Updated May 11, 2020
The Importance of Appropriate and Responsible Membership Policy
The importance of appropriate and responsible membership policy by a business, trade, or professional association increases in proportion to the size and importance of the organization and its services and benefits to the membership. If membership in an association is important to the ability of an individual to compete successfully in the business or trade it represents, it is imperative that membership in such association be available to all eligible and qualified individuals on reasonable and nondiscriminatory terms. A business or trade association that does not provide membership access on such reasonable and nondiscriminatory terms is vulnerable to suit by those persons excluded arbitrarily and unreasonably from membership or arbitrarily and unreasonably expelled from membership in the association.
The law recognizes the right of a business, trade, or professional association to exist and operate to promote and elevate the professionalism, standards of conduct, and type of service provided by its members to the public (clients and customers). Further, the law recognizes, generally, the right of an association to limit its rights, benefits, privileges and services to its membership, so long as membership is available on reasonable and nondiscriminatory terms and conditions.
When associations fail to make membership available on reasonable and nondiscriminatory terms, and when individuals denied membership seek access to association services through the courts, such access often, if not invariably, is granted if the service sought is determined to represent a significant competitive advantage. Further, in such cases, not only may access be granted, but damages may be awarded for injury suffered for any period of time during which services are denied.
How Policies Are Created
Membership policy of a business, trade, or professional association is created by the governing documents of the organization, such as its constitution and bylaws, rules and regulations, code of ethics, and other policies, practices, and procedures existing in written or unwritten form. Membership policy is also created by "interpretations" of the governing documents of the association, and by resolutions or statements of policy approved and adopted from time to time in accordance with the procedures of the association for such approval and adoption. Such policy may be "recommended" or "required" of association members.
How Membership Policy Is Established By the National Association
- The Constitution and Bylaws of the National Association
- Official Interpretations of Article I, Section 2, Bylaws of the National Association
- The Code of Ethics and its interpretations
- Policies approved and adopted, from time to time, by the Board of Directors of the association, such as multiple listing policy and the Membership Qualification Criteria of the National Association
The criterion by which the National Association is guided when adopting rules and regulations applicable to Member Boards is to limit such rules and regulations to those issues of common concern to the REALTOR® organization as a whole. Issues of local impact are left for local resolution.
Membership Policy and Board Jurisdiction Committee
When questions of appropriate membership policy arise that do not appear to have clear and definitive answers in the Constitution and Bylaws of the National Association, or in other presently stated policies approved by the Board of Directors, such questions are referred to the Membership Policy and Board Jurisdiction Committee of the Association for consideration and recommendation to the Board of Directors. The final determination regarding a policy is made by the Board of Directors.
Local Board and State Association Governance
How Local Boards and State Associations Adopt National Policies
The policies of member boards are established by the board and multiple listing service bylaws, board and multiple listing service rules and regulations, policies, practices, and procedures, as approved and adopted by each board (i.e., the board's governing documents), according to its established procedures. Boards must agree to abide by the constitution and bylaws and other rules and regulations of the state association and National Association, and members of these boards have a similar commitment and obligation. All boards and all board members, as a condition of membership, agree to adhere to the Code of Ethics of the National Association.
Pitfalls to Avoid When Establishing Policy
- Board leadership must resist the temptation to overregulate the activities and conduct of the members. Rules and regulations must be maintained at the absolute minimum necessary to function, and should never operate to inhibit innovation, initiative or competition. In the past, some member boards have adopted multiple listing rules and regulations that seek to control or standardize such activities as advertising, financing, escrow, surveys, and title searches. Such subjects do not properly fall within the purview of a board or board multiple listing service.
- Another pitfall to avoid is failing to remain constantly aware of changes made in National Association policy, or to revise policy in a board's governing documents, then fail to advise the state association and National Association of such changes. Boards should advise the state association and National Association of any policy changes and provide such revisions to the National Association for review and response. This will ensure that the board remains in compliance with National Association policy and thus remain covered by the Master Professional Liability Insurance Policy.
