ETHICAL CONSIDERATIONS IN
Walter P. Wolfram
October 27, 2010
ETHICAL CONSIDERATIONS IN LANDLORD/TENANT LAW
“Ethics, (1) the study of standards of conduct and moral judgments; moral philosophy; (2) a treatise on this subject; and (3) the system or code of morals of a particular person, religion, group, profession, etc.” Webster’s New World Dictionary of the American Language, Second College Edition, Simon & Schuster, Cleveland, Ohio 1984.
Scope of Article: “Ethics” are part of a continuum of a morality system commencing with “morals” which are a set of immutable standards of right and wrong that transcend time and cultural lines and provide governance to all people at all times; “mores” are a set of rules of human conduct emanating from a homogenous people group or community that shape their conduct within the group as to themselves and others which change from time to time as the community standards of decency, necessity and expectations of human conduct change; “ethics” are a set of rules promulgated by a smaller group, usually of adults, who share some common goals required of their social group or profession in order to standardize their conduct, to measure individual and group performance and sometimes to provide moral and legal direction of the group suitable to its over- arching purposes; and finally, “manners” which are those nice acts of grace, mercy and kindness that our mothers teach us to grease the wheels of social intercourse. All of these gradients carry a variety of sanctions, some penal, some financial, some expulsion, some public and private admonishment and some merely peer pressure. These sanction systems are of great importance to the governance of our communities, our states and nation and to make life pleasant and tolerable. Our focus is only on the “ethics” of those persons who deal with the larger picture of landlord/tenant relations.
A. WHERE DO WE GET THE STANDARDS?
B. ETHICS MANIFESTED IN THE LAW
The ethics of landlord/ tenant relationships are not crystalized into enforceable codes in the same manner that we find in the learned professions such as physicians, accountants and attorneys. We find that realtors and apartment owners organize into various associations and then formulate codes of ethics in worthy attempts to call their members to a higher level of ethical behavior. [See attached codes]. Therefore, in order to understand what ethical codes are applied to the landlord/tenant relationship, we look to the law. The landlord had well established rights in relation to the tenant prior to the consumerism of the 1960-1980’s but the law’s view of tenant rights did not exist prior to the rise of that consumerism. Although there have been great efforts to turn the clock back since 1980, the simple justice of it all has a hold upon our societal collective consciousness that mandates protection to both sides. Of course, the law of contracts has always placed the landlord in the dominate position and perhaps rightly so as it is he/she that has the investment at stake. We will look at some of the applicable laws to ascertain the ethical standards applicable to both the landlord and the tenant. Remember that these laws do not come out of a vacuum but come out of the crucible of experience.
C. THE LAW TELL US HOW BAD IT HAS BEEN
The mandates of the law dealing with landlord tenant relationships tell us of the terrible things that have transpired against tenants in the past. Laws are not passed in a vacuum but are always in response to circumstances that compel attention of the legislature or of the courts. For instance, we can deduce what was going on in the Sinia desert when the Hebrew nation escaped from the Pharaoh: they were worshiping al kinds of gods, killing each other, stealing from each other, committing adultery, dishonoring their parents–all the things we do today! When we look at the present scheme of protections afforded tenants, we glean that landlords have been very repressive to their tenants in the past such that the legislature leaned on the propertied class rather than on the basically powerless tenant class.
D. GETTING PAID AND FEE ARRANGEMENTS
I list some prohibitions of the law that reflect what went on before consumerism and before there was a consciousness and fear of claims under civil liberties resulting in the passage of these statutes. Many times, the law was there but the community conscience did not exist to enforce it. Here are some of the laws then and now that reflect how bad it can get without the intervention of the law. All of these reflect an attitude toward the development of a code of ethics that governs the landlord//tenant relationship. When establishing terms and conditions of a landlord/tenant contract, there are limits ascertained before-hand and those discovered after the fact.
1. Common Law Unconscionability: Unconscionability is an equitable doctrine designed to prevent the over-reaching of one party. This doctrine tends to comes “after the fact” when the tenant realizes that he/she has been over-reached and taken advantage of to a grossly unfair degree. Proof of unconscionability begins with two broad questions: 1) the procedural aspect, i.e., how did the parties arrive at the terms in controversy; and 2) the substantive aspect, i.e., are there legitimate commercial reasons justifying the terms of the contract. Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 821 (Tex.App.-San Antonio 1996, no pet.). In determining whether a contract is unconscionable, we must examine the entire atmosphere in which the agreement was made; the alternatives, if any, available to the parties at the time the contract was made; the “nonbargaining ability” of one party; whether the contract was illegal or against public policy; and whether the contract was oppressive or unreasonable. Under Texas law, the party asserting unconscionability of the contract bears the burden of proving both procedural and substantive unconscionability. The question is one of law, to be decided by the court. One can readily see the disparity in bargaining position of the tenant. Sometimes one can see certain illegalities–especially now that we have a well developed code regulating the rights of the tenant. However, experience tells us that the tenant’s burden in fact and in court is indeed a harsh one–although stated in terms of “preponderance of the evidence” the reality is more likely “beyond a reasonable doubt.” However, this doctrine has a long and illustrious background and should not be overlooked simply because of the present landlord bias of our courts.
2. DTPA Unconscionability: The Deceptive Trade Practices-Consumer Protection Act defines an “unconscionable action or course of action to mean an act or practice which, to a consumer’s detriment takes advantage of the lack of knowledge, ability, experience or capacity of the consumer to a grossly unfair degree. [§17.45(5) , B&CC] A consumer means an individual, partnership, corporation, this state or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services. . . Goods includes land. [Emphasis supplied] A tenant is always a consumer within the meaning of this act [some exceptions that usually do not apply] and may enforce a claim for unconscionability under this act. This potential should not be overlooked by either the landlord or the tenant as the damages to a consumer include actual damages [and mental anguish] and punitive damages and attorney fees to the tenant if he/she prevails. This, of course, includes excessive rent or conditions of indemnity.
3. Fiduciary Relationships: The landlord/tenant relationship does not per se create a fiduciary relationship. Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171 (Tex.,1997.) “. . . to impose such a [fiduciary] relationship in a business transaction, “ ‘there must be a fiduciary relationship before, and apart from, the agreement made the basis of the suit.’ ” The existence of a fiduciary relationship is a result of an agency relationship, not an element of. An agency creates a fiduciary relationship as a matter of law. There are, in fact, two types of fiduciary relationships; one is a formal fiduciary relationship which arises as a matter of law and includes the relationships principal and agent. . . while the other is an informal fiduciary relationship which may arise from a moral, social, domestic, or purely personal relationship of trust and confidence, generally called a confidential . An agency relationship imposes certain fiduciary duties on the parties. National Plan Adm’rs, Inc. v. National Health Ins. Co., 235 S.W.3d 695 (Tex. 2007). A principal-agent relationship constitutes a fiduciary relationship as a matter of law. Kelly v. Gaines, 181 S.W.3d 394 (Tex. App. Waco 2005 writ denied). [TX JUR, AGENCY §156]
4. Fiduciary Relationships–Jury Question Tells it All: The Texas Pattern Jury Charges, §104.2 sets forth a clear formulation of the nature of the fiduciary relationship which applies to all fiduciaries, whether based on a formal or informal relationship. In looking at this jury question, one gets a clear view of what the landlord’s agent owes to the landlord.
JURY QUESTION NO.
Did Don Davis comply with his fiduciary duty to Paul Payne?
As Paul Payne’s agent, Don Davis owed Paul Payne a fiduciary duty. To prove he complied with his duty, Don Davis must show:
a. The transaction in question was fair and equitable to Paul “Payne;
b. Don Davis made reasonable use of the confidence that Paul Payne placed ind him;
c. Don Davis acted in the utmost good faith and exercised the most scrupulous honesty toward Paul Payne;
d. Don Davis placed the interests of Paul Payne before his own, did not use the advantage of his position to gain any benefit for himself at the expense of Paul Payne, and did not place himself in any position where his self-interest might conflict with his obligation as a fiduciary; and
e. Don Davis fully and fairly disclosed all important information to Paul Payne concerning the transaction.
