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Code of Ethics Explained: Cooperation and Communication

By:
  • Greg Hoff
Jan 1, 2018
THE REALTORS® CODE OF ETHICS is more than a guide to right and wrong. It is a powerful, practical business tool that leads to long lasting relationships with both clients and other Realtors®.

Elaborating on these relationships, the Code of Ethics discusses cooperation in 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.

The majority of complaints regarding Article 3 involve a frustration of expected cooperation between Realtors®. However, the cooperation standard created by Article 3 is malleable, often making Article 3 violations difficult to determine.

Standard of Practice 3-10 provides the basic framework for interpreting cooperation within Article 3:

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.

The parameters of cooperation are left intentionally open – creating a case- by-case basis for determining Article 3 violations.

When reviewing complaints, the committee members consider the facts presented by both parties and determine a reasonable cooperation standard within these circumstances that embodies the spirit of 3-10.

Article 3 is not intended as a set of strict rules establishing cooperation. Instead, cooperation is established upon mutual initiation of a potential transaction between parties. From there, a standard of cooperation can reasonably be inferred based on the specific circumstances. A Realtor®, for example, has not violated Article 3 when he or she merely fails to return a phone call or email from an agent representing an interested buyer or by failing to show a property upon request.

The following hypothetical situation is an example that illustrates the parameters and expectations of cooperation under Article 3.

Realtor® A represented a buyer who was interested in a property listed by Realtor® B. After viewing the property with his client, Realtor® A submitted an offer on behalf of his client to Realtor® B. Realtor®  A attempted to contact Realtor® B several times via phone and email to find out about the status of his client’s offer, but received  no communication in return from Realtor® B. Realtor® B’s client eventually accepted a different offer.

In this situation, Realtor® B would likely not be found in violation of Article 3. Unless it can be shown that Realtor® B purposefully impeded Realtor® A’s client’s offer, Realtor® B has not failed in his duty to cooperate under Article 3.

Conversely, consider the following situation:

Realtor® A represented a tenant who needed a move-in date by the end of the month. Realtor® A showed his client a property listed by Realtor® B and submitted a rental application for the property on behalf of his client. After awaiting approval status for more than a week and receiving no response, Realtor® A contacted Realtor® B again and was notified that his client had in fact been approved. Realtor® A subsequently submitted a drafted lease with a move in date by the end of the month, and required deposits to Realtor® B. Realtor® B again failed to contact Realtor® A for more than a week, putting the move-in date required by Realtor® A’s client in jeopardy. Days before the move-in date, Realtor® A contacted the rental property landlord who informed her that he was unable to move out in time for the client’s move-in date, a fact that had not been communicated to Realtor® A by Realtor® B.

Similar to the first situation, this scenario demonstrates a failure in communication. However, this interaction would likely constitute an Article 3 violation. In this case, Realtor® A and Realtor® B were in the middle of a transaction that was time sensitive.

Realtor® B failed to communicate in a timely manner and failed to disclose that the requested move-in date would be unavailable. This failure of communication falls below the reasonable expectation of cooperation established within these circumstances, and thus would constitute an Article 3 violation.

The distinction between these examples, both involving communication failures, highlights the circumstantial nature of the cooperation parameters established by Article 3.

One of the common Article 3 violations centers around a Realtor® accessing a property in violation of Standard of Practice 3-9, which provides that “Realtors® shall not provide access to listed property on terms other than those established by the owner of the listing broker.”

The following provides an example of such a situation.

Realtor® A listed a property and provided specific instructions for access on the listing, including a requirement of 24- hour notice for scheduling appointments. Realtor® B set up an appointment and showed the property to a client. A week later, Realtor® B returned to the property with the same clients, but without setting an appointment first.

In this situation, Realtor® B would almost certainly be found in violation of Article 3 because he accessed the property in nonconformance of the listing instructions.

Members of the hearing panel focus on the facts of each case to determine whether there was reasonable cooperation. Conduct that is demonstrably purposeful or significantly negligent in cooperation with another agent creates possibility for Article 3 violations.

Beyond what is established by Standard of Practice 3-10, there is no universal standard applicable to every case when determining cooperation.
Group(s):
  • Real Estate Laws
  • Risk Reduction
Categories:
  • Brokers
  • Service Providers