- Most dangerous is to have in place bylaws and rules and regulations that are in compliance with policies of the National Association, but to follow other policies, practices, and procedures contrary or inconsistent with National Association policy.
Governing Document Review
Compliance with policies approved by the National Association's Boar of Directors is an ongoing obligation of boards and associations. This webpage explains the Association governing document review process.
Purpose and Function of a State Association of REALTORS®
A state association has two basic purposes:
- to integrate more closely the work of local, state, and national bodies
- to provide a means of permitting an individual in the real estate business, whose place of business is not located in the jurisdiction of a member board of REALTORS®, to become members of the National Association
By accepting conscientiously the great charge imposed upon them, state associations have established a record of outstanding service and leadership to their local member boards in their respective states.
State associations are invaluable links between the National Association and its member boards. By providing the leadership and expertise at the state level, and by creating an effective liaison between local boards and the National Association, a state association renders great service to the REALTOR® cause, serving constantly to improve the organization of REALTORS®.
NAR Membership Policy
NAR Constitution, Bylaws, and Interpretations of Bylaws
Membership in the National Association of REALTORS® is defined and described in Article I of the Constitution of the National Association. Membership in the National Association (as per Article III of the Constitution of the National Association, January 2002) consists of seven classes:
- member boards
- board members
- individual members
- national affiliate members
- international members
- affiliated institutes, societies and councils
- distinguished service award recipients
For fuller definition and description of membership, refer to Article Ill and its sections in their entirety and current provisions, as may be amended from time to time.
Special reference is made to:
- Article I -- Membership
- Article II -- Dues
- Article III -- Territorial Jurisdiction
- Article V -- Use of The Terms REALTOR®, REALTORS® and REALTOR ASSOCIATE®
These provisions relate to the most frequently recurring areas of interest and concern by member boards and board members.
When licensing to member boards the right and duty to control the use of terms "REALTOR®" and "REALTOR-ASSOCIATE®" and determining those qualified to use the terms, the National Association of REALTORS® delegates to local boards the authority and responsibility of ascertaining an applicant's qualifications for membership in accordance with the membership qualification criteria. It does not contemplate that member boards will impose arbitrary regulations contrary to practices governing professional or trade organizations or require members to conduct their business according to methods unrelated to ethical conduct.
The Three-way Agreement
A new member in a board of REALTORS® may find himself or herself perplexed when first hearing the term "Three-way Agreement" during a meeting of a board committee or a regular full membership meeting. However, the basic concept is simple. The term "Three-way Agreement" refers to the agreement of the National Association of REALTORS® with the state association and the member boards of that state. This agreement among the National Association and the state associations and local boards grants the right to use the term REALTORS® in the name of each state association and local board. The agreement also gives each association and board the right to grant the use of the terms REALTOR® and REALTOR-ASSOCIATE® within the territorial jurisdiction of each association and board to such individuals as deemed qualified for membership. In turn, the state associations and local boards agree to:
- accept the charge of properly granting and regulating the use of terms REALTOR® and REALTOR-ASSOCIATE®
- subscribe to the Code of Ethics of the National Association
- uphold and enforce the Code within the board's jurisdiction
Application Fees for Membership
Interpretation No. 2 of the Official Interpretations of Article 1, Section 2 of the Bylaws of the National Association provides that: "An initiation fee in excess of three times the amount of the annual rate of dues is an inequitable limitation on its membership."
Explanation: Member boards must not place unreasonable burdens on applicants for membership. The requirements for membership must be reasonable and nondiscriminatory.
The initiation fee, if any, charged by a board must not constitute an unreasonable barrier to membership of a person otherwise qualified, nor should a board seek to finance its activities and operations from initiation fees. Therefore, the National Association deems any initiation fee in excess of three times the amount of the annual rate of dues as inequitable.
