A REALTOR® completing the new member Code of Ethics orientation during any three (3) year cycle shall not be required to complete additional ethics training in respect of this requirement until a new three (3) year cycle commences.
Failure to complete the required periodic ethics training shall be considered a violation of a membership duty.
Failure to meet the requirement will result in suspension of membership for the first two months (January and February) of the year following the end of any three (3) year cycle or until the requirement is met, whichever occurs sooner. On March 1 of that year, the membership of a member who is still suspended as of that date will be automatically terminated.
Every Board and Association is required to provide access to necessary ethics training programs either locally, in conjunction with other Boards and Associations, or through other methods (including, but not limited to, home study, correspondence courses, or Internet-based instruction). Any training offered pursuant to this requirement must meet the learning objectives and minimum criteria established by the National Association of REALTORS® from time to time. (Amended 11/19)
I. Policy Summary for Periodic Ethics Training
Members of the National Association of REALTORS® are required to complete periodic ethics training of not less than 2 hours and 30 minutes of instructional time once every three years. Associations of REALTORS® are required to provide access to such programs to members either on their own, in conjunction with other Associations, or through some other method (such as home study, correspondence or internet-based online courses). Any course offered by an Association, regardless of format, must meet the learning objectives and minimum criteria for such courses as established by the National Association of REALTORS® from time to time.
II. Minimum Time for Training
A minimum of 2 hours and 30 minutes of instructional time every three years is required. To provide for maximum flexibility and choice in customizing training best suited for their members, associations may choose to format this time in different ways, including, but not limited to, the following formats:
- One class of 3 hours in length with two breaks of ten to fifteen minutes each. Depending on state law, this format may qualify for continuing education credit.
- Three classes of 50 minutes each.
- Six sessions of 25 minutes each. This format might envision a module or topic included as part of a board or association membership meeting.
- Inclusion of the required content and time elements into a full day or multi-day program. This format might include presenting a Code of Ethics course as part of a GRI program or Professional Standards Seminar.
Boards and associations should not divide the content into sessions of less than 25 minutes each unless the content is part of a longer program which includes other topics. For example, it would not be considered to be a reasonable division of content to have a five or ten minute "Code of Ethics" presentation at monthly board meetings.
III. Learning Objectives and Delivery Vehicles*
In order to provide for flexibility of content and presentation, the learning objectives below are divided into the two categories of required learning objectives and suggested learning objectives. Required learning objectives must be accomplished in every three year cycle.
In addition to the required objectives, boards and associations may teach the Suggested Learning Objectives below, or develop their own learning objectives to accomplish teaching the required material in each cycle, and keep the training current and relevant.
However, any learning objectives developed locally must cover at least one of the following:
- The Code of Ethics and its principles
- Professional standards procedures
- Arbitration, mediation, and/or ombudsman procedures
- Procuring cause claims
For example, an association could design a training that spends two hours and thirty minutes of instructional time on the Required Learning Objectives. Alternatively, an association could develop a training that spends one hour on the Required Learning Objectives and one hour and thirty minutes on the Suggested Learning Objectives. Finally, an association could have a Code of Ethics Training that spends thirty minutes of instructional time covering the Required Learning Objectives, then an additional two hours of instructional time covering agency (which relates Article 16), fair housing (which relates to Article 10), relevant license laws (which could relate to Articles 1, 2, 11, etc.) or appropriate advertising and interaction on social media (which could relate to Articles 12 or 15).
While it’s important to cover the Required Learning Objectives and keep other content relevant to the Code of Ethics and its enforcement process, associations have considerable flexibility in tailoring content to cover any number of issues that might be helpful and relevant to its membership. That being said, subjects such as MLS, lock box procedures, or membership duties are not considered content which fulfills the REALTORS® Code of Ethics Training requirement.
Associations may deliver Code of Ethics Training in a variety of formats. These formats may include, but are not limited to:
- Live classroom or meeting presentations
- Webinars or videos
- Online courses
If the association uses any method which is not presented in a “live” format (such as webinars, videos, or online courses), the association must include a measurement technique with the delivery vehicle to test the member’s understanding of the material. Typically, this measurement technique would be a test.
