February 2016

HAVE YOU PRESENTED ALL OFFERS TO YOUR CLIENT?

IF NOT, BE PREPARED TO ANSWER TO THE B.R.E.

A common complaint call received at PWR involves the lack of a listing agent presenting offers to their client (M.L.S. Rule 9.4). Of course all offers should be presented to the listing agent directly but if you are not able to reach the listing agent after reasonable effort (not less than 24 hours), you may go directly to the client as outlined below in M.L.S. Rule 9.1(b) if instructions are not otherwise indicated in the M.L.S. remarks.

M.L.S. RULE #9.4 PRESENTATION OF OFFERS. The Listing Broker must make arrangements to present the offer as soon as possible, or give the Cooperating Broker a satisfactory reason for not doing so. In the event the Listing Broker will not be participating in the presentation of offers, the Listing Broker shall clearly indicate this fact in the listing information published by the MLS.

M.L.S. RULE #9.1 SHOWINGS AND NEGOTIATIONS. Appointments for showings and negotiations with the seller(s) for the purchase of listed property filed with the MLS shall be conducted through the Listing Broker except under the following circumstances:

1. The Listing Broker gives the Cooperating Broker specific authority to show and/or negotiate directly with the seller(s), or
2. After reasonable effort and no less than 24 hours, the Cooperating Broker cannot contact the Listing Broker or his or her representative. However, the Listing Broker, at his or her option, may preclude such direct negotiations by the Cooperating Broker by giving notice to all Participants through the MLS. In the event all showings and negotiations will be conducted solely by the seller(s), the Listing Broker shall clearly set forth such fact in the listing information published by the MLS.

Buyers are becoming increasing upset because they believe their offers not being presented to the seller and they are reporting the issue directly to the BRE for investigation.

IF YOU ARE CONTACTED BY THE BRE REGARDING THE INVESTIGATION OF AN OFFER, BELOW IS AN EXAMPLE OF THE QUESTIONS THAT WILL BE ASKED OF YOU AND YOUR BROKER:




HOW CAN YOU AVOID A BRE INVESTIGATION OF THIS TYPE?

Maintain communication with the selling agent and if the seller rejects the presented offer, have the seller sign/initial the RPA’s and return that signed/initialed RPA to the selling agent (on all offers received).

January 2016

NEW C.A.R. ARBITRATION POLICY

Enforcement of the Arbitration Award – Effective 1/1/16

There is now a new enhanced arbitration enforcement policy in place that allows for suspension of membership for non-payment of arbitration awards.

After the arbitration award is final (and any appeals to the association have been completed), the prevailing party may request a "show cause" hearing if the non-prevailing party has not paid the award within fifteen (15) days after the due date. The sole purpose of the "show cause" hearing is to determine why the non-prevailing party failed to timely pay the arbitration award and not to re-argue the merits or procedural deficiencies of the matter. The "show cause" hearing is before a panel of three Directors.

Both parties may attend the "show cause" hearing. The non-prevailing party will be asked to "show cause" as to why he or she did not timely pay the arbitration award. If the party pays the full award amount, including any accrued interest, to the prevailing party at any time prior to the "show cause" hearing, the "show cause" hearing will be dismissed, and the case will be considered closed. Both parties may call witnesses, present evidence, and be represented by legal counsel. The procedures for the "show cause" hearing will be the same as those used for a review hearing to the extent they are applicable to the sole issue of nonpayment of the award. In order to help the Directors determine what evidence is relevant in the "show cause" hearing, the Directors should refer to the "Ability to Pay Checklist" (which can be found in the Appendices section of the Professional Standards Reference Manual).

Following the "show cause" hearing, the Directors may: (1) take no action; (2) suspend the non-prevailing party’s association membership; or (3) set a schedule for payment of the arbitration award to the prevailing party.

1. Take no Action - The Directors have sole discretion to determine whether the non-payment of the award is justified due to the party’s financial circumstances. If the Directors take no action, it does not invalidate the award and the prevailing party may still pursue judicial enforcement of the award which could convert the award to an enforceable judgment which can be renewed and enforced against the non-prevailing party as they acquire resources or property. The prevailing party may not request more than one "show cause" hearing.
2. Suspension of Membership - The non-prevailing party’s membership will be suspended for thirty (30) days or until the award plus interest is paid to the prevailing party, whichever is longer. Interest begins to accrue on the arbitration award starting from the due date on the award, at the statutory interest rate of ten percent (10%) per annum. The suspension may be held in abeyance as described below.
3. Payment Plan - The Directors may set up the timing or amounts of each payment under the payment plan, except that each payment must include at least the amount of interest accrued since the last payment (at ten percent (10%) per annum) plus a portion of the principal amount (i.e., the award). The non-prevailing party’s membership will be suspended if the full amount of any payment is not timely received. The prevailing party may notify the association of any non-payment or partial payment, and the association will send the non-prevailing party notice, with a short turnaround time, to provide evidence of full payment. If the party doesn’t provide evidence of full payment by the deadline, the association may suspend the non-prevailing party’s membership until the full payment is made. The prevailing party is not precluded from pursuing a court confirmation notwithstanding the payment plan.