Because under Interpretation No. 1, participation in a board multiple listing service is not mandatory, a board's initiation fee for membership, if any, must be separate from any participation fee that may be charged for the multiple listing service.
Local Board Dues
There are no membership dues payable directly to the National Association by REALTOR® and REALTOR-ASSOCIATE® members. REALTORS® and REALTOR-ASSOCIATES® are deemed members of the National Association when the local board or state association has paid its current dues and certified such individuals as members in good standing in the board or state association.
The Designated REALTOR® Dues Formula
Most member boards and associations adopt and use the designated REALTOR® dues formula established in Article X of the National Association's Model Bylaws for Local Member Boards, because this is the formula used by the National Association to assess dues of member boards.
This article, The REALTOR®'s Dues Formula—A Fair Share, by William D. North, former General Counsel of the National Association of REALTORS®, provides an in-depth discussion of the rationale for the dues formula. The article was published in the June 1981 issue of The Executive Officer.
Voluntary Nature of Membership
Membership in a board of REALTORS® is voluntary. No individual is required to seek and maintain membership in a board of REALTORS®, and with one notable exception, all aspects of membership in a board of REALTORS® is completely voluntary. The one exception to the voluntary nature of membership in a board of REALTORS® is stipulated in Article 111, Section 1.(C) 1 of the Constitution of the National Association which, with respect to the principals of real estate firms, partnerships, and corporations, states, in part, that: ". . . Each principal, partner, or corporate officer actively engaged in the real estate business within its state shall be required to become REALTOR® Members if any other principal of such firm, partnership, or corporation is a REALTOR® Member."
The rationale of the single mandatory aspect of board membership is to ensure a complete commitment on the part of all principals (as described above) of any firm to the Code of Ethics of the National Association, and to the constitution and bylaws and rules and regulations of the local board, state association, and the National Association. With respect to this complete commitment, it is contemplated that a firm, partnership, or corporation comprised of REALTOR® principals shall fully honor and abide by the same rights and obligations as the REALTOR® member or members comprising the firm, partnership, or corporation.
Availability of Membership on Reasonable and Nondiscriminatory Terms
Membership in a local board of REALTORS® must be available on reasonable and nondiscriminatory terms. Member boards of REALTORS® may have no qualification of membership more "rigorous" than the Membership Qualification Criteria of the National Association for applicants who are sole proprietors, partners or corporate officers, nor more "rigorous" than the Membership Qualification Criteria for applicants who are other than principals of a real estate firm, partnership or corporation.
These criteria must be applied equally and without discrimination, and to the extent incorporated into the local board bylaws to all individuals, whether they are applicants for membership in the board or current members of the board. With respect to the applicability of the membership qualification criteria to individuals who are presently members of the board, it is noted that the membership criteria are ongoing qualifications of membership. When a member fails to maintain the qualifications of membership established in a board's bylaws, the board may reconsider the individual's membership status to determine if the individual is eligible for another category of membership, or whether that individual has ceased to possess qualifications for any category of membership in the board.
Membership Qualification Criteria of the National Association for Applicants for REALTOR® Members
The following Membership Qualification Criteria have been developed by the Membership Policy and Board Jurisdiction Committee of the National Association to provide “reasonable and nondiscriminatory written requirements for membership.” These Membership Qualification Criteria are the most rigorous qualifications that an association of REALTORS® may require of REALTOR® applicants.
Board of Choice and Board of Choice Across State Lines
NAR offers a number of resources about the membership policy concerning Board of Choice.
Local Board Membership Categories
A board of REALTORS® determines by the provisions of its bylaws the categories of membership available in the board. Member boards must make REALTOR® membership available to the principals, partners, and corporate officers of real estate firms actively engaged in the real estate business within the state or a state contiguous thereto, and a board must provide REALTOR® membership to real estate salespersons, brokers, and licensed or certified appraisers employed by or affiliated as independent contractors with REALTOR® members of the board or, alternatively, make a category of REALTOR-ASSOCIATE® membership available to such individuals.