Answer “YES” or “NO.” Answer:
Note that once the relationship has been established, the burden of persuasion shifts to the agent to clear himself/herself. See Keck, Mahin, & Cate, Grant Cook v. National Union Fire Insurance Co. Of Pittsburgh, 20 S.W.3rd 692, 699 (Tex 2000).
E. ATTEMPTING TO GET PAID SHOULD NOT
INCLUDE THE FOLLOWING ACTS OR PRACTICES
1. Cutting off the Utilities: The land lord may not interrupt or cause the interruption of utility service, including electrical, water, waste water, or gas paid for by the tenant directly to the utility company [for the exceptions and available procedures see §92.008, Property Code of Texas et seq.] Any attempt to contract around these prohibitions are void. [§92.008(g)]
2. Removal of Doors, Windows, etc., Prohibited: The landlord may not remove a door, window or attic hatchway cover or a lock, latch, hinge, hinge pin, doorknob or other mechanism connected to a door or window [§92.081 (a)]
3. Removal of furniture furnished by Landlord Prohibited: The land lord may not remove furniture, fixtures or appliances furnished by the landlord from the leased premises. [§92.081 (a) If the landlord does this in violation of this section, the tenant may recover one month’s rent plus $1,000.00 actual damages and attorney fees.[|92.081(a)(2)]
4. Threatening Criminal Action to Enforce a Consumer Debt: A landlord may not threaten to bring criminal charges to enforce collection of a consumer debt. [ §392.301(5) and (6) , Finance Code of Texas] A “consumer debt”means an obligation, or an alleged obligation, primarily for personal, family, or household purposes and arising from a transaction or alleged transaction. [§392.001(2), Finance Code of Texas]. In Brown v. Oaklawn Bank, 718 S.W.2d 678 (Tex.,1986.) The Supreme Court in interpreting the former version of this statute pointed out that the mere threat violates the statute.
In its findings of fact, the [trial] court found that Oaklawn had no desire or intent to injure the Browns. Intent on the part of the wrongdoer is not a prerequisite to recovery under the Debt Collection Act. It is sufficient to show that the harm incurred was a reasonably foreseeable result of the wrongdoer’s conduct. Article 5069-11.10 allows recovery for actual damages, punitive damages, and attorney’s fees, all of which were pleaded by the Browns.
The re-codification of this statute into Chapter 392 of the Finance Code [Texas Debt Collection Act] deleted punitive damages as remedy but a violation of this new statute is enforceable under the DTPA [§392.404 states that a “violation of this chapter is a deceptive trade practice under Subchapter E, Chapter 17, Business & Commerce Code (DTPA) and is actionable under that subchapter] which allows mental anguish and punitive damages if the violation is done knowingly or intentionally. The mere misrepresenting of the character, extent or amount of a consumer debt violates the Debt Collection Act, is a violation of the Debt Collection Act and carries serious monetary consequences. This statute sets forth a long series of anti-harassment sections which makes it perilous for a landlord to harass a tenant for a delinquent payment. In Dixon v. Brooks, 604 S.W.2d 330 (Tex.Civ.App., 1980.n.r.e.) That court held that the old version “prohibits any debt collector from “threatening to take any action prohibited by law.” Appellee’s letters threatening to terminate the contract without the necessary notice required by Article 1301b is just such an action. Appellants’ point is sustained.” There is no apparent change in the new version on this point. Landlords beware about getting too tough and especially attempting to get a bill collector to do it for you. .
5. Landlord May Not Refuse to Accept Cash Without a Written Consent: [§92.011 (a)] Landlord May Not Refuse to Accept Cash Without a Written Consent and must issue a written receipt and enter the payment in a record book maintained by the landlord.
6. Landlord May Charge Only a Reasonable Late Fee: A violation can result in the tenant recovering from the landlord a $100.00 penalty, three times the amount of the late fee charged and attorney fees.[§92.019].
F. SPECIAL PROBLEMS RELATED TO LICENSED
REALTORS AND LANDLORDS
The following subdivisions impact whether a realtor acting as the managing agent for the landlord may charge and collect his/her fees for the management services provided.
1. Landlord May Not Discriminate Against Realtor: On Basis of Race, Color, Disability, Religion, Sex, National Origin or Age. [§21.051, Labor Code of Texas] Contract is void if violated.
2. Employment Agency May Not Discriminate Against Lower Employees: On Basis of Race, Color, Disability, Religion, Sex, National Origin or Age. [§21.052, Labor Code of Texas] Contract is voidable if violated.
3. Residential Rental Locator: Real Estate Broker or Agent’s License Required: Texas Occupation Code Sec. 1101.351. (a) Unless a person holds a license issued under this chapter, the person may not:(2) act as a residential rental locator. Absent the license no fees are collectible as contract is void.
4. Absent License–Cause of Action for Damages plus Treble Damages: Occupations Code, Sec. 1101.754.(a) “ A person who receives a commission or other consideration as a result of acting as a broker or salesperson without holding a license or certificate of registration under this chapter is liable to an aggrieved person for a penalty of not less than the amount of money received or more than three times the amount of money received. (b) The aggrieved person may file suit to recover a penalty under this section.”
5. Realtor Cannot Get Paid Absent License: Occupations Code, Sec. 1101.806. (b) A person may not maintain an action to collect compensation for an act as a broker or salesperson that is performed in this state unless the person alleges and proves that the person was: (1) a license holder at the time the act was commenced; or (2) an attorney licensed in any state.
6. When Real Estate Broker or Agent’s License Not Required: Occupations Code Sec. 1101.005. “This chapter does not apply to: . . . (7) an on-site manager of an apartment complex; . . . (10) a transaction involving: (B) the sale, lease, or transfer of a cemetery lot; (c) the lease or management of a hotel or motel;
7. Realtor Must Disclose His/Her Capacity: Occupations Code Sec. 1101.558. “A license holder who represents a party in a proposed real estate transaction shall disclose, orally or in writing, that representation at the time of the license holder’s first contact with: (1) another party to the transaction; or (2) another license holder who represents another party to the transaction.”
G. EQUAL RIGHTS FOR IMMIGRANTS AND ALIENS AS TENANTS?
1. Federal Rights
a. 42 USC 1981 and 1982: These two federal statutes prohibit discrimination on several grounds including race, gender, religion, color, national origin and age. These apply to housing as well as to other contracts.
b. 13th and 14th Amendments to the United States Constitution: 13th Amendment prohibits slavery and involuntary servitude. 14th Amendment establishes that all persons born or naturalized in the United States and subject to its jurisdiction are citizens and no state shall deprive any person of due process of law or equal protection of the law.
2. State Rights:
a. Texas Equal Rights Amendment ot the Constitution, Art.1, §3a, Sec 3a: “Equality under the law shall not be denied or abridged because of sex, race, color, creed, or national origin. This amendment is self-operative.”
b. Equal Rights Amendment Broader Than Federal or State Guarantees: In Interest of McLean 725 S.W.2d 696 (Tex.,1987). “. . . we conclude that the Equal Rights Amendment is more extensive and provides more specific protection than both the United States and Texas due process and equal protection guarantees.” (Per Kilgarlin)
c. Property Code Prohibits Discrimination in Sale or Rental of Property or Services Related thereto: § 301.021§ 301.021. Sale or Rental:
(a) A person may not refuse to sell or rent, after the making of a bona fide offer, refuse to negotiate for the sale or rental of, or in any other manner make unavailable or deny a dwelling to another because of race, color, religion, sex, familial status, or national origin.
(b) A person may not discriminate against another in the terms, conditions, or privileges of sale or rental of a dwelling or in providing services or facilities in connection with a sale or rental of a dwelling because of race, color, religion, sex, familial status, or national origin.
