resnEthics and the Real Estate Agent.pptx

3 Hours Ethics
CE Course
CE.5053002-RE
Copyright 2021 Real Estate School of Nevada, Inc. All Rights Reserved.

Ethics and the Real Estate Agent
Housekeeping
 No phones or texting during the class.
 Please make sure that you sign in.
 Restrooms
 Direct attention to instructor.
 Refrain from distracting activities.
 Breaks
 Instructor Evaluations
 Attendance sign out
 Certificates of Completion

Course Objectives
 To address the ethical issues for the Nevada Real Estate
Licensee.
 To understand the importance of ethical behavior and
practices in order to better serve customers and clients
 To meet the educational requirements for the Nevada
Real Estate Continuing Education courses for license
renewal

Course Content
DUTIES TO CLIENTS AND CUSTOMERS (80 MINUTES TOTAL)
Duties Owed and Representation (20 minutes total) Discovery, and Disclosure (10 minutes total)
Client Confidentiality (10 min) Obligations of Discovery (5 min)
Duties of the Listing agent to the seller (5 min) Latent and Material Defects (5 min)
Duties of the Selling agent to the buyer (5 min)
Broker Cooperation and Compensation (20 minutes total) Disclosures (20 minutes total)
Cooperation (10 min) REALTORS® Interest in the Transaction (5
min)
Compensation (10 min) Professional Services Disclosure (5 min)
Representing More than One Party Personal Involvement Disclosure (5 min)
Compensation Disclosure (5 min)
Accounting practices (5 minutes total) Contracts and Written Agreements
Handling Earnest Money and definitions (5 min) (5 minutes total)

DUTIES TO THE PUBLIC : 80 minutes
Fairness in Housing (15 minutes total) Standards and Licensing (15 minutes total)
Real Estate Salesperson (15 min)
Advertising (15 minutes total)
Responsible and proper advertising Unauthorized Practices (15 minutes total)
Guidelines of Advertising
Prohibited Advertising practices Discipline (20 minutes total)
False Statement
Aggressive sales tactics
DUTIES TO REALTORS® (20 minutes total)
Communication
Business Practices
Disputes
Materials: Code of Ethics National Association of REALTORS®
http://www.realtor.org/mempolweb.nsf/pages/code

National Association of REALTORS® Code Of Ethics
 Preamble
 “Under all is the land. Upon its wise utilization and widely allocated
ownership depend the survival and growth of free institutions and of
our civilization. REALTORS® should recognize that the interests of the
nation and its citizens require the highest and best use of the land and
the widest distribution of land ownership. They require the creation of
adequate housing, the building of functioning cities, the development
of productive industries and arms, and the preservation of a healthful
environment.”
 “Such interests impose obligations beyond those of ordinary
commerce. They impose grave social responsibility and a patriotic duty
to which REALTORS® should dedicate themselves, and for which they
should be diligent in preparing themselves. REALTORS® therefore, are
zealous to maintain and improve the standards of their calling and
share with their fellow REALTORS® a common responsibility for its
integrity and honor.”

 “In recognition and appreciation of their obligations to clients,
customers, the public, and each other, REALTORS® continuously
strive to become and remain informed on issues affecting real
estate and, as knowledgeable professionals, they willingly share
the fruit of their experience and study with others. They identify
and take steps, through enforcement of this Code of Ethics and
by assisting appropriate regulatory bodies, to eliminate
practices which may damage the public or which might discredit
or bring dishonor to the real estate profession. REALTORS®
having direct personal knowledge of conduct that may violate
the Code of Ethics involving misappropriation of client or
customer funds or property, willful discrimination or fraud
resulting in substantial economic harm, bring such matters to
the attention of the appropriate Board or Association of
REALTORS®.”

 “Realizing that cooperation with other real estate professionals
promotes the best interests of those who utilize their services,
REALTORS® urge exclusive representation of clients; do not
attempt to gain any unfair advantage over their competitors;
and they refrain from making unsolicited comments about
other practitioners. In instances where their opinion is sought,
or where REALTORS® believe that comment is necessary, their
opinion is offered in an objective, professional manner,
uninfluenced by any personal motivation or potential advantage
or gain.”

 “The term REALTORS® has come to connote competency,
fairness, and high integrity resulting from adherence to a lofty
ideal of moral conduct in business relations. No inducement
of profit and no instruction from clients ever can justify
departure from this ideal.”
 “In the interpretation of this obligation, REALTORS® can take
no safer guide than that which has been handed down
through the centuries, embodied in the Golden Rules,
‘Whatsoever ye would that others should do to you, do ye
even so to them.’”
 “Accepting this standard as their own, REALTORS® pledge to
observe its spirit in all of their activities and to conduct their
business in accordance with the tenets set forth below.”

Duties Owed and Representation
NAR Code of Ethics
 Article 1: “When representing a buyer, seller, landlord, tenant, other client
as an agent, REALTORS® pledge themselves to protect and promote the
interests of their client. This obligation to the client is primary, but it does
not relieve REALTORS® of their obligation to treat all parties honestly.”
 Differentiate between customers, clients, prospects and agents:
 A CUSTOMER is a third party or non-represented consumer for whom some
level of service is provided and who is entitled to fairness and honesty.
 The customer receives information, services or benefits but has no
contractual relation ship with the licensee or the licensee’s brokerage.
 A CLIENT is also a consumer, but the licensee is given the responsibility to
represent this party in a real estate transaction.

 This client representation is called AGENCY.
 Agency is established by agreeing to an expressed or implied
agreement for cooperation between the client and the agent.
 The agent is now held in a position of special trust and
confidence by the principal (client).
 When first meeting with the potential client, the licensee will
present the Duties Owed form to the interested party and
explain why this form must be completed by the agent and the
client.