A board must also make available institute affiliate membership to individuals who hold a professional designation awarded by an institute, society, or council affiliated with the National Association that addresses a specialty area other than residential brokerage, or to individuals who otherwise hold a class of membership in such institute, society, or council that confers the right to hold office.
REALTOR® and REALTOR-ASSOCIATE® members, in good standing in a local board of REALTORS®, are automatically deemed to be REALTOR® and REALTOR-ASSOCIATE® members, respectively, in good standing with the state and National associations.
Other categories of membership in a local board may include:
- affiliate members
- public service members
- honorary members
- student members
Member boards are not precluded from offering other categories of membership not inconsistent with the membership policies of the National Association.
Association Processing of Membership Application and Action Taken to Suspend Or Terminate
The National Association has approved and made available to member boards a model application for membership in a board of REALTORS®. The form elicits that information from the applicant which is deemed relevant for consideration by the Membership Committee and the Board of Directors. These forms may be ordered in any quantity from Customer Service of the National Association at 1-800-874-6500.
A member board of REALTORS® may require applicants for membership in the board to complete an indoctrination course, as stated in Interpretation No. 18, Official Interpretations of Article 1, Section 2 of the Bylaws of the National Association, which provides that:
"A Board rule which seeks to attain the objectives of Articles 1, 2 and 3 of the Code of Ethics by requiring, as a condition of Board membership, completion of an objective and nondiscriminatory Indoctrination course with a stated passing grade in an examination thereon is not an inequitable limitation on its membership."
EXPLANATION: Each applicant may reasonably be expected to be thoroughly conversant with the requirements of the Code of Ethics and of the Bylaws, Rules and Regulations of the National Association of REALTORS®, the State Association, and the Member Board. Hence, a Board rule requiring that an applicant satisfactorily complete an objective and nondiscriminatory Indoctrination Course covering such requirements is not an inequitable limitation.
Denial of Membership
A real estate board is a membership association or corporation. It is also a business or trade association. It is an association organized for the purpose of improving the business in which its members engage through education, cooperation, exchange of information, and by the establishment and enforcement of ethical standards of practice for the benefit of the public.
In view of this, membership becomes a valuable right and can only be denied, revoked, or modified for good cause and only under circumstances that allow due process. An association of business competitors must admit to membership all qualified applicants.
If an applicant is excluded from membership, the grounds upon which he or she is not accepted should be clear, not speculative. No one should be excluded from membership because of a vigorously competitive manner of conducting business. There can be no arbitrary restrictions on membership, not only because of Article 1, Section 2 of the National Association's Bylaws, but also because of cogent legal reasons.
Qualifications should be limited to those directly relevant to the legitimate interest of a board. Permissible, valid criteria for REALTOR® and REALTOR-ASSOCIATE® membership in a board of REALTORS® is set forth in NAR’s Membership Qualification Criteria.
Whenever an application for membership is denied, the body acting on the application should maintain a full record of proceedings, sufficiently detailed to demonstrate, should the occasion arise, the specific basis or bases of disqualification.
Expulsion or Suspension From Membership
Expulsion and/or suspension from membership is covered in the Sanctioning Guidelines of the Code of Ethics & Arbitration Manual.
MLS Participation and Board Membership
It is reasonable that if a business, trade, or professional association makes membership available to all eligible and qualified individuals on reasonable and nondiscriminatory terms and conditions, the rights, benefits, privileges, and services can be limited to only members of the association. Conversely, non-members of such an association should not be able to "pick and choose" and accordingly demand access to one or more of such rights, benefits, privileges, or services, such as the multiple listing service of a board of REALTORS®. To have a sound legal basis for asserting and defending this principle, a member board of REALTORS® must have "open doors" of board membership on "reasonable and nondiscriminatory" terms. This can be assured by employing the following safeguards.
