Ethics

Section: Real Estate Ethics Estimated study time: 45 minutes Content: Professional ethics in real estate encompasses both legally required conduct (Massachusetts license law and Board regulations) and the voluntary ethical standards adopted by REALTORS® through the National Association of REALTORS® (NAR) Code of Ethics. A REALTOR® is a NAR member who has agreed to abide by the NAR Code of Ethics and Standards of Practice — not all licensed agents are REALTORS®. The NAR Code of Ethics contains 17 articles organized into three sections: duties to clients and customers, duties to the public, and duties to other REALTORS®. Article 1 (Protect and promote the interests of the client) and Article 3 (Cooperation with other brokers) are among the most frequently tested provisions. The core ethical duties in Massachusetts real estate practice include: honesty and fair dealing with all parties (not just clients), disclosure of conflicts of interest, avoidance of misrepresentation, fair housing compliance, protection of client confidences, accurate advertising, and proper handling of client funds. Misrepresentation — making a false statement about a material fact — is both an ethical violation and potentially a license law violation and a basis for civil liability. Misrepresentation can be intentional (fraud), negligent (careless statement made without verifying accuracy), or innocent (false statement made in good faith). All three can give rise to liability. The prohibition on puffery ("this is the nicest house in the city") versus actionable misrepresentation ("this roof was replaced last year" when it was not) is an important distinction. Steering and blockbusting are prohibited ethical violations (and illegal) under the federal Fair Housing Act and Massachusetts fair housing law (M.G.L. Chapter 151B). Steering means directing prospective buyers or tenants…