 This is where it is explained:
 the responsibilities of agents and brokers to their clients
 the responsibility of the licensee to disclose certain material
facts about a property
 to disclose any personal interest the agent has in a property
 how agents and brokers must work together for the client’s
benefit.
 Further, the licensee must explain:
 how earnest money deposits will be handled
 how compensation to the agent is completed
 any costs that the brokerage will be charging the client
 the licensee fiduciary responsibility to the client

 The PROSPECT is a purchaser, seller, tenant, or landlord who is
not subject to a representation relationship with the REALTOR® or
REALTORS® brokerage.
 The agent stays in contact with a prospect in order to convert
them to become a client and to complete a real estate transaction
with them.
 It is to the agent’s best interest to treat prospects with honesty
and fairness when communicating.
 The AGENT is a real estate licensee acting in an agency
relationship as defined by state law or regulation.
 If there is no agency relationship, the REALTOR® is not the agent for
the customer or prospect.

Client Confidentiality
 NRS 645.254.2 states: “Each licensee shall not
disclose, except to the real estate broker, confidential
information relating to a client in violation of NRS
645.254.”
 We are ethically bound to keep the client’s information confidential.
 The client may become vulnerable to inappropriate access to their
personal information if a licensee discloses confidential
information to the other agent or principle or anyone in general.
 If the information falls into the wrong hands, it could put the client
at a disadvantage during negotiating a contract or it could make
the client’s identity subject to theft or fraud.

Client Confidentiality
 It is imperative when an agency is established that you not
disclose confidential information relating to a client for at the
very least 1 year after your agreement ends.
 The client may give the agent written permission to break the
confidentiality agreement, or it may be broken by a court
order.
 Federal law requires all client information, including financial
and demographic information, be kept private.
 Information may not be shared with other parties without
the written consent from the client or by a court order.

Duties of the Listing Agent to the Seller
NAR Code of Ethics Standard of Practice 1-1
 “REALTOR®, when acting as principals in a real estate
transaction, remain obligated by the duties imposed by the
Code of Ethics.”
 Nevada Real Estate Law indicates that the following duties are
owed to the seller:
 Provide the appropriate form prepared by the Nevada State Real
Estate Division covering your duties to the seller (Duties Owed)
 Explain that potential buyers must be informed of all material
facts surrounding the sale of the property

 Present ALL offers for the purchase of the property as soon as
possible, unless the seller waives this obligation through the
“Waiving of Duty to present all Offers” form
 Disclose any and all personal interests or ownership the licensee
has in the property
 Disclose all sources of income relevant to the transaction
 Explain that, should any agency relationships change, that
information shall be promptly disclosed
 Explain that fairness and honesty is owed to all parties

 Provide all disclosures prepared by the Nevada State Real Estate
Division and the Greater Las Vegas Association of REALTORS® to
the seller and explain the need for the disclosures
 Confidential information will not be disclosed relating to a client
for at least 1 year after the agreement ends or by court order or
written permission from the seller
 Be available to the seller

 Perform the duties under the agency relationship and
business model established
 There is no room for stretching the truth, or by conveniently
leaving out facts that may be pertinent to the relationship.
 When signing the “Exclusive Right to Sell”, a fiduciary
relationship is established.
 obligated to maintain the trust, confidence, accountability,
and loyalty to the client

 Protect the sellers’ interests and the promotion of the sale
of the property
 DISCLOSING to the client the truth about the fair market value
of the property
 Exaggeration is not permitted when recommending a Fair
Market Value for the home of the seller
 Fair market value is a changing figure that adjusts with the
real estate market demand
 Inform the seller the company policy regarding
compensation to both your brokerage and to the
cooperating brokerage of the agent who is representing the
buyer.

 The listing agent shall recommend that the seller obtain the
advice of legal counsel or an accountant prior to acceptance of
an offer.
 In the case of MULTIPLE REPRESENTATION in any transaction,
the REALTOR® MUST disclose the relationship to the seller and
obtain permission to represent both sides of the transaction.
 Multiple representation occurs, when one broker individually, or
two agents within the same brokerage firm, represent both
buyer and seller in a real estate transaction.
 Multiple representations is legal with consent from both sides of
a transaction.
 This is completed with the Consent to act form and is also noted
on the Duties Owed form.

 When the listing agent receives an offer from a potential buyer,
he/she is obligated to submit all offers and counter offers
objectively and as quickly as possible.
 If the seller is not available, the agent will make every effort to
contact the seller.
 The listing agent will continue to communicate with the
buyer’s agent the progress of presenting the offer to the seller.
 When the offer is presented to the seller, the listing agent must
be objective and honest.

 The agent will counsel the seller of 3 options when an offer is
presented:
 accept the offer as is
 offer a counteroffer to the terms of the offer
 simply reject the offer
 It is also the obligation for the licensee to write the counteroffer
with the amendments to the original Purchase agreement that
the seller has requested.
 Then the licensee must return the original purchase agreement
(with appropriate signatures and dates) and the counteroffer to
the buyers’ agent in a timely manner.
 The listing agent must also continue to submit to the seller all
offers and counter offers until the closing unless the seller has
waived this obligation in writing.

Waiver of Duties
 Nevada has a Code of Ethics that must be adhered to under penalty
of law.
 Nevada has a few exceptions or waivers to these rules.
 “Waiver of Duties”
 Form 636 allows for the “Waiving of Duty to Present all Offers” to
the sellers.
 The client, licensee and broker must sign this form in order for it
to become effective.
 It overrides NRS 645.254 requiring a licensee to present all offers
to the seller as soon as practicable.
 Form 637 is another waiver that gives authorization to the seller to
negotiate directly with the buyer’s broker or agent.