* Beginning in Cycle 7 (January 1, 2021), the revised mandatory learning objectives are in effect and include content on professionalism. NAR’s in-person course materials have already been updated to include this content.
Required Learning Objectives in Every Three-year Cycle:
Upon completion of the Code of Ethics Continuing Education materials, participants will be able to:
1. Identify at least two aspirational concepts in the Preamble to the Code of Ethics, describe the concept of general business ethics and identify how the Code of Ethics compares and contrasts with the concept of general business ethics.
This learning objective can be accomplished by examination of aspirational concepts in the Preamble such as:
1. The concept of striving to become and remain informed on issues affecting real estate.
2. Willingly sharing the fruit of one’s experience and study with other REALTORS®.
3. The elimination of practices which may damage the public, or bring discredit or dishonor to the real estate profession through Code enforcement and assisting regulatory bodies.
4. Urging the exclusive representation of clients.
5. The concept of not attempting to gain any unfair advantage over competitors.
6. Refraining from unsolicited comments about other practitioners and offering any opinions about competitors in an objective and professional manner.
7. The concept of wide distribution of land ownership.
8. Highest and best use of the land.
9. Principles of competency, fairness and high integrity.
10. Adherence to the Code regardless of inducement of profit or instruction from the client to the contrary.
11. The Golden Rule.
The concept of general business ethics can be described by reference to values, morals, decisions and personal/business judgments which are beyond the minimum standards typically set by the legal system. Likewise, the Code of Ethics embodies many of the central principles of business ethics but focuses on the objective measurement of the conduct of members in the specific business environment of real estate transactions
2. Describe the concepts of at least two of the following Articles of the Code of Ethics: Articles 1, 2, 3, 9, 11, 12, 16 and 17.
A synopsis of the concepts of the noted Articles and recommended Standards of Practice follows. The citing of "recommended" Standards of Practice does not preclude a board or association from using different Standards of Practice in the program.
Article 1: Basic concepts of the Article include the obligation to protect and promote the interests of the client and an explanation that this obligation is one of fidelity in the nature of a fiduciary relationship. The Article also specifies that this obligation of fidelity does not relieve the REALTOR® of the obligation to treat all parties honestly. Important Standards of Practice under Article 1 which are recommended to be discussed, as time allows, include:
Standard of Practice 1-5 defines the conditions under which a REALTOR® may engage in disclosed dual agency.
Standard of Practice 1-6 specifies the obligation to present all offers and counter-offers objectively and as quickly as possible.
Standards of Practice 1-7 and 1-8 include the obligation to present all offers until closing and/or acceptance (depending on the party with whom the REALTOR® is working) and specify additional conditions as to how and when this obligation applies.
Standard of Practice 1-9 defines the obligation of confidentiality.
Standards of Practice 1-12 and 1-13 specify disclosure obligations of REALTORS® upon taking a listing or entering into a buyer/tenant agreement.
Standard of Practice 1-15 authorizes disclosure of the existence of offers on a property with a seller’s approval.
Standard of Practice 1-16 cautions REALTORS® not to access or use, or allow others to access or use, listed property on terms and conditions other than those authorized by the seller.
Article 2: Article 2 might be commonly termed the "property or transaction disclosure" article. Its principles include the obligation not to exaggerate, misrepresent or conceal pertinent facts about the property or the transaction. Article 2 is limited, however, in that it does not include an obligation to discover latent defects, advise on matters outside the scope on one’s real estate license or to disclose facts which are confidential under the scope of agency duties. Standards of Practice 2-1 should be discussed in that it further clarifies the obligation to discover and disclose adverse factors. The discovery obligation extends only to those factors which would be within the expertise required by the real estate licensing authority and does not impose an obligation of expertise in other professional or technical disciplines.
Article 3: Article 3 is the "cooperation" article. The concepts of cooperation and compensation should be distinguished. In particular, the article’s admonition that the obligation of cooperation does not include the obligation to share commissions should be noted. Standards of Practice under Article 3 which are recommended include Standards of Practice 3-1, 3-2 and 3-4.
