Lesson 12: Listing Agreement/Ethics - 360training.com · Lesson 12: Listing Agreement/Ethics Lesson Topics ... covers marketing the property and ... and be scrupulous and meticulous

Texas Principles of Real Estate I

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Lesson 12: Listing Agreement/Ethics

Lesson Topics

This lesson focuses on the following topics:

Listing Property

Property Disclosures and Notices

Types of Listings

Ethics

Lesson Learning Objectives

By the end of this lesson you will be able to:

Understand the responsibility of representing property buyers and sellers in a

professional manner.

Be able to recite four major disclosure issues.

Know the various types of listings and the pros and cons of each.

Listing Property

A listing agreement and a buyer’s representation agreement are basically an employment

contract made between a buyer or seller or owner and a broker. It is not a sales contract

or lease agreement, even if the marketed property is sold or rented. A listing agreement

covers marketing the property and obtaining and submitting offers to lease or buy the

property. A buyer’s representation agreement covers assisting the buyer to find a property

and negotiate an offer for purchase.

Most states require these agreements be in writing if they are to be enforceable in court,

and provide standardized forms for listing agreements that comply with state regulations

and multiple listing service standards.


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Listing agreements create a relationship, called an “agency relationship,” authorizing a

licensee to represent the principal (seller or owner) and the principal’s property to third

parties (buyers or tenants). A buyer’s representation agreement authorizes a licensee to

represent the buyer as a principal. These relationships place a licensee in a position of

trust or fiduciary duty, or an “allegiance.” In this case, the licensee owes the principal the

duties of loyalty, confidentiality, obedience, full disclosure, care, diligence, and

accountability for all funds entrusted to him or her.

The licensee generally agrees to provide all of the real estate services the clients requires

until the property is actually sold or rented. A broker might allow other people (such as

salespeople) to help carry out his or her contractual duties provided they do so under his

or her supervision.

The licensee is usually given the legal status of “special agent” for the principal. This

means the licensee is under contract for one specific act or business transaction (i.e.,

finding a buyer or tenant). Each state’s license law discusses the specific requirements

and duties of special agents. These laws can also define which parties (e.g., salespeople)

may act on an agent’s behalf and under what circumstances.

Anytime a real estate licensee is considering representing a seller or a buyer it deserves

serious consideration. The responsibility is great. Remember the advice given in the

Cannons of Professional Ethics. Do not accept a role as anyone’s agent if you do not feel

you able to comply with the requirements.

§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. They demand:

(1) That the primary duty of the real estate agent is to represent the interests of the

agent's client, and the agent's position, in this respect, should be clear to all parties

concerned in a real estate transaction; that, however, the agent, in performing

duties to the client, shall treat other parties to a transaction fairly;


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(2) That the real estate agent be faithful and observant to trust placed in the agent,

and be scrupulous and meticulous in performing the agent's functions;

(3) That the real estate agent place no personal interest above that of the agent's

client.

§531.2. Integrity. A real estate broker or salesperson has a special obligation to exercise

integrity in the discharge of the licensee's responsibilities, including employment of

prudence and caution so as to avoid misrepresentation, in any wise, by acts of

commission or omission.

§531.3. Competency. It is the obligation of a real estate agent to be knowledgeable as a

real estate brokerage practitioner. The agent should:

(1) Be informed on market conditions affecting the real estate business and

pledged to continuing education in the intricacies involved in marketing real estate

for others;

(2) Be informed on national, state, and local issues and developments in the real

estate industry; and

(3) Exercise judgment and skill in the performance of the work.

Further instructions are received from the National Association of REALTORS® Code of

Ethics.

Included in Preamble of the Code of Ethics are the following statements:

“The term REALTOR® 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

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, which is


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embodied in the Golden Rule, “Whatsoever ye would that others should do

to you, do ye even so to them.”

Included in the Code of Ethics are, Article 1, 9, 11 & 13. Details are as follows:

Article 1

When representing a buyer, seller, landlord, tenant, or other client as an agent,

REALTORS® pledge themselves to protect and promote the interests of their client. This

obligation to the client is primary, but it does not relieve REALTORS® of their obligation

to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party

in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly

Article 9

REALTORS®, for the protection of all parties, shall assure whenever possible that

agreements shall be in writing, and shall be 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 upon their signing and or

initialing (Amended 1-95).

Article 11

The services which the REALTORS® provide 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


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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).

Article 13

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.

Multiple Listing Service

Article 3 of the NAR Code of Ethics says..

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).

Texas has a multiple listing service in which brokers agree to share their listings with other

brokers by pooling the information in a database in exchange for a share of the

commission earned by a transaction. The most common form of such an arrangement is

brokers being members of a board of REALTORS® or real estate agents with all members

agreeing to be bound by rules governing that organization.

As part of agreeing to be a member, such entities usually have their own listing agreement

form with a stipulation clause giving the listing broker both the authority and an obligation

to share the listing with other brokers by submitting the property information into the MLS

database, unless the seller specifically requests that the property not be listed in MLS.

As part of being advertised in the MLS system, the seller’s broker advertises a fee or

commission that will be paid to the “cooperating” broker in a sales transaction. The

cooperating agent may be representing the buyer or may be acting as the listing brokers

sub-agent representing the seller.


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Listing brokers have the opportunity (with the seller’s agreement) to offer to cooperate

with and compensate buyer’s agents or sub-agents or either.

The cooperating broker is the other broker or salesperson that shows the listed property

to a buyer who subsequently purchases the property, entitling the cooperating broker to

the fee or commission as the “procuring cause.” The amount offered to a cooperating

broker is at the sole discretion of the listing broker. If the cooperating broker or

salesperson represents the buyer, the listing agent must receive authorization from the

seller in order to share a part of the commission, although this is usually covered in the

original listing agreement.

A multiple listing service offers advantages to the owner/seller, brokers, and buyers. The

owner/seller receives greater exposure of their property through the MLS system and the

property is, in turn, shown by a larger number of brokers and salespeople to a larger

audience of buyers. As a result, the increased exposure of the property gives the broker

more opportunity to sell the property, earning the commission. The buyer also benefits by

having a wider selection of properties from which to choose.

MLS systems have set rules established by the member brokers as to how soon a broker

must enter the property listing into the system, thereby keeping the broker from attempting

to “hide” the listing so other member brokers do not have a chance to help show it. Other

rules are also set by each system to allow for fairness among members.

Property Disclosures and Notices

Article 2 of the NAR Code of Ethics

REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent

facts relating to the property or the transaction. REALTORS® shall not, however, be

obligated to discover latent defects in the property, to advise on matters outside the scope

of their real estate license, or to disclose facts which are confidential under the scope of

agency or non-agency relationships as defined by state law (Amended 1-00).


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Real estate licensees must be constantly aware of the need to disclose all material

information about the property to buyers. In addition to that there are several disclosures

that are required by Texas law.

Every potential buyer or seller or agent is entitled to be told immediately if the

broker is representing anyone on the property they are inquiring about.

Every unrepresented buyer or seller must be given the Information About

Brokerage Services at the first substantive discussion about specific real property.

Every buyer must be advised, in writing, that they should get an abstract of title

examined by an attorney of their choice or obtain a policy of title insurance.

All buyers must be advised that the property they are interested in may have lead

paint if it was built prior to 1978.

Unless the seller is exempt under the Property Code, seller’s must provide a

Seller’s Disclosure Notice to the buyer.

Buyers must be told if a property is in a mandatory Homeowner’s Association.

Buyers must be told if a property is in a statutory tax district.

Buyers must be advised if they are in a propane gas system service area.

Believe it or not these are the easy ones. Most of the disclosures are listed in the TREC

contract forms in paragraph 6E. There is nothing to decide. The law says they must be

disclosed.

It gets more complicated and requires more thought from the licensee on disclosures that

are not so clear. What is a material fact? If I disclose that am I hurting my seller? If I don’t

disclose am I making myself and my broker vulnerable?

If you feel uncertain talk with your broker. Members of the Texas Association of

REALTORS® also have the Legal Hotline they can call for advice on disclosure issues.


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Padgett v. Pharett (Cal. 1997)

In 1991, the Padgett family entered into a real estate contract from the Stone Point

development for $207,500.

The standard real estate contract specified the sellers were to provide copies of the

governing documents of the development and its homeowners' association, the Stone

Point-Sweetwater Homeowners' Association, to buyers. These documents included the

covenants, conditions and restrictions (CC&R's), bylaws, and financial data.