Duties of the Selling Agent to the Buyer
 When working with a buyer, and an agency
relationship is established, legal and ethical
obligations now exist:
 Bound to be honest and ethical in every phase of the transaction and
must keep the client’s interest in mind at all times
 Help clients fulfill all their contractual obligations and help with the
successful settlement of the purchase contract
 Guide them by helping them find properties at their price and terms
 Establish a plan to help them reach their goal of buying or renting
 Make available all the pertinent information in order to make an
educated decision
 Advise clients to seek expert advice in any matter outside of your
expertise
 Handle all client monies as prescribed by law

 Promote the best interests of clients through education of all
aspects of purchasing real estate
 Advise clients to seek legal counsel concerning legal obligations of
a Purchase/Rental agreement
 Submit offers, counter offers, and addendums in the time set
 Advise buyers of company policies regarding cooperation and the
amount of compensation
 Maintain financial and personal information about the buyer in
strictest of confidence, unless permission to release the
information has been obtained

 Licensee must disclose any personal relationship in the transaction
 Provide a list of several possible vendors needed for the
completion of the transaction: (inspectors, lenders, legal counsel,
etc.)
 Be available to the buyer
 Do not mislead the buyers concerning any savings or monetary
benefits the buyer may receive through the use of the Realtor’s
services.
 For example, if a licensee tells a buyer he/she will save money
if he/she uses the licensee as his agent, he is misleading the
buyer.
 The buyer’s agent must be honest and ethical in all aspects of a
real estate relationship Standard of Practice 1-4

 There is no room for stretching the truth, or by conveniently leaving out
facts that may be pertinent to the relationship.
 The Duties Owed form is required in order to hold confidential, all
information relating to the client.
 Protect the Buyer’s interests and to help in the purchase of a property that
they approve of and are willing to purchase.
 A Buyers Brokerage Agreement may also be used before showing homes.
 This is optional but recommended by most brokerages.
 This will ask for the buyer’s loyalty and will allow you to represent the
buyer exclusively.
 No requirement to seek other properties for the buyers while they have
an active contract to purchase property. NAR Code of Ethics, Standard of
practice 1-8

 Prepare an action plan for the buyer to reach their goal of
purchasing a home.
 showing properties that they have asked to see
 properties recommended they see according to their criteria
and financial ability
 When a property is found and the buyers would like to
write on offer, the licensee will complete the appropriate
contracts and addendums and to explain all to the buyer.

 Present the purchase offer to the seller/sellers’ agent and present
any counter offer back to the buyers in a timely manner
 Disclose the truth about a property including material defects and
the information that the listing agent has noted on the MLS
 Inform the buyer of the brokerage’s policy regarding compensation
 This may include any administrative fees charged by the buyer’s
brokerage
 Buyers must be advised of the potential for any additional
compensation from other brokers, sellers, or other parties
 This may include a “free trip to Hawaii” if a transaction is completed

 When an offer is submitted and accepted, it is the responsibility of the
buyer’s agent to handle all client monies as prescribed by the law.
 Earnest Money becomes part of the contract and must be deposited into a
trust account within 24 business hours of the acceptance of the Purchase
Agreement.
 In Nevada, depositing the earnest money with the escrow company/ title
insurance company satisfies this requirement.
 They become responsible for the handling of earnest money and for keeping an
accounting of any funds concerning the transaction
OR
 The brokerage may set up trust accounts
 the trustee of the account will be responsible for the accounting and
maintenance of this account until the funds are distributed at the end of the
transaction.
 This earnest money will usually be applied toward the purchase price of
the home or to the closing costs incurred in the transaction.
Handling Earnest Money

 If the Earnest Money is deposited into the Brokers trust account,
the money may never be used for any other purpose.
 These funds must be deposited before the end of the next
business day unless specified and agreed to by all parties.
 The broker holds the ultimate responsibility for the use and
dispensation of this trust account.

 The following activities are prohibited when handling client funds
or trust accounts:
 COMMINGLING: Combining client funds with funds from your
private account
 CONVERSION: Using client funds for purposes outside of the
client transaction
 MISMANAGEMENT: failure to keep detailed records of client
fund transactions and escrow account statements. These
records must be kept for 5 years after the conclusion of the
transaction.

 Carry out all terms of the agreement when the contract is
accepted by the sellers.
 helping the buyer with hiring an inspector, a financial officer,
or an attorney, etc.
 Avoid becoming involved with or being accused of questionable
tactics.
 Understand how to protect your clients and yourself
 Finally, disclose, disclose, disclose. When in doubt, disclose again
(and get it in writing).

Discovery and Disclosure
 Article 2: “REALTORS® shall avoid exaggeration, misrepresentation, or
concealment of pertinent facts relating to the property or the transaction.
REALTORS® shall not, however, be obligated to
discover latent defects in the property, to advise on matters outside the
scope of their real estate license, or to disclose facts which are confidential
under the scope of agency or non-agency relationships as defined by state
law.”
 One of the reasons that disclosures are required is to let the buyer know the
facts in order to make informed decisions.
 REALTOR® shall avoid EXAGGERATION, MISREPRESENTATION or
CONCEALMENT of pertinent facts relating to the property or transaction.

 When listing a home, the seller has the duty to disclose
to the buyer any known latent defect that may threaten
the structural soundness of the property.
 It is the duty of the Listing agent to discuss with the seller, the
importance of disclosing any and all defects.
 The listing agent must assist the client in understanding the
importance of full disclosure of both latent and material
defects.
 The listing Agent must discuss with the seller any possible
material defects and determine the impact on the sale of the
property if not repaired.
 The listing agent must interview the seller to determine if there
are any material defects and the importance of disclosing
them.

 The Sellers Real Property Disclosure includes items such as:
 Condition of the appliances
 Heating and cooling equipment; pool equipment; roof, plumbing,
electrical, pest, etc.
 Environmental information; lead paint
 Existence of Common Interest Community and CC&R’s
 In recent times, agents have had to deal with properties that have
unique “stigma’s” such events that have happened at the property
or in the neighborhood.
 The licensee is only obligated to disclose information if the property
caused the incident.
 No requirement to disclose or investigate information regarding the
neighborhood.
 Nevada law does not require the licensee or the seller to investigate
any occurrence, however, if aware of an incident and are asked
by the buyer, the information should be disclosed.

 If representing the buyer, the licensee is responsible for explaining both
types of defects (to follow) and how these defects can affect the
purchase and value of the property.
 Must also disclose any material defects noticed when showing a home.
 For example, if there is a broken window behind a curtain that the
buyer is not aware of, the selling agent must disclose the defect to
the buyer.
 Recommend the buyer have a professional home inspection prior to
completing the purchase.
 It is up to the buyer to investigate such adverse facts that may be
unknown to the seller.

