There are several key steps that your Virginia Licensed Real Estate Agent will help you through. Knowing what these are in advance can help you not be surprised later on:

• Know your budget, consult with a financial institution about what you can be pre-approved for.
• Know your needs, including:
  • Number of bedrooms
  • Location
  • Walking distance to a bus stop
  • Walking distance to a metro stop
  • Price
  • Property condition
  • Age of the property
  • Garage Parking
• Amenities (for condos)
  • Indoor/Outdoor pool
  • Putting Greens
  • Tennis courts
  • In unit washer/dryer
  • Utilities included in condo fees
  • Basketball courts
  • Bowling
  • Concierge service
  • Controlled access
• Realize that something will have to give to get what you want, prioritize your needs so that you can get the most important features.
• Budget time and money:
  • Finding any home is easy. Finding the right home requires time invested in looking at properties.
  • Money for downpayments and closing costs can vary from a couple percentage points to a cash purchase where you provide the entire amount up front.
  
  

  ---

  About the Author ---  Ben Fornshell is a licensed real estate agent with Condo 1 Alexandria.  To learn more about available rentals and purchases in the area check out our free search.

One of the most complex and significant financial events in peoples' lives is the purchase or sale of real estate, be it a house, condo, townhouse or some other investment property. Because of this complexity and significance, people typically seek the help of real estate brokers and sales agents when buying or selling real estate.

Condo Alexandria brokers and sales agents have a thorough knowledge of the real estate market in Northern Virginia communities. Our brokers and agents know which neighborhoods will best fit our clients' needs and budgets. Condo Alexandria real estate agents are familiar with local zoning and tax laws and know where to obtain financing. Agents and brokers also act as intermediaries in price negotiations between buyers and sellers.

• Real estate brokers and sales agents often work evenings and weekends and usually are on call to suit the needs of clients.
• A license to practice real estate is required in every State and the District of Columbia.
• Although gaining a job may be relatively easy, beginning workers face competition from well-established, more experienced agents and brokers.
• Employment is sensitive to swings in the economy, especially interest rates; during periods of declining economic activity and rising interest rates, the volume of sales and the resulting demand for sales workers fall.

When buying a condo or, realistically, almost any other large financial purchase, you can count on the fact that at least one (if not several) contracts will be involved in the process. However, many people may not know what a contract actually is.

Even if you do know what constitutes the basic elements of a contract, it helps to have a working knowledge of the legal terminology that is typically associated with general contracts in order to fully understand their rudimentary function. And while condo owners and those who maintain rental lease agreements may have more experience with contracts than those who don’t, contracts are nonetheless very much a part of every day life for most people (think: contracts with your cell phone company or signing a credit card slip after making a small purchase). What follows is intended to serve as an introduction to contract principals and, hopefully, provide some helpful information to individuals who want to know a little more about basic contract law.

What is a contract?

At its fundamental core, a contract is a legally binding agreement between two parties where a valid offer made by one party is accepted by the other, which is indicated by some mutual exchange of value. Under common contract law, this mutual exchange of value is called "consideration", which must be reasonably relied upon by both parties who agree to contract. Therefore, the three most fundamental elements of all legally valid contracts are offer, acceptance, and consideration.

What types of contracts are there?

There are a variety of legally viable contracts under current common law standards, not all of which must necessarily be in writing. A contract can be written, oral, or implied depending on the parties' actions at the time of the original contract formation. For example, a written document that claims to be a contract is often no more than evidence of the details of the contract, and not the contract itself. A valid contract offer must indicate a desire to enter into a contract (and thereby invite acceptance); should indicate a time period for acceptance; and must reasonably indicate that upon acceptance the contract will form without further approval from offeror. Here, it is the traditional practice in most situations to determine the details to which both parties agree and to transcribe the specifications into writing. This is particularly important if either party wishes to modify the contract at a later time.

In addition, signing a written document is not necessarily an act of acceptance that therefore creates a contract. If the parties have already reached an agreement the written document and signatures may be introduced to the courts as parole evidence of an already existing agreement, but may not determine the validity of the contract on its own. If, for example, the court determines that the original offer was in fact rejected or, if there was a counteroffer which was accepted but without any new consideration, the written and signed contract may prove not to be a contract at all.

Alternatively, if there is nothing in writing or if parts of a written contract are missing, a court may hold that there was an implied contract that existed between the parties and in this instance, a list of the complete terms is not always required. In real estate transactions, for example, an incomplete description of a property may still validate the terms of the contract where the intent of the parties would be used to clarify the specific obligations or missing information that was otherwise implied. On the other hand, to be enforceable, a property sales contract must be written in some form (even if it is incomplete) and oral agreements to sell real estate are not legally binding. In real property contracts, the contract must identify the buyer, the seller and the property itself, even if some details are omitted. Lastly, a real estate contract must establish a purchase price and the terms of the sale in order to validate the agreement.

Finally, a contract can be either unilateral or bilateral in nature. A unilateral contract is a promise for an act where acceptance of the offer is synonymous with the performance of the act and thus, a contract is only created when the act itself is done. Until then, the offeror reserves the right to withdraw the offer. For example, if I offer to pay you $20.00 to jump into the mud, you can either accept my offer by jumping into the mud and I would owe you $20.00 or, if I decide that I would rather keep the money, I can choose to withdrawal my offer so long as you have yet to jump in.

A bilateral contract, in contrast, is a promise for a promise where, as soon as promises are exchanged, both parties are instantly bound by each promise respectively. The vast majority of contracts are bilateral. Here, if I promise to give you $20.00 and you promise to jump into the mud, the contract is accepted by this exchange of promises and not by the performance of the promises themselves.  

So...what did we learn?

