PROFESSIONAL STANDARDS FOR THE REAL ESTATE PROFESSIONAL

FROM: JOHN V. GIARDINELL, ASSOCIATION COUNSEL

It seemed appropriate for us to go over the changes to the Code of Ethics and Standards of Practice which are now in effect. Additionally, the California Association of REALTORS® adopted some changes to their Professional Standards Reference Manual which we will touch upon.

2007 CODE OF ETHICS CHANGES:

Revised Standard of Practice 1-2

This is now the introductory paragraph:

The duties imposed by the Code of Ethics encompass all real estate – related activities and transactions whether conducted in person, electronically, or through any other means.

New Standard of Practice 9-2

This is a new Standard of Practice which became effective in January, 2007 and it reads:

“When assisting or enabling a client or customer in establishing a contractual relationship (e.g., listing and representation agreements, purchase agreements, leases, etc.) electronically, REALTORS® shall make reasonable efforts to explain the nature and disclose the specific terms of the contractual relationship being established prior to it being agreed to by a contracting party.”

Revised Standard of Practice 12-5

REALTORS® shall not advertise nor permit any person employed by or affiliated with them to advertise listed property in any medium (e.g., electronically, print, radio, television, etc.) without disclosing the name of that REALTORS®’ firm in a reasonable and readily apparent manner.

The New Standards of Practice 12-8 through 12-11 and 15-2 cover REALTORS®’ obligations when presenting information over the internet including REALTORS®’ websites.

New Standard of Practice 12-8

The obligation to present a true picture in representations to the public includes information presented, provided, or displayed on REALTORS®’ websites. REALTORS® shall use reasonable efforts to ensure that information on their websites is current. When it becomes apparent that information on their website is no longer current or accurate, REALTORS® shall promptly take corrective action.

New Standard of Practice 12-9

REALTORS® firm websites shall disclose the firm’s name and state(s) of licensure in a reasonable and readily apparent manner. Websites of REALTORS® and non-member licensees affiliated with a REALTORS® firm shall disclose the firm’s name and that REALTORS®’s or non-member licensee’s state(s) of licensure in a reasonable and readily apparent manner.

New Standard of Practice 12-10

REALTORS®’ obligation to present a true picture in their advertising and representations to the public includes the URLs and domain names they use, and prohibits REALTORS® from: 1) engaging in deceptive or unauthorized framing of real estate brokerage websites; 2) manipulating (e.g., presenting content developed by others) listing content in any way that produces a deceptive or misleading result; or 3) deceptively using metatags, keywords or other devices/methods to direct, drive, or divert internet traffic, or to otherwise mislead consumers.

New Standard of Practice 12-11

REALTORS® intending to share or sell consumer information gathered via the Internet shall disclose that possibility in a reasonably and readily apparent manner.

New Standard of Practice 15-2

The obligation to refrain from making false or misleading statements about competitors’ businesses and competitors’ business practices includes the duty to not knowingly or recklessly repeat, retransmit, or republish by false or misleading statements made by others. This duty applies whether false or misleading statements are repeated in person, in writing, by technological means (e.g., the Internet), or by any other means.

Revised Standard of Practice 17-4

The following paragraphs were added into the center of sections one and two:

1) …When arbitration occurs between two (or more) cooperating brokers and where the listing broker is not a party, the amount in dispute and the amount of any potential resulting award is limited to the amount paid to the respondent by the listing broker and any amount credited or paid to a party to the transaction at the direction of the respondent.

2) …When arbitration occurs between two (or more) cooperating brokers and where the listing broker is not a party, the amount in dispute and the amount of any potential resulting award is limited to the amount paid to the respondent by the listing broker and any amount credited or paid to a party to the transaction at the direction of the respondent.

New Standard of Practice 17-5

The obligation to arbitrate established in Article 17 includes disputes between REALTORS^Ò (principals) in different states in instances where, absent an established inter–association arbitration agreement, the REALTOR^Ò (principal) requesting arbitration agrees to submit to the jurisdiction of, travel to, participate in, and be bound by any resulting award rendered in arbitration conducted by the respondent(s) REALTOR^Ò’s association, in instances where the respondent(s) REALTOR^Ò’s association determines that an arbitrable issue exists.

2007 CALIFORNIA ASSOCIATION OF REALTORS® PROFESSIONAL STANDARDS REFERENCE MANUAL

The California Association of REALTORS® (CAR) recently adopted three changes to Professional Standards as part of the recommendations of the Business Practices Task Force. The adoption of these proposals is not mandatory. The changes are as follows:

1. Venue. Ethics (Disciplinary Complaints) currently are filed where the respondent is a member. Under this change, they may also be filed where the property is located, at the option of the complainant. The adoption of this policy by each individual Association is not mandatory but strongly suggested by CAR.

2. Anonymous Complaints. A number of Associations have already adopted this CAR proposal. A Subcommittee of the Association’s Grievance Committee will be formed to investigate and prosecute anonymous Ethics (Disciplinary) Complaints. Members of the Subcommittee are appointed by the Grievance Chair, for a one-year term. Members of the Subcommittee must sign an agreement not to file any anonymous complaints for the year they are on the Subcommittee. When an anonymous complaint is received, the Grievance Chair assigns it to three impartial members of the Subcommittee. These Subcommittee members have the ability to investigate a complaint before making their decision, and are given authority to act for the Grievance Committee. In order to send a complaint to hearing ‘you must be able to touch it, hear it, and see it.’ (e.g., Article 12, advertising violations.)

Options for the Subcommittee are:

1) dismiss the complaint as unworthy of further consideration;

2) notify the respondent of the complaint and give an opportunity to correct; or

3) refer the complaint to the Association Executive committee for hearing.

If the Subcommittee, on behalf of the Grievance Committee, refers the matter for hearing, the Grievance Committee shall be the complaint, and one of the members of the Subcommittee shall represent the Grievance Committee at the hearing.”

Again, the adoption of this policy is not mandatory. If your Association’s Board of Directors decides to adopt this program, training will be available.

3. The third change was the formation of the Ethics Advocates program. The Ethics Advocate would be permitted to assist complainants draft and file their ethics complaints, and represent the complainant at the hearing. There were five Associations throughout the State selected, including Pacific West and Inland Valleys, to participate in a pilot program. We are awaiting additional information from CAR on this program and will provide further information once we receive it.