ACAR Watercooler

The Code of Ethics – Breaking it Down #7 & #8

Posted on April 12, 2010. Filed under: Ethics |

First, find the answer to #6 here.

Articles 7 and 8 are brief, so I thought I would talk about them together.  Very few complaints are filed on these issues, but that doesn’t mean they aren’t important. 

Article 7 states:  In a transaction, REALTORS® shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the REALTOR®’s client or clients. If you are being paid by both the seller and the buyer, parties should be made aware of it.  You can still be compensated by all of the above parties as long as you have the informed consent of your clients.  If it is a dual agency situation, then everyone should be made aware of exactly what that means and be provided an opportunity to approve or reject the situation.

Article 8 states:  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.  This one is pretty clear… don’t put other people’s money into your personal accounts.  That is considered stealing and you may face legal sanctions as well as sanctions from the REALTOR® Association.  We don’t usually have complaints filed on this one because people file with the courts first! 

There are two potential case studies… one for Article 7 and one for Article 8.  I’ll post Article 8 first… If you comment and request the Article 7 case study, I will happily oblige IF you are willing to provide feedback on Article 8!

So, here we go:

REALTOR® A, a listing broker, obtained a signed offer to purchase, together with Buyer C’s check for $5,000 as an earnest money deposit.  Buyer C’s offer was subject to the sale of his current residence.  REALTOR® A presented the offer to Seller B who accepted it.  REALTOR® A then inadvertently deposited the earnest money check in his personal checking account.  Since Buyer C’s offer was contingent on the sale of his current home, Seller B’s house remained on the market.  A week later, REALTOR® A received another offer to purchase Seller B’s house from another broker and presented it to the seller as a back-up offer.  Buyer C was informed about this new offer and reluctantly concluded that he would be unable to waive the sale contingency or proceed with the purchase of Seller B’s house.  He then asked REALTOR® A for his $5,000 check back.  REALTOR® A explained that he had mistakenly deposited Buyer C’s check in his personal bank account which had been attached since he received Buyer C’s offer, and he was temporarily unable to refund the deposit to Buyer C.

Buyer C filed a complaint with the Board of REALTORS®, which was received by the Grieveance Committee.  The Grievance Committee concluded that the complaint warranted a hearing and referred it to the Professional Standards Committee.  At hearing, REALTOR® A explained that his bank account had been unexpectedly attached following the loss of a civil suit which he was appealing; that his deposit of Buyer C’s check in his personal account was a simple error in handling deposit slips; that he was arranging for the prompt release of his account; and that everything would be straightened out in three or four days, which should not be of great inconvenience to Buyer C.

This could happen to anyone, right?  It was an honest mistake that he was working to correct… Is there a violation?  Tell me what you think!

Susan Hansen

ACAR Professional Standards Administrator

Make a Comment

2 Responses to “The Code of Ethics – Breaking it Down #7 & #8”

Comments RSS Feed

Where's The Comment Form?