal solicitations of property owners
who have been identified by a real estate sign, multiple listing
compilation, or other information service as having exclusively
listed their property with another REALTOR®; and
Second, mail or other forms of written solicitations of
prospects whose properties are exclusively listed with another
REALTOR® when such solicitations are not part of a general
mailing but are directed specifically to property owners
identified through compilations of current listings, “for sale”
or “for rent” signs, or other sources of information required by
Article 3 and Multiple Listing Service rules to be made
available to other REALTORS® under offers of subagency or
cooperation. (Amended 1/04)
• Standard of Practice 16-3
Article 16 does not preclude REALTORS® from contacting the
client of another broker for the purpose of offering to provide,
or entering into a contract to provide, a different type of real
estate service unrelated to the type of service currently being
provided (e.g., property management as opposed to brokerage) or
from offering the same type of service for property not subject
to other brokers’ exclusive agreements. However, information
received through a Multiple Listing Service or any other offer
of cooperation may not be used to target clients of other
REALTORS® to whom such offers to provide services may be made.
(Amended 1/04)
• Standard of Practice 16-4
REALTORS® shall not solicit a listing which is currently listed
exclusively with another broker. However, if the listing broker,
when asked by the REALTOR®, refuses to disclose the expiration
date and nature of such listing; i.e., an exclusive right to
sell, an exclusive agency, open listing, or other form of
contractual agreement between the listing broker and the client,
the REALTOR® may contact the owner to secure such information
and may discuss the terms upon which the REALTOR® might take a
future listing or, alternatively, may take a listing to become
effective upon expiration of any existing exclusive listing.
(Amended 1/94)
• Standard of Practice 16-5
REALTORS® shall not solicit buyer/tenant agreements from buyers/
tenants who are subject to exclusive buyer/tenant agreements.
However, if asked by a REALTOR®, the broker refuses to disclose
the expiration date of the exclusive buyer/tenant agreement, the
REALTOR® may contact the buyer/tenant to secure such information
and may discuss the terms upon which the REALTOR® might enter
into a future buyer/tenant agreement or, alternatively, may
enter into a buyer/tenant agreement to become effective upon the
expiration of any existing exclusive buyer/tenant agreement.
(Adopted 1/94, Amended 1/98)
• Standard of Practice 16-6
When REALTORS® are contacted by the client of another REALTOR®
regarding the creation of an exclusive relationship to provide
the same type of service, and REALTORS® have not directly or
indirectly initiated such discussions, they may discuss the
terms upon which they might enter into a future agreement or,
alternatively, may enter into an agreement which becomes
effective upon expiration of any existing exclusive agreement.
(Amended 1/98)
• Standard of Practice 16-7
The fact that a prospect has retained a REALTOR® as an exclusive
representative or exclusive broker in one or more past
transactions does not preclude other REALTORS® from seeking such
prospect’s future business. (Amended 1/04)
• Standard of Practice 16-8
The fact that an exclusive agreement has been entered into with
a REALTOR® shall not preclude or inhibit any other REALTOR® from
entering into a similar agreement after the expiration of the
prior agreement. (Amended 1/98)
• Standard of Practice 16-9
REALTORS®, prior to entering into a representation agreement,
have an affirmative obligation to make reasonable efforts to
determine whether the prospect is subject to a current, valid
exclusive agreement to provide the same type of real estate
service. (Amended 1/04)
• Standard of Practice 16-10
REALTORS®, acting as buyer or tenant representatives or brokers,
shall disclose that relationship to the seller/landlord’s
representative or broker at first contact and shall provide
written confirmation of that disclosure to the seller/
landlord’s representative or broker not later than execution of
a purchase agreement or lease. (Amended 1/04)
• Standard of Practice 16-11
On unlisted property, REALTORS® acting as buyer/tenant
representatives or brokers shall disclose that relationship to
the seller/landlord at first contact for that buyer/tenant and
shall provide written confirmation of such disclosure to the
seller/landlord not later than execution of any purchase or
lease agreement. (Amended 1/04)
REALTORS® shall make any request for anticipated compensation
from the seller/landlord at first contact. (Amended 1/98)
• Standard of Practice 16-12
REALTORS®, acting as representatives or brokers of
sellers/landlords or as subagents of listing brokers, shall
disclose that relationship to buyers/tenants as soon as
practicable and shall provide written confirmation of such
disclosure to buyers/tenants not later than execution of any
purchase or lease agreement. (Amended 1/04)
• Standard of Practice 16-13
All dealings concerning property exclusively listed, or with
buyer/tenants who are subject to an exclusive agreement shall be
carried on with the client’s representative or broker, and not
with the client, except with the consent of the client’s
representative or broker or except where such dealings are
initiated by the client.