Latent Defects/Facts
 There are 2 major kinds of defects (also called facts):
 Latent defects are HIDDEN or major defects which may
compromise the soundness of the property or structure.
 These are defects that may not be obvious during a visual
inspection and may have a negative impact on the value of the
property or may pose a risk to the occupants.
 The seller must fill out the Sellers Real Property Disclosure
(SRPD) form truthfully and completely. If seller neglects to
disclose all latent or material facts, they may be a party to a
lawsuit from the buyer.

Latent Defects/Facts
 The listing agent is also obligated to disclose any KNOWN or
DISCOVERED latent defect to the buyer if upon his/her inspection
of the property.
 The agent shall not be obligated to discover latent defects in the
property if the visual inspection is outside the scope of his/her
real estate license.
 Examples of latent defects are:
 Electrical or plumbing not up to code
 Cracks in the foundation
 Termite damage
 Un-permitted structures or improvements on the property

Material Defects/Facts
 Material defects are KNOWN problems with the property that would have
significant negative impact on the value of the property or may pose a risk to
the residents.
 The seller has the duty to disclose any material defects to any potential
buyer using the same Sellers Real Property Disclosure (SRPD).
 This may include a nonworking dishwasher that needs to be replaced, a non-
working air conditioner, and ceiling stains from previous water damage.
 Seller may opt to repair any defects but must still disclose the repairs on the
SRPD and note the date, the vendor and nature of the repair.
 Any repairs or improvements on the property and building permits
associated with them must also be disclosed by the seller.
 It is up to the Listing Agent to make sure the client does not misrepresent
the property.
 Should the client do so, it is the licensee’s responsibility to inform
all parties.

 The Licensee is not expected to be an expert at investigating or inspecting
properties if it is outside the realm of expertise. NAR code of Ethics
Standard of Practice 2-1
 As a representative of either the seller or buyer, it is important to address
the material and latent defects and to how this may affect the sale or
purchase of the property.
 Represent the client and serve with honesty and integrity.
 Legally, the licensee’s duty is to keep clients fully informed of all facts and
information concerning the property and transaction.
 Nevada Real Estate Law gives the client the right to take legal action to
recover damages suffered as a result of licensees' failure to perform duties
required.
 The law also protects the licensee against misrepresentations made by the
client.

Broker Cooperation and Consideration
 Article 3: “REALTORS® shall cooperate with other brokers except
when cooperation is not in the client’s best interest. The obligation
to cooperate does not include the obligation to share commissions,
fees, or to otherwise compensate another broker.”
 In a professional world, business practices dictate that you should
maintain positive and professional relationships with other brokers
and Real Estate Agents.
 The end results of this cooperation are necessary to meet your
client’s needs.
 Common sense indicates you should be friendly and courteous to
the cooperating broker.
 It is in your best interest in order to have a professional working
relationship.

 When a buyer’s agent calls the listing agent to inquire about the
status of the property, the listing agent shall disclose the existence
of accepted and contingent offers.
 The listing agent must disclose ay personal interest in the property.
 The listing agent must not misrepresent the availability of access to
show or inspect a listed property, nor shall he provide access to the
property on terms other than those agreed upon by the owner.
 NAR Code of Ethics Standard of Practice 3-6, 3-8 and 3-9

 If attempting to market another broker’s listing, you must obtain
permission from the listing broker/agent.
 For example, if you are to have an open house at a home that is not
your listing, you must have the listing agent and brokerage’s
permission to conduct the open house.
 In the world of internet marketing, it is possible to help several
licensees from several brokerages to sell each other’s listings.
 This is called a handshake.
 All licensees involved will need to give permission for the
“handshake” in order for each other licensee to market on the
internet.

Broker Compensation
 The compensation offered to the selling broker by the listing broker
must be disclosed in the MLS
 Cooperating brokers may not assume that the offer of cooperation
includes an offer of compensation.
 Terms of the compensation, if any, shall be ascertained by the
cooperating brokers before beginning efforts to accept the offer of
cooperation.
 The compensation may be in a percentage of the selling price, a
fixed amount, or a variable amount.

Broker Compensation
 Any changes to the agreed upon compensation must be approved
by both brokers in the transaction.
 There may be other sources for compensation to the licensee.
 Compensation may come from the seller OR buyer in the form of a
percentage, a flat fee, or an hourly rate.
 The licensee cannot accept fees, commissions, or compensation of
any kind from anyone except the employing broker.
NAR Code of Ethics Article 6 and 7

 In Nevada, real estate agents are permitted to represent both the
buyer and the seller in the same transaction:
 “Multiple Representation”
 There are strict guidelines in order to avoid potential conflicts.
 The forms “Consent to Act” and “Duties owed” must be
completed
Multiple Representation

 All parties must agree to the terms of representing both parties in
the transaction
 The agent must disclose any potential conflicts to each of the parties
in order for them to make a decision to permit representation of
both sides
 Agents must remember to be impartial but fair with all parties
involved.
 Do not disclose personal information to either party about the
other party.
 This is a grey area that you must understand in order to maintain
the equality and fairness for all parties concerned.
Multiple Representation

Disclosures: Licensee Interest
 “REALTORS® shall not acquire an interest in or buy or present offers
from themselves, any member of their immediate families, their
firms or any member thereof, or any entities in which they have any
ownership interest, any real property without making their true
position known to the owner or the owner’s agent or broker. In
selling property they own, or in which they have any interest,
REALTORS® shall reveal their ownership or interest in writing to the
purchaser or the purchaser’s representative.”

Disclosures: Professional Services
 Licensees must disclose, to all parties, a professional involvement in
a transaction when representing a principal.
 The Nevada Exclusive Right to Represent the Buyer agreement spells
this out in its content.
 It is up to the licensee to explain the concept of this relationship
with other buyers.
 An instance of this may be representing several clients who are
looking for a similar property.
 You must disclose that there may be a possibility that you will
show the same home and maybe write an offer for more than
one client on the same property.
 These disclosures must be in writing.

Disclosures: Personal Involvement
 Recommendations of products or services and any direct interest
must be disclosed to a client in writing and in a timely manner.
 This protects clients from kickbacks and referral fees that could
affect the final cost of the sale or purchase of property.
 For example, if the listing broker is giving away a trip to Hawaii to
the selling agent upon a successful Close of Escrow, that agent
must disclose to the buyer this compensation. Also, the listing
broker must also disclose the bonus to the seller, also in writing.
 If the Brokerage has an interest with cooperating home warranty
companies, title companies, or home inspection agencies, this
must also be disclosed to the client.