After the "show cause" hearing, the suspension will be enforced:

• After the award is confirmed or modified by a court, but only if it is not paid by the date ordered by the court (or within fifteen (15) days after the court order if the order does not provide a due date); or
• If no court action is filed, one hundred and one (101) days after the award is finalized.

Interest will accrue at the legal rate of ten percent (10%) until the award is paid, and the non-prevailing party may be liable for court costs and attorneys’ fees if they lose a court action.

The arbitration enforcement policy does not preclude an association from funding court confirmations of arbitration awards administered through its facilities as the association sees fit.

A member who has been suspended for failure to timely pay an arbitration award will have his or her name and photo published in accordance with C.A.R.’s publication policy. Abiding by an arbitration award is a membership duty, and the suspension of membership for failure to timely pay the award is a form of discipline that subjects a member to publication under the current C.A.R. policy

JUDICIAL PROCEDURES:

In addition to requesting a "show cause" hearing pursuant to the Association’s arbitration enforcement policy, the award recipient can seek judicial enforcement of the award if the non-prevailing party has not timely paid the award.

December 2015

FOCUS YOUR OFFICE MEETING ON PROFESSIONAL COURTESIES

• Identify Best Practices for scheduling and canceling appointments in our immediate marketplace.  Give an example of another market that may use different customs.
• Have you ever had an agent not return your phone call?  What are some ways that you get the agent to return your call, or get feedback?
• What are some of the important items to provide in the home for ease in writing an offer?
• You are on a showing and Mr. Buyer goes to see the garage while Mrs. Buyer goes up to the bedrooms.  How can this be handled?
• The Buyer’s little boy wants to play with toys he sees in a Seller’s home.  What can you do?
• You have a client who wants to view a home that is on a lockbox.  You are not available to show them at a time convenient to them, so they ask you for a one day code. What do you do? 
• Have you ever been called about a mistake on one of your listings? (i.e. improper school listed)  How did you handle the call?  Would you have done anything differently? 
• Do you think Brokers should be called when agents demonstrate a lack of professionalism?  If so, how and who should make the call?  If you were a Broker receiving such a call, how would you handle the situation? 
• Have you ever called an agent or Broker to compliment them on the professionalism they demonstrated?  How do you think this would affect working relations? 
• Is the Golden Rule important to you in how you conduct your business?

Review Pathways to Professionalism below and post it throughout the office.

Pathways to Professionalism

These professional courtesies are intended to be used by REALTORS® on a voluntary basis, and cannot form the basis for a Professional Standards Complaint.

1. Respect for the Public
   • Follow the "Golden Rule”: Do unto other as you would have them do unto you.
   • Respond promptly to inquiries and requests for information.
   • Schedule appointments and showings as far in advance as possible.
   • Call if you are delayed or must cancel an appointment or showing.
   • If a prospective buyer decides not to view an occupied home, promptly explain the situation to the listing broker or the occupant.
   • Communicate with all parties in a timely fashion.
   • When entering a property ensure that unexpected situations, such as pets, are handled appropriately.
   • Leave your business card if not prohibited by local rules.
   • Never criticize property in the presence of the occupant.
   • Inform occupants that you are leaving after showings.
   • When showing an occupied home, always ring the doorbell or knock—and announce yourself loudly before entering. Knock and announce yourself loudly before entering any closed room.
   • Present a professional appearance at all times; dress appropriately and drive a clean car.
   • If occupants are home during showings, ask their permission before using the telephone or bathroom.
   • Encourage the clients of other brokers to direct questions to their agent or representative.
   • Communicate clearly; don’t use jargon or slang that may not be readily understood.
   • Be aware of and respect cultural differences.
   • Show courtesy and respect to everyone.
   • Be aware of—and meet—all deadlines.
   • Promise only what you can deliver—and keep your promises.
   • Identify your REALTOR® and your professional status in contacts with the public.
   • Do not tell people what you think—tell them what you know.
2. Respect for Property
   • Be responsible for everyone you allow to enter listed property.
   • Never allow buyers to enter listed property unaccompanied.
   • When showing property, keep all members of the group together.
   • Never allow unaccompanied access to property without permission.
   • Enter property only with permission even if you have a lockbox key or combination.
   • When the occupant is absent, leave the property as you found it (lights, heating, cooling, drapes, etc.) If you think something is amiss (e.g. vandalism), contact the listing broker immediately.
   • Be considerate of the seller's property. Do not allow anyone to eat, drink, smoke, dispose of trash, use bathing or sleeping facilities, or bring pets. Leave the house as you found it unless instructed otherwise.
   • Use sidewalks; if weather is bad, take off shoes and boots inside property.
   • Respect sellers’ instructions about photographing or video graphing their properties’ interiors or exteriors.
3. Respect for Peers
   • Identify your REALTOR® and professional status in all contacts with other REALTORS®.
   • Respond to other agents' calls, faxes, and e-mails promptly and courteously.
   • Be aware that large electronic files with attachments or lengthy faxes may be a burden on recipients.
   • Notify the listing broker if there appears to be inaccurate information on the listing.
   • Share important information about a property, including the presence of pets, security systems, and whether sellers will be present during the showing.
   • Show courtesy, trust, and respect to other real estate professionals.
   • Avoid the inappropriate use of endearments or other denigrating language.
   • Do not prospect at other REALTORS®' open houses or similar events.
   • Return keys promptly.
   • Carefully replace keys in the lockbox after showings.
   • To be successful in the business, mutual respect is essential.
   • Real estate is a reputation business. What you do today may affect your reputation—and business—for years to come.