Before providing substantive services (such as writing a
purchase offer or presenting a CMA) to prospects, REALTORS®
shall ask prospects whether they are a party to any exclusive
representation agreement. REALTORS® shall not knowingly provide
substantive services concerning a prospective transaction to
prospects who are parties to exclusive representation
agreements, except with the consent of the prospects’ exclusive
representatives or at the direction of prospects. (Adopted 1/93,
Amended 1/04)
• Standard of Practice 16-14
REALTORS® are free to enter into contractual relationships or to
negotiate with sellers/ landlords, buyers/tenants or others who
are not subject to an exclusive agreement but shall not
knowingly obligate them to pay more than one commission except
with their informed consent. (Amended 1/98)
• Standard of Practice 16-15
In cooperative transactions REALTORS® shall compensate
cooperating REALTORS® (principal brokers) and shall not
compensate nor offer to compensate, directly or indirectly, any
of the sales
licensees employed by or affiliated with other REALTORS® without
the prior express knowledge and consent of the cooperating
broker.
• Standard of Practice 16-16
REALTORS®, acting as subagents or buyer/tenant representatives
or brokers, shall not use the terms of an offer to
purchase/lease to attempt to modify the listing broker’s offer
of compensation to subagents or buyer/tenant representatives or
brokers nor make the submission of an executed offer to
purchase/lease contingent on the listing broker’s agreement to
modify the offer of compensation. (Amended 1/04)
• Standard of Practice 16-17
REALTORS®, acting as subagents or as buyer/tenant
representatives or brokers, shall not attempt to extend a
listing broker’s offer of cooperation and/or compensation to
other brokers without the consent of the listing broker.
(Amended 1/04)
• Standard of Practice 16-18
REALTORS® shall not use information obtained from listing
brokers through offers to cooperate made through multiple
listing services or through other offers of cooperation to refer
listing brokers’ clients to other brokers or to create
buyer/tenant relationships with listing brokers’ clients, unless
such use is authorized by listing brokers. (Amended 1/02)
• Standard of Practice 16-19
Signs giving notice of property for sale, rent, lease, or
exchange shall not be placed on property without consent of the
seller/landlord. (Amended 1/93)
• Standard of Practice 16-20
REALTORS®, prior to or after terminating their relationship with
their current firm, shall not induce clients of their current
firm to cancel exclusive contractual agreements between the
client and that firm. This does not preclude REALTORS®
(principals) from establishing agreements with their ASSOCIATEd
licensees governing assignability of exclusive agreements.
(Adopted 1/98)
Article 17
In the event of contractual disputes or specific non-contractual
disputes as defined in Standard of Practice 17-4 between
REALTORS® (principals) ASSOCIATEd with different firms, arising
out of their relationship as REALTORS®, the REALTORS® shall
submit the dispute to arbitration in accordance with the
regulations of their Board or Boards rather than litigate the
matter.
In the event clients of REALTORS® wish to arbitrate contractual
disputes arising out of real estate transactions, REALTORS®
shall arbitrate those disputes in accordance with the
regulations of their Board, provided the clients agree to be
bound by the decision.