While there are many, many other legal constructs that are fundamental to basic contract law (all of which are best left to a legal or other certified professional who can advise you of your rights and responsibilities), the golden principals of all contract law include an offer, acceptance, and some consideration that can be reasonably relied upon by both parties in order to make the contract legally enforceable. While there are different kinds of contracts which include oral, written and implied contracts, all jurisdictions within the United States require that certain kinds of contracts, such as those involving real estate transactions, must be in writing and, in such cases, must identify the buyer, the seller, and the property itself, as well as the purchase price for the property.

Lastly, a contract can be either unilateral or bilateral and knowing the distinction between the two outlines the liability and responsibility that each party may or may not assume. One of the many benefits of living in a free market is that anyone who is legally competent to contract (save for juveniles and those who are legally defined as mentally incompetent) has the right to do so. This is a powerful right and one which must be used responsibly and knowledgeably. The more you know about these kinds of the contractual agreements, the more prepared you will be to make educated decisions when, and if, you decide to sign on the dotted line.

The Virgina Real Estate Board was established in 1924 to regulate businesses and individuals representing others in real property transactions, including condominiums, cooperatives, and time-shares. An adjunct responsibility allows the Board to investigate housing discrimination under the aegis of the Federal Fair Housing Act. The Board currently licenses approximately 55,000 individuals and businesses.

Department of Professional and Occupational Regulation
9960 Mayland Drive Suite 400
Richmond, Virginia 23233-1463

Executive Director: Christine Martine (804) 367-8552

For further information, contact:

Phone: (804) 367-8526
Email: Board for Real Estate

Real estate agents act as go-betweens for buyers and sellers of real estate property. With certain exceptions, anyone who assists with the sale of real estate in the Commonwealth of Virginia is required to be licensed by the state.  Each and every real estate agents must be affiliated with a real estate broker. A broker is a real estate profession who has higher educational requirements and who has a minimum of three years of full-time experience as a real estate agent. A realtor is a real estate agent or broker who is a member of the National Association of Realtors. As a realtor, agents and brokers agree to ascribe to a high standard of ethics and participate in continuing education programs.

In most cases, a real estate agent works for one party, either the buyer or seller, renter or landlord. The agent uses his or her specialized training to best represent the clients' best interests. In some cases, the agent will work in a dual capacity representing both sides of the transaction.  In all cases, the agent's first duty is to truth and honesty. But when you choose a real estate agent, don't be afraid to ask about what obligations state law imposes.

Some agencies have up-front fees or retainers.  It's okay to shop around and to interview several agents and agencies to find the one that you feel most comfortable working with, but it's only fair to the agent and to yourself to settle on one agent to sell or buy a home. Although it is your right and duty as a consumer to shop around, it is unethical and unfair to work with more than one agent at a time. An experienced agent will always ask if you already have representation. This way the agent won't waste his time or accidentally interfere with the relationship you already have.

Good evening Mr. Nesbitt,

I placed an offer on a condo in December 30, 2008. I signed the contract on that day and gave a cashier's check to the seller's real estate agent in the amount of $750. I waited for the signed contract from the seller to come back to me, but a lot of time lapsed and a signed contract from the seller never came. I decided to pull out. On January 23, my agent sent in a statement, letting the seller know that I was pulling out and that I wanted my earnest money back. Several weeks later, the real estate agent said I had to sign a termincation form to receive my earnest money. That was sent in on February 10, 2009. I still have not received my earnest money back. The seller's agent said they are waiting on the assest manager to release the funds.

I have decided to take the agency to small claims court. I do not feel that best interest is being considered. Please give me some advice. Thanks.

Firstly and mostly, let me start off by saying that real estate agents and brokers are not attorneys. I do not practice law and it is not my business to give you legal advice of any kind. However, I do have some experience in these type of matters and will comment as best as I can.

Based upon your letter, I am assuming that you made an offer on a piece of property and you paid $750 in earnest money to the selling agent. The offer was not accepted but the selling agent has not promptly released your funds.

I would recommend that you call the selling broker---not the selling agent. Brokers and the Commonwealth of Virginia take very serious the trust given us as escrow agents. The broker (not the agent) must release the money. Try to speak directly with the broker and explain what you have gone through. I am certain that the selling broker will act swiftly to return you money.

If the broker does not respond with in a short but reasonable amount of time, the next level to contact would be the Northern Virginia Association of Realtors. If that doesn't give satisfaction, the Commonwealth of Virginia's DPOR should be your next contact. If you are owed money, things will proceed quickly at this point.

But you probably want to consult an attorney to verify that my advice will suit your specific case.

Will Nesbitt

When you've picked out the house, townhouse or condo you want to make your own, it's time to write the offer. An offer is a written description of the terms under which you the buyer would purchase the subject property. If the seller accepts your terms the next step would be to proceed to closing and thus full ownership of the property. Although most realtors in Northern Virginia use the standard Northern Virginia Association of Realtors contract there are many possible contingencies, addendums and options that will alter the offer to make it specific to your situation.

One of the most common contingencies added to the offer is the "financing contingency". This contingency specifies that if the buyer cannot get financing then the deal is off and the earnest money is returned to the buyer without penalty.

Another matter that must be address in the offer is the down payment. One way that the down payment differs from the earnest money in that the down payment is paid at closing rather than at the time of the offer. The seller wants to know the buyer's down payment amount because it provides further further evidence of the buyer's qualifications to secure a mortgage.

The offer also describes the interest rate and some terms of the proposed loan. The rates and terms described in the offer are not an offer of credit from a lending institution and do not reflect the loan that the borrower will receive. Rather, the rates and terms are describe to provide a safeguard against any dramatic change in interest rates between when the offer is made and when the loan is closed. In other words if the rates double but the buyer is still approved for financing the buyer could cancel the offer because the terms exceed what he can tolerate financially.

Every purchase will have closing costs. Both buyers and sellers have expenses at closing. Buyers, especially first time buyers, are usually scraping for down payment and closing costs. The seller cannot help with down payment, but the seller can subsidized the buyer's closing costs. If so negotiated the seller can pay all or a portion of the buyer's taxes, origination fees or title insurance. This money comes directly from the seller's pocket so if buyers who need assistance can expect to pay a little higher price than those who do not need a subsidy.