Sellers were also required to disclose, in writing, any known pending litigation affecting

the property. Despite this, the buyers’ and sellers’ real estate agents and brokers failed

to disclose to the defendants that there was a pending lawsuit between the development’s

homeowners’ association and the developer concerning alleged construction defects in

the common areas of the property. The Padgetts were able to successfully sue for

negligence against their real estate broker and the sellers’ real estate broker.

Case Study

You are the listing broker of a home in a well-kept neighborhood of medium-priced homes.

The home you are listing is not along the power lines, but there is an elementary school

in the neighborhood that is located on land purchased from the power company with a

close proximity to a power substation and high-voltage lines. When the school was being

constructed, there were protests from parents who cited several studies that showed that

children who were constantly exposed to electromagnetic fields (EMFs) developed

childhood leukemia and other diseases. As a result of the parental concerns, the school

board agreed to periodically test the EMF levels throughout the year, but no significant

results were discovered. The school board voted to allow parents to move their children

to another school within the district if they were still concerned about the potential effects

of EMFs.


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The owners of your listing have asked you not to mention anything about the EMF issue.

You have read the results from several studies on the effects of EMFs and the results

seemed conflicting and confusing. In your state, there is no law compelling you to disclose

the EMF issue. You have seen evidence that the homes that are along the power lines

sell for less than comparable neighborhood homes without power lines. If you disclose

that children who attend the neighborhood elementary school may be exposed to a

potential environmental risk, your listing will probably sell for less.

How would you handle this situation?

Facts:

The sellers would like to sell their home (subject property).

Their home is not close to the high voltage power lines.

The neighborhood elementary school is located in close proximity to a power

substation and high voltage lines.

Some parents are concerned about potential long-term affects to children who are

chronically exposed to electromagnetic fields (EMF) and those parents protested

the construction of the school on the site purchased from the power company.

The school board has agreed that parents who are concerned about EMFs may

move their children to another school within the district.

The EMF readings at the school have been periodically tested and none of the

readings have been reported as significant thus far.

Homes located along high voltage power lines have sold for less than comparable

homes that are not near power lines.

The sellers have requested that the listing broker not mention the EMF issue while

marketing the home.


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Assumptions:

There is not a clear scientific conclusion that EMFs are harmful.

Since homes next to high voltage lines have sold for less than other comparable

homes and there has been publicity over the EMF issue in relation to the

construction of the elementary school, it is possible that the subject property may

sell for less rather now or later.

Persons affected: All persons that will probably be affected by whatever decision is

reached.

Examples of affected persons in Case Study E:

The broker does not want to disobey the seller because of the fiduciary duties

involved in agency law; however, the broker is concerned that not disclosing the

EMF controversy may be dishonest. If a buyer’s child were to come down with a

disease believed to be caused by EMFs, the broker would feel guilty, and the buyer

might sue.

Sellers may receive less for their home due to the controversy over the EMFs and

the elementary school. The buyer might sue down the line if the buyer felt that he

or she were coerced into buying due to the seller’s withholding of the EMF

information.

Potential buyers may not be familiar with the controversy. If they have children

and purchase the home, they may discover the controversy after their purchase.

As a result of owning the home, they may worry about health effects from EMFs if

they allow their children to attend the elementary school. If they decide not to risk

the possibility of EMF health risks by having their children attend another school,

the buyer may be inconvenienced daily during the school year in arranging to

transport their child to an elementary school that is farther away. They also may

believe that they paid too much for the home considering the situation and may be

concerned that they will not be able to sell the home because of the EMF

controversy.


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The broker of the firm may not want the listing because of the controversy

associated with the neighborhood and the potential for a lawsuit. The broker may

decide to accept the listing either with or without a disclosure regarding the EMF

controversy.

Associates in the firm may not be comfortable recommending the listing to

persons who call in on ads for the subject property.

Peers may refuse to show the listing because they are familiar with the controversy

and feel that other neighborhoods would be less risky for buyers in terms of stability

of investment and safety for children.

The neighborhood may be hurt if all of their homes lose value because buyers

are not comfortable buying due to the EMF controversy.

Sometimes there is not a right or a wrong answer. Every situation is different. This case

would be worthy of a lot of consideration and the sales agent should certainly talk with

the broker. The broker may want to talk with an attorney regarding the situation.

The broker may decide it is not worth taking the listing unless the seller is in agreement

of disclosure of all of the facts.

Section 1101.652 of The Real Estate License Act states that the commission may

suspend or revoke a license if the licensee:

Engages in misrepresentation, dishonesty, or fraud when selling, buying, trading, or

leasing real property in the name of: (This is only a partial list)

(A) The license holder;

(B) The license holder's spouse; or

(C) A person related to the license holder within the first degree by consanguinity;


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Or if the license holder, while acting as a broker or salesperson:

Acts negligently or incompetently;

Engages in conduct that is dishonest or in bad faith or that demonstrates

untrustworthiness;

Makes a material misrepresentation to a potential buyer concerning a

significant defect, including a latent structural defect, known to the license

holder that would be a significant factor to a reasonable and prudent buyer in

making a decision to purchase real property;

Fails to disclose to a potential buyer a defect described by Subdivision (3) that

is known to the license holder;

Makes a false promise that is likely to influence a person to enter into an

agreement when the license holder is unable or does not intend to keep the

promise;

Pursues a continued and flagrant course of misrepresentation or makes false

promises through an agent or salesperson, through advertising, or otherwise;

Fails to make clear to all parties to a real estate transaction the party for whom

the license holder is acting;

Receives compensation from more than one party to a real estate transaction

without the full knowledge and consent of all parties to the transaction;

Fails within a reasonable time to properly account for or remit money that is

received by the license holder and that belongs to another person;

Commingles money that belongs to another person with the license holder's

own money;

Guarantees or authorizes or permits a person to guarantee that future profits

will result from a resale of real property;

Places a sign on real property offering the real property for sale or lease without

obtaining the written consent of the owner of the real property or the owner's

authorized agent;

Offers to sell or lease real property without the knowledge and consent of the

owner of the real property or the owner's authorized agent;


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Offers to sell or lease real property on terms other than those authorized by the

owner of the real property or the owner's authorized agent;

Induces or attempts to induce a party to a contract of sale or lease to break the

contract for the purpose of substituting a new contract;

Negotiates or attempts to negotiate the sale, exchange, or lease of real

property with an owner, landlord, buyer, or tenant with knowledge that that

person is a party to an outstanding written contract that grants exclusive agency

to another broker in connection with the transaction;

Publishes or causes to be published an advertisement, including an

advertisement by newspaper, radio, television, the Internet, or display, that

misleads or is likely to deceive the public, tends to create a misleading

impression, or fails to identify the person causing the advertisement to be

published as a licensed broker or agent.

Types of Listings

Open Listings

Open listings allow a seller to list his or her property concurrently with a number of

competing brokers, or to sell the property on his or her own without facing liability for a

commission payment.

Some sellers believe this type of listing works in their favor because more listings mean

more prospects and the seller will not be locked into paying a commission if the property

is sold as a result of the seller’s own initiative. In addition, an open listing policy releases

the seller from any obligation to inform the other listing brokers when the property goes

under contract or is closed. The sale of the property under such an agreement essentially

cancels all outstanding listings.

Real estate licensees, on the other hand, generally avoid open listing agreements,

primarily because it can be difficult to determine who is entitled to the commission

payment when so many brokers are involved. Furthermore, brokers often do not feel


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protected in this type of agreement because a licensee who diligently advertises a

property might not be rewarded for his or her efforts if another licensee secures the sale

of the property. Even if the compensated agent benefits from the marketing effort of

others, the commission is earned only by the individual who closes the sale.

Exclusive Right to Sell Listings

Real estate professionals generally prefer exclusive right to sell listings over other listing

agreements. This type of agreement states that as long as the property is sold within the

time frame stipulated in the contract, the listing broker named in the contract will receive

a commission for his or her role as agent in the real estate transaction. It does not matter

how the sale is secured, whether by the named listing agent, another agent, or as a result

of the owner finding a buyer without the listing agent’s assistance. Regardless, a

commission must be paid to the listing agent who holds exclusive rights to the

commission.