The obligation to participate in arbitration contemplated by
this Article includes the obligation of REALTORS® (principals)
to cause their firms to arbitrate and be bound by any award.
(Amended 1/01)
• Standard of Practice 17-1
The filing of litigation and refusal to withdraw from it by
REALTORS® in an arbitrable matter constitutes a refusal to
arbitrate. (Adopted 2/86)
• Standard of Practice 17-2
Article 17 does not require REALTORS® to arbitrate in those
circumstances when all parties to the dispute advise the Board
in writing that they choose not to arbitrate before the Board.
(Amended 1/93)
• Standard of Practice 17-3
REALTORS®, when acting solely as principals in a real estate
transaction, are not obligated to arbitrate disputes with other
REALTORS® absent a specific written agreement to the contrary.
(Adopted 1/96)
• Standard of Practice 17-4
Specific non-contractual disputes that are subject to
arbitration pursuant to Article 17 are:
1) Where a listing broker has compensated a cooperating broker
and another cooperating broker subsequently claims to be the
procuring cause of the sale or lease. In such cases the
complainant may name the first cooperating broker as respondent
and arbitration may proceed without the listing broker being
named as a respondent. Alternatively, if the complaint is
brought against the listing broker, the listing broker may name
the first cooperating broker as a third-party respondent. In
either instance the decision of the hearing panel as to
procuring cause shall be conclusive with respect to all current
or subsequent claims of the parties for compensation arising out
of the underlying cooperative transaction. (Adopted 1/97)
2) Where a buyer or tenant representative is compensated by the
seller or landlord, and not by the listing broker, and the
listing broker, as a result, reduces the commission owed by the
seller or landlord and, subsequent to such actions, another
cooperating broker claims to be the procuring cause of sale or
lease. In such cases the complainant may name the first
cooperating broker as respondent and arbitration may proceed
without the listing broker being named as a respondent.
Alternatively, if the complaint is brought against the listing
broker, the listing broker may name the first cooperating broker
as a third-party respondent. In either instance the decision of
the hearing panel as to procuring cause shall be conclusive with
respect to all current or subsequent claims of the parties for
compensation arising out of the underlying cooperative
transaction. (Adopted 1/97)
3) Where a buyer or tenant representative is compensated by the
buyer or tenant and, as a result, the listing broker reduces the
commission owed by the seller or landlord and, subsequent to
such actions, another cooperating broker claims to be the
procuring cause of sale or lease. In such cases the complainant
may name the first cooperating broker as respondent and
arbitration may proceed without the listing broker being named
as a respondent. Alternatively, if the complaint is brought
against the listing broker, the listing broker may name the
first cooperating broker as a third-party respondent. In either
instance the decision of the hearing panel as to procuring cause
shall be conclusive with respect to all current or subsequent
claims of the parties for compensation arising out of the
underlying cooperative transaction. (Adopted 1/97)
4) Where two or more listing brokers claim entitlement to
compensation pursuant to open listings with a seller or landlord
who agrees to participate in arbitration (or who requests
arbitration) and who agrees to be bound by the decision. In
cases where one of the listing brokers has been compensated by
the seller or landlord, the other listing broker, as
complainant, may name the first listing broker as respondent and
arbitration may proceed between the brokers. (Adopted 1/97)
5) Where a buyer or tenant representative is compensated by the
seller or landlord, and not by the listing broker, and the
listing broker, as a result, reduces the commission owed by the
seller or landlord and, subsequent to such actions, claims to be
the procuring cause of sale or lease. In such cases arbitration
shall be between the listing broker and the buyer or tenant
representative and the amount in dispute is limited to the
amount of the reduction of commission to which the listing
broker agreed. (Adopted 1/05)
The Code of Ethics was adopted in 1913. Amended at the Annual
Convention in 1924, 1928, 1950, 1951, 1952, 1955, 1956, 1961,
1962, 1974, 1982, 1986, 1987, 1989, 1990, 1991, 1992, 1993,
1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004
and 2005.