Although the seller cannot help with down payment, the seller can offer some or all of the financing. The terms of the offer will describe the loan that the buyer expects to receive from the seller.

When we make the offer I can help advise you on what terms and conditions will best suit your unique circumstances and what terms are mostly likely to be acceptable to the seller.

Real estate contracts often have contingencies. A contingency is a clause in a contract that gives either the buyer or seller a way to get out of the contract if certain conditions or timelines aren't met. A contract could be contingent on anything a buyer and seller agree to, but there are a few very common contingencies. Typical contingencies are:

• financing
• sale of home
• home inspection
• appraisal

Generally, a contingency only last for a period of time and the contingency expires. After a contingency expires, either the contract expires or the contingency expires depending upon the terms of the sales agreement.

For example, Mary needs to needs to sell her present home before being able to get financing on a new condo she wants to buy. So Mary makes her offer contingent upon the sale of her existing home. If Mary is able to sell her home sold within that time period specified by the contingency, she can go forward with her purchase of the new condo. But if she fails to sell within the specified time period, the condo seller has the option of getting out of the deal.

Whenever possible, seller's prefer offers that don't have contingencies. This is becuase sellers usually believe that they can find another buyer capable making a purchase without contingencies. However, in today's market, sellers are more willing to accept contingencies than they have been in years. So contingencies, like appraisal and home inspection, are quite common and meet with little resistance from sellers.

The exact terms of a contingency, like everything else in a real estate contract, are negotiable. As your agent I can help guide you to make sure your contract has the right contingencies.

"To the General Public:

"For some businesses, simply doing what is legal may be good enough; but I have bound myself to a higher standard because my vocation is central to the interests of the nation and its citizens. The practice of real estate helps provide housing, places of commerce, industries and farms while preserving a healthful environment. For this reason, the practice of real estate imposes a grave social responsibility and a patriotic duty upon myself and others who practice real estate agency and brokerage. With them, I share a common responsibility of integrity and honor.

"As your realtor I have dedicated myself to the high ideals of a code of ethics which compels my best adherance to competency, fairness, and high integrity. No inducement of profit and no instruction from clients ever can justify departure from that dedication. The National Association of REALTORS has described that code of ethics at Realtor.org.

"Documents therein and elsewhere specify duties and best practices of real estate brokerage and agency. These rules describe the requirements of disclosure of agency, financial arrangements, following the law of the land, marketing practices, negotiation methods, how clients are charged for services, how offers are presented, confidentiality, and more.

"You could read that entire document, but the spirit of those ideals can be summed up fairly easily.

• The Golden Rule: 'Whatsoever ye would that others should do to you, do ye even so to them.'
• Primum non nocere --- A latin phrase meaning 'first do no harm'.
• Strive for excellence --- By meeting on-going educational requirements, I continually hone my competency."

Sincerely,

Will Nesbitt

The listing agreement is an agreement or "contract" between a property owner and a licensed real estate professional. The listing agreement authorizes an agent to act on the behalf of the property owner for the purpose of selling the subject property. In other words, the listing agreement describes the powers and limits of your real estate agent when your sell your home. Listing agreements can be negotiated to include any number of terms specific to your relationship and property, but all valid listing agreements will always include the following elements:

Writing

In the Commonwealth of Virginia verbal real estate contracts are valid but not enforceable. What does that mean? Well in short-hand it means that all real estate contracts must be in writing.

Employment

The listing agreement is actually an employment contract for personal services offered by the broker to a property seller. This contract describes the terms and conditions of employing the broker. Often the broker will assign an agent to a specific property, but the listing contract is not between the agent and the seller. The listing agreement is an agreement with the broker employing the agent and the property owner. The listing agreement grants the broker and his agent the power to represent you in marketing and selling your home.

Compensation

For any contract to be valid, there has to be compensation. A listing agreement is no different. The listing agreement specifies the amount paid to the broker and establishes the timing of the payment to the broker. Most listing agreements charge a percentage of the sales price and this amount is paid at closing when the home sells.

In addition, the listing agreement will also describe instances where the seller might have to pay the broker even though the property has not sold. A rare example of this can happen when a broker finds a qualified buyer who is ready and willing to pay the asking price with the terms the seller wants, but the seller refuses to go through with the sale.

Title

The listing agreement requires the seller to make representations with regard to who owns title to the property. Obviously, only the owner of a property can sell a property, but the portion of the agreement also ensures against the possibility that there are additional owners of the property. All owners of the property must agree to the listing agreement.

Term

The seller authorizes the broker to act on his behalf for only for a specified period of time, or "term". The term is often 180 days and is only rarely less than 60 days. A listing agreement is a legally binding contract, so the property owner should never agree to a listing that doesn't specify a termination date. In the event that the listing terminates before the property sells, it is a simple matter to sign a new listing agreement with a new termination date.

Fine Print

There are of course other components to the listing agreement. Most of these are time-tested boiler-plate phrasings that are designed to reduce or eliminate the chance for confusion and prevent litigation. But the listing agreement is a legal document, so property sellers should read and understand the terms before signing. Your agent or broker can help explain the agreement to you, but if you require legal counsel consult an attorney. Lawyers, not real estate professionals, provide legal assistance.

Most people have heard of the MLS, but many are unclear as to exactly what it is. MLS stands for Multiple Listing Service.

The Multiple Listing Service is probably your best tool as a home buyer and your best friend as a home seller.

But what exactly is the MLS?

The MLS is a database.

In the old days MLS databasing was done on filing cards and notebooks. Today that information is aggregated on computers. MLS data includes information about what properties are for sale and certain details about those properties such as condo amenities, number of bedrooms, garage parking. Almost everything you'd want to know about a given property is catalogued on the MLS.

Much of that information is public, such as the selling price and the address. Some of that information is private, or reserved for those who have professional access to the MLS. For example, real estate agents know which properties are vacant. The general public doesn't need to know this information as sharing that information might pose a risk to some property owners.

