ETHICS CORNER

Articles 1 through 17 establish specific obligations.
Failure to observe these requirements subjects the
REALTOR® to disciplinary action.

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)

Case #6-3: Management Responsibility in Relation to Manager’s Enterprises (Reaffirmed Case #16-3 May, 1988. Transferred to Article 6 November, 1994.)

REALTOR® A managed a large apartment building for his client, Owner B. After the building had been under his management for two years, REALTOR® A acquired a vacant site adjacent to the building and developed it as an automobile parking lot with monthly rates set at $50. REALTOR® A advised Owner B of this action, feeling that it would be advantageous to the building, and Owner B indicated that he, too, felt this development was favorable to him.

Six months after opening his parking lot, REALTOR® A raised the monthly rate to $100. When this came to the attention of Owner B, he filed a complaint against REALTOR® A with the Board of REALTORS® charging that the parking rate increase represented an unethical attempt on the part of REALTOR® A to profit by Owner B’s investment in the apartment building; that REALTOR® A should have raised rents in the building but had instead substituted the rent increase with an increased rate in his parking lot.

A hearing was called on the complaint before the Board’s Professional Standards Committee. At the hearing, REALTOR® A presented data tabulating monthly parking rates in the general area of his enterprise, which showed that $100 was the average prevailing rate for similar facilities in the area. He also presented information which showed that the rent charged in Owner B’s building was relatively high in comparison with similar apartments in the area.

After careful review of this data, the Hearing Panel concluded that REALTOR® A’s parking lot enterprise had involved no expenditure of Owner B’s funds; that his action in establishing this business had met with Owner B’s approval at the outset; that REALTOR® A’s exhibits demonstrated that there was no merit to Owner B’s contention that a justified rent increase had been shunted into an increase in parking rates; that Owner B’s interests had in no sense been betrayed; that the proximity of the parking area continued to be an asset to Owner B’s building; and that REALTOR® A was not in violation of Article 6.