Explanatory Notes
The reader should be aware of the following policies which have
been approved by the Board of Directors of the National
Association:
In filing a charge of an alleged violation of the Code of Ethics
by a REALTOR®, the charge must read as an alleged violation of
one or more Articles of the Code. Standards of Practice may be
cited in support of the charge.
The Standards of Practice serve to clarify the ethical
obligations imposed by the various Articles and supplement, and
do not substitute for, the Case Interpretations in
Interpretations of the Code of Ethics.
Modifications to existing Standards of Practice and additional
new Standards of Practice are approved from time to time.
Readers are cautioned to ensure that the most recent
publications are utilized.
Section 1031 – A 75
Year History
IRC 1031 – “No gain or loss is recognized if
property held for productive use in a trade or business or for
investment is exchanged solely for property of a like-kind to be
held either for productive use in a trade or business or for
investment”.
What Type of Properties Qualify For A 1031
Exchange?
-
Any property held for productive use in
trade or business or for investment such as Real Estate,
Aircraft, Equipment, Vehicles
-
Properties are like kind if they fall
into the same:
- North American Industry Classification System (NAICS)
NOTE: Section 1031 excludes certain property such as bonds,
stocks and partnership interests
Advantages of 1031 Exchange
-
Defer paying taxes on the disposition of
depreciated property (i.e. Real Estate)
-
Retain the use of money that otherwise
would have been paid in tax ~ The Time Value ~
-
Leverage 100% of the proceeds from the
sale of Relinquished Property to acquire like-kind
Replacement Property
Disadvantages of Exchanges
-
Basis in the Replacement Property will be
reduced
- Example: Sell for $500,000 with a tax basis of $250,000
- Replace for $650,000 which will result in an adjusted tax
basis of $400,000
Trade Off
-
Pay tax on sale of the Relinquished
Property and depreciate the Replacement Property from its
full fair market value; or,
-
1031 Exchange into Replacement Property,
defer the tax and forego future depreciation
Therefore: The True Value of the 1031 Exchange is the
Time Value of Money
Role of the Qualified Intermediary
-
An arms length independent third party
that acquires the Relinquished Property from the taxpayer
and transfers it to a third party buyer, and subsequently
acquires the Replacement Property from a third party seller
and transfers it to the taxpayer to complete the exchange
-
Provides documentation to structure the
transaction
-
Responsible for safeguarding the proceeds
from the sale of the Relinquished Property in a Qualified
Escrow or Trust Account, and transferring such proceeds to
either the seller of the Replacement Property or back to the
taxpayer if a Replacement Property is not identified within
45 days or an identified Replacement Property is not closed
on within 180 days
What Guidelines Must I Follow?
-
Establish Intent to Exchange prior to
sale
-
Acquire Replacement Property equal to or
greater in value than the Relinquished Property with equal
or greater debt
-
Reciprocal exchange of property rights
with the Qualified Intermediary
-
New proceeds from the sale of the
Relinquished Property must be used to acquire Replacement
Property
-
Follow strict timing rules
Timing
Straightforward Exchange Documents
-
Exchange Agreement
-
Qualified Escrow Agreement or Qualified
Trust
-
Assignment of Rights to the Relinquished
Real Estate
-
Assignment of Rights to the Replacement
Real Estate
-
Purchase and Sale (P & S) Addenda or 1031
Language for both the Relinquished and Replacement Real
Estate
Reverse Exchange
-
In September of 2000, the IRS issued
Revenue Procedure 2000-37 providing a safe harbor for
structuring Reverse Exchanges when a taxpayer needs to
purchase the Replacement Property prior to selling the
Relinquished Property
-
Revenue Procedure 2000-37 approves the
use of an Exchange Accommodation Titleholder (EAT) to
control timing and value issues
-
An EAT is defined as an arms length
independent party used to “Park” the Relinquished or
Replacement Property and hold “Qualified Indicia of
Ownership”
Exchange Last Documents
-
Assignment of the Purchase Agreement to
the EAT for Replacement Real Estate
-
Promissory Note for the purchase price of
the Replacement Real Estate (EAT as Maker, Lender as Payee)
-
Commercial Real Estate Mortgage to secure
lender’s interest
-
Net Ground Lease Agreement (Triple Net)
with an option to Purchase
-
QEAA (Qualified Exchange Accommodation
Agreement)
-
Exchange Contract
-
Qualified Escrow Agreement (if required)
-
Assignments of Rights to the Relinquished
Contract
-
Assignment of the Option
Exchange Last Timing
-
The EAT and the taxpayer have 5 days to
enter into a QEAA
-
Taxpayer has 45 days to Identify
Relinquished Real Estate
-
Taxpayer has 180 days to find a buyer for
the Relinquished Real Estate, close, and subsequently
exercise an option under the lease to purchase and close on
the Replacement Real Estate from the EAT
-
Buyer of Relinquished Real Estate from
the EAT cannot be the Exchanger or a disqualified party
For more information, go to
www.tvpx.com
Planning a
construction project?