Standard of Practice 3-1 affirms the distinction between cooperation and compensation. Listing agents/brokers establish the terms and conditions of offers to cooperate. Cooperating brokers may not assume that cooperation includes compensation. Cooperating brokers must ascertain the terms of compensation, if any, before beginning efforts to accept the offer of cooperation.
Standard of Practice 3-1 obligates the REALTOR® making an offer of compensation to timely communicate any change in that offered compensation prior to the time a cooperating REALTOR® submits an offer to purchase/lease the property.
Standard of Practice 3-4 defines the disclosure obligations of listing agents/brokers to disclose dual or variable rate commission arrangements and the obligation of buyer/tenant representatives to disclose such information to their client.
Article 9: Article 9’s primary concept is to require REALTORS® to assure, whenever possible, that agreements be in writing, expressing the specific terms and obligations of the parties. In addition, Standard of Practice 9-1 amplifies this obligation by requiring REALTORS® to use reasonable care to ensure that these documents are kept current through the use of written extensions or amendments.
Article 11: Article 11 deals with the standard of competence a REALTOR® must maintain for the discipline in which the REALTOR® engages. In addition, the Article sets forth the principle that a REALTOR® who works outside the field of competence in which the REALTOR® typically engages must either engage the assistance of one who is competent in that field or fully disclose the facts to the client.
Article 12: Article 12 might be called the "truth in advertising" article. Its call is for REALTORS® to present a "true picture" in real estate related advertising and representations to the public, including those online and in social media. Standard of Practice 12-7 should be included for discussion. This Standard of Practice covers the use of the term "sold" in signs and advertising.
Article 16: Article 16 encompasses the idea of non-interference with agency and other exclusive relationships of other REALTORS®. Its central premise is that a REALTOR® shall not engage in any practice or take any action which is inconsistent with the agency or other exclusive relationship that other REALTORS® have with clients. While Article 16 is a relatively short Article, it has many Standards of Practice which have been established to support it. Discussion of the following Standards of Practice is recommended as time allows:
Standard of Practice 16-2: This Standard of Practice clarifies the types of personal, mail and other forms of written solicitations which are ethical and unethical. Explanation should be given that "general" types of solicitation, as defined in the Standard of Practice, are not unethical and that the Standard of Practice is narrow and specific as to the types of solicitations which are recognized as unethical under Article 16.
Standard of Practice 16-4 and 16-6: These two companion Standards of Practice specify the appropriate conduct of a REALTOR® when confronted with issues regarding solicitation of a listed property. While the basic premise of Standard of Practice 16-4 is that solicitation of a listing which is currently listed exclusively with another REALTOR® is unethical, procedures are set out in Standard of Practice 16-4 and 16-6 which modify this basic premise under certain limited conditions. Standard of Practice 16-5 deals with parallel issues in the solicitation of buyers/tenants subject to exclusive buyer/tenant agreements.
Standard of Practice 16-9: This Standard of Practice specifies the conditions under which a REALTOR® is required to inquire of a prospective client as to the client being subject to another exclusive agreement. The Standard of Practice requires REALTORS® to make reasonable efforts to determine whether the client is subject to another current, valid, exclusive agreement prior to the REALTOR® entering into an agency agreement or other exclusive relationship with the client.
Standard of Practice 16-13: Standard of Practice 16-13 sets out the obligation not to deal with another REALTOR®’s client who is subject to an exclusive agreement unless the client’s agent or broker gives consent or unless the client initiates such dealings.
Article 17: Article 17 is the REALTOR®’s obligation to arbitrate (and mediate, if required by the association) certain monetary disputes rather than litigate them. The conditions on mandatory arbitration are that the dispute must be a contractual or specific non-contractual dispute defined by Standard of Practice 17-4, be between REALTORS® associated with different firms and be arising out the their relationship as REALTORS®. Standard of Practice 17-4 defines the types of non-contractual disputes which are required to be arbitrated. Of the four non-contractual disputes in Standard of Practice 17-4, the first subparagraph is likely the most common occurrence, representing disputes between two co-brokers.