Yes, the MLS is a database, but it is also something more.

The MLS is a marketplace.

The collection of information on the MLS serves as the primary repository of details about real estate for sale or rent. MLS data is the foundation for most websites, and it is the primary reference point for most real estate professionals. As properties are contracted and sold, the data is constantly updated. Today, most agents and websites have data that is practically up to the minute.

The MLS is not free, but it's free to you the consumer. Agents and brokers pay fees for access to MLS data and to fees to maintain and improve the system. Professionals like me make that data available to the public for the purpose of helping buyers and sellers connect.

The MLS is a tool.

Like all tools, the MLS gives the best results when wielded by a professional. (More on this below.)

The MLS is for sellers.

Home sellers want access to the maximum number of buyers, in the most cost effective manner. When compared to the expense of newspaper, radio or other ads, the MLS is incredibly targeted and very affordable. The professionals who use this data will only bring qualified buyers shopping for property in your price range. It doesn't get better than that.

When a seller chooses a real estate agent with MLS access, the seller's sales force is equal to the number of agents who are using the MLS. The larger pool of prospective buyers the greater the chance that the property will sell quickly and for a fair market value.

The MLS is for buyers.

The MLS makes home shopping extremely convenient. MLS data does not cost the buyers a dime. Thanks to the internet and sites like Condo1Alexandria.com you can search MLS listings 24 hours a day 7 days a week. Many consumers find that a "self-search" through the MLS is a good starting point for finding the right home.

A real estate agent is for you.

In the old days consumers needed an agent to help them look through the data. These days its easy for the public to access most of the data available. So, you can do it yourself.

But if you try to find a home on your own or you try to sell without an agent, you'll quickly discover why most people choose to employ a professional. It's true: you could probably cut your own hair, change your oil filter and fill your own cavities. But why would you?

These days the problem isn't that the data is hard to find. The data is often up to the minute. These days, the problem is that there is too much data. Buyers are overwhelmed with choices. Sellers are drowned out by the noise of available information.

That's one reason why when it's time to get serious about buying or selling, a real estate professional can help guide you through the process.

Most agents know the tricks and secrets of the MLS.

As an agent, I have access to more complicated tools and search processes not available to the consumer. I work with the MLS every single day. The MLS is one of the most important tools in my toolbox. Once you have an idea of what you want to accomplish, I can employ the MLS in ways that you haven't imagined.

I recently had a client ask me what "EMD" was. EMD is an acronym for Earnest Money Deposit. Earnest money is money paid by the buyer to a neutral fund to show that the buyer is serious. This money is paid at the time that an offer is made to purchase a property. The buyer pays this money into an "escrow account" to indicate that this the offer is serious and real.

The earnest money is deposited into an escrow account. An escrow account is a neutral bank account. Depending on the terms negotiated the earnest money can be held by the buyer's agent, the seller's agent or a neutral third party. No matter who holds the money there are strict laws governing the handling and disbursement of earnest money. The escrow agent (the entity that holds the escrow money) cannot commingle (or mix) these funds with operating funds or personal funds. The escrow agent can only release those funds as specified by the contract or as agreed by both parties to the contract. At closing, the earnest money is released and applied to the purchase price.

In the event the offer isn't accepted, the earnest money is released to the purchaser. In the event the offer is accepted but the sale doesn't close, then the sales agreement generally spells out the conditions under which the buyer would forfeit the earnest money. In most cases, if the seller meets all the terms of the contract, the seller will keep the earnest money. If the seller does not meet the terms of the contract, then the buyer, may receive a total or partial refund of the earnest money. If the sale cannot close due to a contingency such as financing or appraisal, the money is generally released to the buyer.

The amount of earnest money deposit varies based on the type of property being purchased and local market conditions. When you make an offer on a property, I can assist you to determine the appropriate amount to pay as an earnest money deposit.

Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS (R)

Effective January 1, 2009

Preamble

Duties to Clients and Customers

Article 1

• Standard of Practice 1-1

REALTORS(R), when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)

• Standard of Practice 1-2

The duties imposed by the Code of Ethics encompass all real estate-related activities and transactions whether conducted in person, electronically, or through any other means.

The duties the Code of Ethics imposes are applicable whether REALTORS(R) 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(R) acting in non-agency capacities.

As used in this Code of Ethics, “client” means the person(s) or entity(ies) with whom a REALTOR(R) or a REALTOR(R)’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(R) or the REALTOR(R)’s firm; “prospect” means a purchaser, seller, tenant, or landlord who is not subject to a representation relationship with the REALTOR(R) or REALTOR(R)’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

REALTORS(R), in attempting to secure a listing, shall not deliberately mislead the owner as to market value.

• Standard of Practice 1-4

REALTORS(R), when seeking to become a buyer/tenant representative, shall not mislead buyers or tenants as to savings or other benefits that might be realized through use of the REALTOR(R)’s services. (Amended 1/93)

• Standard of Practice 1-5

REALTORS(R) may represent the seller/landlord and buyer/tenant in the same transaction only after full disclosure to and with informed consent of both parties. (Adopted 1/93)

• Standard of Practice 1-6

REALTORS(R) shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95)

• Standard of Practice 1-7

When acting as listing brokers, REALTORS(R) 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(R) shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS(R) shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease. (Amended 1/93)

• Standard of Practice 1-8

REALTORS(R) , 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(R), acting as agents or brokers of buyers/tenants, shall recommend that buyers/tenants obtain the advice of legal counsel if there is a question as to whether a pre-existing contract has been terminated. (Adopted 1/93, Amended 1/99)

• Standard of Practice 1-9

The obligation of REALTORS(R) to preserve confidential information (as defined by state law) provided by their clients in the course of any agency relationship or non-agency relationship recognized by law continues after termination of agency relationships or any non-agency relationships recognized by law. REALTORS(R) 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 REALTOR
(R)’s advantage or the advantage of third parties unless:


1. clients consent after full disclosure; or


2. REALTORS
(R) are required by court order; or

3. it is the intention of a client to commit a crime and the information is necessary to prevent the crime; or


4. it is necessary to defend a REALTOR
(R) or the REALTOR(R)’s employees or associates against an accusation of wrongful conduct.