Before altering any land surface within or near 100’ of wetlands
or a flood plain, or 200’ near a river, you need prior approval
of our town Conservation Commission, to comply with state and
local wetlands protection regulations. This would apply to work
ranging from minor site preparation and tree removal to larger,
land-altering activities in these areas.
Identifying and mapping wetlands areas can only be done by a
professional. Consult with the Conservation Commission at Town
Hall for procedural assistance as well as guidance through the
permitting process. Massachusetts was the
first state to adopt regulations protecting wetlands, because
they are essential in protecting our public and private water
supply, flood control, storm damage prevention, pollution
control, and provide habitats for fish and wildlife.
Whether you are interested in purchasing land
for development, building and selling new construction,
remodeling an existing home for resale or customizing a new home
to your needs, The Higgins Group offers one-stop shopping with
specialized knowledge of construction project management.
We can also help you prepare your home to maximize the market
value when you sell. We can assist you and with our network of
reliable local businesses and trades people we can recommend
experts such as:
-
Remodeling contractors to fix or update
features in your home
-
Painting and decorating professionals to
refresh your property
-
Professional organizers to maximize the
space in your home
-
Staging services to best highlight the
features of your home
-
Mobile storage solution and a coordinated
moving plan for a stress-free move to help complete the
process.
Our agent representatives, who have over 600
years of real estate experience collectively in the group and
are longstanding residents of this area, can offer the inside
knowledge and experience that you need to make the right
decisions!
We are now a member of The
Realty Guild
“Because all real estate is local”
About the Guild
Realty Guild members are a select group of independent real
estate offices not belonging to a franchise or chain. Membership
is exclusive, allowing one office per city or town. It is a
network of 80 companies servicing over 200 cities and towns. In
fact, if the Guild were to be looked at as one company, we would
be listed in the top 15 companies nation-wide.
Realty Guild offices are among the most respected and productive
in New England. Because all members are REALTORS, they follow a
strict code of ethics; because they own and control their own
business, they are free of corporate pressures; and because they
are committed to their communities they are responsive to your
needs.
Safety First!
New regulations for all homeowners and landlords take effect
March 31, 2006 State-mandated installation of
carbon monoxide detectors in all residential properties
containing fossil fuel burning equipment (e.g. furnace, boiler,
water heater, or fireplace) and/or indoor parking.
Prior to sale or transfer of such property, the fire department
must inspect for proper installation of both smoke detectors and
carbon monoxide detectors and issue a Certificate of Compliance.
Visit the links below for the state
regulations and further details regarding installation,
maintenance requirements, landlord duties, inspection and alarms
installed in dwellings of hearing impaired persons. Provided by
the Greater Boston Real Estate Board (GBREB)
New Regulations and
Summary of Regulations
Information from the Department of Fire Services
This information is provided
for educational purposes only. For legal interpretations of
these regulations please consult your attorney. For further
clarification of installation requirements please contact your
local fire department. |
