Principles Chapter 4 Summary

Professional Code and Ethics

Enacted laws prohibiting discrimination in the national housing market:

          Civil Rights Act of 1866;

          Executive Order 11063;

          Civil Rights Act of 1968 (Fair Housing Act) “Equal Access to Housing in HUD Programs – Regardless of

Sexual Orientation or Gender Identity.”

Forms of illegal discrimination:

          Discriminatory misrepresentation and advertising;

          Providing unequal services;

          Steering, blockbusting, redlining;

          Restricting MLS participation.

The Fair Housing Act allows for exemptions under a few specific circumstances:

          A privately owned single-family home where no broker is used and no discriminatory advertising is used;

     Rental  of  an  apartment  where  the  owner  is  also  an  occupant,  provided  the  advertising  is  not discriminatory;

     Facilities owned by private clubs and leased non-commercially to members; religious organizations and leased non-commercially to members.

Equal Opportunity in Housing – Required HUD poster for fair housing laws in selling, renting, advertising, and financing residential properties.

Discrimination based on  sex and  discrimination against handicapped persons and families with children is

prohibited, except:

     In government-designated retirement housing; in a retirement community if all residents are 62 years of age or older;

          In a retirement community if 80% of the dwellings have one person who is 55 years of age or older;

          In residential dwellings of four units or fewer, and single family houses.

          If sold or rented by owners who have no more than three houses.

Discrimination by the client:

          Refusing a full-price offer from a party;

          Removing the property from the market to sidestep a potential purchase by a party;

          Accepting an offer from one party that is lower than one from another party.

Persons who feel they have been discriminated against under federal fair housing laws may file a complaint

with the Office of Fair Housing and Equal Opportunity (OFHEO), within one year of the violation.

Filing suit – party may file suit in court within two years of the violation. May seek: restraining order; actual damages and punitive damages not to exceed $1,000.

A violator who intentionally violates equal opportunity rights is subject to criminal prosecution.

Fair financing laws – mortgage financing field to promote equal opportunity in housing.

Equal Credit Opportunity Act (ECOA) requires lenders to be impartial in determining who qualifies for a loan.

Home Mortgage Disclosure Act is designed to prohibit redlining. Codes of ethics and professional practices cover:

     Job performance: a professional real estate agent must understand the skills and knowledge the profession requires.

          Duties to clients: most codes of ethics uphold the commitment to fulfill fiduciary duties.

Some of the guidelines for working with customers are:

          Honestly representing market value and property condition.

          Avoiding calling a service “free” that in fact is contingent on receiving a commission.

          Disclosure and advertising truthfully;

          Non-discrimination: real estate professionals must comply with fair housing laws.

          Professional relationships: professional conduct excludes disparagement of competitors.

Trade association – voluntary nonprofit organization to resolve the industry’s problems, promote its progress, and enhance its service.

Real estate association/board – voluntary organization whose members are engaged in some phase of the real estate business.

The California Association of Realtors is an organization composed of the members of local associations/boards of realtors (people engaged in the real estate business and members of the Association) throughout the State.

Qualified real estate brokers and licensed appraisers can participate in the Multiple Listing Service – MLS is a facility for the orderly dissemination of listing information.

A licensee is anyone who is licensed to practice real estate by the state.

To be called a Realtor, a licensee must be a member of a local board as well as a member of the national organization.

A Realist is a broker who is a member of both the local and national chapters of the Association of Real Estate


A member of the public or a Realtor wishing to file a complaint must first contact the local board or association. The official complaint is then given to the Grievance Committee who makes a decision as to whether the complaint should be dismissed or forwarded for a Professional Standards Hearing, which is conducted by a panel of Realtors who members of the organization.

An arbitration complaint is generally over an issue of money.

Where the Code of Ethics and the law conflict, the obligations of the law must take precedence.

Regulatory Ethics Standards:

          Article 1 – Protecting the best interests of the client;

          Article 2 – Disclosure of pertinent facts;

          Article 9 – Get it in writing.

          Article 12 – Truth in advertising;

          Article 16 – Respecting another agency relationship.

Guidelines for making ethical decisions regarding agency:

          Determine the exact nature of the problem and the parties involved.

          Concentrate on the pertinent facts of the case.

          Check for laws or regulations that may affect the decision.

          Specify who stands to gain and who stands to lose by the decision.

          Explore various solutions to the problem.

          Make a decision that can be supported comfortably.