Information concerning latent material defects is not considered confidential information under this Code of Ethics. (Adopted 1/93, Amended 1/01)

• Standard of Practice 1-10

REALTORS(R) shall, consistent with the terms and conditions of their real estate licensure and their property management agreement, competently manage the property of clients with due regard for the rights, safety and health of tenants and others lawfully on the premises. (Adopted 1/95, Amended 1/00)

• Standard of Practice 1-11

REALTORS(R) who are employed to maintain or manage a client’s property shall exercise due diligence and make reasonable efforts to protect it against reasonably foreseeable contingencies and losses. (Adopted 1/95)

• Standard of Practice 1-12

When entering into listing contracts, REALTORS(R) must advise sellers/landlords of:


1. the REALTOR
(R)’s 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)

• Standard of Practice 1-13

When entering into buyer/tenant agreements, REALTORS(R) must advise potential clients of:

1. the REALTOR
(R)’s 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)

• Standard of Practice 1-14

Fees for preparing appraisals or other valuations shall not be contingent upon the amount of the appraisal or valuation. (Adopted 1/02)

• Standard of Practice 1-15

REALTORS(R), 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(R) shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended 1/09))

Article 2

• Standard of Practice 2-1

REALTORS(R) 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(R) the obligation of expertise in other professional or technical disciplines. (Amended 1/96)

• Standard of Practice 2-2

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

• Standard of Practice 2-3

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

• Standard of Practice 2-4

REALTORS(R) shall not be parties to the naming of a false consideration in any document, unless it be the naming of an obviously nominal consideration.

• Standard of Practice 2-5

Factors defined as “non-material” by law or regulation or which are expressly referenced in law or regulation as not being subject to disclosure are considered not “pertinent” for purposes of Article 2. (Adopted 1/93)

Article 3

• Standard of Practice 3-1

REALTORS(R), acting as exclusive agents or brokers of sellers/ landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation. (Amended 1/99)

• Standard of Practice 3-2

REALTORS(R) shall, with respect to offers of compensation to another REALTOR(R), timely communicate any change of compensation for cooperative services to the other REALTOR(R) prior to the time such REALTOR(R) produces an offer to purchase/lease the property. (Amended 1/94)

• Standard of Practice 3-3

Standard of Practice 3-2 does not preclude the listing broker and cooperating broker from entering into an agreement to change cooperative compensation. (Adopted 1/94)

• Standard of Practice 3-4

REALTORS(R), 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)

• Standard of Practice 3-5

It is the obligation of subagents to promptly disclose all pertinent facts to the principal’s agent prior to as well as after a purchase or lease agreement is executed. (Amended 1/93)

• Standard of Practice 3-6

REALTORS(R) shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation. (Adopted 5/86, Amended 1/04)

• Standard of Practice 3-7

When seeking information from another REALTOR(R) concerning property under a management or listing agreement, REALTORS(R) shall disclose their REALTOR(R) status and whether their interest is personal or on behalf of a client and, if on behalf of a client, their representational status. (Amended 1/95)

• Standard of Practice 3-8

REALTORS(R) shall not misrepresent the availability of access to show or inspect a listed property. (Amended 11/87)

Article 4

• Standard of Practice 4-1

For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS(R) prior to the signing of any contract. (Adopted 2/86)

Article 5

Article 6

• Standard of Practice 6-1

REALTORS(R) shall not recommend or suggest to a client or a customer the use of services of another organization or business entity in which they have a direct interest without disclosing such interest at the time of the recommendation or suggestion. (Amended 5/88)

Article 7

Article 8

Article 9

• Standard of Practice 9-1

For the protection of all parties, REALTORS(R) shall use reasonable care to ensure that documents pertaining to the purchase, sale, or lease of real estate are kept current through the use of written extensions or amendments. (Amended 1/93)

• Standard of Practice 9-2

When assisting or enabling a client or customer in establishing a contractual relationship (e.g., listing and representation agreements, purchase agreements, leases, etc.) electronically, REALTORS(R) 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

Article 10

• Standard of Practice 10-1

When involved in the sale or lease of a residence, REALTORS(R) 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(R) may provide other demographic information. (Adopted 1/94, Amended 1/06)

• Standard of Practice 10-2

When not involved in the sale or lease of a residence, REALTORS(R) 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(R) 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 information and any additions, deletions, modifications, interpretations, or other changes shall be disclosed in reasonable detail. (Adopted 1/05, Renumbered 1/06)

• Standard of Practice 10-3

REALTORS(R) shall not print, display or circulate any statement or advertisement with respect to selling or renting of a property that indicates any preference, limitations or discrimination based on race, color, religion, sex, handicap, familial status, or national origin. (Adopted 1/94, Renumbered 1/05 and 1/06)

• Standard of Practice 10-4

As used in Article 10 “real estate employment practices” relates to employees and independent contractors providing real estate-related services and the administrative and clerical staff directly supporting those individuals. (Adopted 1/00, Renumbered 1/05)

Article 11

• Standard of Practice 11-1

When REALTORS(R) prepare opinions of real property value or price, other than in pursuit of a listing or to assist a potential purchaser in formulating a purchase offer, such opinions shall include the following:


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 (Amended 1/01)

• Standard of Practice 11-2

The obligations of the Code of Ethics in respect of real estate disciplines other than appraisal shall be interpreted and applied in accordance with the standards of competence and practice which clients and the public reasonably require to protect their rights and interests considering the complexity of the transaction, the availability of expert assistance, and, where the REALTOR(R) is an agent or subagent, the obligations of a fiduciary. (Adopted 1/95)

