We thoroughly check each answer to a question to provide you with the most correct answers. Found a mistake? Tell us about it through the REPORT button at the bottom of the page. Ctrl+F (Cmd+F) will help you a lot when searching through such a large set of questions.
- The Code of Ethics is based on the concept of:
Let the public be served. When the Code of Ethics was adopted in the early 1900s, the rule of law was “caveat emptor” (“Let the buyer beware”). The Code took a different approach, based on the motto “Let the public be served.” One of the foundations of the Code is protection of the public. Many of the Articles (e.g., 1, 2, 8, 9) are founded on protecting the consumer.
- The Code of Ethics was adopted:
To establish standards of conduct for the industry. There were no real estate licensing laws when the Code was adopted in 1913. One of the primary purposes of the Code was to establish professional standards of conduct for the real estate industry.
- The Preamble to the Code:
Sets out aspirational ideals that REALTORS® should strive to attain. The Preamble to the Code is the aspirational basis for the ethical concepts that REALTORS® believe in. Included are the core concepts of honesty, integrity, fairness, and moral conduct in business relations. Near the end of the Preamble, the timeless, universal principle of the Golden Rule is cited. Because the Code sets the ideals that we strive to attain, it is subjective in nature. As such, it cannot be used as a basis for disciplinary action against a REALTOR®. Only the Articles of the Code are used as the basis for discipline of REALTOR® membership.
- The Code is primarily enforced through:
Local associations of REALTORS®. The enforcement of the Code is handled mainly by the local REALTORS® associations. Real estate is one of the few industries that have a Code of Ethics that is enforced. Many industry codes of ethics are aspirational in nature and are not enforced by the organization sponsoring the code. The REALTOR® Code of Ethics has an enforcement process available to anyone who believes a REALTOR® has violated the Code of Ethics.
- The two basic types of complaints that are handled by local associations are:
Ethics complaints and requests for arbitration. An ethics complaint is a complaint about a REALTOR®’s conduct that has allegedly violated one of the Articles of the Code of Ethics. Under Article 17 of the Code, REALTORS® are required to arbitrate certain types of monetary disputes they have with other REALTORS®. So, a second type of matter handled most frequently by local associations is a request for arbitration falling under Article 17 of the Code.
- The three committees or groups that are involved in the Code enforcement process are:
Grievance Committee, Professional Standards Committee, and Board of Directors. The Grievance Committee is a screening committee that initially reviews ethics complaints and requests for arbitration. The Grievance Committee does not hold hearings but simply determines, on the basis of the written information presented in the complaint/request, whether a possible violation of the Code may exist or whether the request for arbitration presents a matter that can be arbitrated within Article 17. If the Grievance Committee believes that a possible violation may exist or that a matter can be arbitrated, it forwards the complaint/request to the Professional Standards Committee. The Professional Standards Committee appoints a hearing panel (usually three or five members of the Committee) to conduct a hearing. The hearing is a “due process” hearing similar to a court proceeding. The hearing panel decides whether a violation of the Code occurred and makes a recommendation for discipline, if any. In an arbitration request, the hearing panel decides which party is entitled to the monetary award. In either case, a right of appeal or review exists to the Board of Directors.
- A request for mandatory arbitration is based on:
A monetary dispute between REALTORS® (principals) in different firms. Generally, a request for mandatory arbitration is based on a monetary dispute. The dispute must be of a contractual or specific non-contractual nature, and it must be between REALTORS® (principals) in different firms arising out of their relationship as REALTORS®. Article 17 specifies the types of disputes that are required to be arbitrated.
- A request for arbitration is most commonly based on a dispute about:
A cooperative (selling) commission. The most common type of monetary dispute between REALTORS® (principals) in different firms relates to a cooperative (selling) commission, sometimes also known as a co-brokerage commission. In the residential field, the offer of compensation is most commonly made by a listing broker in the context of filing listings with the MLS. In the commercial field, offers of compensation are often made directly among brokers in a market.
- The concept of procuring cause is used to decide commission disputes in arbitration cases. Which of the following statements is true about the concept of procuring cause?
No predetermined rules of entitlement are allowed to be used by a hearing panel. The concept of procuring cause is the basis upon which the typical commission dispute about a cooperative commission is decided. The “Arbitration Guidelines” in the Code of Ethics and Arbitration Manual (Appendix II to Part 10) set out a comprehensive set of guidelines by which hearing panels decide a commission dispute. All of the concepts are from the “Arbitration Guidelines.”