(c) This section does not prohibit discrimination against a person because the person has been convicted under federal law or the law of any state of the illegal manufacture or distribution of a controlled substance.
d. Illegal Immigrants Are Not Enemy Aliens–Their Contract for Rentals Are Enforceable for and Against Landlord:See Commercial Standard Fire & Marine Co. v. Galindo, 484 S.W.2d 635, 637 (Tex.Civ.App.- El Paso, 1972. n.r.e.) “At the outset, we take judicial notice that the Plaintiff, being a citizen of Mexico, though an illegal alien, is not an enemy alien. 42 U.S.C.A. s 1981 provides as follows: All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.’ Even though the enactment of this legislation was not for the purpose of protecting aliens, this provision has been held to apply both to aliens and illegal aliens. . . Takahashi v. Fish and Game Commission, 334 U.S. 410, 68 S.Ct. 1138, 92 L.Ed. 1478. An illegal alien seeking recovery for work, labor and services contracted for after his entry into the United States was protected under the equal protection of the laws clause of the United States Constitution . . . An illegal alien is not barred from prosecuting his action for personal injuries.”
Because of the interrelation of the federal and state constitutions and statutes, the basic protections of due process and equal protection provided therein are granted to illegal immigrants unless the matter before the court was an integral part of the immigrant’s illegal access to this country. An illegal immigrant has standing to sue and be sued on any tort or contract that anyone else would be unless there is a inter-relationship with the claim or defense and their illegal entry into this country that would make the claim or defense void.
This rather dramatic point is the basic underpinning of the federal government’s refusal to bring the prisoner’s of war from the Middle East into this country and instead holding them at Guantanamo Bay, outside of this country so that there are no constitutional protections–once inside, the 13th and 14th amendments grant the prisoners the rights of equal protection because they are “persons” which includes constitutional rights to competent attorneys, writs of habeas corpus, trials before juries with real judges and the application of the rule of law.
The significance to all this is that it is not against federal law to rent to an illegal immigrant and the contract can be enforced as though there were no immigration issue. There is always the risk that the illegal immigrant tenant will be arrested or may simply go home and leave the landlord holding the sack without any realistic remedy.
There have been attempts to prohibit the sale or renting of residential property to illegal immigrants by some local communities but they fall afoul of the supremacy clause of the United States Constitution. The federal law prevails.
H. DEALING WITH UNREPRESENTED PERSONS
When the landlord is dealing with unrepresented persons, it is easier to tell all, disclose all and obey all before the deal is struck than it is to attempt to undo a bad mess stemming from a violation of any of the laws set out above. In addition to those standards of conduct there are the following matters that must be attended to at the time of the entering int the rental transaction. [All references are to the Property Code of Texas]
1. Landlord must give written parking rules to tenant at time of lease execution. [§92.00131]
2. Landlord may not prohibit tenant from calling police. [§92.015]
3. Landlord may not block tenant from cancelling and leaving to escape family violence. Tenant must provide court orders. [§92.016]
4. Landlord may not pass government fines to tenant unless tenant is at fault and caused the fine.[§92.018]
5. Landlord that has an on-site management or superintendent’s office for residential property must have a 24/7 emergency telephone. [§92.020]
6. Landlord prohibited from retaliation against tenant for attempting to exercise their rights under the statutes . Good for 6 months. Long list of prohibitions set out
7. Landlord must install smoke alarms and other security devices under certain circumstances. [§92.006] There is a long list of health and safety regulations that the landlord should read in full and understand along with the risks involved in today’s rental market.
I. RULES OF PROFESSIONAL CONDUCT
1. Landlords: The rules of professional conduct applicable to the landlord/tenant relationship do not exist per se but are found in the application of the laws of the land and derived from long experience–usually in the outpouring of sad stories to the legislature or the courts relating stories of the abuse of the less fortunate. However, these abuses stem in turn from the failure of tenants to live up to their obligations to pay their rent, obey the laws or rules of the property owners and to obey the law and live decently and not tear up the landlords’ property. The landlord has a great investment and is entitled to have his /her property safe from the vandalism that can come at the hands of unruly tenants. However, we do have the Code of Ethics and Standards of Practice of the National Association of Realtors and the Code of Ethics of the Apartment Association of he Panhandle. Both sets are attached hereto and are worth reading. The only possible sanction for their violation would be expulsion from the associations or be background in a lawsuit charging aa realtor with a breach of fiduciary duty.
2. Real Estate Agents: Many times a real estate agent undertakes to represent both the landlord and the tenant. In such cases, the same obligation of full disclosure must be met. It is suggested that the Texas Real Estate Commission’s special contract provision for such disclosure when the real estate agent is representing both a seller and a purchaser is a starting point with minor only changes necessary.
It is a violation of ethics for a real estate agent to fail to make such disclosure. Since the real estate agent relationship creates a fiduciary relationship 2, the breach of that relationship may be a proximate cause of actual damages including economic loss, attorney fees, mental anguish damages and punitive damages. 3
3. Attorneys Drafting Leases for Landlord and Tenant : Experience shows us that some residential lease contracts are drawn by an attorney selected by the landlord but who, for reasons not always clear, undertakes to represent not only the landlord but also the tenant on the basis that he/she is “merely a scrivener who commits to writing what the parties have agreed to” and therefore is not acting in a situation where there is an impermissible conflict of interest.
4. Attorney’s Joint Representation Permissible – If: Joint representation of the landlord and tenant or the buyer and the seller by an attorney is indeed permissible but only if the attorney follows the applicable Disciplinary Rules of the State Bar of Texas of which he/she is member and who is liable for the sanctions and liabilities for violation of those rules. Specifically, when the attorney finds himself/herself involved with preparing a residential lease agreement for both the landlord and the tenant he/she must answer early-on the cardinal question of the moment– whom do I represent? If the attorney has been selected by one of the parties to represent both parties, the attorney must disclose who made the selection. It is permissible for the attorney to represent both sides in a non-adversary transaction providing the attorney complies with the applicable rules of Professional Conduct. First, the attorney must disclose that the selection was made by one of the parties and the other party must agree to the selection. Disclosure for one type of client may differ from the disclosure requirements for other types of clients. The sophistication levels may vary and that variance may well require a different level of disclosure to make certain that the client have full knowledge of what has been disclosed.4 In addition there are very specific rules of professional conduct that must be abided by. Those are Rules 1.06 and 1.07, adopted by the Supreme Court of Texas effective Jan. 1, 1990, and are appended hereto as endnotes .i
It is easy to oversimplify the issue of ethics as they apply to landlord/tenant relationships. Most of the time, a good sense of justice and fairness will protect those who seek both justice and fairness; however, there are situations that a workable knowledge of the formalized rules are necessary and great care must be indulged in to obey them. I do hope that this beginning paper will assist in seeking out those rules.
1 See Cruse v. O’Quinn, 273 S.W.3d 766, 775 (Tex.App.-Houston [14 Dist.] 2008, writ denied) “A violation of the Disciplinary Rules does not necessarily establish a cause of action, nor does it void an otherwise valid contract executed outside of the attorney-client relationship . . . . But, as Cruse acknowledges, a court may deem these rules to be an expression of public policy, so that a contract violating them is unenforceable as against public policy. Dardas v. Fleming, Hovenkamp & Grayson, P.C., 194 S.W.3d 603, 613 (Tex.App.-Houston [14th Dist.] 2006, pet. denied); Bond v. Crill, 906 S.W.2d 103, 106 (Tex.App.-Dallas 1995, no writ); Polland & Cook v. Lehmann, 832 S.W.2d 729, 736 (Tex.App.-Houston [1st Dist.] 1992, writ denied).
2Rules of the Texas §531 Real Estate Commission Chapter 531 Canons of Professional Ethics and Conduct for Real Estate Licensees §531.1. Fidelity. . . A real estate broker or salesperson, while acting as an agent for another, is a fiduciary. Special obligations are imposed when such fiduciary relationships are created.
