Q. We received an application from someone with a criminal history. Can we deny membership based on that alone?
The bases upon which an applicant for REALTOR® membership may be denied are established in your association’s bylaws and clarified in NAR’s membership qualification criteria. If the association has adopted language in its bylaws stating “no record of criminal convictions” or “no record of official sanctions,” then the association may consider convictions within the past seven years involving crimes that reasonably relate to the real estate business or put clients, customers, or other real estate professionals at risk. Any criminal conviction older than seven years cannot be considered by an association.
Whether a crime reasonably relates to the real estate business or puts others at risk is a determination for each association. A crime “reasonably relates to the real estate business” if it affects the individual’s ability to fulfill the responsibilities and obligations of a real estate professional and uphold the REALTOR® Code of Ethics, such as embezzlement. A crime reasonably “puts clients, customers, or other real estate professionals at risk” if it involves dishonest, deceptive, or violent acts.
If the association determines the crime does relate to real estate or puts others at risk, the applicant must have the opportunity to provide mitigating factors, and the association must take this information into consideration. Associations must apply the criminal history component of the membership criteria to all applicants uniformly and avoid making exceptions for one applicant while denying another with a similar criminal history.
Applicants must have the opportunity to provide mitigating factors related to a criminal history and the association must consider the information provided.
Q. The president of my association doesn’t want to follow the bylaws. What am I supposed to do?
The leadership (including president, president-elect, and all directors) of an association owes fiduciary duties to the association, including the duties of care and obedience. The duty of care requires leadership to act the same as a reasonable person would in similar circumstances. It translates into the leadership ensuring that they understand the association’s governing documents and follow the amendment procedures to update the governing documents to match the association’s practice. The duty of obedience requires association leaders to act in accordance with the association’s governing documents (including, but not limited to, the association’s bylaws). Conscious disregard for the association’s bylaws can lead to legal consequences for the association and for the leadership. For example, if an association didn’t follow its bylaws’ election procedure and was sued, the court could overturn the election and require a new one in accordance with the procedures in the bylaws.
Working with association legal counsel, remind your leaders about their fiduciary duties and the potential liability they and the association face when the bylaws are not followed. It is also important to note that the association could jeopardize its NAR-provided errors and omissions insurance because the insurance policy requires that associations implement and follow mandatory NAR policies and their own governing documents.