- REALTORS® have an obligation to protect and promote the interests of their clients but also have an obligation to treat all parties:
Honestly. Article 1 of the Code sets out these fiduciary concepts. The obligation to protect and promote the client’s interests is balanced by the obligation to treat all parties honestly.
- If a listing broker tells another broker, “I’ll cooperate with you,” the other broker:
May not assume that the listing broker will pay him/her a cooperative commission. Article 3 clearly states, “The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker.” The cooperating broker must ascertain the terms of compensation, if any, before beginning efforts to cooperate.
- A cooperating broker in a transaction may:
Both A and B. According to the Standard of Practice 12-7, “Only REALTORS® 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.” Thus, a cooperating broker involved in a transaction may claim to have sold the property in the transaction. The only time limitation in the Standard of Practice relates to the cooperating broker posting a “sold” sign before closing. After closing, permission of the listing broker is not necessary for a cooperating broker to post the “sold” sign.
- Disciplinary action in an ethics complaint may NOT include:
A written apology. The Code of Ethics and Arbitration Manual lists the appropriate sanctions that a hearing panel may recommend to discipline a REALTOR® who has violated the Code of Ethics. Only those authorized sanctions are permissible. All of the disciplinary actions noted above other than the written apology are on the list of authorized sanctions. An apology of any sort cannot be mandated by a hearing panel or association.
A. Let the buyer beware
B. Let the seller beware
C. Let the public be served
D. Let the public fend for themselves
A. To establish standards of conduct for the industry
B. Only as “recommendations” for proper conduct
C. In 1931
D. Long after Real Estate licensing laws were in existence
A. Sets out aspirational ideals that Realtors should strive to attain.
B. Can be used as the basis for disciplinary action against a Realtor
C. Requires Realtors to meet the standards set forth in the preamble
D. Is a summary of all the articles included in the code
A. The national association of Realtors
B. State associations of Realtors
C. Local association of Realtors
D. None of the above
A. Ethics complaints and license law complaints
B. License law complaints and mediation matters
C. Ethics complaints and request for arbitration
D. License law complaints and request for arbitration
A. Grievance committee, appeals committee, and board of directors
B. Professional standards committee, arbitration committee and mediation committee
C. Professional standards committee, mediation committee, and board of directors
D. Grievance committee, professional standards committee, and board of directors
A. A monetary dispute between Realtors (principals) in different firms
B. A legal claim for damages between Realtors in different firms
C. A monetary dispute between sales-persons in different firms
D. A legal claim for damages between a salesperson and his/her broker
A. A listing commission
B. A cooperative (selling) commission
C. An earnest money dispute
D. A claim for damages
A. No predetermined rules of entitlement are allowed to be used by a hearing panel.
B. A hearing panel should not consider the entire course of conduct in the transaction and should decide the case on one factor.
C. Whether an agent abandoned or estranged a buyer is not an important factor in determining which party will receive an award
D. Generally, a hearing panel should split an award and shouldn’t make the award all to one party or the other.
C. Fairly and honestly
A. May assume that the listing broker will pay him/her a cooperative commission
B. May not assume that the listing broker will pay him/her a cooperative commission
C. Has an arbitration claim against the broker if the listing broker fails to pay a cooperative commission
D. Has a legal claim for the cooperative commission against the listing broker if the listing broker refuses to pay a cooperative commission
A. Claim to have “sold” the property involved in the transaction
B. Post a “sold” sign on the property involved in the transaction after the closing (with the buyers permission)
C. Not claim to have “sold” the property but may state that they have “participated” or assisted in the transaction
D. Both A and B
A. A fine not to exceed $5,000
B. A letter of reprimand
C. A requirement that the respondent attend a course of education
D. A written apology
Was this helpful?
The Quizzma Team is a collective of experienced educators, subject matter experts, and content developers dedicated to providing accurate and high-quality educational resources. With a diverse range of expertise across various subjects, the team collaboratively reviews, creates, and publishes content to aid in learning and self-assessment.
Each piece of content undergoes a rigorous review process to ensure accuracy, relevance, and clarity. The Quizzma Team is committed to fostering a conducive learning environment for individuals and continually strives to provide reliable and valuable educational resources on a wide array of topics. Through collaborative effort and a shared passion for education, the Quizzma Team aims to contribute positively to the broader learning community.