3 McGuire v. Kelley, 41 S.W.3d 679 (Tex.App.-Texarkana,2001. no writ) The court upheld award for damages breach of fiduciary relationship for economic loss, attorney fees, punitive damages and would have allowed mental anguish damages but plaintiff forgot to ask for them from the trial court.
4 Rule 1.06, Texas Rules of Professional Conduct: Comment No.8: Disclosure and consent are not formalities. Disclosure sufficient for sophisticated clients may not be sufficient to permit less sophisticated clients to provide fully informed consent. While it is not required that the disclosure and consent be in writing, it would be prudent for the lawyer to provide potential dual clients with at least a written summary of the considerations disclosed.
i. Rule 1.06 Conflict of Interest: General Rule
(a) A lawyer shall not represent opposing parties to the same litigation.
(b) In other situations and except to the extent permitted by paragraph (c), a lawyer shall not represent a person if the representation of that person:
(1) involves a substantially related matter in which that person’s interests are materially and directly adverse to the interests of another client of the lawyer or the lawyers firm; or
(2) reasonably appears to be or become adversely limited by the lawyers or law firm’s responsibilities to another client or to a third person or by the lawyers or law firm’s own interests.
(c) A lawyer may represent a client in the circumstances described in (b) if:
(1) the lawyer reasonably believes the representation of each client will not be materially affected; and
(2) each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any.
(d) A lawyer who has represented multiple parties in a matter shall not thereafter represent any of such parties in a dispute among the parties arising out of the matter, unless prior consent is obtained from all such parties to the dispute.
(e) If a lawyer has accepted representation in violation of this Rule, or if multiple representation properly accepted becomes improper under this Rule, the lawyer shall promptly withdraw from one or more representations to the extent necessary for any remaining representation not to be in violation of these Rules.
(f) If a lawyer would be prohibited by this Rule from engaging in particular conduct, no other lawyer while a member or associated with that lawyer’s firm may engage in that conduct.
Rule 1.07 Conflict of Interest: Intermediary
(a) A lawyer shall not act as intermediary between clients unless:
(1) the lawyer consults with each client concerning the implications of the common representation, including the advantages and risks involved, and the effect on the attorney-client privileges, and obtains each client’s written consent to the common representation;
(2) the lawyer reasonably believes that the matter can be resolved without the necessity of contested litigation on terms compatible with the clients’ best interests, that each client will be able to make adequately informed decisions in the matter and that there is little risk of material prejudice to the interests of any of the clients if the contemplated resolution is unsuccessful; and
(3) the lawyer reasonably believes that the common representation can be undertaken impartially and without improper effect on other responsibilities the lawyer has to any of the clients.
(b) While acting as intermediary, the lawyer shall consult with each client concerning the decision to be made and the considerations relevant in making them, so that each client can make adequately informed decisions.
(c) A lawyer shall withdraw as intermediary if any of the clients so requests, or if any of the conditions stated in paragraph (a) is no longer satisfied. Upon withdrawal, the lawyer shall not continue to represent any of the clients in the matter that was the subject of the intermediation.
(d) Within the meaning of this Rule, a lawyer acts as intermediary if the lawyer represents two or more parties with potentially conflicting interests.
(e) If a lawyer would be prohibited by this Rule from engaging in particular conduct, no other lawyer while a member of or associated with that lawyer’s firm may engage in that conduct.
1. Apartment Association of the Panhandle Code of Ethics
2. Code of Ethics and Standards of Practice of the National Association of Realtors
3. Common Law quotes
CODE OF ETHICS
We, the members of the Apartment Association of the Panhandle, recognizing our duty to the public and the intimate nature of the relationship between the apartment resident and the owner, or manager, and being aware of the vastly increasing role of the apartment industry in providing the home of the future, and in order to provide the apartment-residing public with each and every member, together and alone, agreeing that, so long as we remain members of the Association, and so long as nothing confined herein shall be unlawful, we shall:
(a) Promote, employ and maintain a high standard of integrity in the performance of all rental obligations and services in the operation of multi-housing communities.
(b) Maintain and operate multi-housing communities in accordance with fair and honorable standards of competition, ever mindful of the purposes of AAP in compliance with the bylaws thereof.
(c) Strive continually to promote the education and fraternity of the membership and to promote the progress and dignity of the multi-housing industry in creating a better image of itself in order that the public may be better served.
(d) Seek to provide better values, so that an even greater share of the public may enjoy the many benefits of multi-housing living.
(e) Establish high ethical standards of conduct with multi-housing rental agencies, suppliers and others doing business with the multi-housing industry.
(f) Endeavor to expose all schemes to mislead or defraud the multi-housing residing public and to aid in the exposure of those responsible.
(g) Refrain from attempting to obtain residents through advertising or otherwise, by means of deceptive, misleading or fraudulent statements, misrepresentations or the use of implications, unwarranted by fact or reasonable probability.
(h) Not use the TAA logo on forms other than official TAA lease-related forms or give incorrect impression that a form is approved by TAA.
(i) Abide by all national, state and local laws of every kind and nature.
(j) Not reproduce or reprint any publication or form which is copyrighted by TAA and sold by AAP.
(k) Not knowingly use any unlawfully reproduced or reprinted TAA forms or publications.
(i) Not use the TAA logo in any manner without using the phrase “Member of above” in conjunction with the logo.
Disciplinary action for any violation of the above Code of Ethics shall be delegated to and be the exclusive responsibility of the Board of Directors of the Apartment Association of the Panhandle.
Code of Ethics and Standards of Practice
of the NATIONAL ASSOCIATION OF REALTORS®
Effective January 1, 2009
Where the word REALTORS® is used in this Code and Preamble, it shall he deemed to include REALTOR-ASSOCIATE®S.
While the Code of Ethics establishes obligations that may be higher than those mandated by law, in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence,
Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization. REALTORS® should recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership. They require the creation of adequate housing, the building of functioning cities, the development of productive industries and farms, and the preservation of a healthful environment.
Such interests impose obligations beyond those of ordinary commerce. They impose grave social responsibility and a patriotic duty to which REALTORS® should dedicate themselves, and for which they should be diligent in preparing themselves, REALTORS® therefore, are zealous to maintain and improve the standards of their calling and share with their fellow REALTORS® a common responsibility for its integrity and honor.
In recognition and appreciation of their obligations to clients, customers, the public, and each Other, REALTORS® continuously strive to become and remain informed on issues affecting real estate and, as knowledgeable professionals, they willingly share the fruit of their experience and study with others. They identify and lake steps, through enforcement of this Code of Ethics and by assisting appropriate regulatory bodies, to eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession. REALTORS® having direct personal knowledge of conduct that may violate the Code of Ethics involving misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm, bring such matters to the attention of the appropriate Board or Association or REALTORS®. (Amended 1/00)
Realizing that cooperation with other real estate professionals promotes the best interests of those who utilize their services, REALTORS® urge exclusive representation of clients; do not attempt to gain any unfair advantage over their competitors; and they refrain from making unsolicited continents about other practitioners. in instances where their opinion is sought, or where REALTORS® believe that comment is necessary. their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.
The term REALTORS® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal.
In the interpretation of this obligation, REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, “Whatsoever ye would that others should do to you, do ye even so to them.”
Accepting this standard as their own, REALTORS® pledge to observe its spirit in all of their activities whether conducted personally, through associates or others, 0m via technological means, and to conduct their business in accordance with the tenets set forth below, (Amended 1/07)
Duties to Clients and Customers
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. (Amended 1/01)
• Standard of Practice 1-1
REALTORS®, when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics, (Amended 1/93)
• Standard of Practice 1-2
The duties imposed by the Code of Ethics encompass all real estate related activities and transactions whether conducted in person, electronically, or through any other means.
The duties the Code of Ethics imposes are applicable whether REALTORS® are acting as agents or in legally recognized non-agency capacities except that any duty imposed exclusively on agents by law or regulation shall not be imposed by this Code of Ethics on REALTORS® acting in non-agency capacities.