Compensation Disclosures
 Broker Compensation: As a listing agent, your compensation is
negotiable and is based on the agreed to Brokerage Listing
Agreement signed by the seller and the broker.
 This is usually a percentage of the sales price of a property, but
can also be a(n):
 Flat rate
 Variable rate
 Hourly rate
 The agreed upon compensation must be disclosed in the listing
agreement.

 Compensation from more than one source: it is not legal for an
agent or broker to accept any fees, rebates or any other financial
benefit outside the real estate transaction without the knowledge
and written consent of the client.
 If you receive compensation as a result of any “free” services
offered to the client, you must disclose this to all parties and your
broker.
 All commissions from a transaction must be paid directly to the
principal broker(s) and distributed by the brokerage to the
licensee(s).
 Only with written permission from the principal broker, may a third
party pay you directly.
Compensation Disclosures

Contracts and Written Agreements
 For the protection of all parties in a real estate transaction, agreements,
contracts, addendums and counteroffers must be written in clear and
understandable language.
 The document must include the specific conditions, and terms of all parties.
 Documents pertaining to the transaction must be kept current through the
use of extensions, amendments, or addendums.
 The licensee is responsible for reviewing each contract or addendum with the
client to ensure he/she understands and accepts the conditions of the
agreement.
 This is evidenced through their signature and date.
 The Licensee must also provide the client with a copy of any and all forms
and agreements he/she has signed and agreed to, at the time of signing
whenever possible.
NAR Code of Ethics Standard of Practice 9

 When assisting a client with agreements and contracts, the agent will
make reasonable efforts to explain the nature and disclose the specific
terms of the contractual relationship being established prior to it being
agreed to.
 Always have the contracts and any changes in writing and agreed upon
by all.
 Licensees cannot write legal contracts without also being an attorney.
 The forms provided by the local Board of REALTORS® have been
written by legal counsel and approved by the appropriate powers for
your protection.
 Use only standard forms in the completion of your duties to
your client.

 Your job is to assist the client by educating them on each of the clauses in
the contract.
 You must use reasonable care to make sure all documents necessary for
the sale or purchase are kept current.
 Any changes or additions to a contract should be in writing.
 You must make every effort to keep all parties up to date on any
developments that may impact any agreement already signed. NRS
645.300
 If your client has a legal issue or question, you must refer the client to
an attorney. It is common to give the client a list of 3-4 attorneys for
them to call and interview. The client then bears the responsibility of
choosing the professional and you, as the licensee, are not responsible
for offering your opinion.
NAR Code of Ethics Article 13

Duties to the Public: Fairness in Housing
 The Federal Fair Housing Act and its amendments, prohibit discrimination
in the sale, rental, or financing of housing based on race, color, religion,
national origin, sex, familial status or handicap.
 These categories are referred to as “protected classes”.
 The Fair Housing Act was passed by Congress in 1968.
 Ethical conduct with respect to fair housing extends to any activity relating
to the sale or rental of a property.
 Throughout history, individuals have been given different levels of service
or have been denied service because they were a member of a “protected
class”.
 The U.S. Department of Housing and Urban Development enforce the Fair
Housing Act through the Fair Housing and Equal Opportunity offices.

 The fair housing laws are formulated to allow everyone fair treatment
when searching for residential properties.
 The Fair Housing Act DOES allow for legitimate exclusion of occupants if
the reasons are not discriminatory.
 An example of this would be a governmental development that is
designed for and houses elderly people can exclude families with
young children.
 This exclusion must be approved by the appropriate governmental
agency and must be disclosed on any listing contract.

 It is up to the licensee to make every effort to provide the amenities
necessary for a disabled person to have access to the goods and
services they may need for a client/licensee relationship.
 Having access to the Real Estate brokerage office must be accessible
by all since the office is a public office.
 For example, if you are representing a deaf person, you may need to
hire an interpreter, or to have pen and paper available in order to
communicate with each other. Having wheelchair access to your
office is also necessary.

Forms of Discrimination
 Blockbusting is the act of encouraging people to sell by claiming that the
entry of a certain protected class of people into the area will have a
negative effect on the property values.
 It is illegal to claim that the presence of certain protected classes will
cause property values to decline, that crime and antisocial behavior will
increase or that the quality of schools will decline. NRS 645.321
 Steering is the channeling of members of protected classes to buildings or
areas that are already occupied by primarily the same protected class or
away from areas occupied by members of a protected class that are
deemed undesirable.
 Any tactic that puts your interest ahead of the clients, is unethical.

Forms of Discrimination
 Bait and Switch is a tactic of the promise of a specific property,
range, or type of property and then showing others instead.
 This is considered a deceptive trade practice. NRS 598.0917
 High Pressure is a sales tactic that misrepresents the interest in a
property, the number of potential buyers, the value of properties,
or potential condition of the area that would impact the buyer or
seller.

 If a person has a dispute concerning discrimination, there is a
process for them to file a complaint.
 The Office of Fair Housing and Equal Opportunity investigates the
complaints and they will determine whether reasonable cause
exists.
 If reasonable cause is found, the parties involved are notified by
HUD’s issuance of a Determination and a Charge of
discrimination.
 A hearing is scheduled before a HUD administrative law judge.
 The complaint may also be litigated in Federal Court.
 The ethical conduct, with respect to Fair housing, extends to all
activities relating to the sale or rental of a property.
 A REALTOR® must know the guidelines and must never
discriminate or cause any discrimination when conducting
business.
NAR Code of Ethics Article 10

Unethical Actions of a Licensee
 Making false and or misleading statements
 Encouraging buyers or sellers to waive their rights to inspect a
property or to read a contract or disclosure, using bait and switch
tactics
 Not disclosing to your client any known material defects in a
property
 Failure to present any offer or counteroffer
 Failing to include complete terms and conditions of the real estate
transaction
 Knowing making any false statement or report

Unethical Actions of a Licensee
 Making a false promise through agents, salespersons or advertising
 Knowingly making false statement regarding the value of a property
 These are considered questionable tactics, unethical behaviors, and
illegal acts under the licensing laws.
 The licensee must avoid these tactics and understand the importance
of protecting their client’s interests.
 These items are a breach of the trust that is established in the
agency relationship and therefore contrary to the Code of Ethics.