When comparing these terms with those of an open listing agreement, it is clear why real

estate licensees would favor this approach. From the licensee’s perspective, holding an

exclusive right to a commission protects her from the possibility of dedicating time and

effort to a sale only to have the commission go to another party. For this same reason,

real estate professionals encourage sellers to favor exclusive right to sell listings. They

argue that when an agent has a vested interest in a property, he or she is more willing to

expend time, effort, and money on diligently marketing that property. Because the listing

agent has a secure hold on the commission, she can spend more time and energy finding

a qualified buyer. This stands in opposition to an open listing agreement, in which brokers

may expend less effort promoting a property and may settle for an offer below the

property’s market value, for fear that another broker may secure the sale of the property

before they do and consequently receive the commission.


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Exclusive Agency Listings

Exclusive agency listings combine elements of open listing agreements and exclusive

right to sell agreements. As with open listings, exclusive agency listings release the owner

from any obligation to pay a commission in the event the owner secures the sale of the

property. As with an exclusive right to sell listing, the seller agrees to list the property with

only one broker during a specified listing term. The distinguishing characteristic of

exclusive agency listings is that the named listing broker is owed commission only if the

property is sold by someone other than the owner.

This feature of the agreement can lead to problems on occasion. In an exclusive agency

listing agreement, an owner may conspire with the broker’s prospective buyer to execute

the sale of the property after the listing agreement expires so as to avoid the payment of

a commission to the named listing broker. In this case, the listing broker can only collect

commission by proving that he or she was the procuring cause of the sale. That is, the

agent must demonstrate that he or she was the individual who found a ready, willing, and

able buyer and whose actions put the sale into motion.

Net Listings

Net listings are listing agreements in which the seller pays any amount over the listing

price set in the contract as commission. A seller may choose to enter into a net listing

agreement if that seller has a set price that he or she will accept for the property and does

not wish to negotiate other offers with prospective buyers. Net listings can work in

conjunction with open listings, exclusive right to sell listings, and exclusive agency listings.

Consider the following scenario:

Seller X has a parcel of land that he has been trying to sell on his own for quite

some time. Tired of trying to market the property but unwilling to accept the low

offers he has received in the past, he calls upon Licensee Y to secure the sale of

the lot for no less than $100,000. Seller X agrees that in exchange for not being

bothered with the details of the real estate transaction, Licensee Y will receive as

commission the difference between the actual sale price and the seller’s desired


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net price. Shortly thereafter, Licensee Y secures the sale of the property for

$110,000, and she walks away with a 10% commission.

In many states, net listings are illegal because of the potential risk to both the seller and

the licensee. Although they are permitted in Texas, many real estate licensees advise

against them and they are not commonly used.

Think back to the previous example of the parcel of land that was sold for $110,000 with

a 10% commission. At first glance it may seem that a licensee would be willing to dedicate

a lot of time and effort to the marketing of this property because of the opportunity to

secure such a high commission rate. Though this may indeed be true in some cases, it is

not guaranteed. The following two examples suggest the ways that net listings can work

to the disadvantage of either the agent or the principal.

The interaction between Seller X and Licensee Y might have worked out much differently

for Licensee Y:

Again, Seller X sets a net price of $100,000 for the parcel of land, allowing

Licensee Y to accept as commission any difference between this amount and the

actual sale price. Licensee Y, hoping to receive a higher-than-usual commission,

puts a lot of time, energy and money into promoting the property, which she lists

for $110,000. After Licensee Y has spent a few hundred dollars and a number of

hours on the marketing of the property, a prospective buyer makes an offer on it.

The offer is for only $100,000. Because Licensee Y must honor the interests of her

client, she must communicate this offer to Seller X, who is pleased that he’ll receive

the desired amount for the land and accepts the offer. In this scenario, Licensee Y

walks away with nothing except lost time, energy, and money.


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The interaction between Seller X and Licensee Y might also have worked out differently

for Seller X:

Seller X again seeks $100,000 for the sale of his property. Choosing not to disclose

to Seller X that the actual market value of the property is substantially higher than

his desired net amount, Licensee Y lists the property for $130,000. Shortly after

putting the property on the market, a buyer agrees to buy the piece of property for

the listed price of $130,000, thereby securing a 30% commission for the agent. In

this situation, Licensee Y did not disclose the fair market value of the property to

Seller X and can be held liable for withholding information and knowingly

misleading her client.

The Texas Real Estate Commission permits net listing agreements to be made only if the

principal requires or demands this kind of listing and the principal is fully aware of the

current market value of the property. Details regarding TREC’s stance on net listings can

be found in section 535.16 (b) of TREC’s Rules.

Listing Agreements

The listing agreement is a written contract between the owner of real property and the

agent representing the owner in the marketing and sale of that property. This document

outlines each party’s terms and conditions, including the agent’s responsibility to

represent the principal to the best of his or her ability in accordance with the law and the

principal’s responsibility to pay the stated commission to the agent for his or her expertise

and service.

A listing agreement should be detailed and comprehensive so as to avoid any

misunderstandings regarding the obligations and intentions of each party. At a minimum,

the listing agreement should include the following information:

An “Information about Brokerage Services” form

An explanation of the agent’s duties to the principal and the third party

The names of the parties involved in the transaction


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A legal description and the physical address of listed property, along with any other

fixtures to be included in the sale (furniture or accessories, for example)

The beginning and termination dates of the contract

The terms of commission for the agent’s participation and the seller’s agreement

to pay this commission when the agent completes his or her contractual duties

The terms of the sale, including the listed price and financing options

The remaining balance of the seller’s mortgage, if any, as of the start date of the

contract

The type of listing

Written permission to market the property in a reasonable manner

Written permission to keep a lockbox on the premises

Written consent to intermediary representation, if applicable

The appropriate fair housing language and logo

Dated signatures from the parties involved in the transaction indicating that they

have read and understood the agreement and accepted its terms and conditions

Components of a Listing Agreement

Generally listing agreements have the following components as terms and conditions

between the broker and sellers:

1. Parties to The Agreement: The seller’s and broker’s identities are provided along

with their contact information.

2. Property Description: A legal description and the address of the property is

provided along with acknowledging any included improvements and accessories.

3. Listing Price: The asking price for the property is provided here.

4. Listing Term: The amount of time that the agent will be authorized to market the

property on behalf of the seller is provided here.

5. Broker’s Compensation: In this section, the broker’s compensation will be defined

along with the conditions under which the compensation will be payable to the

broker by the seller. There is also usually a protection period clause that protects

the broker when he or she introduces a prospective buyer to the property during


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the listing term, but then the listing expires before the prospective buyer ends up

buying the property.

6. Listing Services: This provision describes how the property will be exposed

through the Multiple Listing Service (MLS) and other databases on which the

property will be exhibited.

7. Access to The Property: This section provides authorization to access the

premises by approved parties along with addressing the use of a keybox or other

similar device providing access to the property.

8. Cooperation with Other Brokers: This section describes how the listing broker will

cooperate with other brokers looking to sell the property and the listing broker’s

compensation to the cooperating broker.

9. Intermediary: This section describes the conditions under which a listing broker

will, or will not, show the property to prospective buyers procured by the broker.

10. Confidential Information: This section acknowledges the duty of the listing broker

to keep any confidential information about the seller confidential even after the

listing expires unless authorized by the seller to divulge it.

11. Broker’s Authority: This section addresses the terms and conditions on which the

broker will offer the property to the public, including such issues as marketing the

property online and the financing options that the seller is authorizing.

12. Seller Representations: Here the seller warrants certain things about the property,

including having marketable title, it is not bound by any unknown encumbrances

or conditions, current on any financial commitments on the property unless

disclosed, and other warranties to the broker.

13. Additional Promises to Broker by Seller: This section acknowledges that the seller

will cooperate with the broker in the marketing of the seller’s property.

14. Limitation of Liability: The broker is having the seller acknowledge that the broker

is not liable for any issues on the property that are not caused by the broker but by

other parties including the seller.

15. Special Provisions: This is a section that allows the broker and seller to include

any other miscellaneous terms or conditions.


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16. Default: If the seller defaults, this section defines the recourse that the broker will

have against the seller.

17. Mediation: This section acknowledges that the parties will attempt to come to an

agreement if there is a dispute, and if they are not able to arrive at an agreement,

will mediate the dispute.

18. Attorney’s Fees: This section does acknowledge that if any party takes legal action

against the other party, that the prevailing party will be entitled to all costs of any

proceeding including reasonable attorney’s fees.

19. Addenda and Other Documents: This section identifies any additional addenda or

exhibits included that are a part of the listing agreement.