As used in this Code of Ethics, “client” means the person(s) or entity(ies) with whom a REALTORS® or a REALTORS®‘s firm has an agency or legally recognized non-agency relationship; “customer” means a party to a real estate transaction who receives information, services, or benefits but has no contractual relationship with the REALTORS® or the REALTORS®‘s firm; “prospect” means a purchaser, seller, tenant, or landlord who is not subject to a representation relationship with the REALTORS® or REALTORS®‘s firm; “agent” means a real estate licensee t including brokers and sales associates) acting in an agency relationship as defined by state law or regulation: and “broker” means a real estate licensee (including brokers and sales associates) acting as an agent or in a legally recognized non-agency capacity. (Adopted 1/95, Amended 1/07)
• Standard of Practice 1-3
REALTORS`° ht attempting to secure a listing. shall not deliberately mislead the owner as to market value.
• Standard of Practice 1.4
REALTORS®, when seeking to become a buyer/tenant representative, shall not mislead buyers or tenants as to savings or other benefits that might be realized through use of the REALTOR'”S services. (Amended 1/93)
• Standard of Practice 1-5
REALTORS® may represent the seller/landlord and buyer/tenant in the same transaction only after full disclosure to and with informed consent of both parties. (Adopted 1/93)
• Standard of Practice 1-6
REALTORS” shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95)
• Standard of Practice 1-7
When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing, REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease, (Amended 1/93)
• Standard of Practice 1-8
REALTORS®, acting as agents or brokers of buyers/tenants, shall submit to buyers/tenants all offers and counter-offers until acceptance but have no obligation to continue to show properties to their clients alter an offer has been accepted unless otherwise agreed in writing. REALTORS®, acting as agents or brokers of buyers/tenants, shall recommend that buyers/tenants obtain the advice of legal counsel if there is a question as to whether a pre-existing contract has been terminated. (Adopted 1/93, Amended 1/99)
• Standard of Practice 1-9
The obligation of REALTORS® to preserve confidential information (as defined by state law) provided by their clients in the course of any agency relationship or non-agency relationship recognized by law continues after termination of agency relationships or any non- agency relationships recognized by law. REALTORS® shall not knowingly, during or following the termination of professional relationships with their clients:
reveal confidential information of clients; or
use confidential information of clients to the disadvantage of clients; or
use confidential information of clients for the REALTORS®‘s advantage or the advantage of third parties unless:
a) clients consent after full disclosure; or
b) REALTORS® are required by court order; or
c) it is the intention of a client to commit a crime and the information is necessary to prevent the crime; or
d) it is necessary to defend a REALTORS® or the REALTORS®‘s employees or associates against an accusation of wrongful conduct. Information concerning latent material defects is not considered confidential information under this Code of Ethics. (Adopted 1/93, Amended 1/01)
• Standard of Practice 1-10
REALTORS® shall, consistent with the terms and conditions of their real estate licensure and their property management agreement, competently manage the property of clients with due regard for the rights, safety and health of tenants and others lawfully on the premises. (Adopted 1/95, Amended 1/00)
• Standard of Practice 1.11
REALTORS® who are employed to maintain or manage a client’s property shall exercise due diligence and make reasonable efforts to protect it against reasonably foreseeable contingencies and losses, (Adopted 1/95)
• Standard of Practice 1-12
When entering into listing contracts. REALTORS® must advise sellers/landlords of:
the REALTORS® company policies regarding cooperation and the amount(s) of any compensation that will be offered to subagents, buyer/tenant agents, and/or brokers acting in legally recognized non-agency capacities;
the fact that buyer/tenant agents or brokers, even if compensated by listing brokers, or by sellers/landlords may represent the interests of buyers/tenants; and
any potential for listing brokers to act as disclosed dual agents, e.g., buyer/tenant agents. (Adopted 1/93, Renumbered 1/98, Amended 1/03)
• Standard of Practice 1-13
When entering into buyer/tenant agreements. REALTORS® must advise potential clients of:
the REALTORS®‘s company policies regarding cooperation;
the amount of compensation to be paid by the client;
the potential for additional or offsetting compensation from other brokers, from the seller or landlord, or from other parries;
any potential for the buyer/tenant representative to act as a disclosed dual agent, e.g., listing broker, subagent, landlord’s agent, etc., and
the possibility that sellers or sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulation, or by any confidentiality agreement between the parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06)
• Standard of Practice 1-14
Fees for preparing appraisals or other valuations shall not be contingent upon the amount of the appraisal or valuation. (Adopted’ 1/02)
• Standard of Practice 1.15
REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of oilers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended 1/09)
REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to (he property or the transaction. REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters Outside the scope or 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. (Amended 1/00)
• Standard of Practice 2-1
REALTORS® shall only lie obligated to discover and disclose adverse factors reasonably apparent to someone with expertise in those areas required by their real estate licensing authority. Article 2 does not impose upon the REALTORS®‘s the obligation of expertise in other professional or technical disciplines. (Amended 1/96)
• Standard of Practice 2-2 (Renumbered as Standard of Practice 1-12 1/98)
• Standard of Practice 2-3 (Renumbered as Standard of Practice 1-13 1/98)
• Standard of Practice 2.4 REALTORS® shall not be parties to the naming of a false consideration in any document, unless it lie the naming of an obviously nominal consideration.
• Standard of Practice 2-5
Factors defined as “non-material” by law or regulation or which are expressly referenced in law or regulation as not being subject to disclosure are considered not “pertinent” for purposes of Article 2. (Adopted 1/93)
REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95)
• Standard of Practice 3.1
REALTORS®, acting as exclusive agents or brokers of sellers/ landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation. (Amended 1/99)
• Standard of Practice 3-2
REALTORS® shall, with respect to offers of compensation to another REALTORS®, timely communicate any change of compensation for cooperative services to the other REALTORS® prior to the time such REALTORS® produces an offer to purchase/lease the property. (Amended 1/94)
• Standard of Practice 3-3
Standard of Practice 3-2 does not preclude the listing broker and cooperating broker from entering into an agreement to change cooperative compensation. (Adopted 1/94)
• Standard of Practice 3.4
REALTORS®, acting as listing brokers, have an affirmative obligation to disclose the existence of dual or variable rate commission arrangements (i.e., listings where one amount of commission is payable if the listing broker’s firm is the procuring cause of sale/lease and a different amount of commission is payable if the sale/lease results through the efforts of the seller/landlord or a cooperating broker). The listing broker shall, as soon as practical, disclose the existence of such arrangements to potential cooperating brokers and shall, in response to inquiries from cooperating brokers, disclose the differential that would result in a cooperative transaction or in it sale/lease that results through the efforts of the seller/landlord. If the cooperating broker is it buyer/tenant representative, the buyer/tenant representative tons( disclose such information to their client before the client makes an offer to purchase or lease, (Amended 1/02)
• Standard of Practice 3-5
It is the obligation of subagents to promptly disclose all pertinent facts to the principal’s agent prior to as well as after a purchase or lease agreement is executed, (Amended 1/93)
• Standard of Practice 3-6
REALTORS® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation. (Adopted 5/86, Amended 1/04)
• Standard of Practice 3-7
When seeking information from another REALTORS® concerning property under it management or listing agreement, REALTORS® shall disclose their REALTORS® status and whether their interest is personal or on behalf of a client and, if on behalf of a client, their representational status. (Amended 1/95)
• Standard of Practice 3-8
REALTORS® shall not misrepresent the availability of access to show or inspect a listed property. (Amended 11/87)
REALTORS® shall not acquire an interest in or buy or present otters from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker, In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00)
• Standard of Practice 4-1
For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract. (Adopted 2/86)
REALTORS® shall not undertake to provide professional services concerning a property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all affected parties.