3. Identify possible violations of the Code of Ethics, specifically related to at least one of the two Articles selected in Objective #2 after participating in interactive learning methods such as case studies, quizzes, role play, and group discussion of fact scenarios.
Minimum content for this Learning Objective includes at least one interactive exercise which demonstrates some of the principles of the Articles and Standards of Practice discussed under Learning Objective #2. Boards and Associations may use interactive methods to accomplish Learning Objectives #2 and #3 together.
4. Briefly describe the professional standards enforcement process of the board or association.
This Learning Objective is not intended to require a complete "course" on Professional Standards Enforcement Procedures. The minimum content required by this Objective is a brief description of the Professional Standards enforcement process. Included would be one or more of the following concepts:
1.The basic steps in processing an ethics complaint and an arbitration request; that is, a written submission to the Grievance Committee, and if the complaint/request meets the standards set out by the procedures, the forwarding of the complaint/request to the Professional Standards Committee for a full hearing.
2. The difference between the Grievance Committee as an initial screening committee and the Professional Standards Committee as the decision- making committee.
3. The difference between an ethics complaint which deals with a member’s conduct and an arbitration request which deals with a money dispute between REALTORS®.
4. The types of discipline which may be imposed for a violation of the Code of Ethics.
5. How the Ombudsman and Mediation processes offer valuable alternative dispute resolution options for members.
Suggested Learning Objectives in Any Three-year Cycle
Boards and associations may choose to complete any or all of these learning objectives to fulfill the required minimum class time.
Upon completion of the Code of Ethics Continuing Education materials, participants will be able to:
1. Describe the concepts in selected Articles of the Code of Ethics (other than those selected in the required learning objectives).
Accomplishment of this learning objective follows the same pattern as Required Learning Objective #1.
2. Given interactive learning methods such as case studies, quizzes, role play, or group discussion of fact scenarios, identify possible violations of the Code of Ethics, specifically related to the Articles selected in Objective #1.
This learning objective is also accomplished as in Required Learning Objective #2.
3. Describe the history of the Code of Ethics as it relates to its origins, its influence on state licensing laws and its establishment of arbitration as the monetary dispute resolution process between REALTORS®.
This learning objective is directed to content of the following nature:
1. The Code of Ethics was adopted in 1913 as one of the first industry codes of ethics.
2. The Code of Ethics is a living document which is changed as necessary to meet the challenges of new business concepts which have developed during its history.
3. However, the Code of Ethics includes timeless concepts such as honesty, obligations to clients and avoidance of self-dealing.
4. The Code of Ethics was a precursor to state licensing of real estate practitioners.
5. The Code of Ethics was a model for many of the original state licensing laws.
6. The Code of Ethics has mandated the arbitration of money disputes between REALTORS® since its inception in 1913. REALTORS® have participated in this "Culture of Cooperation" for 100+ years and, as a result, have a unique system in which competitors cooperate and pay commissions to each other for such cooperation. This system is clearly to the public’s benefit in the efficient sale of real property.
4. List the major categories of the Articles of the Code of Ethics.
This learning objective begins the process of demonstrating the structure of the Code. Information to be included in this learning objective is a discussion of the way the Code is prioritized as to its categories, Articles and Standards of Practice. The instructor should discuss the fact that the Code is divided into three categories by design, with the idea that Duties to Clients and Customers is the first priority in the Code, Duties to the Public is the next priority, and Duties to REALTORS® is the final priority. The instructor should also then introduce the idea that the material within the categories is also prioritized. This introduction should lead into the next learning objective.
5. Describe the structure of the Code and its supporting materials.
Within this learning objective, the material should describe the Articles of the Code as the broadest statements of ethical principles embodied by the Code. Discussion should then proceed to the concept that the Standards of Practice further define the Article under which they are placed. Then, the Case Interpretations should be presented as hypothetical factual situations which have been described by the NAR Professional Standards Committee in which a hypothetical REALTOR® has been found in violation of the Code of Ethics or in which a hypothetical REALTOR® has been exonerated of an allegation of a violation of the Code of Ethics. In addition, further discussion should be included which describes the prioritization of the Articles of the Code beginning with the duties of highest priority (i.e. Article 1 and its obligation to protect and promote the interests of the client).