20. Entire Agreement: This section acknowledges that the agreement that the seller

and broker are signing is the entire agreement along with the other standard

covenants that go along with it.

21. Additional Notices: This section is usually the section that has the disclaimers

being made to the seller by the broker such as compensation being negotiable,

advice to consult competent parties on lending, legal, and accounting matters, that

broker must comply with equal housing opportunity laws, for the seller to secure

items that could be stolen, and other provisions.

22. Signature Section: This is the place, usually at the end of the agreement, where

the broker and sellers sign and date their signatures.

Sample Listing Agreement

The following is a “SAMPLE” copy of the most current edition of the Texas Association of

REALTORS® (TAR) boilerplate listing agreement. This is a sample copy and is not

intended for use without the permission of TAR or any of its affiliate members. It is strictly

provided to illustrate typical terms and conditions that are encompassed in a listing

agreement for residential property in Texas.


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RESIDENTIAL REAL ESTATE LISTING AGREEMENT

EXCLUSIVE RIGHT TO SELL

USE OF THIS FORM BY PERSONS WHO ARE NOT MEMBERS OF THE TEXAS ASSOCIATION OF REALTORS® IS NOT AUTHORIZED. ©Texas Association of REALTORS®, Inc.

2014

____________________________________________________________

1. Parties: The parties to this agreement (this Listing) are:

Seller: __________________________________________________________

Address: __________________________________________________________

City, State, Zip: ____________________________________________________

Buyer: ___________________________________________________________

Address: _______________________________________________________

City, State, Zip: ______________________________________________________

Phone: __________________________________________________________

Email: ________________________________________________________

2. PROPERTY: “Property” means the land, improvements, and accessories described below, except

for any described exclusions.

A. Land: Lot _______________ Block ____________, ______________

(address/zip code), or as described on attached exhibit. (If Property is a condominium, attach

Condominium Addendum.)

B. Improvements: The house, garage and all other fixtures and improvements attached to

the above- described real property, including without limitation, the following

permanently installed and built-in items, if any: all equipment and appliances, valances,

screens, shutters, awnings, wall-to-wall carpeting, mirrors, ceiling fans, attic fans, mail

boxes, television antennas and satellite dish system and equipment, heating and air-

conditioning units, security and fire detection equipment, wiring, plumbing and lighting

fixtures, chandeliers, water softener system, kitchen equipment, garage door openers,


Page 22 of 67

cleaning equipment, shrubbery, landscaping, outdoor cooking equipment, and all other

property owned by Seller and attached to the above-described real property.

C. Accessories: The following described related accessories, if any: window air conditioning

units, stove, fireplace screens, curtains and rods, blinds, window shades, draperies and

rods, controls for satellite dish system, controls for garage door openers, entry gate

controls, door keys, mailbox keys, above- ground pool, swimming pool equipment and

maintenance accessories, and artificial fireplace logs.

D. Exclusions: The following improvements and accessories will be retained by Seller and

excluded:

_____________________________________________________________.

____________________________________________________________.

E. Owners’ Association: The property ❑ is ❑ is not subject to mandatory membership

in an owners’ association.

3. LISTING PRICE:

Seller instructs Broker to market the Property at the following price: $ _______________

(Listing Price). Seller agrees to sell the Property for the Listing Price or any other price

acceptable to Seller. Seller will pay all typical closing costs charged to sellers of residential

real estate in Texas (seller’s typical closing costs are those set forth in the residential

contract forms promulgated by the Texas Real Estate Commission).

4. TERM:

A. This Listing begins on _______________and ends at 11:59 p.m. on_______________.

B. If Seller enters into a binding written contract to sell the Property before the date this Listing

begins and the contract is binding on the date this Listing begins, this Listing will not

commence and will be void.

C.

5. BROKER'S FEE:

A. Fee: When earned and payable, Seller will pay Broker a fee of:

❑ (1) _______________% of the sales price.

❑ (2) ____________________________________________.

B. Earned: Broker's fee is earned when any one of the following occurs during this Listing:


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(1) Seller sells, exchanges, options, agrees to sell, agrees to exchange, or agrees to option

the Property to anyone at any price on any terms;

(2) Broker individually or in cooperation with another broker procures a buyer ready, willing,

and able to buy the Property at the Listing Price or at any other price acceptable to Seller;

or

(3) Seller breaches this Listing.

C. Payable: Once earned, Broker's fee is payable either during this Listing or after it ends at

the earlier of:

(1) the closing and funding of any sale or exchange of all or part of the Property;

(2) Seller's refusal to sell the Property after Broker’s Fee has been earned;

(3) Seller’s breach of this Listing; or

(4) at such time as otherwise set forth in this Listing.

Broker's fee is not payable if a sale of the Property does not close or fund as a result of: (i)

Seller's failure, without fault of Seller, to deliver to a buyer a deed or a title policy as required

by the contract to sell; (ii) loss of ownership due to foreclosure or other legal proceeding;

or (iii) Seller's failure to restore the Property, as a result of a casualty loss, to its previous

condition by the closing date set forth in a contract for the sale of the Property.

D. Other Fees:

(1) Breach by Buyer Under a Contract: If Seller collects earnest money, the sales price, or

damages by suit, compromise, settlement, or otherwise from a buyer who breaches a

contract for the sale of the Property entered into during this Listing, Seller will pay Broker,

after deducting attorney’s fees and collection expenses, an amount equal to the lesser of

one-half of the amount collected after deductions or the amount of the Broker's Fee stated

in Paragraph 5A. Any amount paid under this Paragraph 5D(1) is in addition to any amount

that Broker may be entitled to receive for subsequently selling the Property.

(2) Service Providers: If Broker refers Seller or a prospective buyer to a service provider

(for example, mover, cable company, telecommunications provider, utility, or contractor)

Broker may receive a fee from the service provider for the referral. Any referral fee Broker

receives under this Paragraph 5D(2) is in addition to any other compensation Broker may

receive under this Listing.

(3) Transaction Fees or Reimbursable Expenses: __________________________

__________________________________________________________________.


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E. Protection Period:

(1) “Protection period” means that time starting the day after this Listing ends and

continuing for days. “Sell” means any transfer of any interest in the Property whether by

oral or written agreement or option.

(2) Not later than 10 days after this Listing ends, Broker may send Seller written notice

specifying the names of persons whose attention was called to the Property during this

Listing. If Seller agrees to sell the Property during the protection period to a person named

in the notice or to a relative of a person named in the notice, Seller will pay Broker, upon

the closing of the sale, the amount Broker would have been entitled to receive if this Listing

were still in effect.

(3) This Paragraph 5E survives termination of this Listing. This Paragraph 5E will not apply

if:

(a) Seller agrees to sell the Property during the protection period;

(b) the Property is exclusively listed with another broker who is a member of the

Texas Association of REALTORS® at the time the sale is negotiated; and

(c) Seller is obligated to pay the other broker a fee for the sale.

F. County: All amounts payable to Broker are to be paid in cash in

________________________________________________ County, Texas.

6. LISTING SERVICES:

❑ A. Broker will file this Listing with one or more Multiple Listing Services (MLS) by the earlier

of the time required by MLS rules or 5 days after the date this Listing begins. Seller authorizes

Broker to submit information about this Listing and the sale of the Property to the MLS.

Notice: MLS rules require Broker to accurately and timely submit all information the MLS

requires for participation including sold data. Subscribers to the MLS may use the information

for market evaluation or appraisal purposes. Subscribers are other brokers and other real

estate professionals such as appraisers and may include the appraisal district. Any information

filed with the MLS becomes the property of the MLS for all purposes. Submission of information

to MLS ensures that persons who use and benefit from the MLS also contribute information.


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❑ B. Broker will not file this Listing with a Multiple Listing Service (MLS) or any other listing

service.

7. ACCESS TO THE PROPERTY:

A. Authorizing Access: Authorizing access to the Property means giving permission to another

person to enter the Property, disclosing to the other person any security codes necessary

to enter the Property, and lending a key to the other person to enter the Property, directly

or through a keybox. To facilitate the showing and sale of the Property, Seller instructs

Broker to:

(1) access the Property at reasonable times

(2) authorize other brokers, their associates, inspectors, appraisers, and contractors to

access the Property at reasonable times; and

(3) duplicate keys to facilitate convenient and efficient showings of the Property.