• Standard of Practice 11-3

When REALTORS(R) 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(R). (Adopted 1/96)

• Standard of Practice 11-4

The competency required by Article 11 relates to services contracted for between REALTORS(R) 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)

Article 12

• Standard of Practice 12-1

REALTORS(R) may use the term “free” and similar terms in their advertising and in other representations provided that all terms governing availability of the offered product or service are clearly disclosed at the same time. (Amended 1/97)

• Standard of Practice 12-2

REALTORS(R) 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(R) to obtain a benefit from a third party is clearly disclosed at the same time. (Amended 1/97)

• Standard of Practice 12-3

The offering of premiums, 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(R) making the offer. However, REALTORS(R) must exercise care and candor in any such advertising or other public or private representations so that any party interested in receiving or otherwise benefiting from the REALTOR(R)’s offer will have clear, thorough, advance understanding of all the terms and conditions of the offer. The offering of any inducements to do business is subject to the limitations and restrictions of state law and the ethical obligations established by any applicable Standard of Practice. (Amended 1/95)

• Standard of Practice 12-4

REALTORS(R) shall not offer for sale/lease or advertise property without authority. When acting as listing brokers or as subagents, REALTORS(R) shall not quote a price different from that agreed upon with the seller/landlord. (Amended 1/93)

• Standard of Practice 12-5

REALTORS(R) shall not advertise nor permit any person employed by or affiliated with them to advertise listed property in any medium (e.g., electronically, print, radio, television, etc.) without disclosing the name of that REALTOR(R)'s firm in a reasonable and readily apparent manner. (Adopted 11/86, Amended 1/07)

• Standard of Practice 12-6

REALTORS(R), 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(R) or real estate licensees. (Amended 1/93)

• Standard of Practice 12-7

Only REALTORS(R) who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have “sold” the property. Prior to closing, a cooperating broker may post a “sold” sign only with the consent of the listing broker. (Amended 1/96)

• Standard of Practice 12-8

The obligation to present a true picture in representations to the public includes information presented, provided, or displayed on REALTORS(R)’ websites. REALTORS(R) shall use reasonable efforts to ensure that information on their websites is current. When it becomes apparent that information on a REALTOR(R)’s website is no longer current or accurate, REALTORS(R) shall promptly take corrective action. (Adopted 1/07)

• Standard of Practice 12-9

REALTOR(R) firm websites shall disclose the firm’s name and state(s) of licensure in a reasonable and readily apparent manner.

Websites of REALTORS(R) and non-member licensees affiliated with a REALTOR(R) firm shall disclose the firm’s name and that REALTOR(R)’s or non-member licensee’s state(s) of licensure in a reasonable and readily apparent manner. (Adopted 1/07)

• Standard of Practice 12-10

REALTORS(R)’ obligation to present a true picture in their advertising and representations to the public includes the URLs and domain names they use, and prohibits REALTORS(R) from:


1. engaging in deceptive or unauthorized framing of real estate brokerage websites;


2. manipulating (e.g., presenting content developed by others) listing content in any way that produces a deceptive or misleading result; or


3. deceptively using metatags, keywords or other devices/methods to direct, drive, or divert Internet traffic, or to otherwise mislead consumers. (Adopted 1/07)

• Standard of Practice 12-11

REALTORS(R) intending to share or sell consumer information gathered via the Internet shall disclose that possibility in a reasonable and readily apparent manner. (Adopted 1/07)

• Standard of Practice 12-12

REALTORS(R) 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)

• Standard of Practice 12-13

The obligation to present a true picture in advertising, marketing, and representations allows REALTORS(R) to use and display only professional designations, certifications, and other credentials to which they are legitimately entitled. (Adopted 1/08)

Article 13

Article 14

• Standard of Practice 14-1

REALTORS(R) shall not be subject to disciplinary proceedings in more than one Board of REALTORS(R) or affiliated institute, society or council in which they hold membership with respect to alleged violations of the Code of Ethics relating to the same transaction or event. (Amended 1/95)

• Standard of Practice 14-2

REALTORS(R) shall not make any unauthorized disclosure or dissemination of the allegations, findings, or decision developed in connection with an ethics hearing or appeal or in connection with an arbitration hearing or procedural review. (Amended 1/92)

• Standard of Practice 14-3

REALTORS(R) shall not obstruct the Board’s investigative or professional standards proceedings by instituting or threatening to institute actions for libel, slander or defamation against any party to a professional standards proceeding or their witnesses based on the filing of an arbitration request, an ethics complaint, or testimony given before any tribunal. (Adopted 11/87, Amended 1/99)

• Standard of Practice 14-4

REALTORS(R) 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

(R)

Article 15

• Standard of Practice 15-1

REALTORS(R) shall not knowingly or recklessly file false or unfounded ethics complaints. (Adopted 1/00)

• Standard of Practice 15-2

The obligation to refrain from making false or misleading statements about competitors’ businesses and competitors’ business practices includes the duty to not knowingly or recklessly repeat, retransmit, or republish false or misleading statements made by others. This duty applies whether false or misleading statements are repeated in person, in writing, by technological means (e.g., the Internet), or by any other means. (Adopted 1/07)

Article 16

• Standard of Practice 16-1

Article 16 is not intended to prohibit aggressive or innovative business practices which are otherwise ethical and does not prohibit disagreements with other REALTORS(R) involving commission, fees, compensation or other forms of payment or expenses. (Adopted 1/93, Amended 1/95)

• Standard of Practice 16-2

Article 16 does not preclude REALTORS(R) 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(R). 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(R); and

Second, mail or other forms of written solicitations of prospects whose properties are exclusively listed with another REALTOR(R) 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 REALTORS(R) under offers of subagency or cooperation. (Amended 1/04)

• Standard of Practice 16-3

Article 16 does not preclude REALTORS(R) 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(R) to whom such offers to provide services may be made. (Amended 1/04)

