NAR Professional Ethics & Compliance 3 — Questions and Answers
Question 1: A REALTOR® is asked to provide a comparative market analysis (CMA) for a fee. Which Article governs how this analysis must be presented?
- Article 2 — no misrepresentation
- Article 11 — competence and scope of practice (Correct answer)
- Article 8 — handling of client funds
- Article 6 — referral disclosure
Correct answer: Article 11 — competence and scope of practice
Article 11 requires REALTORS® to perform services only within their area of competence and to disclose when a service falls outside their expertise.
Question 2: Under the Code of Ethics, a REALTOR® acting as a dual agent must:
- Automatically reduce their commission by 50%
- Obtain informed written consent from all parties before proceeding (Correct answer)
- Disclose the dual agency only to the buyer
- File a dual agency disclosure only if the state requires it
Correct answer: Obtain informed written consent from all parties before proceeding
The Code of Ethics requires REALTORS® to obtain informed written consent from all parties before proceeding with dual or limited agency representation.
Question 3: Which Standard of Practice under Article 12 specifically addresses the use of 'sold' designations in advertising?
- SOP 12-4 (Correct answer)
- SOP 12-7
- SOP 12-10
- SOP 12-1
Correct answer: SOP 12-4
SOP 12-4 prohibits REALTORS® from advertising properties listed or sold by others without obtaining the listing broker's permission.
Question 4: A REALTOR® receives an earnest money deposit from a buyer. Under Article 8, these funds must be:
- Deposited into the REALTOR®'s personal account temporarily
- Held in a separate escrow or trust account as required by state law (Correct answer)
- Given directly to the seller for safekeeping
- Returned to the buyer until an offer is accepted
Correct answer: Held in a separate escrow or trust account as required by state law
Article 8 requires that client funds be held in escrow or trust accounts separate from the REALTOR®'s personal or business accounts.
Question 5: If a REALTOR® is found in violation of the Code of Ethics, which of the following is NOT a sanction available to the hearing panel?
- Letter of warning
- Suspension or termination of membership
- Criminal prosecution referral by the panel (Correct answer)
- Mandatory education or training
Correct answer: Criminal prosecution referral by the panel
NAR ethics panels can impose sanctions like warnings, fines, suspension, or mandatory education, but criminal prosecution is handled by law enforcement, not the panel.
Question 6: Under the Code of Ethics, REALTORS® cooperating on a transaction have a duty to:
- Share all client information between agents freely
- Refrain from misrepresenting the properties of competitors (Correct answer)
- Prioritize their own client's interests over cooperation
- Negotiate compensation directly with the opposing client
Correct answer: Refrain from misrepresenting the properties of competitors
Article 15 requires REALTORS® not to make false or misleading statements about other real estate professionals, their businesses, or their properties.
Question 7: The 'procuring cause' standard is most relevant in determining:
- Which party bears closing costs in a transaction
- Which broker is entitled to the commission in a cooperative sale (Correct answer)
- Whether a property disclosure was timely
- How earnest money should be distributed after a failed sale
Correct answer: Which broker is entitled to the commission in a cooperative sale
Procuring cause is the standard used in arbitration to determine which broker initiated the unbroken chain of events leading to the sale and is therefore entitled to the commission.
NAR Professional Ethics & Compliance 3
A REALTOR® is asked to provide a comparative market analysis (CMA) for a fee.
Which Article governs how this analysis must be presented?