B. Scheduling Companies: Broker may engage the following companies to schedule

appointments and to authorize others to access the Property: _________________

_________________________________________________________________

__.

C. Keybox: A keybox is a locked container placed on the Property that holds a key to the

Property. A keybox makes it more convenient for brokers, their associates, inspectors,

appraisers, and contractors to show, inspect, or repair the Property. The keybox is opened

by a special combination, key, or programmed device so that authorized persons may enter

the Property, even in Seller’s absence. Using a keybox will probably increase the number

of showings, but involves risks (for example, unauthorized entry, theft, property damage,

or personal injury). Neither the Association of REALTORS® nor MLS requires the use of a

keybox.

(1) Broker ❑ is ❑ is not authorized to place a keybox on the Property.

(2) If a tenant occupies the Property at any time during this Listing, Seller will furnish Broker

a written statement (for example, TAR No. 1411), signed by all tenants, authorizing the use

of a keybox or Broker may remove the keybox from the Property.

D. Liability and Indemnification: When authorizing access to the Property, Broker, other

brokers, their associates, any keybox provider, or any scheduling company are not


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responsible for personal injury or property loss to Seller or any other person. Seller

assumes all risk of any loss, damage, or injury. Except for a loss caused by Broker, Seller

will indemnify and hold Broker harmless from any claim for personal injury, property

damage, or other loss.

8. COOPERATION WITH OTHER BROKERS:

Broker will allow other brokers to show the Property to prospective buyers. Broker will offer to pay the

other broker a fee as described below if the other broker procures a buyer that purchases the Property.

A. MLS Participants: If the other broker is a participant in the MLS in which this Listing is filed,

Broker will offer to pay the other broker:

(1) if the other broker represents the buyer: _______% of the sales price or $ ___________;

and

(2) if the other broker is a subagent: _______% of the sales price or $ ___________.

B. Non-MLS Brokers: If the other broker is not a participant in the MLS in which this Listing is

filed, Broker will offer to pay the other broker:

(1) if the other broker represents the buyer: _______% of the sales price or $___________;

and

(2) if the other broker is a subagent: _______% of the sales price or $___________.

9. INTERMEDIARY: (Check A or B only.)

A. ❑ Intermediary Status: Broker may show the Property to interested prospective buyers

who Broker represents. If a prospective buyer who Broker represents offers to buy the

Property, Seller authorizes Broker to act as an intermediary and Broker will notify Seller

that Broker will service the parties in accordance with one of the following alternatives.

(1) If a prospective buyer who Broker represents is serviced by an associate other than the

associate servicing Seller under this Listing, Broker may notify Seller that Broker will:

(a) appoint the associate then servicing Seller to communicate with, carry out

instructions of, and provide opinions and advice during negotiations to Seller; and (b)

appoint the associate then servicing the prospective buyer to the prospective buyer for

the same purpose.

(2) If a prospective buyer who Broker represents is serviced by the same associate who is

servicing Seller, Broker may notify Seller that Broker will: (a) appoint another associate


Page 27 of 67

to communicate with, carry out instructions of, and provide opinions and advice during

negotiations to the prospective buyer; and (b) appoint the associate servicing the Seller

under this Listing to the Seller for the same purpose.

(3) Broker may notify Seller that Broker will make no appointments as described under this

Paragraph 9A and, in such an event, the associate servicing the parties will act solely

as Broker’s intermediary representative, who may facilitate the transaction but will not

render opinions or advice during negotiations to either party.

B. ❑ No Intermediary Status: Seller agrees that Broker will not show the Property to

prospective buyers who Broker represents.

Notice: If Broker acts as an intermediary under Paragraph 9A, Broker and Broker’s associates:

may not disclose to the prospective buyer that Seller will accept a price less than the asking

price unless otherwise instructed in a separate writing by Seller;

may not disclose to Seller that the prospective buyer will pay a price greater than the price

submitted in a written offer to Seller unless otherwise instructed in a separate writing by

the prospective buyer;

may not disclose any confidential information or any information Seller or the prospective

buyer specifically instructs Broker in writing not to disclose unless otherwise instructed in

a separate writing by the respective party or required to disclose the information by the

Real Estate License Act or a court order or if the information materially relates to the

condition of the property;

may not treat a party to the transaction dishonestly; and

may not violate the Real Estate License Act.

10. CONFIDENTIAL INFORMATION:

During this Listing or after it ends, Broker may not knowingly disclose information obtained in

confidence from Seller except as authorized by Seller or required by law. Broker may not disclose to

Seller any confidential information regarding any other person Broker represents or previously

represented except as required by law.


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11. BROKER’S AUTHORITY:

A. Broker will use reasonable efforts and act diligently to market the Property for sale, procure

a buyer, and negotiate the sale of the Property.

B. In addition to other authority granted by this Listing, Broker may:

(1) advertise the Property by means and methods as Broker determines, including but not

limited to creating and placing advertisements with interior and exterior photographic and

audio-visual images of the Property and related information in any media and the Internet;

(2) place a “For Sale” sign on the Property and remove all other signs offering the Property for

sale or lease;

(3) furnish comparative marketing and sales information about other properties to prospective

buyers;

(4) disseminate information about the Property to other brokers and to prospective buyers,

including applicable disclosures or notices that Seller is required to make under law or a

contract;

(5) obtain information from any holder of a note secured by a lien on the Property;

(6) accept and deposit earnest money in trust in accordance with a contract for the sale of the

Property;

(7) disclose the sales price and terms of sale to other brokers, appraisers, or other real estate

professionals;

(8) in response to inquiries from prospective buyers and other brokers, disclose whether the

Seller is considering more than one offer, provided that Broker will not disclose the terms

of any competing offer unless specifically instructed by Seller;

(9) advertise, during or after this Listing ends, that Broker “sold” the Property; and

(10) place information about this Listing, the Property, and a transaction for the Property on an

electronic transaction platform (typically an Internet-based system where professionals

related to the transaction such as title companies, lenders, and others may receive, view,

and input information).

C. Broker is not authorized to execute any document in the name of or on behalf of Seller

concerning the Property.


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12. SELLER’S REPRESENTATIONS:

Except as provided by Paragraph 15, Seller represents that:

A. Seller has fee simple title to and peaceable possession of the Property and all its

improvements and fixtures, unless rented, and the legal capacity to convey the Property;

B. Seller is not bound by a listing agreement with another broker for the sale, exchange, or

lease of the Property that is or will be in effect during this Listing;

C. any pool or spa and any required enclosures, fences, gates, and latches comply with all

applicable laws and ordinances;

D. no person or entity has any right to purchase, lease, or acquire the Property by an option,

right of refusal, or other agreement;

E. there are no delinquencies or defaults under any deed of trust, mortgage, or other

encumbrance on the Property;

F. the Property is not subject to the jurisdiction of any court;

G. all information relating to the Property Seller provides to Broker is true and correct to the

best of Seller’s knowledge; and

H. the name of any employer, relocation company, or other entity that provides benefits to

Seller when selling the Property is: ____________________________________.

13. SELLER’S ADDITIONAL PROMISES: Seller agrees to:

A. cooperate with Broker to facilitate the showing, marketing, and sale of the Property;

B. not rent or lease the Property during this Listing without Broker’s prior written approval;

C. not negotiate with any prospective buyer who may contact Seller directly, but refer all

prospective buyers to Broker;

D. not enter into a listing agreement with another broker for the sale, exchange, or lease of

the Property to become effective during this Listing;

E. maintain any pool and all required enclosures in compliance with all applicable laws and

ordinances;

F. provide Broker with copies of any leases or rental agreements pertaining to the Property

and advise Broker of tenants moving in or out of the Property;

G. complete any disclosures or notices required by law or a contract to sell the Property; and

H. amend any applicable notices and disclosures if any material change occurs during this

Listing.


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14. LIMITATION OF LIABILITY:

A. If the Property is or becomes vacant during this Listing, Seller must notify Seller’s casualty

insurance company and request a “vacancy clause” to cover the Property. Broker is not

responsible for the security of the Property nor for inspecting the Property on any periodic

basis.

B. Broker is not responsible or liable in any manner for personal injury to any person

or for loss or damage to any person’s real or personal property resulting from any

act or omission not caused by Broker’s negligence, including but not limited to

injuries or damages caused by:

(1) other brokers, their associates, inspectors, appraisers, and contractors who are

authorized to access the Property;

(2) acts of third parties (for example, vandalism or theft);

(3) freezing water pipes;

(4) a dangerous condition on the Property; or

(5) the Property’s non-compliance with any law or ordinance.

