Membership Qualification Criteria for REALTOR® Applicants That Are Principals
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 who are principals in a real estate firm. The term “principal,” as used in the NAR Constitution and Bylaws and in this Membership Qualification Criteria policy includes licensed or certified individuals who are sole proprietors, partners in a partnership, officers or majority shareholders of a corporation, and office managers (including branch office managers) acting on behalf of principals of a real estate firm.
Associations may elect to adopt all, some, or none of the criteria. All membership qualification criteria adopted by an association must be set forth in its bylaws.
The Criteria and explanatory notes have the approval of National Association legal counsel, and were approved by the Board of Directors of the National Association of REALTORS® February 5, 1974, and amended in 1982, 1985, 1987,1990, 1991, 1996, 2001, 2006, 2007, and 2017.
An association may adopt and may require a REALTOR® applicant to provide satisfactory evidence of the following Membership Qualification Criteria:
1. An applicant must hold a valid real estate license and must be engaged with a real estate firm located within the state where the association is located or a contiguous state.
Explanation: Holding "a valid real estate license" means REALTOR® applicants who are principals in a real estate firm must have and maintain a current, valid license or certification to conduct real estate brokerage or appraisal of real property from an appropriate state regulatory agency.
2. An applicant must be actively engaged in the real estate business and its recognized fields.
Explanation: Being "actively engaged" in the real estate business means that on a continual and ongoing basis, the licensed or certified applicants is affiliated with a real estate firm and holds themselves out to the public as an individual seeking to service and servicing real estate business. Being actively engaged in the real estate business, and shall actively seek and service real estate business. It does not contemplate that applicants must devote all or even a majority of their time to the real estate business or derive any particular percentage of their income from such business. In addition, it does not contemplate that applicants shall have no other job or occupation.
Where question arises as to whether or not applicants are "actively engaged" in the real estate business, they shall be given the opportunity to present evidence related to the actual and intended scope of their business activities.
3. An Applicant must have a place of business within the state or a state contiguous thereto.
4. An Applicant must have no record of civil judgments imposed within the past seven (7) years involving judgments of civil rights laws, real estate license laws, or other laws prohibiting unprofessional conduct rendered by the courts or other lawful authorities.
5. An applicant who has a record of criminal conviction(s) within the past seven (7) years involving a crime that reasonably relates to the real estate business or puts clients, customers, or other real estate professionals at risk, must provide, and the association must consider, mitigating factors relating to that criminal history.
Explanation: Associations have an interest in ensuring that REALTORS® will protect the interests, property, and funds of their clients and that a REALTOR®’s actions will not discredit the REALTOR® organization or the real estate profession. The U.S. Department of Housing and Urban Development issued its “Guidance on Application of the Fair Housing Act Standards to Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions”, which cautions housing providers to be mindful of using criminal histories in making housing-related decisions may result in a disparate impact on a protected class in violation of the Fair Housing Act. Because the Fair Housing Act extends its protections to individuals seeking membership in a real estate organization, associations should also carefully consider how it uses criminal history as a basis to deny an individual membership in the association.
A crime that “reasonably relates to the real estate business” includes those affecting the applicant’s ability to fulfill the responsibilities and obligations of a real estate professional and uphold the REALTOR® Code of Ethics. A crime that reasonably “puts clients, customers, or other real estate professionals at risk” includes those involving dishonest, deceptive, or violent acts.
Applicants must be given the opportunity to provide mitigating factors, and the association must take into consideration such factors, related to the applicant’s criminal history, including but not limited to the: i) applicant’s age at the time of the conviction(s), ii) nature and seriousness of the crime; iii) extent and nature of past criminal activity; iv) time elapsed since criminal activity was engaged in; v) rehabilitative efforts undertaken by the applicant since the conviction(s); vi) facts and circumstances surrounding the conviction(s); and vii) evidence of current fitness to practice real estate.
Associations should be sure to apply the membership criteria to all applicants uniformly, and avoid making exceptions for one applicant while denying an exception to another applicant with a similar criminal history.
6. An applicant must provide information and an association may consider any information related to the following:
- All final findings of Code of Ethics violations and violations of other membership duties in any other association within the past three (3) years
- Pending ethics complaints (or hearings)
- Unsatisfied discipline pending
- Pending arbitration requests (or hearings)
- Unpaid arbitration awards or unpaid financial obligations to any other association or association MLS
- Any misuse of the term REALTOR® or REALTORS ® by the applicant or in the name of the applicant’s firm
Explanation: Article IV, Section 2, of the NAR Bylaws prohibits Member associations from knowingly granting REALTOR® or REALTOR-ASSOCIATE® membership to any applicant who has an unfulfilled sanction pending which was imposed by another association of REALTORS® for violation of the Code of Ethics. An applicant who i) has an ethics complaint or arbitration request or ii) an unfilled sanction that does not pertain to a violation of the Code of Ethics that is pending at another association of REALTORS® may be granted “provisional” membership provided all other qualifications for membership have been satisfied.
Associations may reconsider the membership status of such individuals when all pending ethics and arbitration matters (and related discipline) have been resolved or within six months from the date that provisional membership is approved if such matters have not been resolved. Provisional members shall be considered REALTORS® and shall be subject to all of the same privileges and obligations of REALTOR® membership.
7. An applicant and the real estate firm in which the applicant is a principal must not be named as a debtor in any bankruptcy judgements or pending bankruptcy proceeding within three (3) years of the date of the application for membership.
Qualification: If the applicant or the applicant’s real estate firm is named as a debtor in such bankruptcy proceeding, membership may not be denied unless the Board establishes that its interests and those of its members and the public could not be adequately protected by requiring that the applicant pay cash in advance for association dues and MLS fees for up to one (1) year from the date that membership is approved. In the event that an existing member initiates bankruptcy proceedings, the member may be placed on a "cash basis" from the date that bankruptcy is initiated until one (1) year from the date that the member has been discharged from bankruptcy.
8. An applicant must complete the association’s orientation course.
Qualification: It is presumed that the orientation course to be completed as a prerequisite for membership is confined to the subjects of the Constitution, Bylaws, policies, rules and regulations of the local Board, State Association, and the National Association as well as the Code of Ethics of the National Association. It is not contemplated that completion of the orientation course covering topics included in the licensing examination will be required for qualification.
9. An applicant must agree to continuously abide by the National Association of REALTORS® Code of Ethics.
10. An applicant must agree to abide by the constitution, bylaws, policy, and rules and regulations of the local board, state association, and the National Association of REALTORS®.
Explanation: By such agreement in the application, applicants assume a continuing membership obligation.
Important Note to Member Boards
When a Board declines to accept an applicant on the basis of failure to satisfy Membership Qualification Criteria 1, 4, 5 or 7, it is recommended that the association seek a declaratory judgment in the civil courts affirming its decision. An association’s local legal counsel should advise as to the proper form and procedures in seeking a declaratory judgment. To assist the association’s local legal counsel, there is a sample form included in the Code of Ethics and Arbitration Manual.