Canons of Ethics for the Real Estate Industry

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“There are 19 articles included within this segment covering a wide range of applications for the real estate industry. The first six articles focus on the duties of a real estate licensee to the general public and the real estate industry.”

Last month, we had a discussion on Ohio real estate license law, and a few specific implications for property management companies. This month, we are going to expand this discussion a bit, and introduce a specific segment of Ohio license law, entitled Canons of Ethics for the Real Estate Industry. There are 19 articles included within this segment covering a wide range of applications for the real estate industry. The first six articles focus on the duties of a real estate licensee to the general public and the real estate industry. The next 10 focus on duties to clients and customers, and the last three focus on duties to fellow licensees. We will again focus on the specific articles that directly impact property management companies.

Article 1

This is the broadest and longest of the 19 articles, and covers a variety of duties and responsibilities of a licensed real estate agent. In part, the article reads “A licensee should endeavor to maintain and establish high standards of professional conduct and integrity in dealings with members of the public as well as with fellow licensees and, further, seek to avoid even the appearance of impropriety in any activities as a licensee.”

Article 4 and Article 6

These articles focus on the responsibility to remain current and knowledgeable within the industry. Article 4 specifically focuses on laws and statutes related to the Ohio real estate license law. Article 6 is broader in scope and encompasses matters affecting real estate in the community, state and the nation with regards to matters such as taxation, legislation, land use, city planning and other items which affect property interests.

Article 7

This article is all about disclosure, placing responsibility on the licensee to disclose all known material facts about a property. This can be a precarious concept, as the licensee can only disclose things of which they are aware. But the article includes the words “material facts,” which means that the licensee cannot hide behind ignorance for obvious, openly observable facts.

Article 9

This article strongly suggests that any and all financial obligations and commitments related to a real estate transaction is in writing. Although Ohio does allow for verbal contracts, in many instances the contract must be in writing in order to be enforceable. This article further stipulates, that copies of any written agreements are distributed to all parties involved at the time they are executed.

Article 10

This article is concerned with conflict of interest and states that a licensee should not enter an agency relationship with a party whose interests are in conflict with those of the licensee, or another client represented by the licensee without fully disclosing the potential conflict and obtaining the informed consent of all parties involved.

Article 12 and Article 14

These articles are concerned with properties in which the licensee has a direct interest. Article 12 is focused on a licensee acting as the seller’s agent. Full disclosure must be made by the licensee in instances where the purchaser is the licensee, another licensee affiliated with the same brokerage, a business entity in which the licensee has an interest or is a member of the licensee’s immediate family. Article 14 is broader and requires full disclosure to all parties involved if the licensee completed any professional services concerning a property, in which the licensee has a present or contemplated interest. Article 14 also prohibits a licensee from completing an appraisal, if the fee is contingent on the amount of the appraisal.

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Articles 17 through 19

These last three articles are focused on duties to fellow licensees. Article 17 suggests that a licensee respects the exclusive agency of another licensee until it has expired or until the client, without solicitation, initiates a discussion with the licensee. Obviously, the client must abide by the terms and conditions of the current exclusive agreement, until it is no longer in full force. Article 18 suggests that a licensee should not solicit a listing currently listed with another brokerage, but there is a caveat. In the event that the listing broker refuses to disclose the expiration and nature of the listing, the licensee may contact the client in order to find out this information. Article 19 is very similar to Article 18 but instead focuses on buyer/tenant – a licensee should not solicit a buyer/tenant who is subject to an exclusive buyer/tenant rep agreement unless the broker, when asked, refuses to disclose the expiration and nature of the exclusive buyer/tenant rep agreement.

Ethical treatment of all our clients is critical in the trust we wish to earn every day. Ira Krumholz CPM

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