The National Association of REALTORS® Responds to REALTOR® Conduct Against Protected Classes

 Tracy Rucka  |    December 16, 2020
NAR Responds

On November 13, the National Association of REALTORS®’ (NAR) board of directors adopted policies reflecting a commitment to fair housing. In a significant and unprecedented step in the adoption of new rules, NAR implemented the changes effective immediately instead of its usual effective date for new rules at the start of a calendar year. 

In the last year, the number of complaints relating to the conduct of REALTORS® to national, state and local associations has grown exponentially. The claims of inappropriate discriminatory conduct by REALTORS® relates to in-person, online and social media activity. In response to the unprecedented complaints, NAR president Vince Malta directed NAR’s professional standards committee to consider the scope and applicability of the REALTOR® Code of Ethics and the professional standards process by which the association addresses alleged violations of the Code.

The committee convened the interpretations and procedures advisory board to investigate, assess and promulgate changes to policy and the Code. The deliberations were extensive, including many meetings and months of input and discussion. In November, the recommendations went to the NAR board of directors. 

The actions of the NAR board allow local associations to raise awareness of the Code. There is now a process to allow a complainant to file an ethics complaint alleging a violation of the Code for a REALTOR®’s conduct as it relates to the protected classes enumerated in the Code. A member may be subject to discipline, as with any Code violation, if the hearing panel finds clear, strong and convincing evidence of the member’s conduct contrary to the Code.

Beginning November 13, 2020, there are four categories of changes to the Code and professional standards policies and procedures: 

  • The first is a change to the Code applicability to member activities beyond the scope of a real estate transaction.
  • The second is a new Standard of Practice corresponding to Article 10, prohibiting discriminatory speech and conduct.
  • The third change relates to a revision of the definition of “public trust.”
  • Finally, administrative changes to educate and implement the aforementioned changes. 

Modification to Policy Statement 29

Prior to the board vote in November, Policy Statement 29 of the Code of Ethics and Arbitration Manual limited the applicability of the Code to real estate-related activities and transactions. To address the discriminatory speech used on social media, the scope or reach of the Code needed to be expanded. 

29. Applicability of the Code of Ethics 

A REALTOR® shall be subject to disciplinary action under the Code of Ethics with respect to all of their activities. 

In the context of discriminatory speech and conduct, such speech or conduct no longer needs to be tied directly to real estate-related activity or a transaction. Having said this, for most other conduct by a member, there still needs to be a nexus to real estate-related activity or a transaction because most of the remaining articles of the Code specify real estate-related conduct.

New Standard of Practice 10-5

Standard of Practice 10-5

REALTORS® must not use harassing speech, hate speech, epithets, or slurs” against members of those protected classes.

A violation of Article 10 may be found when a REALTOR® engages in the enumerated conduct about a member or members of a protected class. The enumerated conduct consists of harassing speech, hate speech, epithets or slurs against any of the Code’s nine protected classes: 

  • Race
  • Color
  • Religion
  • Sex
  • Handicap
  • Familial status
  • National origin
  • Sexual orientation
  • Gender identity 

Four types of conduct are addressed in Standard of Practice 10-5: harassing speech, hate speech, epithets and slurs. What is considered harassing speech? NAR’s Code of Conduct and Sexual Harassment Policy includes the following about harassment: 

Examples of harassment include, but are not limited to:

epithets, slurs or negative stereotyping; threatening, intimidating or hostile acts; denigrating jokes; and the display or circulation of written or graphic material that denigrates or shows hostility toward an individual or group based on a protected characteristic. 

A hearing panel will consider the existing standards on harassment to determine whether harassing speech has occurred. Then the panel will determine whether the harassing speech was based on one of the protected classes. In addition to harassing speech, the panel may find evidence of hate speech, which is speech that is intended to insult, offend or intimidate a person because of some trait, such as a protected class. Epithets are disparaging or abusive word or phrases. Slur is an insulting or disparaging remark or innuendo. To find a violation of Article 10 of the Code, a hearing panel would need to find — by clear, strong and convincing evidence — that a member engaged in the enumerated conduct against one of the nine protected classes in the Code.

Modification to the Definition of "Public Trust" and Notification to Regulatory Bodies

The policy also changed the definition of public trust. The previous definition of public trust included: “misappropriation of client or customer funds or property, willful discrimination and fraud resulting in substantial economic harm.” The newly adopted changes now provide: “misappropriation of client or customer funds or property, discrimination against the protected classes under the Code of Ethics and fraud.” 

The professional standards process has included the responsibility of the association to notify the regulatory body when an ethics decision finds a violation of the public trust. During a professional standards hearing, the REALTOR® in question is allowed to have counsel present. While the right to counsel has not changed, the criteria for when ethics violations can be sent to regulatory bodies has changed. For example, the newly modified definition of public trust now allows the association to notify the regulatory body in any case where fraud of discrimination against a protected class occurs. 

After a professional standards hearing, when the hearing panel finds a violation of the Code relating to fraud or discrimination, the decision will be forwarded to the appropriate regulatory body. The notification is not based on a claim of a violation but is based on a finding of a violation after a due process hearing. 

Specific to Wisconsin, a local association could forward findings of discrimination to any of these regulatory bodies:

  • The Wisconsin Department of Safety and Professional Services (DSPS)
  • The Real Estate Examining Board (REEB) of the DSPS
  • The Equal Rights Division of the Wisconsin Department of Workforce Development
  • The Fair Housing and Equal Opportunity Office of the U.S. Department of Housing and Urban Development

In the event the conduct was fraud, the appropriate distribution might include these regulatory bodies:

  • The Real Estate Examining Board (REEB) of the DSPS
  • The Wisconsin Department of Agriculture, Trade, and Consumer Protection

Prior to these changes, notification of discrimination or fraud by a REALTOR® was limited to the licensing authority; now, the notification adds and includes other appropriate governmental agencies. 

Modification to Address Implementation of the Changes 

Additionally, changes occurred in the Code of Ethics and Arbitration Manual to facilitate the implementation of the changes. Appendix VII to Part Four, Sanctioning Guidelines has been amended, including how panels impose discipline if a violation includes discriminatory conduct by a member. Historically education has been an enumerated discipline; for example, a member found in violation may be required to take implicit bias training. A section of Appendix VII to Part Four reads:

Conversely, cases in which there is reason to believe that violations of the public trust, including demonstrated misappropriation of client or customer funds or property, discrimination against the protected classes under the Code of Ethics, or fraud have occurred should be considered particularly egregious violations of the Code of Ethics when determining appropriate discipline.

The Code of Ethics and Arbitration Manual has been amended to include new Appendix XII Appropriate Interpretation of Standard of Practice 10-5 and Statement of Professional Standards Policy 29. The new appendix includes context for hearing panel members presented with a case that may include Article 10. The appendix includes the definitions of harassing speech, hate speech, epithets and slurs.

A question raised about the new Standard of Practice 10-5 is, what about free speech? Since the adoption of the Code in 1908, REALTORS® have always subscribed to a set of standards —  sometimes higher standards than those found in the law. Given REALTOR® membership is voluntary and the association is a private organization, the association may adopt ethical obligations for members.

The Code continues to evolve to forward the goals found in the preamble and captured by the Golden Rule. The NAR board has taken affirmative steps to accomplish the goals of the American Dream for all: open housing and equal opportunity in housing. 

Tracy Rucka is Director of Professional Standards and Practices for the WRA.  

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