Revised 11/13 N.A.R.

November 2015

Ethically Speaking, What Would You Do If...

Your Grievance Committee is hard at work processing the ethics complaints filed by the public and/or other agents.

Below are typical examples of complaints our Grievance Committee might review before voting on whether an Ethics Case should go forward to the Professional Standards committee for a formal hearing.

After you review your N.A.R. Code of Ethics, review the scenarios below to see if you can determine which Code of Ethics should be charged.

Ethically Speaking: What would you do if……

Instructions: List the Article of the Code and/or Standard of Practice that relate.

1. Listing broker Al has a contract on his listing. That contract falls through because a home inspection revealed that there is a structural problem with the chimney. The owner will not fix the problem. He tells listing broker Al that the inspection is to be kept confidential and not to disclose the defect to the other cooperating broker. Listing broker Al advises the seller that he cannot follow that instruction and cancels the listing. A month later, listing broker Al sees the property relisted with broker Bob and wonders if the owner has told Bob about the faulty chimney. Can Al tell listing broker Bob about the latent material defect?
   
   Article(s) __________ Standard(s) of Practice: __________
   
   
2. You are assisting seller client Frank by negotiating a contract with an in-house buyer client. Frank has verbally accepted the offer and you are on your way to his house to sign the contracts. You receive a call from cooperating broker Sue who says she has a cash buyer for Frank’s property and she wants to know if there are any other offers on the table. Who should make the decision about disclosing the existence of the other offer?
   
   Article(s) __________ Standard(s) of Practice: __________
   
   
3. Listing broker Janice takes a listing on seller client Mark’s house and agrees to X% commission if her firm is successful in selling Mark’s house or XX% commission if a sale results through the efforts of a cooperating broker. The house has only been on the market for a few days when Janice receives three offers. One from an agent in Janice’s firm, the other two are from cooperating brokers with other firms. Does Janice have an obligation to disclose the commission arrangement to the cooperating brokers?
   
   Article(s) __________ Standard(s) of Practice: __________
   
   
4. Emily and Andres are a father/daughter team trying to get a start in the real estate business. Their broker assigned them to an area to farm. After sending out a mailing introducing themselves, they also walked through the area and started talking to homeowners and offering their services. A few claimed they might be interested in selling, but said they would only list with the agents and firm that had sold the most homes in that area. After that, Emily and Andrew put together a mailing. The mailing not only included a list of sold properties but also a map of the area with the word "SOLD" on each house that had closed in the past year. At the bottom the flyer it said: "Call us! We can sell your home!" the flyer didn’t mention who had sold the homes. Within a week of the mailing, they successfully listed two homes. Did Emily and Andrew present a true picture in their advertising? If not, what information should have been included in their mailing?
   
   Article(s) __________ Standard(s) of Practice: __________
   
   
5. Tony is showing former seller client Sally’s home to his current buyer client Larry. Larry asks Tony if he knows anything about the seller’s motivation. Tony knows that Sally is having difficulty. Sally even confided her bottom line to Tony during their listing. Should Tony tell Larry he knows about Sally?
   
