All members of CREA are subject to the REALTOR® Code. Do you, as a REALTOR®, know what type of conduct falls under this code of ethics? Here are eight common issues that could raise concerns under different sections of the REALTOR® Code.
- REALTORS® need to know their stuff.
Article 1 of the REALTOR® Code establishes that a REALTOR® shall be informed regarding the essential facts that affect current market conditions. This means being aware of current legislation, appropriate financing procedures, mortgaging requirements and being familiar with real estate transaction forms. It also means REALTORS® should attend educational courses in order to stay current regarding all aspects of real estate transactions.
Not only do REALTORS® need to inform themselves about information regarding the real estate industry, they also need to take steps to find out information about the properties they are listing or are taking buyers to see. Article 4 of the REALTOR® Code sets out that a REALTOR® has an obligation to discover facts pertaining to a property which a prudent REALTOR® would discover in order to avoid error or misrepresentation.
- REALTORS® owe a duty to their clients.
A REALTOR®’s primary duty is to his or her clients. This is established in Article 3 of the REALTOR® Code, which states that a REALTOR® shall protect and promote the interests of his or her client.
This duty involves several things: It means disclosing information about a transaction to the client at the earliest possible opportunity. It means refraining from using information about a client to his or her disadvantage. It means keeping confidential information confidential and being able to account for all of a client’s monies that were entrusted to the REALTOR®.
When dealing with two clients in a dual agency situation, this Article of the REALTOR® Code means you cannot use the information contained in one offer to put the other client at a competitive disadvantage.
If one party to a transaction is not represented by a REALTOR® then the REALTOR® involved in the transaction must disclose to all parties that his or her duty is to the client. Article 2 of REALTOR® Code sets out that this disclosure must be made in writing and should be made before providing any professional services.
- REALTORS® need to know the limits of their expertise.
No client is served well by a real estate agent who provides services in an area with which they are not familiar. Doing so could raise concerns under Article 12 of the REALTOR® Code, which requires REALTORS® to provide skilled and conscientious service, in conformity with standards of competence which are reasonably expected in the specific real estate disciplines in which the REALTOR® engages.
If a REALTOR® lacks expertise in a particular subject area, they should only provide the service in question with the assistance of another professional who is qualified. This Article of the REALTOR® Code goes hand in hand with Article 10, which states that a REALTOR® shall encourage parties to a transaction to seek the advice of outside professionals where such advice is beyond the expertise of the REALTOR®.
So don’t do an appraisal if you are not trained to perform one – suggest that your client hire a qualified professional to conduct the appraisal instead.
- REALTORS® must tell the truth in their advertising.
Advertising is an area that leads to several complaints under the REALTOR® Code. It is therefore important for all REALTORS® to ensure that their advertising of properties is accurate and displays the name of the brokerage as well as any additional information required by provincial regulation. This is the requirement set out in Article 13 of the REALTOR® Code.
Article 14 further provides that if a REALTOR® is going to advertise the listing of another brokerage then the seller must consent to this in writing.
Property advertising is not the only advertising subject to the REALTOR® Code. REALTORS® also need to ensure that any claims they make in advertising are clear, accurate, and understandable in order to comply with Article 15.
This means compensation advertising needs to state if additional charges apply (e.g., a flat fee listing where a buyer’s agent fee may be additional). It means performance claims need to include the geographical area, time frame, and basis for which the claim is being made (e.g., top selling REALTOR® in Ottawa for 2015 based on stats from the Ottawa Real Estate Board). It also means advertising of programs, initiatives, or guarantees must clearly set out all significant details of how the program works, including, but not limited to, exceptions and time frames (e.g. “Buy a house with 0% down, ” or “If I don’t sell your house, I will buy it from you”).
- REALTORS® need to get contracts in writing.
When it comes to contracts, the written word is paramount. It is essential that REALTORS® get service agreements and transaction agreements in writing. This obligation is set out in Article 5 and 6 of the REALTOR® Code.
There are a few important elements of Article 5 that bear emphasis:
- Listing agreements must always be in writing.
- Buyer agency agreements do not have to be in writing (unless required by provincial regulation), but REALTORS® must always make reasonable efforts to have such agreements signed.
- In dual agency situations, written dual agency agreements are required. These agreements must not only contain the consent of the parties, but must also set out the duties and obligations of the parties under the dual agency.
These written agreements should be signed at the earliest possible opportunity and REALTORS® are required to explain the terms of the agreements to their clients to help them understand. The contracts must be kept current through the use of written extensions and amendments. Electronic contracts are valid in several provinces so REALTORS® should check to see if they can satisfy these sections of the REALTOR® Code electronically in their jurisdiction.
- REALTORS® are required to use CREA’s trademarks properly.
Hopefully all REALTORS® know they are licensed to use CREA’s trademarks. What they might not realize, though, is that misusing the trademarks raises concerns under the REALTOR® Code. Article 27 of the REALTOR® Code establishes that REALTORS® must only use CREA’s trademarks in accordance with CREA’s rules and policies.
Not only do members have to use the trademarks correctly to comply with this Article of the REALTOR® Code but they also must not challenge the validity of CREA’s trademarks or attempt to register a new trademark that contains CREA’s trademarks or is confusingly similar to CREA’s trademarks.
If a REALTOR® is partnering with a non-member, they are responsible for ensuring that their partner does not use CREA’s trademarks in an unauthorized manner. They also need to ensure that their buyers and sellers who they are providing services for do not misuse CREA’s trademarks. A significant obligation in this respect involves the requirement that every REALTOR® who partners with a non-member and allows the display of CREA’s trademarks by the non-member, must enter into a written contract with that person or organization that protects CREA’ trademarks.
More information about how to use CREA’s trademarks correctly can be found on REALTOR Link®.
- REALTORS® are accountable for their actions.
Article 22 of the REALTOR® Code establishes that the principal of a brokerage is required to supervise and control the activities of the REALTOR® and other personnel for whom he/she is responsible. This Article has existed in the Code for some time now.
However, the REALTOR® Code is a dynamic document and is amended from time to time to reflect the changing needs of the public and the values of society and to act as an assurance of higher professional standards. A new Article 21 was added in 2015 to make it clear that REALTORS® are also accountable for their actions, even if those actions take place when they are not acting in their official capacity.
The new Article 21 deals with “conduct unbecoming” and states that a REALTOR® shall not engage in conduct that is disgraceful, unprofessional or unbecoming of a REALTOR®. This is intended to deal with conduct that, having regard to all of the circumstances, is egregious in nature and goes beyond simple error.
- REALTORS® must show respect to other REALTORS®.
Real estate is a highly competitive profession. This makes it very important for REALTORS® to show civility when dealing with other REALTORS®. This obligation is found in Article 19 of the REALTOR® Code, which provides that a REALTOR® shall never publicly discredit any other Registrant.
If the REALTOR®’s opinion is sought, it should be rendered with strict professional integrity and courtesy. This also means that a REALTOR® should not comment in a derogatory manner as to the capacity, integrity and competence of any other Registrant. Keep in mind that this Article of the REALTOR® Code applies to all comments, including comments made on social media sites.
CREA has created a new course on the REALTOR® Code that can be found on REALTOR Link®. Take the course today to find out more about the REALTOR® Code in general and to learn more about the sections of the REALTOR® Code discussed in this article.
The article above is for information purposes and is not legal advice or a substitute for legal counsel.