• Standard of Practice 16-4

REALTORS(R) shall not solicit a listing which is currently listed exclusively with another broker. However, if the listing broker, when asked by the REALTOR(R), 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(R) may contact the owner to secure such information and may discuss the terms upon which the REALTOR(R) might take a future listing or, alternatively, may take a listing to become effective upon expiration of any existing exclusive listing. (Amended 1/94)

• Standard of Practice 16-5

REALTORS(R) shall not solicit buyer/tenant agreements from buyers/ tenants who are subject to exclusive buyer/tenant agreements. However, if asked by a REALTOR(R), the broker refuses to disclose the expiration date of the exclusive buyer/tenant agreement, the REALTOR(R) may contact the buyer/tenant to secure such information and may discuss the terms upon which the REALTOR(R) 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)

• Standard of Practice 16-6

When REALTORS(R) are contacted by the client of another REALTOR(R) regarding the creation of an exclusive relationship to provide the same type of service, and REALTORS(R) have not directly or indirectly initiated such discussions, they may discuss the terms upon which they might enter into a future agreement or, alternatively, may enter into an agreement which becomes effective upon expiration of any existing exclusive agreement. (Amended 1/98)

• Standard of Practice 16-7

The fact that a prospect has retained a REALTOR(R) as an exclusive representative or exclusive broker in one or more past transactions does not preclude other REALTORS(R) from seeking such prospect’s future business. (Amended 1/04)

• Standard of Practice 16-8

The fact that an exclusive agreement has been entered into with a REALTOR(R) shall not preclude or inhibit any other REALTOR(R) from entering into a similar agreement after the expiration of the prior agreement. (Amended 1/98)

• Standard of Practice 16-9

REALTORS(R), prior to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service. (Amended 1/04)

• Standard of Practice 16-10

REALTORS(R), acting as buyer or tenant representatives or brokers, shall disclose that relationship to the seller/landlord’s representative or broker at first contact and shall provide written confirmation of that disclosure to the seller/landlord’s representative or broker not later than execution of a purchase agreement or lease. (Amended 1/04)

• Standard of Practice 16-11

On unlisted property, REALTORS(R) 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(R) shall make any request for anticipated compensation from the seller/ landlord at first contact. (Amended 1/98)

• Standard of Practice 16-12

REALTORS(R), acting as representatives or brokers of sellers/landlords or as subagents of listing brokers, shall disclose that relationship to buyers/tenants as soon as practicable and shall provide written confirmation of such disclosure to buyers/tenants not later than execution of any purchase or lease agreement. (Amended 1/04)

• Standard of Practice 16-13

All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client’s representative or broker, and not with the client, except with the consent of the client’s representative or broker or except where such dealings are initiated by the client.

Before providing substantive services (such as writing a purchase offer or presenting a CMA) to prospects, REALTORS(R) shall ask prospects whether they are a party to any exclusive representation agreement. REALTORS(R) shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects’ exclusive representatives or at the direction of prospects. (Adopted 1/93, Amended 1/04)

• Standard of Practice 16-14

REALTORS(R) are free to enter into contractual relationships or to negotiate with sellers/ landlords, buyers/tenants or others who are not subject to an exclusive agreement but shall not knowingly obligate them to pay more than one commission except with their informed consent. (Amended 1/98)

• Standard of Practice 16-15

In cooperative transactions REALTORS(R) shall compensate cooperating REALTORS(R) (principal brokers) and shall not compensate nor offer to compensate, directly or indirectly, any of the sales licensees employed by or affiliated with other REALTORS(R) without the prior express knowledge and consent of the cooperating broker.

• Standard of Practice 16-16

REALTORS(R), 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)

• Standard of Practice 16-17

REALTORS(R), acting as subagents or as buyer/tenant representatives or brokers, shall not attempt to extend a listing broker’s offer of cooperation and/or compensation to other brokers without the consent of the listing broker. (Amended 1/04)

• Standard of Practice 16-18

REALTORS(R) shall not use information obtained from listing brokers through offers to cooperate made through multiple listing services or through other offers of cooperation to refer listing brokers’ clients to other brokers or to create buyer/tenant relationships with listing brokers’ clients, unless such use is authorized by listing brokers. (Amended 1/02)

• Standard of Practice 16-19

Signs giving notice of property for sale, rent, lease, or exchange shall not be placed on property without consent of the seller/landlord. (Amended 1/93)

• Standard of Practice 16-20

REALTORS(R), prior to or after terminating their relationship with their current firm, shall not induce clients of their current firm to cancel exclusive contractual agreements between the client and that firm. This does not preclude REALTORS(R) (principals) from establishing agreements with their associated licensees governing assignability of exclusive agreements. (Adopted 1/98)

Article 17

• Standard of Practice 17-1

The filing of litigation and refusal to withdraw from it by REALTORS(R) in an arbitrable matter constitutes a refusal to arbitrate. (Adopted 2/86)

• Standard of Practice 17-2

Article 17 does not require REALTORS(R) 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 1/93)

• Standard of Practice 17-3

REALTORS(R), when acting solely as principals in a real estate transaction, are not obligated to arbitrate disputes with other REALTORS(R) absent a specific written agreement to the contrary. (Adopted 1/96)

• Standard of Practice 17-4

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


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)



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)



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)

• Standard of Practice 17-5

The obligation to arbitrate established in Article 17 includes disputes between REALTORS(R) (principals) in different states in instances where, absent an established inter–association arbitration agreement, the REALTOR(R) (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) REALTOR(R)’s association, in instances where the respondent(s) REALTOR(R)’s association determines that an arbitrable issue exists. (Adopted 1/07)

Explanatory Notes

Here's a hypothetical question to ponder.

A salesperson named Roscoe has a client named Zane. Zane is a long time friend of the family and he listed his luxury condo for sale with Roscoe. Zane's condo is beautiful, immaculately clean and in a nice part of town.

But things get a little complicated from here.