6. Identify the roles of the various committees of the association charged with enforcement of the Code of Ethics.
This learning objective should identify the various committees of the board which deal with professional standards matters. Specifically, the roles of the Grievance Committee, Professional Standards Committee, and the Board of Directors should be discussed.
7. Describe the concepts of due process used in enforcement hearing processes.
The concepts and elements of due process to be included in this learning objective are:
1. Due process is a basic right of the parties to a hearing.
2. The broadest statement of due process is the idea of conducting a hearing within the bounds of fundamental fairness.
3. Due process rights include the following rights:
a. Right to know nature of complaint/arbitration request in advance.
b. Opportunity to prepare an adequate defense.
c. Right to call witnesses.
d. Right to present evidence/testimony.
e. Right to cross-examine witnesses called by other side.
f. Right to have legal counsel present.
g. Right to a hearing before an impartial peer panel.
8. Given interactive learning methods such as case studies, quizzes, role play, or group discussion of fact scenarios, identify appropriate and inappropriate applications of the concepts of due process described in Objective #7.
Included in the interactive methods to demonstrate this learning objective could be mock hearings.
9. Briefly describe the bases upon which a procuring cause arbitration claim is decided.
This Learning Objective is not intended to be a course on arbitration or procuring cause. However, the minimum content for this Objective should include a brief discussion of the concept of procuring cause as the standard by which REALTOR® to REALTOR® commission disputes are decided; that the concept of procuring cause is determined by the factors specified by the NAR Professional Standards Committee in the Code of Ethics and Arbitration Manual; that no one factor, such as who showed the property first, who wrote the successful offer to purchase, or who secured a written agency agreement with the buyer, will determine the outcome of the case.
10. List at least three of the factors upon which a procuring cause arbitration claim is decided.
Content for this learning objective would be derived from the Code of Ethics and Arbitration Manual’s Appendix as to Suggested Factors for Consideration by a Hearing Panel in Arbitration.
11. Describe the processing of an ethics complaint.
This learning objective is directed to the Grievance Committee process in determining whether a complaint should be forwarded for a hearing, the Professional Standards Hearing Panel process and the appeal process.
12. Describe the processing of an arbitration claim.
This information should parallel that of Objective #11 for arbitration claims.
13. Given interactive learning methods such as case studies, quizzes, role play, or group discussion of fact scenarios, identify issues and possible outcomes in a procuring cause arbitration claim.
This learning objective envisions a discussion of issues in a procuring cause case and possible outcomes. Information should be taken from the Appendix on Suggested Factors for Consideration by a Hearing Panel in Arbitration, including the Sample Fact Analyses of arbitration cases contained in that appendix.
14. Describe the mediation process.
The primary focus of this objective is to describe the mediation process as a voluntary dispute resolution process available to parties to an arbitration claim before and/or after the Grievance Committee processes the case.
15. List the benefits of the mediation process.
While an extensive list could be developed, some of the benefits which might be discussed include:
1. The mediation process is voluntary and thus consensual. The parties decide the case only if they choose to settle.
2. The mediation process is "win-win" in the sense that each party comes away from a mediation agreement with something, as contrasted to an arbitration hearing in which there is a "winner" and "loser" and one party very well may leave the case with nothing.
3. If the parties reach an agreement in mediation, the deposits of the parties are returned.
4. Mediation is a much more informal process than an arbitration hearing.
5. While arbitration is confidential, mediation has fewer "outsiders" (e.g. panelists) involved and thus fewer persons will know of the dispute.
6. Because mediation is a consensual process rather than an adjudicative process, there is a greater likelihood of preserving relationships between the parties for future benefits and business of the parties.
16. Given interactive learning methods such as case studies, quizzes, role play, or group discussion of fact scenarios, demonstrate possible outcomes in a mediation of a procuring cause claim.
This learning objective might be accomplished by a mock mediation, group exercise on mediation or the like.
17. Describe the content and format of "Pathways to Professionalism"; discuss how it can enhance relations between REALTORS®, and how it ensures heightened professional services to consumers.