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 lees, the REALTORS® or REALTORS®‘s firm may receive as a direct result of such recommendation. (Amended 1/99)•
• Standard of Practice 6-1
REALTORS® shall riot recommend or suggest to a client or a customer the use of services of another organization or business entity in which they have a direct interest without disclosing such interest at the time of the recommendation or suggestion. (Amended 5/88)
In a transaction, REALTORS® shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the REALTORS®‘s client or clients, (Amended 1/93)
REALTORS® shall keep in a special account in on appropriate financial institution, separated from their own funds, monies coming into their possession in trust fur other persons, such as escrows, trust funds, clients’ monies, and other like items.
REALTORS®, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases are in writing in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties. A copy of each agreement shall be furnished to each party to such agreements upon their signing or initialing. (Amended 1/04)
• Standard of Practice 9.1
For the protection of all parties, REALTORS® shall use reasonable care to ensure that documents pertaining to the purchase. sale, or lease of real estate are kept current through the use of written extensions or amendments. (Amended 1/93)
• Standard of Practice 9-2
When assisting or enabling a client or customer in establishing a contractual relationship (e.g., listing and representation agreements, purchase agreements, leases, etc.) electronically, REALTORS® shall make reasonable efforts to explain the nature and disclose the specific terms of the contractual relationship being established prior to it being agreed to by a contracting party. (Adopted 1/07)
Duties to the Public
REALTORS® shall not deny equal professional services to any person for reasons of race, color•, religion, sex, handicap, familial status, or national origin, REALTORS® shall not he parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, or national origin. (Amended 1/90)
REALTORS®, in their teal estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, or national origin. (Amended 1/00)
• Standard of Practice 10-1
When involved in the sale or lease of a residence, REALTORS® shall not volunteer information regarding the racial, religious or ethnic composition of any neighborhood nor shall they engage in any activity which may result in panic selling, however, REALTORS® may provide other• demographic information. (Adopted 1/94, Amended 1/06)
• Standard of Practice 10-2
When not involved in the sale o• lease of a residence, REALTORS® may provide demographic information related to a property, transaction or professional assignment to a party if such demographic information is (a) deemed by the REALTORS® to be needed to assist with or complete, in a manner consistent with Article 10, a real estate transaction or professional assignment and (b) is obtained or derived Irons a recognized, reliable, independent, and impartial source. The source of such information and any additions, deletions, modifications, interpretations, or other changes shall be disclosed in reasonable detail. (Adopted 1/05, Renumbered 1/06)
• Standard of Practice 10.3
REALTORS® shall not print, display or circulate any statement or advertisement with respect to selling or renting of a property that indicates any preference, limitations or discrimination based on race, color, religion, sex, handicap, familial status, or national origin. (Adopted 1/94, Renumbered 1/05 and 1/06)
• Standard of Practice 10-4
As used in Article 10 “real estate employment practices” relates to employees and independent contractors providing teal estate- related services and the administrative and clerical staff directly supporting those individuals. (Adopted 1/00, Renumbered 1/05 and 1/06)
The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.
REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/95)
• Standard of Practice 11.1
When REALTORS® prepare opinions of real property value or price, other than in pursuit of a listing or to assist it potential purchaser in formulating a purchase offer, such opinions shall include the following:
identification of the subject property
defined value or price
limiting conditions, including statements of purpose(s) and intended users)
any present or contemplated interest, including (he possibility of representing the seller/landlord or buyers/tenants
basis for the opinion, including applicable market data
if the opinion is not an appraisal, a statement to that effect (Amended 1/01)
• Standard of Practice 11-2
The obligations of the Code of Ethics in respect of real estate disciplines other than appraisal shall be interpreted and applied in accordance with the standards of competence and practice which clients and the public reasonably require to protect their rights and interests considering the complexity of the transaction, the availability of expert assistance, and, where the REArroa.- is an agent or subagent, the obligations of a fiduciary. (Adopted 1/95)
• Standard of Practice 11-3
When REALTORS® provide consultive services to clients which involve advice or counsel for a fee (not a commission), such advice shall be rendered in an objective manner and the fee shall not be contingent On the substance of the advice or counsel given, If brokerage or transaction services are to be provided in addition to consultive services, it separate compensation may be paid with prior agreement between the client and REALTORS®. (Adopted 1/96)
• Standard of Practice 11-4
The competency required by Article I relates to services contracted for between REALTORS® and their clients or customers, the duties expressly imposed by the Code of Ethics; and the duties imposed by law or regulation. (Adopted 1/02)
REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. REALTORS® shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional, (Amended 1/08)
• Standard of Practice 12-1
REALTORS® may use the term “free” and similar terms in their advertising and in other representations provided that all terms governing availability of the offered product or service are clearly disclosed at the same time. (Amended 1/97)
• Standard of Practice 12-2
REALTORS® may represent their services as “free” or without cost even if they expect to receive compensation from a source other than their client provided that the potential for the REALTORS® to obtain a benefit from a third party is clearly disclosed at the same time. (Amended 1/97)
• Standard of Practice 12-3
The offering of premiums, prize~, merchandise discounts or other inducements to list, sell, purchase, or lease is not, in itself, unethical even if receipt of the benefit is contingent on listing, selling, purchasing, or leasing through the REALTORS® must exercise care and candor in any such advertising or other public or private representations so that any party interested in receiving or otherwise benefiting from the REALTOR’S offer will have clear, thorough, advance understanding of all the terms and conditions of the offer. The offering of any inducements to do business is subject to the limitations and restrictions of state law and the ethical obligations established by any applicable Standard of Practice. (Amended 1/95)
• Standard of Practice 12-4
REALTORS® shall not offer for sale/lease or advertise property without authority, When acting as listing brokers or as subagents, REALTORS® shall not quote a price different from that agreed upon with the seller/landlord. (Amended 1/93)
• Standard of Practice 12-5
REALTORS® shall not advertise nor permit any person employed by or affiliated with them to advertise listed property in any medium (e.g., electronically, print, radio, television, etc.) without disclosing the name of that REALTORS®‘s firm in a reasonable and ‘cattily apparent manner. (Adopted 11/86, Amended 1/07)
• Standard of Practice 12-6
REALTORS®, when advertising unlisted real property for sale/lease in which they have an ownership interest, shall disclose their status as both owners/landlords and as REALTORS® or real estate licensees. (Amended //93)
• Standard of Practice 12-7
Only REALTORS® 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. (Amended 1/96)
• Standard of Practice 12-8
The obligation to present a true picture in representations to the public includes information presented, provided, or displayed on REALTORS®‘s websites. REALTORS® shall use reasonable efforts to ensure that information on their websites is current, When it becomes apparent that information on a REALTORS®‘s website is no longer current or accurate, REALTORS® shall promptly take corrective action. (Adopted 1/07)
• Standard of Practice 12.9
REALTORS® firm websites shall disclose the firm’s name and state(s) of licensure in a reasonable and readily apparent manner. Websites of REALTORS®‘ and non-member licensees affiliated with a REALTOR® firm shall disclose the firm’s name and that REALTOICS or non-member licensee’s state(s) of licensure in a reasonable and readily apparent manner. (Adopted 1/07)
• Standard of Practice 12-10
REALTORS®‘s obligation to present a true picture in their advertising and representations to the public includes the URLs and domain names they use, and prohibits REALTORS® from:
engaging in deceptive or unauthorized framing of real estate brokerage websites;
manipulating (e.g., presenting content developed by others) listing content in any way that produces a deceptive or misleading result; or
deceptively using metatags, keywords or other devices/methods to direct, drive, or divert Internet traffic, or to otherwise mislead consumers. (Adopted 1/07)
• Standard of Practice 12-11
REALTORS® intending to share or sell consumer information gathered via the Internet shall disclose that possibility in a reasonable and readily apparent manner. (Adopted 1/07)
• Standard of Practice 12-12
REALTORS® shall not: use URLs or domain names that present less than a true picture, or 2) register URLs or domain names which, if used, would present less than a true picture. (Adopted 1/08)
• Standard of Practice 12-13
The obligation to present a true picture in advertising, marketing, and representations allows REALTORS® to use and display only professional designations, certifications, and other credentials to which they are legitimately entitled. (Adopted 1/08)
REALTORS® shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.