Zane's condo was the site of a widely publicized and grizzly murder of a celebrity who lived in Zane's building. The celebrity's body was found in Zane's second bedroom. As a result of the murder, Zane had weeks of bad dreams until finally he moved to a hotel and enlisted Roscoe's services. Roscoe put the condo on the market and shortly there after it sold at open house to Deanna. Deanna thought it was sort of cool to be connected to the celebrity.

Roscoe kept in touch with Deanna through annual calendars and then a few years later when Deanna was ready to move she asked Roscoe to list the property. Roscoe listed the property for sale but he neglected to either disclaim or disclose the murder.

Sally bought the condo and then one night while reading Wikipedia, she finds out that her home was the site of the celebrity's final moments on this earth.  Sally uses that room for her nursery.

Since Deanna and Roscoe did not disclose the murder, does Sally have an action against Roscoe, Deanna or for that matter Zane?

In the Commonwealth of Virginia, there is no requirement to disclose (or disclaim) "stigmatizing events".

Stigmatizing events are events which have no physical affect on the property. So, whether the property was the site of a homicide, felony, or suicide, the seller and agent are not required to disclose the event.

A couple of quick nugget of trivia for those who are interested.

Pat is a licensed agent in the Commonwealth of Virginia who sells, rents and manages real estate for others for a fee. Pat contacts a homeowner named Al in an attempt to obtain a listing for Al's property. When must agency disclosure be provided to the Al and his wife Jane?

Agency disclosures must be made when there are substantive discussions about a specific property. In this case, agency disclosures must be made at the time the Al and Jane agrees to list the property because there will be substantive discussions when or if the seller agrees to list.

Tom is Pat's broker. A prospective buyer named Omar enters Tom's office.  Omar is directed into the conference room. Tom sits down and discusses finances with Omar to financially qualified the buyer. Tom then hands Omar off to Pat. Omar and Pat begin to review the available property that is within Omar's financial limitations and also meets the wants and needs of the buyer.

When is the agency relationship disclosed?

When Omar expresses an interest in a particular piece of property, agency disclosure is required. This is correct because Virginia regulations state that disclosure is required before substantive discussions about a specific property.

Take the example of an imaginary agent name Anna Delong of PDQ Realty. Anna's client Oscar Funk wants to sell his house. So Oscar approaches Anna. Oscar signs a 90 day exclusive listing to sell his home. A week later, Anna decides to chuck it all. She moves to Canada and puts her license on inactive status.

What happens to Oscar's listing? Does it just become an open listing because the agent is gone? Is the listing voidable on the grounds of abandonment? Does the listing remain in effect? Or, is the listing automatically terminated because Anna quit?

A listing agreement is between a broker and a seller, not between an agent and seller. Therefore, Oscar listed his property with PDQ Realty and not with Anna. The listing remains in effect and unchanged. The broker at PDQ should assign an agent or meet with Oscar to select the best agent for the job.

I just received this:

I am a student interested in the field of real estate. I understand that a real estate agent makes money on the sale of a property based upon a percentage of the final sale price. I was wondering how a real estate agent makes money on a lease of a rental property?

Thanks for the help, Jim

A landlord lists his property with a real estate agent for a number of reasons. The landlord benefits from the agent's experience and connections, but also because the agent has access to the MLS (or Multiple Listing Service) and other venues for promoting the rental property. 

There are many ways that a rental listing can be charged, but most usually the landlord agrees to pay a portion of the first month's rent to the listing agent.  The more the rent, the higher the commission paid.  Landlords are generally happy to pay this because a listing agent saves them time and money (as compared to ads in the paper plus dealing with calls from unqualified renters).

If the renter has his own agent, the listing agent will pay a predetermined portion of the commission to the selling agent (as the renter's agent is called).  Please let me know if this helps.

Do you know the difference between equitable title and legal title? 

Equitable title is conveyed to the buyer when the seller signs the offer to purchase. A ratified sales contract creates equitable title. After closing and accepting the deed, the buyer receives legal title.

An imaginary developer named Harold Dumas owns a 100-acre tract of land along a major river. Harold plans to build a river front community on this property. However, just before Harold applied for his building permit, he learns that the County has changed the zoning on his land. He is now prohibited from building residential development on this property. His property currently used as farmland, can only be used as farmland or for light industrial usage. Can Harold expect compensation from the county for the loss he thinks he has suffered?

Harold could expect compensation for his property if the land was physically taken by the government. This is not the case.  He could also expect compensation for his property if the county overly regulated the property so that all economic value is lost. Both of these case would be described in legal terms as "inverse condemnation".

Unfortunately for Harold, inverse condemnation presents a very high standard to meet. His property can't be used as a residential subdivision, but the the property is not useless. Thus Harold could expect no compensation.

Can a lender deny credit to a crime ridden neighborhood?

Harold the Developer (from above) has made quite a bit of money redeveloping apartment buildings. He has excellent credit and has a great relationship with his bank.  But the lender turns down his latest project because they feel the neighborhood is a crime risk.  Is this legal?

If the bank turned down the loan because the area is occupied by members of a protected class, this could be considered redlining.  But if the bank has just cause to believe that crime will doom the project, it is permissible to turn down Harold's loan. The Fair Housing Act serves protected classes, but criminals are not a protected class.

In the Commonwealth of Virginia, emails sent for the purpose of advertising real estate services must contain specified disclosures at the beginning or end of the message. Does that mean disclosures are required in all emails? 

Let's look at the case of Earl and Brian. Earl lists his home for sale with an agent named Brian. Earl is a busy guy and doesn't like phone calls. Earl prefers email and thus he and Brian communicate regardly by email. Late one night, Brian replies to one of Earl's emails but includes none of the required disclosures!

Has Larry violated the rules of the Commonwealth of Virginia?

The answer is no.  Earl is already Brian's client and thus these emails are not solicitations.  Disclosures are unnecessary when dealing with existing clients and in any correspondence required by the ordinary conduct of business.