Professional Standards - As a REALTOR® member of the Marin Association of REALTORS®, you have agreed to abide by the NAR Code of Ethics. This Code of Ethics is comprised of a Preamble and 17 Articles. Most Articles have corresponding Standards of Practice that support and interpret the Article. In addition, Case Interpretations provided by NAR demonstrate the application of the Articles to particular situations.
Article 2
REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law.
Case #2-7: Obligation to Determine Pertinent Facts
Realtor® A, a home builder, showed one of his newly constructed houses to Buyer B. In discussion, the buyer observed that some kind of construction was beginning nearby. He asked Realtor® A what it was. “I really don’t know,” said Realtor® A, “but I believe it’s the attractive new shopping center that has been planned for this area.” Following the purchase, Buyer B learned that the new construction was to be a bottling plant and that the adjacent area was zoned industrial.
Charging that the proximity of the bottling plant would have caused him to reject purchase of the home, Buyer B filed a complaint with the Board of Realtors® charging Realtor® A with unethical conduct for failing to disclose a pertinent fact. The Grievance Committee referred the complaint for a hearing before a Hearing Panel of the Professional Standards Committee.
During the hearing, Realtor® A’s defense was that he had given an honest answer to Buyer B’s question. At the time he had no positive knowledge about the new construction. He knew that other developers were planning an extensive shopping center in the general area, and had simply ventured a guess. He pointed out, as indicated in Buyer B’s testimony, that he had prefaced his response by saying he didn’t know the answer to this question.
The Hearing Panel concluded that Buyer B’s question had related to a pertinent fact; that Realtor® A’s competence required that Realtor® A know the answer or, if he didn’t know the answer, he should not have ventured a guess, but should have made a commitment to get the answer. The Hearing Panel also noted that although Realtor® A had prefaced his response with “I don’t know,” he had nonetheless proceeded to respond and Buyer B was justified in relying on his response. Realtor® A was found to have violated Article 2.