Advertising
 Responsible and proper advertising: it is crucial that advertising
any area of your real estate business is conducted in an honest
and truthful manner.
 NAR has added this category to the Code of Ethics in order for the
industry to present a true and honest picture of the intended goal
of the advertisement.
 All advertising must adhere to the ethical and fair opportunity for
all

Advertising Guidelines
 You must display the name of your brokerage, as it is known by the
public, clearly on the advertisement.
 The brokerage’s name is to be the primary focus of advertisements.
It includes the city and state which the main office is located.
 Any advertising must be approved by the broker.
 Brokerage signs need to be displayed in a conspicuous place on the
premises of the brokerage and must match the name on the
broker’s license.
 When advertising a specific property, client consent is needed.
 Internet advertising includes all ads communicated over the internet
and must have the same guidelines as print ads and must have an
opt-out feature.

Prohibited Advertising Practices
 Deceptive advertising practices is strictly forbidden.
 Language that would indicate a preference or limitation on the
buyer is prohibited.
 Age restricted property is an exception and must be approved with
the proper state authorities
 Advertising a property for sale as “children only”; “home for sale
near churches” “African American neighborhood” etc. are
prohibited
 Stating or implying that the property is being offered “by owner”,
or by an unlicensed individual, when it is being listed with a
licensee.
 If you are uncertain whether a word may be prohibited, don’t use
it.

Be Careful with Your Advice
 Do not give legal advice: the client should consult an attorney
 Do not give construction advice: the client should see a home
inspector
 Do not give accounting advice: the client should seek an
accountant
 In all these cases, provide the client with a list of reliable experts
 If a client feels he has received unreliable advice, that client may
decide to sue the licensee for illegally practicing outside the scope
of authority
 There are a number of instances where your client should consult a
professional licensed in the specialty in question

Discipline
In the event a licensee is charged with a complaint, the complaint will
be filed with the Nevada Real Estate Division. Once charged, the
licensee is obligated to cooperate in the investigation and proceedings
of the local real estate association.

Discipline
The basis for complaints filed may be:
 Making any material misrepresentation
 Making any false promises of a character likely to influence,
persuade or induce
 Accepting a commission or valuable consideration from any person
except the licensed real estate broker with whom associated
 Representing, or attempting to represent. a real estate broker other
than the broker with whom associated, without the express
knowledge and consent of the broker
 Failing to maintain, for review and audit by the Division, each
brokerage agreement and property management agreement
governed by the provisions of this chapter and entered into
by the licensee

 Failing, within a reasonable time, to account for or to remit any
money which comes into his possession, and which belongs to
others
 Failing to maintain a trust account or properly depositing the
earnest money with the proper Escrow Holder
 Failing to deposit any check or cash received as earnest money
before the end of the next banking day unless otherwise provided in
the purchase agreement
 Commingling the money or other property of his clients with his
own or converting the money of others to his own use

 Making any false promises of a character likely to influence,
persuade or induce
 Accepting a commission or valuable consideration from anyone
except the licensed real estate broker with whom he is associated
 Willfully using any trade name, service mark, or insigne of
membership in any real estate organization of which the licensee is
not a member, without the legal right to do so
 Paying a commission, compensation, or a finder’s fee to any person
for performing the services of a licensee who has not secured his
license pursuant to this chapter.
 A conviction of, or the entry of a plea of guilty, guilty but mentally ill,
or nolo contendere to:
 A felony relating to the practice of the licensee, property
manager or owner-developer; or
 Any crime involving fraud, deceit, misrepresentation or
moral turpitude

 Guaranteeing future profits which may result from the resale of real
property
 Failure to include a fixed date of expiration in any written brokerage
agreement or failure to leave a copy of such a brokerage agreement or
any property management agreement with the client
 Accepting, giving, or charging any undisclosed commission, rebate, or
direct profit on expenditures made for a client
 Gross negligence or incompetence in performing any act for which he is
required to hold a license
 Any other conduct which constitutes deceitful, fraudulent, or dishonest
dealing
 Any conduct which took place before he became licensed which was in
fact unknown to the Division, and which would have been grounds for
denial of a license had the Division been aware of the conduct

 Knowingly permitting any person whose license has been revoked or
suspended to act as a licensee with or on behalf of the licensee
 Filing a complaint that is determined by a district court to be frivolous
 Offering real estate for sale or lease without the knowledge and consent
of the owner or his authorized agent or on terms other than those
authorized by the owner or his authorized agent
 Negotiating a sale, exchange, or lease of real estate, or communicating
after such negotiations but before closing, directly with a client if he
knows that the client has a brokerage agreement in force in connection
with the property granting an exclusive agency, including, without
limitation, an exclusive right to sell to another broker, unless permission
in writing has been obtained from the other broker

 Failure to deliver within a reasonable time a completed copy of any
purchase agreement or offer to buy or sell real estate to the purchaser or to
the seller
 Failure to deliver, within 10 business days after the transaction is closed, a
complete, detailed closing statement showing all the receipts and
disbursements handled by him for the seller; failure to deliver to the buyer a
complete statement showing all money received in the transaction and how
and for what it was disbursed, or failure to retain true copies of those
statements in his files. The furnishing of those statements by an escrow
holder relieves this responsibility and must be deemed to be in compliance
with this provision.
 Representing through the preparation of false documents, an amount in
excess of the actual sale price of the real estate or terms differing from
those agreed upon
 Failure to produce any document, book, or record concerning any real estate
transaction under investigation by the Division

 Failure to reduce a bona fide offer to writing where a proposed purchaser
requests that it be submitted in writing
 Failure to submit all written bona fide offers to a seller when the offers are
received before the seller accepts an offer in writing and until the broker has
knowledge of that acceptance
 Refusing because of race, color, national origin, sex or ethnic group to show,
sell or rent any real estate for sale or rent to qualified purchasers or renters
 Knowingly submitting any false or fraudulent appraisal to any financial
institution or other interested person
 Makes a misrepresentation in the sale of insurance for home protection
 Misrepresents the provisions of the contract of insurance for home
protection
 Misappropriates any fees or premiums collected for the insurance for home
protection

Duties to Fellow REALTORS®
 It is strictly forbidden to say
detrimental comments about
other colleagues
 Licensees may be brought before
the Commission
 Do not gossip about other people
or brokerages. This may result in
a disciplinary action.

