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Code Of Ethics Case Scenario: Refusal to Extend Cooperation in Sale of New Homes

July 13, 2018 in KCRAR

The National Association of REALTORS® provides case
scenarios of Code of Ethics cases as a resource to members to help further
their understanding of the Code of Ethics. This year is a Code of Ethics
education year, meaning REALTORS® have until Dec. 31 to complete a
Code of Ethics training

The following in a case scenario provided from NAR:

Case #3-5: Refusal to Extend Cooperation
in Sale of New Homes

(Reaffirmed Case #22-5
May, 1988. Transferred to Article 3 November, 1994. Revised November,
2001. Revised May, 2017)

REALTOR® A, who operated a
brokerage business in many areas of the city, was also a home builder. For
the homes he built, he maintained a separate sales force and consistently
refused to permit other REALTORS® to show his new homes.

This practice came to the attention of an officer of the
Association of REALTORS® who
made a complaint which was referred to the Professional Standards
Committee by the Grievance Committee.

At the hearing, the Hearing Panel
asked REALTOR® A to answer charges that his policy violated Article 3 of the
Code of Ethics.

REALTOR® A’s defense was
that Article 3 requires REALTORS® to cooperate with other brokers
“except when cooperation is not in the client’s best interest.” He
contended that in selling his own new homes there was no client; that he
was not acting in the capacity of a broker, but as owner-seller; and that,
under the circumstances, Article 3 did not apply to his marketing
the houses he built.

The Hearing Panel concluded REALTOR® A’s defense was valid; that he was a principal; that Article 3 permitted him, as the builder-owner, to decide what marketing procedure would be in his best interest; and that although other REALTORS® might disagree with his decision, he was not in violation of Article 3.

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