If charged with unethical practice or asked to present evidence or to cooperate in any other way, in any professional standards proceeding or investigation, REALTORS® shall place all pertinent facts before the proper tribunals of the Member Board or affiliated institute, society, or council in which membership is held and shall take no action to disrupt or obstruct such processes. (Amended 1/99)
• Standard of Practice 14-4
REALTORS® shall not he subject to disciplinary proceedings in more than one Board of REALTORS® or affiliated institute, society, or council in which they hold membership with respect to alleged violations of the Code of Ethics relating to the same transaction or event, (Amended 1/95)
• Standard of Practice 14-2
REALTORS® shall not make any unauthorized disclosure or dissemination of the allegations, findings, or decision developed in connection with an ethics hearing or appeal or in connection with an arbitration hearing or procedural review. (Amended 1/92)
• Standard of Practice 14.3
REALTORS® shall not obstruct the Board’s investigative or professional standards proceedings by instituting or threatening to institute actions for libel, slander, or defamation against any party to a professional standards proceeding or their witnesses based on the filing of an arbitration request, an ethics complaint, or testimony given before any tribunal. (Adopted 11/87, Amended 1/99)
• Standard of Practice 14-4
REALTORS® shall not intentionally impede the Board’s investigative or disciplinary proceedings by tiling multiple ethics complaints based on the same event or transaction. (Adopted / 1/88)
Duties to REALTORS®
REALTORS® shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices. (Amended 1/92)
• Standard of Practice 15-1
REALTORS® shall not knowingly or recklessly file false or unfounded ethics complaints. (Adopted 1/00)
• Standard of Practice 15.2
The obligation to refrain from making false or misleading statements about competitors’ businesses and competitors’ business practices includes the duty to not knowingly or recklessly repeat, retransmit, or republish false or misleading statements made by others. This duty applies whether false or misleading statements are repealed in person, in writing, by technological means (e.g., the Internt), or by any other means. (Adopted 1/07)
REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS have with clients. (Amended 1/04)
• Standard of Practice 16-1
Article 16 is not intended to prohibit aggressive or innovative business practices which are otherwise ethical and does not prohibit disagreements with other REALTORS® involving commission, lees, compensation or other forms of payment or expenses. (Adopted 1/93, Amended 1/95)
• Standard of Practice 16-2
Article 16 does not preclude REALTORS® from making general announcements to prospects describing their services and the terms of their availability even though some recipients may have entered into agency agreements or other exclusive relationships with another REALTOR®. A general telephone canvass, general mailing or distribution addressed to all prospects in a given geographical area or in a given profession, business, club, or organization, or other classification or group is deemed “general” for purposes of this standard. (Amended 1/04)
Article 16 is intended to recognize as unethical two basic types of solicitations:
First, telephone or personal solicitations of property owners who have been identified by a real estate sign. multiple listing compilation, or other information service as having exclusively listed their property with another REALTOR®, and
Second, mail or other forms of written solicitations of prospects whose properties are exclusively listed with another REALTOR® when such solicitations are not part of a general mailing but are directed specifically to property owners identified through compilations of current listings, “far sale” or “for rent” signs, or other .sources of information required by Article 3 and Multiple Listing Service rules to be made available to other REALTORS® under offers of subagency or cooperation. (Amended 1/0-1)
• Standard of Practice 16-3
Article. 16 does not preclude REALTORS® from contacting the client of another broker for the purpose of offering to provide, or entering into a contract to provide, a different type of real estate service unrelated to the type of service currently being provided (e.g., property management as opposed to brokerage) or from offering the same type of service for property not subject to other brokers’ exclusive agreements. However, information received through a Multiple Listing Service or any other offer of cooperation may not be used to target clients of other REALTORS® to whom such oilers to provide services may be made. (Amended 1/04)
• Standard of Practice 16-4
REALTORS® shall not solicit a listing which is currently listed exclusively with another broker, However, if the listing broker, when asked by the REALTORS®, refuses to disclose the expiration date and nature of such listing; i.e., an exclusive right to sell, an exclusive agency, open listing, or other form of contractual agreement between the listing broker and the client, the REALTORS® may contact the owner to secure such information and may discuss the terms upon which the REALTORS® might take a future listing or, alternatively, may take a listing to become effective upon expiration of any existing exclusive listing, (Amended 1/94)
• Standard of Practice 16-5
REALTORS® shall not solicit buyer/tenant agreements from buyers/ tenants who are subject to exclusive buyer/tenant agreements. However, if asked by a REALTOR® the broker refuses to disclose the expiration date of the exclusive buyer/tenant agreement, the REALTOR® may contact the buyer/tenant to secure such information and may discuss the terms upon which the REALTOR® might enter into a future buyer/tenant agreement or, alternatively, may enter into a buyer/tenant agreement to become effective upon the expiration of any existing exclusive buyer/tenant agreement. (Amended 1/94, Amended 1/98)
• Standard of Practice 16-6
When REALTORS® are contacted by the client of another REALTORS® regarding the creation of an exclusive relationship to provide the same type of service, and REALTORS® have not directly or indirectly initiated such discussions, they may discuss the terms upon which they might enter into a future agreement or, alternatively, may enter into an agreement which becomes effective upon expiration of any existing exclusive agreement. (Amended 1/98)
• Standard of Practice 16-7
The fact that a prospect has retained a REALTORS® as an exclusive representative or exclusive broker in one or more past transactions does not preclude other REALTORS® from seeking such prospect’s future business. (Amended 1/04)
• Standard of Practice 16-8
The fact that an exclusive agreement has been entered into with a REALTOR® shall not preclude or inhibit any other REALTORS® from entering into a similar agreement after the expiration of the prior agreement. (Amended 1/98)
• Standard of Practice 16-9
REALTORS®, prior to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service, (Amended 1/04)
• Standard of Practice 16-10
REALTORS®, acting as buyer or tenant representatives or brokers, shall disclose that relationship to the seller/landlord’s representative or broker at first contact and shall provide written confirmation of that disclosure to the seller/landlord’s representative or broker not later than execution of a purchase agreement or lease. (Amended 1/04)
• Standard of Practice 16-11
On unlisted property, REALTORS® acting as buyer/tenant representatives or brokers shall disclose that relationship to the seller/landlord at first contact for that buyer/tenant and shall provide written confirmation of such disclosure to the seller/landlord not later than execution of any purchase or lease agreement. (Amended 1/04)
REALTORS® shall make any request for anticipated compensation from the seller/landlord at first contact. (Amended 1/98)
• Standard of Practice 16-12
REALTORS®, acting as representatives or brokers of sellers/landlords or as subagents of listing brokers, shall disclose that relationship to buyers/tenants as soon as practicable and shall provide written confirmation of such disclosure to buyers/tenants not later than execution of any purchase or lease agreement, (Amended 1/04)
• Standard of Practice 16-13
All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client’s representative or broker, and not with the client, except with the consent of the client’s representative or broker or except where such dealings are initiated by the client.
Before providing substantive services (such as writing a purchase offer or presenting a CMA) to prospects, REALTORS® shall ask prospects whether they are a party to any exclusive representation agreement. REALTORS® shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects’ exclusive representatives or at the direction of prospects. (Adopted 1/93, Amended 1/04)
• Standard of Practice 16-14
REALTORS® are free to enter into contractual relationships or to negotiate with sellers/landlords, buyers/tenants or others who are not subject to an exclusive agreement but shall not knowingly obligate them to pay more than one commission except with their informed consent. (Amended 1/98)
• Standard of Practice 16.15
In cooperative transactions REALTORS® shall compensate cooperating REALTORS® (principal brokers) and shall not compensate nor offer to compensate, directly or indirectly, any of the stiles licensees employed by or affiliated with other REALTORS® without the prior express knowledge and consent of the cooperating broker.
