Brush up on this hot topic and try the quiz again. To learn about your duties and responsibilities as a real estate professional, check out the following resources available through the NATIONAL ASSOCIATION OF REALTORSŪ:
You chose not to answer this question. Correct Answer: Let the public be served.
When the Code of Ethics was adopted in the early 1900s, the rule of law was "caveat emptor" ("Let the buyer beware"). The Code took a different approach, based on the motto "Let the public be served." One of the foundations of the Code is protection of the public. Many of the Articles (e.g., 1, 2, 8, 9) are founded on protecting the consumer.
The Code of Ethics was adopted:
You chose not to answer this question. Correct Answer: To establish standards of conduct for the industry.
There were no real estate licensing laws when the Code was adopted in 1913. One of the primary purposes of the Code was to establish professional standards of conduct for the real estate industry.
The Preamble to the Code:
You chose not to answer this question. Correct Answer: Sets out aspirational ideals that REALTORSŪ should strive to attain.
The Preamble to the Code is the aspirational basis for the ethical concepts that REALTORSŪ believe in. Included are the core concepts of honesty, integrity, fairness, and moral conduct in business relations. Near the end of the Preamble, the timeless, universal principle of the Golden Rule is cited. Because the Code sets the ideals that we strive to attain, it is subjective in nature. As such, it cannot be used as a basis for disciplinary action against a REALTORŪ. Only the Articles of the Code are used as the basis for discipline of REALTORŪ membership.
The Code is primarily enforced through:
You chose not to answer this question. Correct Answer: Local associations of REALTORSŪ.
The enforcement of the Code is handled mainly by the local REALTORSŪ associations. Real estate is one of the few industries that have a Code of Ethics that is enforced. Many industry codes of ethics are aspirational in nature and are not enforced by the organization sponsoring the code. The REALTORŪ Code of Ethics has an enforcement process available to anyone who believes a REALTORŪ has violated the Code of Ethics.
The two basic types of complaints that are handled by local associations are:
You chose not to answer this question. Correct Answer: Ethics complaints and requests for arbitration.
An ethics complaint is a complaint about a REALTORŪ's conduct that has allegedly violated one of the Articles of the Code of Ethics. Under Article 17 of the Code, REALTORSŪ are required to arbitrate certain types of monetary disputes they have with other REALTORSŪ. So, a second type of matter handled most frequently by local associations is a request for arbitration falling under Article 17 of the Code.
The three committees or groups that are involved in the Code enforcement process are:
You chose not to answer this question. Correct Answer: Grievance Committee, Professional Standards Committee, and Board of Directors
The Grievance Committee is a screening committee that initially reviews ethics complaints and requests for arbitration. The Grievance Committee does not hold hearings but simply determines, on the basis of the written information presented in the complaint/request, whether a possible violation of the Code may exist or whether the request for arbitration presents a matter that can be arbitrated within Article 17.
If the Grievance Committee believes that a possible violation may exist or that a matter can be arbitrated, it forwards the complaint/request to the Professional Standards Committee. The Professional Standards Committee appoints a hearing panel (usually three or five members of the Committee) to conduct a hearing. The hearing is a "due process" hearing similar to a court proceeding. The hearing panel decides whether a violation of the Code occurred and makes a recommendation for discipline, if any. In an arbitration request, the hearing panel decides which party is entitled to the monetary award. In either case, a right of appeal or review exists to the Board of Directors.
A request for mandatory arbitration is based on:
You chose not to answer this question. Correct Answer: A monetary dispute between REALTORSŪ (principals) in different firms.
Generally, a request for mandatory arbitration is based on a monetary dispute. The dispute must be of a contractual or specific non-contractual nature, and it must be between REALTORSŪ (principals) in different firms arising out of their relationship as REALTORSŪ. Article 17 specifies the types of disputes that are required to be arbitrated.
A request for arbitration is most commonly based on a dispute about:
You chose not to answer this question. Correct Answer: A cooperative (selling) commission.
The most common type of monetary dispute between REALTORSŪ (principals) in different firms relates to a cooperative (selling) commission, sometimes also known as a co-brokerage commission. In the residential field, the offer of compensation is most commonly made by a listing broker in the context of filing listings with the MLS. In the commercial field, offers of compensation are often made directly among brokers in a market.
The concept of procuring cause is used to decide commission disputes in arbitration cases. Which of the following statements is true about the concept of procuring cause?
You chose not to answer this question. Correct Answer: No predetermined rules of entitlement are allowed to be used by a hearing panel.
The concept of procuring cause is the basis upon which the typical commission dispute about a cooperative commission is decided. The "Arbitration Guidelines" in the Code of Ethics and Arbitration Manual (Appendix II to Part 10) set out a comprehensive set of guidelines by which hearing panels decide a commission dispute. All of the concepts are from the "Arbitration Guidelines."
REALTORSŪ have an obligation to protect and promote the interests of their clients but also have an obligation to treat all parties:
You chose not to answer this question. Correct Answer: Honestly.
Article 1 of the Code sets out these fiduciary concepts. The obligation to protect and promote the client's interests is balanced by the obligation to treat all parties honestly.
If a listing broker tells another broker, "I'll cooperate with you," the other broker:
You chose not to answer this question. Correct Answer: May not assume that the listing broker will pay him/her a cooperative commission.
Article 3 clearly states, "The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker." The cooperating broker must ascertain the terms of compensation, if any, before beginning efforts to cooperate.
A cooperating broker in a transaction may:
You chose not to answer this question. Correct Answer: Both A and B.
According to the Standard of Practice 12-7, "Only REALTORSŪ who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have 'sold' the property. Prior to closing, a cooperating broker may post a 'sold' sign only with the consent of the listing broker." Thus, a cooperating broker involved in a transaction may claim to have sold the property in the transaction. The only time limitation in the Standard of Practice relates to the cooperating broker posting a "sold" sign before closing. After closing, permission of the listing broker is not necessary for a cooperating broker to post the "sold" sign.
Disciplinary action in an ethics complaint may NOT include:
You chose not to answer this question. Correct Answer: A written apology.
The Code of Ethics and Arbitration Manual lists the appropriate sanctions that a hearing panel may recommend to discipline a REALTORŪ who has violated the Code of Ethics. Only those authorized sanctions are permissible. All of the disciplinary actions noted above other than the written apology are on the list of authorized sanctions. An apology of any sort cannot be mandated by a hearing panel or association.