C. Seller agrees to protect, defend, indemnify, and hold Broker harmless from any damage,

costs, attorney’s fees, and expenses that:

(1) are caused by Seller, negligently or otherwise;

(2) arise from Seller’s failure to disclose any material or relevant information about the

Property; or

(3) are caused by Seller giving incorrect information to any person.

15. SPECIAL PROVISIONS:

16. DEFAULT: If Seller breaches this Listing, Seller is in default and will be liable to Broker for the

amount of the Broker’s fee specified in Paragraph 5A and any other fees Broker is entitled to

receive under this Listing. If a sales price is not determinable in the event of an exchange or breach

of this Listing, the Listing Price will be the sales price for purposes of computing Broker’s fee. If

Broker breaches this Listing, Broker is in default and Seller may exercise any remedy at law.


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17. MEDIATION: The parties agree to negotiate in good faith in an effort to resolve any dispute related

to this Listing that may arise between the parties. If the dispute cannot be resolved by negotiation,

the dispute will be submitted to mediation. The parties to the dispute will choose a mutually

acceptable mediator and will share the cost of mediation equally.

18. ATTORNEY’S FEES: If Seller or Broker is a prevailing party in any legal proceeding brought as a

result of a dispute under this Listing or any transaction related to or contemplated by this Listing,

such party will be entitled to recover from the non-prevailing party all costs of such proceeding and

reasonable attorney’s fees.

19. ADDENDA AND OTHER DOCUMENTS:

Addenda that are part of this Listing and other documents that Seller may need to provide are:

☒ A. Information About Brokerage Services;

❑ B. Seller Disclosure Notice (§5.008, Texas Property Code);

❑ C. Seller’s Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards

(required if Property was built before 1978);

❑ D. MUD, Water District, or Statutory Tax District Disclosure Notice (Chapter 49, Texas Water

Code);

❑ E. Request for Information from an Owners’ Association;

❑ F. Request for Mortgage Information;

❑ G. Information about On-Site Sewer Facility;

❑ H. Information about Special Flood Hazard Areas;

❑ I. Condominium Addendum to Listing;

❑ J. Keybox Authorization by Tenant;

❑ K. Seller’s Authorization to Release and Advertise Certain Information; and

❑ L.____________________________________________________________________

_____________________________________________________________________.

20. AGREEMENT OF PARTIES:

A. Entire Agreement: This Listing is the entire agreement of the parties and may not

be changed except by written agreement.


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B. Assignability: Neither party may assign this Listing without the written consent of

the other party.

C. Binding Effect: Seller’s obligation to pay Broker an earned fee is binding upon Seller

and Seller’s heirs, administrators, executors, successors, and permitted assignees.

D. Joint and Several: All Sellers executing this Listing are jointly and severally liable

for the performance of all its terms.

E. Governing Law: Texas law governs the interpretation, validity, performance, and

enforcement of this Listing.

F. Severability: If a court finds any clause in this Listing invalid or unenforceable, the

remainder of this Listing will not be affected and all other provisions of this Listing

will remain valid and enforceable.

G. Notices: Notices between the parties must be in writing and are effective when sent

to the receiving party’s address, fax, or e-mail address specified in Paragraph 1.

21. ADDITIONAL NOTICES:

A. Broker’s fees or the sharing of fees between brokers are not fixed, controlled,

recommended, suggested, or maintained by the Association of REALTORS®, MLS, or

any listing service.

B. Fair housing laws require the Property to be shown and made available to all persons

without regard to race, color, religion, national origin, sex, disability, or familial status. Local

ordinances may provide for additional protected classes (for example, creed, status as a

student, marital status, sexual orientation, or age).

C. Seller may review the information Broker submits to an MLS or other listing service.

D. Broker advises Seller to remove or secure jewelry, prescription drugs, and other valuables.

E. Statutes or ordinances may regulate certain items on the Property (for example, swimming

pools and septic systems). Non-compliance with the statutes or ordinances may delay a

transaction and may result in fines, penalties, and liability to Seller.

F. If the Property was built before 1978, Federal law requires the Seller to: (1) provide the

buyer with the federally approved pamphlet on lead poisoning prevention; (2) disclose the

presence of any known lead-based paint or lead-based paint hazards in the Property; (3)

deliver all records and reports to the buyer related to such paint or hazards; and (4) provide

the buyer a period up to 10 days to have the Property inspected for such paint or hazards.


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G. Broker cannot give legal advice. READ THIS LISTING CAREFULLY. If you do not

understand the effect of this Listing, consult an attorney BEFORE signing.

____________________________ ___________________________________

Broker’s Printed Name License No. Seller Date

By ______________________________________________

_______________________________________ _____________________________

Broker’s Associate’s Signature Seller Date

Ethics

NAR Code of Ethics

NAR Copy: Code of Ethics and Standards of Practice of the National Association of

Realtors®. Effective January 1, 2016. http://www.realtor.org/about-nar/governing-

documents/the-code-of-ethics

Where the word Realtors® is used in this Code and Preamble, it shall be 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.

Preamble

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

http://www.realtor.org/about-nar/governing-documents/the-code-of-ethics



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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 take 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 of 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 comments 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 Realtor® 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.


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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, or via technological means, and to

conduct their business in accordance with the tenets set forth below. (Amended 1/07)

ARTICLE 1 OVERVIEW: Article 1 describes the agent’s fiduciary duties to the client and

the duties to the other parties in the transaction. If the licensee is on the listing side of the

transaction, the licensee would most likely have a fiduciary duty to the seller and must be

honest with the buyer and buyer’s agent.

Duties to Clients and Customers

Article 1

When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors®

pledge themselves to protect and promote the interests of their client. This obligation to

the client is primary, but it does not relieve Realtors® of their obligation to treat all parties

honestly. When serving a buyer, seller, landlord, tenant or other party in a non- agency

capacity, Realtors® remain obligated to treat all parties honestly. (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)


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.


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As used in this Code of Ethics, “client” means the person(s) or entity(ies) with whom

a REALTOR ® or a REALTOR®’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

REALTOR® or the REALTOR®’s firm; “prospect” means a purchaser, seller, tenant, or

landlord who is not subject to a representation relationship with the REALTOR® or

REALTOR®’s firm; “agent” means a real estate licensee (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 – In this Standard of Practice the agent is prohibited from

misleading the seller on pricing.

Realtors®, in attempting to secure a listing, shall not deliberately mislead the owner as

to market value.


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 Realtorize services. (Amended 1/93)

Standard of Practice 1-5 – This SOP addresses the duty of the agent to get informed

consent when in a dual or limited agency.

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)


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Realtors® shall submit offers and counter-offers objectively and as quickly as possible.

(Adopted 1/93, Amended 1/95)


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)


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 after 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 – This SOP addresses that an agent has a vow of

confidentiality to a client even when their fiduciary obligation addressed in their

employment agreement expires. The vow of confidentiality continues forever.

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


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any non-agency relationships recognized by law. Realtors® shall not knowingly,

during or following the termination of professional relationships with their clients:

1) reveal confidential information of clients; or

2) use confidential information of clients to the disadvantage of clients; or

3) use confidential information of clients for the Realtorcon 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 Realtorcommit a Realtors n 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)


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)


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 – This SOP addresses the duty of cooperating with other

brokers and the possibility of Dual Agency.

When entering into listing contracts, Realtors® must advise sellers/ landlords of:


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1) the RealtorRea 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;

2) 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

3) 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)


When entering into buyer/tenant agreements, Realtors® must advise potential clients

of:

1) the Realtors® company policies regarding cooperation;

2) the amount of compensation to be paid by the client;

3) the potential for additional or offsetting compensation from other brokers,

from the seller or landlord, or from other parties;

4) any potential for the buyer/tenant representative to act as a disclosed dual

agent, e.g., listing broker, subagent, landlord’s agent, etc., and

5) 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)


Fees for preparing appraisals or other valuations shall not be contingent upon the

amount of the appraisal or valuation. (Adopted 1/02)


Realtors®, in response to inquiries from buyers or cooperating brokers shall, with the

sellers’ approval, disclose the existence of offers on the property. Where disclosure is

authorized, Realtors® shall also disclose, if asked, whether offers were obtained by


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the listing licensee, another licensee in the listing firm, or by a cooperating broker.



Realtors® shall not access or use, or permit or enable others to access or use, listed

or managed property on terms or conditions other than those authorized by the owner

or seller. (Adopted 1/12)

ARTICLE 2 OVERVIEW – This article addresses the agent’s disclosure duties on material

facts.

