The Board of Directors of the National Association of Realtors® took a stance against discrimination in the real estate industry during its meeting on November 13, 2020. Inspired by demand for social change and an unprecedented number of complaints received by NAR relating to discriminatory conduct and language by Realtors®, the Board approved changes to the Code of Ethics, NAR Bylaws (the “Bylaws”), and the Code of Ethics and Arbitration Manual (“CEAM”). The changes to the Code of Ethics take effect immediately (November 13, 2020).
The Code of Ethics exists to set a clear standard for real estate practice by Realtors® and allows Realtors® to self-police and correct any behavior that may be harmful to the reputations of all Realtors®. Article 10 of the Code of Ethics has been clarified to state that the denial of equal professional services to members of a protected class includes harassing speech, hate speech, epithets and/or slurs against members of a protected class. This is accomplished by adding a new Standard of Practice 10-5 (“SOP 10-5”), which states:
“REALTORS® must not use harassing speech, hate speech, epithets, or slurs based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity.”
The new SOP 10-5 serves to inform the public that Realtors® do not tolerate discriminatory actions in their business practices and speech. SOP 10-5 does not require anything additional of Realtors®; it simply clarifies the existing obligation that Realtors® not discriminate against any person on the basis of a protected class in the course of their business practices and speech.
As with any allegation that a violation of the Code of Ethics was committed, all parties are protected by a thorough process required under the CEAM. In short, for a hearing panel to find a violation of Article 10, as supported by SOP 10-5, evidence must be presented which proves by clear, strong, or convincing evidence that the violation occurred.
Realtors® are professionals 24-7 and do not remove their “Realtor® hats” when they are not actively representing a client or working on a transaction. Accordingly, the CEAM has been updated to clarify that the Code of Ethics applies to Realtors® in all of their activities, not just their real estate related activities. If a Realtor® uses harassing speech, hate speech, epithets or slurs against a member of a protected class in their personal social media profile, they are publicly demonstrating the denial of equal professional services to members of that same protected class.
Finally, the NAR Bylaws and the CEAM have been updated to demonstrate the seriousness with which NAR treats Code of Ethics violations involving discrimination and fraud. The Bylaws and CEAM already require Realtor® Associations to share violations of the Public Trust with the state real estate licensing authority. “Public Trust” is now defined under the Bylaws and CEAM as “demonstrated misappropriation of client or customer funds or property, discrimination against the protected classes under the Code of Ethics, or fraud.” Previously, discrimination had to be willful and fraud had to result in substantial economic harm to be considered a violation of the Public Trust requiring a report to the state real estate licensing authority. The changes to definition of Public Trust take effect on January 1, 2021.
Realtors® set the highest standard of professionalism in the real estate industry, and these updates demonstrate NAR’s dedication to these standards. Your clients and members of the general public should feel confident that protections are in place to prohibit discrimination from affecting one of the most important transactions of their lives.
Additional Resources:
https://www.nar.realtor/national-leadership/committee-members-liaisons/nar-professional-standards-committee-recommendations
Appendix XII to Part Four – Appropriate Interpretation of Standard of Practice 10-5 and Statement of Professional Standards Policy 29
https://cdn.nar.realtor/sites/default/files/documents/Exhibit-02-Standard-of-Practice-10-19-20.pdf
Frequently Asked Questions:
Q. When do the changes to the Code of Ethics take effect?
A. November 13, 2020
Q. Does SOP 10-5 apply retroactively to behavior or speech before November 13, 2020?
A. No.
Q. Doesn’t this violate Realtors’® 1st Amendment right to freedom of speech?
A. The 1st Amendment to the United States Constitution only applies to behavior by the government, not private membership groups like NAR. Furthermore, US courts routinely recognize even governmental restrictions on certain types of speech, including those that incite violence or constitute a danger to the public (such as shouting “fire” in a crowded theater).
Q. Does this mean that I can be found in violation of the Code of Ethics based on my political or religious beliefs?
A. It is important to emphasize that the new SOP 10-5 is not expanding the scope of Article 10; it is clarifying that violations of Article 10 can include discrimination occurring through specific types of speech. SOP 10-5 does not apply to all types of speech – it specifically prohibits harassing speech, hate speech, epithets or slurs based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. Merely stating a political or religious viewpoint does not necessarily constitute harassing speech, hate speech, epithets or slurs. As stated above, the CEAM has many procedures and policies in place to ensure adequate due process before a Realtor® is found in violation.