Contract Interference
 “REALTORS® shall not engage in any practice or take any action inconsistent
with the agency or other exclusive relationship recognized by law that
other REALTORS® have with clients.”
 Never attempt to violate an exclusive brokerage agreement or encourage a
client that has an exclusive brokerage agreement with another brokerage
to violate or breach that contract in order to enter a contract with you.
 When meeting a potential client, ask if they are working with another
brokerage and if so, ask the potential client when the contract with the
other brokerage REALTOR® expires.
 You may then ask if you may call them after the expiration.
 You may not solicit by telephone if a phone number is on the Do Not
Call list.
 If you are sending out printed material, include a disclaimer stating: “If
your home is listed with another REALTOR®, this notice is not
considered a solicitation.”

Disputes
 “In the event of contractual disputes or specific non-contractual disputes
as defined in Standard of Practice 17-4 between REALTORS® (principals)
associated with different firms, arising out of their relationship as
REALTORS®, the REALTORS® shall submit the dispute to arbitration in
accordance with the regulations of their Board or Boards rather than
litigate the matter. In the event clients of REALTORS® wish to arbitrate
contractual disputes arising out of real estate transactions, REALTORS®
shall arbitrate those disputes in accordance with the regulations of their
Board, provided the clients agree to be bound by the decision. The
obligation to participate in arbitration contemplated by this Article
includes the obligation of REALTORS® (principals) to cause their firms to
arbitrate and be bound by any award.”

Disputes
 The licensee, who has a dispute with a different brokerage, must
submit the dispute to arbitration instead of to litigation.
 The licensee then must agree to be bound by the decision of the
association and bound by any award.

NAR Code of Ethics
 Article 1
When representing a buyer, seller, landlord, tenant, other client as an agent,
REALTORS® pledge themselves to protect and promote the interests of their client.
This obligation to the client is primary, but it does not relieve REALTORS® of their
obligation to treat all parties honestly. When serving a buyer, seller, landlord,
tenant or other party in a non-agency capacity. REALTORS® remain obligated to
treat all parties honestly.
 Article 2
REALTORS® shall avoid exaggeration, misrepresentation, or concealment of
pertinent facts relating to the property or the transaction. REALTORS® shall not,
however, be obligated to discover latent defects in the property, to advise on
matters outside the scope of their real estate license, or to disclose facts which are
confidential under the scope of agency or non-agency relationships as defined by
state law.

 Article 3
REALTORS® shall cooperate with other brokers except when cooperation is not in
the client’s best interest. The obligation to cooperate does not include the
obligation to share commissions, fees, or to otherwise compensate another broker.
 Article 4
REALTORS® shall not acquire an interest in or buy or present offers from
themselves, any member of their immediate families, their firms or any member
thereof, or any entities in which they have any ownership interest, any real
property without making their true position known to the owner or the owner’s
agent or broker. In selling property they own, or in which they have any interest.
REALTORS® shall reveal their ownership or interest in writing to the
purchaser or the purchaser’s representative.
 Article 5
REALTORS® shall not undertake to provide professional services concerning a
property or its value where they have a present or contemplated interest unless
such interest is specifically disclosed to all affected parties.

 Article 6
REALTORS® shall not accept any commission, rebate, or profit on expenditures
made for their client, without the client’s knowledge and consent. When
recommending real estate products or services (e.g., homeowner’s insurance,
warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall
disclose to the client or customer to whom the recommendation is made any
financial benefits or fees, other than real estate referral fees, the REALTOR® or
REALTOR®’s firm may receive as a direct result of such recommendation.
 Article 7
In a transaction, REALTORS® shall not accept compensation from more than one
party, even if permitted by law, without disclosure to all parties REALTOR®’s client
or clients.
 Article 8
REALTORS® shall keep in a special account in an appropriate financial institution,
separated from their own funds, monies coming into their possession in trust for
other persons, such as escrows, trust funds, clients’ monies, and other like items.

 Article 9
REALTORS®, for the protection of all parties, shall assure whenever possible
that agreements shall be in writing, and shall be in clear and
understandable language expressing the specific terms, conditions,
obligations and commitments of the parties. A copy of each agreement
shall be furnished to each party upon their signing or initialing.
 Article 10
REALTORS® shall not deny equal professional services to any person for
reasons of race, color, religion, sex, handicap, familial status, or national
origin. REALTORS® shall not be parties to any plan or agreement to
discriminate against a person or persons on the basis of race, color,
religion, sex, handicap, familial status, or national origin. REALTORS®, in
their real estate employment practices, shall not discriminate against any
person or persons on the basis of race, color, religion, sex, handicap,
familial status, or national origin.

 Article 11
The services which REALTORS® provide to their clients and customers shall
conform to the standards of practice and competence which are
reasonably expected in the specific real estate disciplines in which they
engage; specifically, residential real estate brokerage, real property
management, commercial and industrial real estate brokerage, land
brokerage, real estate appraisal, real estate counseling, real estate
syndication, real estate auction, and international real estate. REALTORS®
shall not undertake to provide specialized professional services concerning
a type of property or service that is outside their field of competence
unless they engage the assistance of one who is competent on such types
of property or service, or unless the facts are fully disclosed to the client.
Any persons engaged to provide such assistance shall be so identified to
the client and their contribution to the assignment should be set forth.

 Article 12
REALTORS® shall be honest and truthful in their real estate
communications and shall present a true picture in their advertising,
marketing, and other representations. REALTORS® shall ensure that their
status as real estate professionals is readily apparent in their advertising,
marketing, and other representations, and that the recipients of all real
estate communications are, or have been, notified that those
communications are from a real estate professional.
 Article 13
REALTORS® shall not engage in activities that constitute the unauthorized
practice of law and shall recommend that legal counsel be obtained when
the interest of any party to the transaction requires it.