- Impose no membership qualification requirements more "rigorous" than the Membership Qualification Criteria of the National Association for REALTOR® members and REALTOR-ASSOCIATE® members, respectively.
- Have no membership policies that are inconsistent with or in violation of the official interpretations of Article 1, Section 2 of the Bylaws of the National Association in place.
- Ensure due process in any and all considerations of membership matters, especially with respect to denial, suspension, or expulsion from membership. Such denial, suspension, or expulsion should only be done with consultation and advice of board legal counsel. In each such case, the possible use of a petition for declaratory relief (or similar legal procedure in a state not having declaratory relief procedures) should be considered to confirm the propriety of the board's actions and to minimize any legal liability which might accrue to the board and its members from such denial, suspension, or expulsion.
- Seek information and assistance from the state association and National Association about unusual or difficult matters relative to membership.
If all of the safeguard procedures described above are in place, a board should have a solid and defensible basis for asserting and defending the right of the board to require membership in the board as a reasonable prerequisite to participation in the board's multiple listing service. However, even if it follows the safeguard practices, a board may encounter an individual or individuals who demand access to the multiple listing service without board membership. If this occurs, the board's leadership should request advice from the state and National associations and board legal counsel.
Procedures to Follow in States Other Than California, Florida, Georgia, and Alabama, Upon Demand for MLS Access by Non-Members
If a member board is faced with a demand for MLS participation without board membership, the state association and the Member Experience team of the National Association should be notified promptly of such demand and be informed of the details surrounding the matter. Further, upon notification and request, the Member Experience team will provide any further possible assistance that may be required.
A detailed explanation of each step follows.
- Explain that the multiple listing service is a board service, and invite application by any individual or individuals for such membership. Explain and emphasize the many rights, benefits, privileges, and services of the board.
- Process any board membership application received from such an individual or individuals promptly. Or, in absence of any application for board membership and upon continued demand for access to the multiple listing service, advise that any request by an individual or individuals will be presented to the board of directors for consideration.
- Upon the continued demand for access to the board multiple listing service without board membership, the board of directors of the board, with advice of counsel, may consider directing the board to:
- file a petition for declaratory relief (or the use of a similar legal procedure in any state not having declaratory relief procedure)
- seek a judgment to confirm the board's right to condition participation in the multiple listing service on board membership when such membership is available on reasonable and nondiscriminatory terms and conditions to all eligible and qualified individuals
- If civil suit is to be filed by the board, the board should seriously consider providing the multiple listing service to the individual or individuals demanding access to it, pending any final judgment in the suit. However, the board should document that it does not agree with the individual's alleged legal rights to participate in the its multiple listing service without board membership, and that the service is being provided as an interim measure until the legal question is adjudicated.
MLS Access Under Board of Choice
Under board of choice, MLS participation is available to any REALTOR® (principal) or any firm comprised of REALTORS® (principals), irrespective of where they hold primary membership, subject only to:
- their agreement to abide by any MLS rules and regulations
- agreement to arbitrate contractual disputes with other participants
- payment of any MLS dues, fees, and charges
The universal access to services component of board of choice is interpreted as requiring MLS participatory rights to be available to REALTOR® principals, or to firms comprised of REALTOR® principals, irrespective of where primary or secondary membership is held. This does not preclude an MLS from assessing REALTORS® who are not local primary or secondary members additional fees to offset actual expenses incurred in providing MLS services such as courier charges, long distance phone charges, etc., or for charging any participant specific fees for optional additional services. None of the foregoing shall be construed as requiring a board to grant MLS participatory rights under board of choice, where such rights were previously terminated by the action of that board's board of directors.
Membership Policy Statements Approved by the Board of Directors of the National Association of REALTORS®
See the official Membership Policy Statements approved by the Board of Directors of the National Association of REALTORS.