Laws in general are established for public protection. Laws, however, sometimes fail in their attempt to address what may be deemed as either ethical or nonethical actions. With the ongoing reports of ethical breeches in American industries and professional occupations, there seems to be a resurgence of public demand for, not only legal, but also ethical treatment in both business as well as ones’ own personal activities. Business ethics should be recognized as a social responsibility with the understanding that there is "never a right way to do a wrong thing." Law, in and of itself, often fails in the demands to treat others in the professional dignified way one would wish for themselves. General laws, however, become the foundation for lawful acts in the attempt to meet society’s requirement for protection against those who would otherwise be abusive toward the innocent. Some laws are designed to address the needs which are specific to a given vocation or profession.
The real estate industry is regulated by a number of such laws. Real estate laws may have been developed as a result of the common practice of citizens over a prolonged period or it may have been ultimately determined in a legal manner by a court of law.
Additionally, governing bodies, by virtue of their position, may pass laws by passing certain statutes. These governing bodies in turn, often appoint administrative agencies to act on their behalf. Such administrative agencies are normally empowered to make additional rules and regulations to help clarify the law and facilitate its enforcement. While Arkansas real estate licensees are subject to all applicable real estate laws, and those affecting public representation, they are normally more directly involved with the administrative agency, known as the Arkansas Real Estate Commission.
The Arkansas Real Estate Commission building is located at 612 South Summit Street, Little Rock, Arkansas. Additional information regarding the Arkansas Real Estate Commission and the laws, rules and regulations affecting Arkansas licensees can be viewed at: www.state.ar.us/arec/. The commission is charged with assuring that certain minimum standards are met before an individual can be licensed to represent the public in Arkansas real estate matters. Such minimum standards are listed on the web site of Camp Real Estate School by returning to our Home Page. Once licensed, the licensee can then be held accountable by the commission for violations of license law or approved rules and regulations.
Considering these various forms of law, it is understood that in general, "Law sets minimum standards that society will accept." Ethics, however, raises the bar to a higher standard of practice. The real estate industry has access to one of the oldest formed professional "Code of Ethics" existing in the United States. This code was developed by the National Association of REALTORS®. The "Code" was formed in 1913 and has continued to undergo amendments as needed in order to keep pace with changing needs for ethical public service and representations. Being referred to as a REALTOR® is limited to those who have voluntarily become members of the trade association. The REALTOR® Association is not a state agency, and therefore the Association’s purpose within the code is to support, not interpret the law. Likewise, in the absence of holding a law degree, a licensee is restricted from offering legal opinions or giving legal advice. However, Arkansas license law has often been influenced in their development by observing the REALTORS® pre-existing code of ethics and how it further aided public protection. Being integrated into law, it would now mandate compliance for all licensees, regardless of whether or not they are REALTOR® members.
It should be understood, however, that neither REALTOR® nor Non-REALTOR® membership is the determining factor as to ones’ ethics. By virtue of membership, REALTOR® members are held accountable to the Code of Ethics of the National Association of REALTORS® and can be brought into peer judgement and be disciplined for violations. Both REALTORS® and Non-REALTORS® are always subject to the law, but both should further voluntarily strive (with or without a written code), to be ethical in all of their dealings.
"The time is always right to do what is right."
Dr. Martin Luther King
Within any firm, the managing Broker is often the one that sets company policy, approves contracts for presentation, provides internal education and provides general guidance to those licensed with the firm. Therefore, they are normally considered to be the "Mentor" of how things should be done by agents representing the firm. As a result, a constant and consistent message and example should be demonstrated by those in leadership, as to proper ethics and practice.
"If ethics are poor at the top that behavior is
copied down through the organization."
Robert Noyce, inventor of the silicon chip
Someone has said ethics is what you are when you think no one is watching. Others equate ethics with the principles of the "Golden Rule." While one can be required to comply with the law, one cannot make another exceed the law’s requirement and be ethical. However, no one can keep a person from being such. Those who strive for consistent ethical behavior gain the respect of the community they serve and are on the path toward success in both their personal and professional lives. Again, restated, there is "never a right way to do a wrong thing."
REALTORS®, Non-REALTORS® and the public should strive to hold each other accountable to ethical behavior. Likewise, the public needs to demonstrate the same level of ethics toward those they entrust with their business.
