Code of Ethics Case Study – Article 2

Case #2-9: Realtor®’s Responsibility for Realtor-Associate®’s Statement (Reaffirmed Case #9-15 May, 1988. Transferred to Article 2 November, 1994.)

Realtor-Associate® D, associated with the firm of Realtor® A, obtained an offer to buy a property at less than the listed price. The offer was rejected. The property had been exclusively listed by Realtor® B and had been published through the Multiple Listing Service of the local Board of Realtors®. The owner received no further offers and at the expiration of the exclusive listing with Realtor® B, he approached Realtor® C and exclusively listed the property with him.

About this time, Realtor-Associate® D terminated his association with Realtor® A and became affiliated with Realtor® C’s organization.

The prospect who had made the unsuccessful offer on the property continued to seek the assistance of Realtor-Associate® D and made another offer on the property, this time at the full listed price. Realtor-Associate® D and Realtor® C, the listing broker, submitted this offer to the owner, and it was accepted.

A few months following the sale, the purchaser complained to the Board of Realtors® that Realtor-Associate® D had made a statement that “a visible gas pipeline easement extended to the property but did not go onto any part of the property.” The complainant presented evidence that the easement, in fact, crossed the property, and the complainant charged Realtor® C and Realtor-Associate® D with misrepresentation.

The complaint was reviewed by the Grievance Committee and then referred to the Board’s Professional Standards Committee which promptly scheduled a hearing and asked Realtor® C and Realtor-Associate® D to be present to answer charges of unethical conduct in violation of Article 2 of the Code of Ethics.

At the hearing, Realtor-Associate® D confirmed that he had made the statement attributed to him; that he thought it was correct because the information had been given to him by a neighboring property owner. Questioning revealed that Realtor-Associate® D had made no effort to verify the information from authoritative sources. Realtor® C protested he knew nothing about the matter; that he had not been present when Realtor-Associate® D made the statement; that he was not responsible for the oral statements made by a Realtor-Associate®; and that Realtor-Associate® D’s first contact with the buyer had occurred while Realtor-Associate® D was associated with Realtor® A.

It was concluded by the Hearing Panel that Realtor® C and Realtor-Associate® D were in violation of Article 2 of the Code of Ethics in a way that materially imposed upon the buyer, who actually received measurably less in his package of ownership rights when he purchased the property than he was led to believe he was buying. Since it had been demonstrated that Realtor-Associate® D made the statement containing misinformation on a pertinent fact while he was affiliated with Realtor® C, and in view of the fact that Realtor® C was the exclusive agent of the seller at the time, Realtor® C was held to be responsible.

He was advised that a Realtor® is definitely responsible for pertinent statements of his salespersons in real estate transactions.

Realtor® C and Realtor-Associate® D were found in violation of Article 2.

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