Code of Ethics - Article 1

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 1 - When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client.  This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly.  When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly.

Case #1-4: Fidelity to Client - Client A contacted Realtor^® B to list a vacant lot. Client A said he had heard that similar lots in the vicinity had sold for about $50,000 and thought he should be able to get a similar price. Realtor^® B stressed some minor disadvantages in location and grade of the lot, and said that the market for vacant lots was sluggish. He suggested listing at a price of $32,500 and the client agreed.

In two weeks, Realtor^® B came to Client A with an offer at the listed price of $32,500. The client raised some questions about it, pointing out that the offer had come in just two weeks after the property had been placed on the market which could be an indication that the lot was worth closer to $50,000 than $32,500. Realtor^® B strongly urged him to accept the offer, stating that because of the sluggish market, another offer might not develop for months and that the offer in hand simply vindicated Realtor^® B’s own judgment as to pricing the lot. Client A finally agreed and the sale was made to Buyer C.

Two months later, Client A discovered the lot was no longer owned by Buyer C, but had been purchased by Buyer D at $55,000. He investigated and found that Buyer C was a brother-in-law of Realtor^® B, and that Buyer C had acted on behalf of Realtor^® B in buying the property for $32,500.

Client A outlined the facts in a complaint to the Board of Realtors^®, charging Realtor^® B with collusion in betrayal of a client’s confidence and interests, and with failing to disclose that he was buying the property on his own behalf.

At a hearing before a panel of the Board’s Professional Standards Committee, Realtor^® B’s defense was that in his observation of real estate transactions there can be two legitimate prices of property—the price that a seller is willing to take in order to liquidate his investment, and the price that a buyer is willing to pay to acquire a property in which he is particularly interested. His position was that he saw no harm in bringing about a transaction to his own advantage in which the seller received a price that he was willing to take and the buyer paid a price that he was willing to pay.

The Hearing Panel concluded that Realtor^® B had deceitfully used the guise of rendering professional service to a client in acting as a speculator; that he had been unfaithful to the most basic principles of agency and allegiance to his client’s interest; and that he had violated Articles 1 and 4 of the Code of Ethics.

Code of Ethics - Article 6

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 6 - REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.
When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation.

Case #6-6: Disclose Affiliated Business Relationships Prior to Recommending Real Estate-Related Products or Services

Realtor^® Z, a broker and sole proprietor, had invested considerable time, money and energy into developing her website. Seeking to recoup some of her costs, she approached virtually every provider of real estate-related products and services in her area, including financial institutions, title insurance companies, home inspectors, mortgage brokers, insurance agencies, appraisers, exterminators, decorators, landscapers, furniture and appliance dealers, rug and carpet dealers, moving companies, and others about advertising on her home page. As a condition of having a link to their own sites appear on her home page, Realtor^® Z required that a fee be paid to her each time a consumer “clicked through” from her site to an advertiser’s.

Ads for providers of real estate-related products and services who agreed to Realtor^® Z’s terms appeared on her home page under the heading “Preferred Providers”. Immediately under that heading read “These vendors provide quality goods and services. Please patronize them.”

Buyer A frequented Realtor^® Z’s website seeking information about available properties. Using that website, he became aware of a property on Elm Street that he made an offer on through Realtor^® Z, which was accepted by the seller. The sale closed shortly afterwards.

Buyer A was an avid remodeler and, using Realtor^® Z’s website, linked to the Real Rug company website, among others. Interested by what he found there, he subsequently visited their showroom in person and purchased wall-to-wall carpeting and several expensive area rugs.

Given the size of Buyer A’s order, one of the owners of Real Rug came to oversee the delivery and installation. In the course of conversation with Buyer A, he commented favorably on the amount of referral business received from Realtor^® Z’s website. “And to think I only pay a small fee for each customer who’s referred to me by Realtor^® Z,” he added.

Buyer A was somewhat surprised that Realtor^® Z would receive money for referring clients and customers to providers of real estate-related products and services and contacted the local association of Realtors^®. The association provided him with a copy of the Code of Ethics. Reading it carefully, Buyer A concluded that Realtor^® Z’s actions might have violated Article 6, and he filed an ethics complaint against Realtor^® Z.

At the hearing, Realtor^® Z defended herself and her website, stating that the advertisements for real estate-related products and services on her website were simply that, only advertisements and not recommendations or endorsements of the products and services found there. She acknowledged she collected a fee each time a visitor to her website clicked on the links found under “Preferred Providers” but claimed that simply referring to those advertisers as “preferred” did not constitute a recommendation or endorsement of the products and/or the services offered.

The hearing panel disagreed with Realtor^® Z’s reasoning, pointing out that a reasonable consumer would certainly conclude that referring to a provider of real estate-related products or services as being “preferred” by a Realtor^® constituted a recommendation or endorsement. Further, since Realtor^® Z received a fee each time a consumer “clicked through” to one of Realtor^® Z’s “Preferred Providers”, Realtor^® Z received a referral fee, and disclosure of that fee was required under Article 6. Realtor^® Z was found in violation of Article 6.