 Article 14
If charged with unethical practice or asked to present evidence or to
cooperate in any other way, in any professional standards proceeding or
investigation, REALTORS® shall place all pertinent facts before the proper
tribunals of the Member Board or affiliated institute, society, or council in
which membership is held and shall take no action to disrupt or obstruct such
processes.
 Article 15
REALTORS® shall not knowingly or recklessly make false or misleading
statements about competitors, their businesses, or their business practices.
 Article 16
REALTORS® shall not engage in any practice or take any action inconsistent
with the agency or other exclusive relationship recognized by
law that other REALTORS® have with clients.

 Article 17
In the event of contractual disputes or specific non-contractual disputes as
defined in Standard of Practice 17-4 between REALTORS® (principals)
associated with different firms, arising out of their relationship as
REALTORS ®, the REALTORS® shall submit the dispute to arbitration in
accordance with the regulations of their Board or Boards rather than
litigate the matter. In the event clients of REALTORS® wish to arbitrate
contractual disputes arising out of real estate transactions, REALTORS®
shall arbitrate those disputes in accordance with the regulations of their
Board, provided the clients agree to be bound by the decision.
The obligation to participate in arbitration contemplated by this Article
includes the obligation of REALTORS® (principals) to cause their firms to
arbitrate and be bound by any award.

End-of-Course Quiz
1. When entering into an Exclusive Right to sell Agreement, you
must disclose _______ to the seller?
A. The property condition
B. The buyers’ highest price in an offer
C. The commission you will collect on the sale of the property
D. All the above

End-of-Course Quiz
2. Who writes and approves the Code of Ethics?
A. GLVAR
B. Nevada Association of REALTORS®
C. Your brokerage
D. National Association of REALTORS®

End-of-Course Quiz
3. The NAC are:
A. National Association of Computers
B. Nevada College of Assistants
C. Nevada Administrative Codes
D. Nevada Academy of Collectors

End-of-Course Quiz
4. What items below must you keep confidential as part of
representing the seller?
A. The history of the listing
B. The seller’s financials
C. The property address
D. Existence of water damage in the garage

End-of-Course Quiz
5. The Fair Housing Act was passed by Congress in:
A. 1988
B. 1978
C. 1968
D. 1962

End-of-Course Quiz
6. The Code of Ethics are considered:
A. The REALTOR® Golden Rule
B. A pledge to protect and promote the interests of the client
C. Standards of practice that treat all parties honestly
D. All the above

End-of-Course Quiz
7. The SRPD is filled out by the:
A. Buyer
B. Listing agent
C. Seller
D. Buyer’s agent

End-of-Course Quiz
8. You are a licensed real estate agent, and you want to sell
your own home. Are you allowed to represent yourself in the
transaction?
A. No, you must hire another agent or broker.
B. Yes, as long as you keep the details secret.
C. Yes, but you must disclose to all potential clients you are a real estate agent
licensee and have ownership in the property.
D. Yes, but you will need to get permission from the state.

End-of-Course Quiz
9. A seller of a home asks you to add a clause in a purchase
contract submitted by a potential buyer. What should you do?
A. Cross out the verbiage that the client objects to
B. Write an addendum
C. Write a counteroffer
D. None of the above

End-of-Course Quiz
10. Examples of discriminatory conduct include:
A. Refusing to rent to a person because of their sex, religion, race, color, familial
status, national origin or disability.
B. Engaging in conduct that discourages a client from purchasing in a certain part
of the community
C. Imposing different terms and conditions to those who are members of a
protected group.
D. All the above

End-of-Course Quiz
11. When representing a seller, what are your responsibilities
to the buyer?
A. You do not need to submit any lowball offers
B. To be fair and honest
C. To communicate directly with your buyer
D. You have no other responsibility other than to the seller

End-of-Course Quiz
12. Which of the following actions are legally permitted?
A. Telling a potential tenant that the apartment has been rented when it has not
B. Altering the terms of a contract for a member of a minority group
C. Refusing to rent a home to a minority because they are unable to afford the
home
D. Advertising a property for sale only to a special group

End-of-Course Quiz
13. Steering is a violation of what?
A. False language in a contract
B. Fair housing practices
C. The automobile manufacturer’s code
D. Animal cruelty

End-of-Course Quiz
14. What is the purpose of a disclosure?
A. To inform clients/customers of potential problems in a home
B. To inform clients/customers if you have a personal interest in the transaction
C. To inform clients/customers if you have a personal interest in the transaction
D. All the Above

End-of-Course Quiz
15. When writing a purchase contract for a buyer:
A. You may include why the buyer is buying the home.
B. You will provide a copy of the contract to the buyer upon their signing or
initialing it.
C. You can enter your own facts into the contract.
D. You can explain that the buyer is a minority and really needs the house

End-of-Course Quiz
16. What defect should be disclosed on the Seller’s Real
Property Disclosure?
A. Leaking roof
B. Electrical wiring not up to code
C. Homeowner association
D. All the above

End-of-Course Quiz
17. The For Sale sign in front of your listing must include:
A. “For Sale by Owner”
B. An 800 number to call
C. The name of the brokerage as it is known by the public
D. “Families Only”

End-of-Course Quiz
18. Commingling is:
A. Spending your client’s funds that were supposed to be submitted to a trust
account
B. Depositing your client’s funds into your personal bank account
C. Spending social time with your client
D. None of the above

End-of-Course Quiz
19. An example of unethical practices in real estate is:
A. Representing a real estate broker other than the one with whom you are
associated
B. Failure to submit all written bona fide offers to the seller.
C. Knowingly making disparaging remarks about a fellow REALTOR®
D. All the above

End-of-Course Quiz
20. When representing both the buyer and the seller in a
transaction, what forms must you have filled out and agreed
upon by both parties which discloses the relationship?
A. Duties Owed and Consent to Act
B. Confirmation of Agency and Mold Disclosure.
C. Short Sale Disclosure and Duties Owed
D. All the Above

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