Article 2

Realtors® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts

relating to the property or the transaction. Realtors® shall not, however, be obligated to

discover latent defects in the property, to advise on matters outside the scope of their real

estate license, or to disclose facts which are confidential under the scope of agency or

non- agency relationships as defined by state law. (Amended 1/00)


Realtors® shall only be 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 Realtor® the obligation of

expertise in other professional or technical disciplines. (Amended 1/96)


(Renumbered as Standard of Practice 1-12 1/98)


(Renumbered as Standard of Practice 1-13 1/98)


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Realtors® shall not be parties to the naming of a false consideration in any document,

unless it be the naming of an obviously nominal consideration.


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)

ARTICLE 3 OVERVIEW: This article addresses the duty of the agent to cooperate with

the other agent as long as this cooperation in the client’s best interests.

Article 3

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)


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)


Any change in compensation offered for cooperative services must be communicated

to the other Realtor® prior to the time that Realtor® submits an offer to purchase/lease

the property. After a Realtor® has submitted an offer to purchase or lease property,

the listing broker may not attempt to unilaterally modify the offered compensation with

respect to that cooperative transaction. (Amended 1/14)


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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)


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 a sale/lease

that results through the efforts of the seller/ landlord. If the cooperating broker is a

buyer/tenant representative, the buyer/tenant representative must disclose such

information to their client before the client makes an offer to purchase or lease.

(Amended 1/02)


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)


Realtors® shall disclose the existence of accepted offers, including offers with

unresolved contingencies, to any broker seeking cooperation. (Adopted 5/86,

Amended 1/04)


When seeking information from another Realtor® concerning property under a

management or listing agreement, Realtors® shall disclose their Realtor® status and


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whether their interest is personal or on behalf of a client and, if on behalf of a client,

their relationship with the client. (Amended 1/11)


REALTORS® shall not misrepresent the availability of access to show or inspect a

listed property. (Amended 11/87)


Realtors® shall not provide access to listed property on terms other than those

established by the owner or the listing broker. (Adopted 1/10)


The duty to cooperate established in Article 3 relates to the obligation to share

information on listed property, and to make property available to other brokers for

showing to prospective purchasers/tenants when it is in the best interests of

sellers/landlords. (Adopted 1/11)

ARTICLE 4 OVERVIEW: This article addresses the agent’s duty of disclose any conflicts

of interest when they are either buying or selling their own properties or for a family

member.

Article 4

Realtors® shall not acquire an interest in or buy or present offers 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 ownerproperty without making their tproperty 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)


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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)

OVERVIEW OF ARTICLE 5: This article addresses that an agent shall not provide

services on a property that they have an interest in without the informed consent of the

other party.

Article 5

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.

ARTICLE 6 OVERVIEW -Avoid Side Deals without Client’s Informed Consent

Article 6

Realtors® shall not accept any commission, rebate, or profit on expenditures made for

their client, without the client’s knowledge and consent. When recommending real estate

products or services (e.g., homeowner’s insurance, warranty programs, mortgage

financing, title insurance, etc.), Realtors® shall disclose to the client or customer to whom

the recommendation is made any financial benefits or fees, other than real estate referral

fees, the Realtors® or Realtors®’s firm may receive as a direct result of such

recommendation. (Amended 1/99)

ARTICLE 7 OVERVIEW - Accept Compensation from Only One Party, Except With Full

Disclosure and Informed Consent


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Article 7

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

Realtord c client or clients. (Amended 1/93)

OVERVIEW OF ARTICLE 8 - Keep the Funds of Clients and Customers in Escrow

Article 8

Realtors® shall keep in a special account in an appropriate financial institution, separated

from their own funds, monies coming into their possession in trust for other persons, such

as escrows, trust funds, clients’ monies, and other like items.

OVERVIEW OF ARTICLE 9 - Assure Whenever Possible, that Transactional Details are

in Writing

Article 9

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)


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)


When assisting or enabling a client or customer in establishing a contractual

relationship (e.g., listing and representation agreements, purchase agreements,


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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

OVERVIEW OF ARTICLE 10 - Provide Equal Service to All Clients and Customers

Article 10

Realtors® shall not deny equal professional services to any person for reasons of race,

color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender

identity. Realtors® shall not be parties to any plan or agreement to discriminate against

a person or persons on the basis of race, color, religion, sex, handicap, familial status,

national origin, sexual orientation, or gender identity. (Amended 1/14)

Realtors®, in their real estate employment practices, shall not discriminate against any

person or persons on the basis of race, color, religion, sex, handicap, familial status,

national origin, sexual orientation, or gender identity. (Amended 1/14)


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)


When not involved in the sale or 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 Realtor® 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 from a

recognized, reliable, independent, and impartial source. The source of such


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information and any additions, deletions, modifications, interpretations, or other

changes shall be disclosed in reasonable detail. (Adopted 1/05, Renumbered 1/06)


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, national

origin, sexual orientation, or gender identity. (Adopted 1/94, Renumbered 1/05 and

1/06, Amended 1/14)


As used in Article 10 “real estate employment practices” relates to employees and

independent contractors providing real estate-related services and the administrative

and clerical staff directly supporting those individuals. (Adopted 1/00, Renumbered

1/05 and 1/06)

OVERVIEW OF ARTICLE 11 - Be Knowledgeable and Competent in the Fields of

Practice in Which You Ordinarily Engage. Obtain Assistance Or Lack of Experience if

Necessary

Article 11

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, land

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


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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 1/10)


When Realtors® prepare opinions of real property value or price they must:

1) be knowledgeable about the type of property being valued,

2) have access to the information and resources necessary to formulate an

accurate opinion, and

3) be familiar with the area where the subject property is located unless lack of

any of these is disclosed to the party requesting the opinion in advance. When

an opinion of value or price is prepared other than in pursuit of a listing or to

assist a potential purchaser in formulating a purchase offer, the opinion shall

include the following unless the party requesting the opinion requires a specific

type of report or different data set:

1) identification of the subject property

2) date prepared

3) defined value or price

4) limiting conditions, including statements of purpose(s) and intended

user(s)

5) any present or contemplated interest, including the possibility of

representing the seller/landlord or buyers/tenants

6) basis for the opinion, including applicable market data

7) if the opinion is not an appraisal, a statement to that effect

8) disclosure of whether and when a physical inspection of the property’s

exterior was conducted

9) disclosure of whether and when a physical inspection of the property’s

interior was conducted

10) disclosure of whether the Realtor® has any conflicts of interest

(Amended 1/14)


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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 Realtor® is an agent or subagent, the obligations

of a fiduciary. (Adopted 1/95)


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, a separate compensation may be paid with prior agreement between the

client and Realtor®. (Adopted 1/96)


The competency required by Article 11 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)

OVERVIEW OF ARTICLE 12 - Present a True Picture in Your Advertising and Other

Public Presentations

Article 12

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)


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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)


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 Realtor® to obtain a benefit from a third party is clearly disclosed at the same

time. (Amended 1/97)


The offering of premiums, prizes, 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 Realtor® making the

offer. However, 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 Realtorse 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)


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)


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Realtors® shall not advertise nor permit any person employed by or affiliated with them

to advertise real estate services or listed property in any medium (e.g., electronically,

print, radio, television, etc.) without disclosing the name of that Realtor®’s firm in a

reasonable and readily apparent manner either in the advertisement or in electronic

advertising via a link to a display with all required disclosures. (Adopted 11/86,

Amended 1/16)


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 1/93)


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)


The obligation to present a true picture in representations to the public includes

information presented, provided, or displayed on Realtors®’ websites. Realtors® shall

use reasonable efforts to ensure that information on their websites is current. When it

becomes apparent that information on a Realtortio website is no longer current or

accurate, Realtors® shall promptly take corrective action. (Adopted 1/07)


REALTOR® firm websites shall disclose the firm’s name and state(s) of licensure in a

reasonable and readily apparent manner.


