History of the Code of Ethics
One of the primary reasons National Association of REALTORS® formerly National
Association of Real Estate Exchanges was founded back in 1908 was to establish
ethical standards to guide real estate professionals and to measure their conduct.
In the early 1900’s there were no licensing of real estate practitioners, no License laws
and buyers and sellers were left to fend for themselves. At the time there was rampant
land speculation, exploitation and general disorder. Caveat emptor, or buyer beware,
governed real estate transactions. Real estate practitioners, if licensed at all, were
licensed as peddlers
In 1908 a group of committed Real estate professionals emerged who believed that
brokers needed to be organized and that high standards needed to be established and
enforced.
These real estate professionals focused on the key principles that were necessary to
protect buyers and sellers. Their efforts resulted in the firs code of ethics which was
adopted in 1913. It was First ethical code for business after medicine, engineering and
law.
The Code of Ethics was created to establish a standard of professional conduct for real
estate practitioners. It is based on the concept of service. “Let the public be served”
underlies the entire Code. Protection of the public is the ongoing basis for the Code.
(If you would like to see the original Code of Ethics click here.)
It focused on service to the public and a commitment to professionalism. It further
included “Duties to Clients” and “Duties to Other Brokers”
Many of the principles established in the Code became the basis for later-adopted state
license laws.
Even though the code has changed many times over the years, many of the
fundamental principles of the original code are still in place today. The Code of Ethics
includes timeless concepts such as honesty, obligations to clients and avoidance of
self-dealing.
The founders knew that the code needed to be much more than just a simple set of
rules, it needs to be a serious standard of performance a practical guide for measuring
professional conduct. The Code was designed to be a living document that undergoes
continuous review and scrutiny to ensure it reflects current reality in the ever changing
real estate marketplace.
Many judicial decisions rely on the Code of Ethics as the standard of conduct for the
real estate industry.
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NATIONAL ASSOCIATION OF REALTORS®
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©Copyright 2009
The REALTORS Code of Ethics Quadrennial Education Program Participant's Guide
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REALTORS® were pioneers in alternative dispute resolutions systems. While
alternative dispute resolution systems including arbitration and mediation have become
popular in the courts in recent years, the Code of Ethics has required REALTORS® to
arbitrate their disputes since 1913. REALTORS® have participated in this "Culture of
Cooperation" for eighty plus years and, as a result, have a unique system in which
competitors cooperate and pay commissions to each other for such cooperation. This
system is clearly to the public’s benefit in the efficient sale of real property.
Regardless of real estate business specialty (such as appraisal, property management,
etc.), all REALTORS® are bound by the Code of Ethics.
The Code of Ethics imposes duties above and in addition to duties imposed by law or
regulation. If the Code and state law conflict, the Code always yields to the law. Laws
differ from state to state, so always check with legal counsel if you have any question
about whether your conduct conforms to the law.
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NATIONAL ASSOCIATION OF REALTORS®
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©Copyright 2009