Since the National Association of REALTORS® "Code of Ethics" is the only written code for the real estate industry, it is worthy of highlighting the basic intent of its 17 Articles. The code is categorized under three basic headings, Duties to Clients and Customers, Duties to the Public and Duties to REALTORS®. The full code can be further referenced at: www.realtor.org/mempolweb.nsf/pages/Code?OpenDocument.
Duties to Clients and Customers
REALTORS® protect and promote their clients’ interests while treating all parties honestly.
REALTORS® refrain from exaggeration, misrepresentation or concealment of pertinent facts related to property or transactions.
REALTORS® cooperate with other real estate professionals to advance their clients’ best interest.
When buying or selling on their own account or for their families or firms, REALTORS® make their true position or interest known.
REALTORS® do not provide professional services where they have any present or contemplated interest in property without disclosing that interest to all affected parties.
REALTORS® disclose any fee or financial benefit they may receive from recommending related real estate products or services.
REALTORS® receive compensation from only one party, except where they make full disclosure and receive informed consent from their client.
REALTORS® keep entrusted funds of clients and customers in a separate escrow account.
REALTORS® make sure that contract details are spelled out in writing and that parties receive copies.
Duties to the Public
REALTORS® give equal professional service to all clients and customers irrespective of race, color, religion, sex, handicap, familial status or national origin.
REALTORS® are knowledgeable and competent in the fields of practice in which they engage or they get assistance from a knowledgeable professional, or disclose any lack of expertise to their client.
REALTORS® paint a true picture in their advertising and in other public representations.
REALTORS® do not engage in the unauthorized practice of law.
REALTORS® willingly participate in ethics investigations and enforcement actions.
Duties to REALTORS®
REALTORS® make only truthful, objective comments about other real estate professionals.
REALTORS® respect the exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with their clients.
REALTORS® arbitrate financial disagreements with other REALTORS® and with their clients.
In an effort to continue reinforcing the practice of ethics by REALTOR® members, all REALTORS® are required to take an approved ethics course at least once every four years. However, many local Boards of REALTORS® have ongoing ethics training for new licensees and refresher courses for current membership. A full copy of the REALTOR® Code of Ethics and Standards of Practice can be found at: www.realtor.org/mempolweb.nsf/pages/Code?OpenDocument.
Whether one is a REALTOR® or Non-REALTOR® licensee, has no bearing on the importance of one dealing in an ethical manner with all parties at all times. Loyalty to the client is paramount but dealing honestly with all parties is imperative. Such statements are consistent with both law and ethics for anyone seeking to deal professionally with another.
With over one million members nationwide, the term REALTOR® is a registered trademark of the National Association of REALTORS®. We are all challenged to be leaders in ethical behavior both in our personal as well as our professional lives. Ethical behavior is found in individuals possessing great strength of character, determination for doing right, and seeking the betterment not only for themselves but all others. They become great role models and make great leaders.
"I am more afraid of an army of 100 sheep led
by a lion than an army of 100 lions led by a sheep."
– Talleyrand, (1754-1838)
Law allows for many forms of business structures. Therefore, many real estate companies may vary in the level of services they provide for the fees they receive. To be successful, a real estate firm may often assess the market and may change in their business philosophy or marketing techniques in order to meet the needs of their customers or clients. However, to be professional and maintain the respect of both their peers and the public, they must always temper all their decisions and actions based on ethical consistency.
"In matters of style, swim with the current.
In matters of principle, stand like a rock."
–Thomas Jefferson, 3rd President (1743-1826)
Camp Real Estate School has long been a provider of Ethics courses as required by the National Association of REALTORS®. Such courses can be offered as a classroom attendance course or obtained through Distance Education. Either way, the course will meet the annual continuing education requirements of the Arkansas Real Estate Commission, the State Board of Private Career Education and the Oklahoma Real Estate Commission. Such course offerings are available at different times and locations throughout the state. Sponsorships for courses can be arranged with REALTOR® Boards or Brokers wishing to offer in-house continuing education courses.
For further information, contact your local Board of REALTORS® or Camp Real Estate School – "Where education is a passion not a pastime."
(This writing is the opinion of the author. Nothing herein constitutes legal advice. Anyone seeking legal advice is advised to seek out a competent attorney).