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Websites of REALTORS® and non-member licensees affiliated with a REALTOR® firm

shall disclose the firm’s name and that REALTOR®’s or non-member licensee’s

state(s) of licensure in a reasonable and readily apparent manner. (Adopted 1/07)


Realtors®’ obligation to present a true picture in their advertising and representations

to the public includes Internet content posted, and the URLs and domain names they

use, and prohibits Realtors® from:

1) engaging in deceptive or unauthorized framing of real estate brokerage

websites;

2) manipulating (e.g., presenting content developed by others) listing and other

content in any way that produces a deceptive or misleading result;

3) deceptively using metatags, keywords or other devices/methods to direct,

drive, or divert Internet traffic; or

4) presenting content developed by others without either attribution or without

permission, or

5) to otherwise mislead consumers. (Adopted 1/07, Amended 1/13)


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)


Realtors® shall not:

1) 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)


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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)

OVERVIEW OF ARTICLE 13 - Do Not Engage in the Unauthorized Practice of Law

Article 13

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.

OVERVIEW OF ARTICLE 14 - Be a Willing Participant in Code Enforcement Procedures

Article 14

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)


Realtors® shall not be 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)


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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)


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)


Realtors® shall not intentionally impede the Board’s investigative or disciplinary

proceedings by filing multiple ethics complaints based on the same event or

transaction. (Adopted 11/88)

Duties to Realtors®

OVERVIEW OF ARTICLE 15 - Ensure that Your Comments about Other Real Estate

Professionals are Truthful and Not Misleading

Article 15

Realtors® shall not knowingly or recklessly make false or misleading statements about

other real estate professionals, their businesses, or their business practices. (Amended

1/12)


REALTORS® shall not knowingly or recklessly file false or unfounded ethics

complaints. (Adopted 1/00)


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The obligation to refrain from making false or misleading statements about other real

estate professionals, their businesses, and their business practices includes the duty

to not knowingly or recklessly publish, repeat, retransmit, or republish false or

misleading statements made by others. This duty applies whether false or misleading

statements are repeated in person, in writing, by technological means (e.g., the

Internet), or by any other means. (Adopted 1/07, Amended 1/12)


The obligation to refrain from making false or misleading statements about other real

estate professionals, their businesses, and their business practices includes the duty

to publish a clarification about or to remove statements made by others on electronic

media the Realtor® controls once the Realtor® knows the statement is false or

misleading. (Adopted 1/10, Amended 1/12)

OVERVIEW OF ARTICLE 16 - Respect the Exclusive Representation or Exclusive

Brokerage Relationship Agreements that Other REALTORS® have with their Clients

Article 16

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)


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, fees, compensation or other forms of payment or expenses.



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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, “for 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 Realtorsnd

Multiple Listinsubagency or cooperation. (Amended 1/04)


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 offers

to provide services may be made. (Amended 1/04)


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Realtors® shall not solicit a listing which is currently listed exclusively with another

broker. However, if the listing broker, when asked by the Realtor®, 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 Realtor® may contact the owner to secure such

information and may discuss the terms upon which the Realtor® might take a future

listing or, alternatively, may take a listing to become effective upon expiration of any

existing exclusive listing. (Amended 1/94)


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. (Adopted 1/94,

Amended 1/98)


When Realtors® are contacted by the client of another Realtor® 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)


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The fact that a prospect has retained a Realtor® 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)


The fact that an exclusive agreement has been entered into with a Realtor® shall not

preclude or inhibit any other Realtor® from entering into a similar agreement after the

expiration of the prior agreement. (Amended 1/98)


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)


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)


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)


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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)


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)


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)


In cooperative transactions Realtors® shall compensate cooperating Realtors®

(principal brokers) and shall not compensate nor offer to compensate, directly or


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indirectly, any of the sales licensees employed by or affiliated with other Realtors®

without the prior express knowledge and consent of the cooperating broker.


Realtors®, acting as subagents or buyer/tenant representatives or brokers, shall not

use the terms of an offer 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)


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)


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)


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)


Realtors®, prior to or after their relationship with their current firm is terminated, shall

not induce clients of their current firm to cancel exclusive contractual agreements

between the client and that firm. This does not preclude Realtors® (principals) from


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establishing agreements with their associated licensees governing assignability of

exclusive agreements. (Adopted 1/98, Amended 1/10)

OVERVIEW OF ARTICLE 17 - Arbitrate and Mediate Contractual and Specific Non-

Contractual Disputes with Other REALTORS® and Your Clients

Article 17

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 mediate the dispute if the

Board requires its members to mediate. If the dispute is not resolved through mediation,

or if mediation is not required, Realtors® shall submit the dispute to arbitration in

accordance with the policies of the Board rather than litigate the matter.

In the event clients of Realtors® wish to mediate or arbitrate contractual disputes arising

out of real estate transactions, Realtors® shall mediate or arbitrate those disputes in

accordance with the policies of the Board, provided the clients agree to be bound by any

resulting agreement or award.

The obligation to participate in mediation and arbitration contemplated by this Article

includes the obligation of Realtors® (principals) to cause their firms to mediate and

arbitrate and be bound by any resulting agreement or award. (Amended 1/12)


The filing of litigation and refusal to withdraw from it by Realtors® in an arbitrable

matter constitutes a refusal to arbitrate. (Adopted 2/86)


Article 17 does not require Realtors® to mediate in those circumstances when all

parties to the dispute advise the Board in writing that they choose not to mediate


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through the Board’s facilities. The fact that all parties decline to participate in mediation

does not relieve Realtors® of the duty to arbitrate.

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 to arbitrate

before the Board. (Amended 1/12)


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)


Specific non-contractual disputes that are subject to arbitration pursuant to Article 17

are:

1) 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)


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2) 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)

3) 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)


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4) 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)

5) 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 be 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)


The obligation to arbitrate established in Article 17 includes disputes between

Realtors® (principals) in different states in instances where, absent an established

inter-association arbitration agreement, the Realtor® (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) Realtorend

association, in instances where the respondent(s) Realtortio association determines

that an arbitrable issue exists. (Adopted 1/07)

Explanatory Notes

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


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Practice may be cited in support of the charge. The Standards of Practice serve to clarify

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.

2016© (Source: http://www.realtor.org/about-nar/governing-documents/the-code-of-

ethics)

Lesson 12 Summary

The listing agreement is the written contract between the owner of real property and the

agent who represents the owner in the marketing and sale of that property. This document

outlines each party’s terms and conditions, including the agent’s responsibility to

represent the principal to the best of his or her ability and in accordance with the law and

the principal’s responsibility to pay the stated commission to the agent for his or her

expertise and service.

There are four types of listing agreements: open listings, exclusive right to sell listings,

exclusive agency listings, and net listings. Some sellers prefer open listings, in which the

seller can list his or her property concurrently with a number of competing brokers. With

an open listing, the seller can also sell the property on his or her own without being liable

for paying a commission.

Brokers, however, generally avoid these agreements, primarily because it is difficult to

determine who is entitled to the commission payment when so many brokers are involved.

Also, brokers do not want to work diligently to find a buyer for a property without a

guaranteed commission.

Most licensees prefer exclusive right to sell listings over other listing agreements. This

type of agreement states that as long as the property is sold within the time frame




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stipulated in the contract, the listing broker named in the contract will receive a

commission for his or her role as agent in the real estate transaction.

Exclusive agency listings combine elements of both open listing agreements and

exclusive right to sell agreements. Under this type of agreement, the seller agrees to list

the property with only one broker, but the seller does not have to pay commission if he or

she sells the property independently. The distinguishing characteristic of exclusive

agency listings is that the named listing broker is owed commission only if the property is

sold by someone other than the owner. This fact can lead to problems if the seller

conspires to avoid paying the commission by negotiating with one of the agent’s

prospective buyers to wait to close until after the exclusive agency listing expires.

The final type of listing agreement is the net listing, in which the seller pays as commission

any amount over the listing price set in the contract. A seller may choose to enter into a

net listing agreement if that seller has a set price that he or she will accept for the property

and does not wish to negotiate other offers with prospective buyers. Net listings can be

used in conjunction with open listings, exclusive right to sell listings, and exclusive agency

listings.

In this lesson we also examined the ethics required of real estate agents when they decide

to represent a client. We reviewed:

The Cannons of Professional Ethics

The Texas Real Estate License Act

The Preamble of the Code of Ethics

The NAR Code of Ethics

We looked at the disclosures that are required by law and discussed the need for

judgement sometimes in recognizing what truly is a material fact. There are several

disclosures that are required by Texas law—most of which are listed in the TREC contract

forms in paragraph 6E. According to the law, these must be disclosed.


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A portion of Section 1101.652 of the License Act was reviewed to see the area where

licensees are vulnerable it they make misrepresentations or fail to disclose a material fact.

Please return to the course player to take the lesson quiz.