• Standard of Practice 16-16
REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an oiler to purchase/lease to attempt to modify the listing broker’s offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation. (Amended 1/04)
• Standard of Practice 16-17
REALTORS®, acting as subagents or as buyer/tenant representatives or brokers, shall not attempt to extend a listing broker’s offer of cooperation and/or compensation to other brokers without the consent of the listing broker. (Amended 1/04)
• Standard of Practice 16-8
REALTORS® shall not use information obtained from listing brokers through offers to cooperate made through multiple listing services or through other offers of cooperation to refer listing brokers’ clients to other brokers or to create buyer/tenant relationships with listing brokers’ clients, unless such use is authorized by listing brokers. (Amended 1/02)
• Standard of Practice 16.19
Signs giving notice of property for sale, rent, lease, or exchange shall not be placed on property without consent of the seller/landlord. (Amended 1/93)
• Standard of Practice 16-20
REALTORS®, prior to or after terminating their relationship with their current firm, shall not induce clients of their current lion to cancel exclusive contractual agreements between the client and that firm. This does not preclude REALTORS® (principals) from establishing agreements with their associated licensees governing assignability of exclusive agreements. (Adopted 1/98)
In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between REALTORS® (principals) associated with different firms, arising out of their relationship as REALTORS®, the REALTORS® shall submit the dispute to arbitration in accordance with the regulations of their Board or Boards rather than litigate the matter.
In the event clients of REALTORS® wish to arbitrate contractual disputes arising out of real estate transactions, REALTORS® shall arbitrate those disputes in accordance with the regulations of their Board, provided the clients agree to he bound by the decision.
The obligation to participate in arbitration contemplated by this Article includes the obligation of REALTORS® (principals) to cause their firms to arbitrate and be bound by any award. (Amended 1/01)
• Standard of Practice 17.1
The filing of litigation and refusal to withdraw from it by REALTORS® in an arbitrable matter constitutes a refusal to arbitrate.. (Adopted 2/86)
• Standard of Practice 17-2
Article 17 does not require REALTORS® to arbitrate in those circumstances when all parties to the dispute advise the Board in writing that they choose not In arbitrate before the Board, (Amended 1/93)
• Standard of Practice 17-3
REALTORS®, when acting solely as principals in a real estate transaction, are not obligated to arbitrate disputes with other REALTORS® absent a specific written agreement to the contrary. (Adopted 1/96)
• Standard of Practice 17.4
Specific non-contractual disputes that are subject to arbitration pursuant to Article 17 are:
Where a listing broker has compensated a cooperating broker and another cooperating broker subsequently claims to be the procuring cause of the sale or lease. In such cases the complainant may name the first cooperating broker as respondent and arbitration may proceed without the listing broker being named as a respondent, When arbitration occurs between two (or more) cooperating brokers and where the listing broker is not a party, the amount in dispute and the amount of any potential resulting award is limited to the amount paid to the respondent by the listing broker and any amount credited or paid to a party to the transaction at the direction of the respondent. Alternatively, if the complaint is brought against the listing broker, the listing broker may name the first cooperating broker as a third-party respondent. in either instance the decision of the hearing panel as to procuring cause shall be conclusive with respect to all current or subsequent claims of the parties for compensation arising out of the underlying cooperative transaction. (Adopted 1/97, Amended 1/07)
Where a buyer or tenant representative is compensated by the seller or landlord, and not by the listing broker, and the listing broker, as a result, reduces the commission owed by the seller or landlord and, subsequent to such actions, another cooperating broker claims to be the procuring cause of sale or lease. In such cases the complainant may name the first cooperating broker as respondent and arbitration may proceed without the listing broker being named as a respondent. When arbitration occurs between two (or more) cooperating brokers and where the listing broker is not a party, the amount in dispute and the amount of any potential resulting award is limited to the amount paid to the respondent by the seller or landlord and any amount credited or paid to a party to the transaction at the direction of the respondent. Alternatively, if the complaint is brought against the listing broker, the listing broker may name the first cooperating broker as a third-party respondent. In either instance the decision of the hearing panel as to procuring cause shall be conclusive with respect to all current or subsequent claims of the parties for compensation arising out of the underlying cooperative transaction, (Adopted 1/97, Amended 1/07)
Where a buyer or tenant representative is compensated by the buyer or tenant and, as a result, the listing broker reduces the commission owed by the seller or landlord and, subsequent to such actions, another cooperating broker claims to be the procuring cause of sale or lease. in such cases the complainant may name the first cooperating broker as respondent and arbitration may proceed without the listing broker being named as a respondent. Alternatively, if the complaint is brought against the listing broker, the listing broker may name the first cooperating broker as a third-party respondent, In either instance the decision of the hearing panel as to procuring cause shall be conclusive with respect to all current or subsequent claims of the parties for compensation arising out of the underlying cooperative transaction. (Adopted 1/97)
Where two or more listing brokers claim entitlement to compensation pursuant to open listings with a seller or landlord who agrees to participate in arbitration (or who requests arbitration) and who agrees to be bound by the decision, In cases where one of the listing brokers has been compensated by the seller or landlord, the other listing broker, as complainant, may name the first listing broker as respondent and arbitration may proceed between the brokers. (Adopted 1/97)
Where a buyer or tenant representative is compensated by the seller or landlord, and not by the listing broker, and the listing broker, as a result, reduces the commission owed by the seller or landlord and, subsequent to such actions, claims to be the procuring cause of sale or lease. In such cases arbitration shall he between the listing broker and the buyer or tenant representative and the amount in dispute is limited to the amount of the reduction of commission to which the listing broker agreed, (Adopted 1/05)
• Standard of Practice 17-5
The obligation to arbitrate established in Article I7 includes disputes between REALTORS® (principals) in different states in instances where, absent an established inter-association arbitration agreement, the REALTORS® (principal) requesting arbitration agrees to submit to the jurisdiction of, travel to, participate in, and be bound by any resulting award rendered in arbitration conducted by the respondent(s) REALTORS®‘s association, in instances where the respondent(s) REALTOR'”ti association determines that an arbitrable issue exists. (Adopted 1/07)
The Code of Ethics ties adopted in 1913. Amended at the Animal Convention in 1924, 1928, 1950, 1951, 1952, 1955, 1956, 1961, 1962, 1974, 1982, 1986, 1987, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1990, 1997, 1998,1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008.
The reader should be aware of the following policies which have been approved by the Board of Directors of the National Association:
In filing a charge of an alleged violation of the Code of Ethics by a REALTOR”, the charge must read as an alleged violation of one or more Articles of the Code. Standards of Practice may be cited in support of the charge.
The Standards of Practice serve to clarity the ethical obligations imposed by the various Articles and supplement, and do not substitute for, the Case Interpretations in Interpretations of the Code of Ethics.
Modifications to existing Standards of Practice and additional new Standards of Practice are approved from time to time, Readers are cautioned to ensure that the most recent publications are utilized.
THE COMMON LAW
The “Common Law” is more than a mere body of law derived from judicial decisions without the intervention of statutes or a written constitution. Rather, it involves the great judicial process of a reasoned search for justice within the confines of known and knowable principles governing human conduct derived from our western culture. Ultimately, all great problems of property rights, personal freedoms and seemingly insoluble community , political and societal tensions come to the halls of the Common Law for resolution, there to be debated and struggled with on a continuing basis as our law accommodates, within the confines of changing circumstances of contemporary community expectations and standards of decency. If we are to suffer the cataclysm of annihilation and mankind must once a gain evolve from some primordial ooze, our successors will then as now engage in the reasoned search for justice—always within the confines of these great, immutable principles which we call the “Common Law.” (Published 11-2001)
The rule of decision in this state consists of those portions of the common law of England that are not inconsistent with the constitution or the laws of this state, the constitution of this state, and the laws of this state. (§5.01, Texas Civil Practice and Remedy Code)
…All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law. [Bill of Rights, Article I, §13, Constitution of the State of Texas]