   Article(s) __________ Standard(s) of Practice: __________
   
   
6. REALTOR® Peter was sitting in an open house on his listing on Sunday afternoon. Buyers Mary and Paul stopped in to view the home. REALTOR® Peter introduced himself to Mary and Paul and asked if they were working with another broker. Paul responded that they were. In fact, they were represented by REALTOR® Charlie. They also said they were familiar with the property because they had visited it before since it was previously owned by a close personal friend. REALTOR® Peter offered to show them through the house. Mary and Paul were very interested. Peter knows how anxious his sellers are to sell. Should REALTOR® Peter offer to write an offer for the buyers? What should he do?
   
   Article(s) __________ Standard(s) of Practice: __________
   
   
7. Cindy has a listing from seller client Mark. She was given permission at the time of the listing to place a combination lockbox on the property. Cindy procured a buyer for the property and it is now under contract. Seller client Mark has moved all of his personal belongings out of the house since the house is supposed to close in two weeks. The buyers want to show the property to their parents who are only in town for a few hours on Sunday. However, Cindy has a prior commitment. She has to attend her niece’s baptism and celebration afterward in a town that is two hours away and will not be available to let the buyers and their parents into the house. Is it OK for Cindy to provide the buyers with the combination to the lockbox since the house is vacant?
   
   Article(s) __________ Standard(s) of Practice: __________
   
   
8. Marge is very excited that a buyer for a motel complex walked in on her "floor time" in the office. The buyer explained that he wanted an experienced REALTOR® to assist him and that he would need to look at the financial records of the business for the past three years. The buyer explained, further, that he would rely on the advice of the REALTOR® about the competition in the hospitality industry and that he would also need help in determining the value of the business. Marge has been in the business for two weeks and can’t believe her good fortune. Should Marge disclose her lack of expertise in this area of business? Can she work with someone else in the office who is experienced? What are Marge’s options and obligations under the Code?
   
   Article(s) __________ Standard(s) of Practice: __________
   
   

October 2015

ARE YOU A RESPONDENT IN AN ETHICS CASE?

IF SO, IT WILL COST YOU TIME AND MONEY

Each month the PWR Grievance Committee meets to review the cases that have been filed by the members of the public or other agents. They determine whether the case should be dismissed or sent forward for a full disciplinary hearing. While reviewing a case, the committee often adds additional Code of Ethics, M.L.S. Rules & Bylaws to the Complaint that may have not been cited by the original complainant.

If you are named as a Respondent in an Ethics Case, you will be asked to submit a written response to the charges and attend a hearing where you may contest the charges and present your case to a panel from the Professional Standards Committee. After the hearing, the panel will make a determination and impose disciplinary action if they feel there was a violation of the Code of Ethics, M.L.S. Rules and/or Bylaws.

To get a better idea of the process you will have to go through in defending yourself at an Ethics Hearing, below is an Ethics Fact Sheet for your review. It’s not an easy process but since the results may now be published by C.A.R. and with the heavy fines in place (up to $15,000); the better choice would be to abide by the Code of Ethics, M.L.S. Rules, Bylaws and not find yourself as a Respondent in the first place. LEARN THE RULES, FOLLOW THE RULES.

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ETHICS HEARING FACT SHEET

IMPORTANT INFORMATION YOU NEED TO KNOW

The hearings are relatively informal proceedings and are not designed to follow the strict rules of evidence that attorneys are generally familiar with in court proceedings. Although the technical rules of evidence are not applicable, the Hearing Panel Chairperson is empowered to rule on the admissibility of relevant evidence.

If, for example, a party is consuming a great deal of time on a subject that has no bearing on the case, the Hearing Panel members may caution the party and, eventually, even disallow further submission of evidence on that point. Character evidence, unless directly related to the issues, is not admissible. Therefore, relevant evidence is as important in a hearing of this type as it is in a court proceeding, but the latitude is generally broader.

Once the Hearing Panel reaches a decision, you will be notified by mail and advised of your appeal rights.

WE HAVE BEEN ASKED TO EMPHASIZE THE FOLLOWING POINTS:

MEMBERSHIP:
Members and MLS Participants and Subscribers have a duty to give evidence in accordance with the Code of Ethics and/or MLS Rules & Regulations & Bylaws.

BURDEN OF PROOF:
The Complainant has the burden to prove clearly that a Code of Ethics Article, MLS Rule or Bylaws Rule has been violated and should provide evidence on each alleged Code of Ethics Article, M.L.S. Rule or Bylaw Rules violation. The Code of Ethics Standards of Practice are guidelines to support the Code of Ethics.

AMENDMENTS:
If a Complainant chooses to amend the complaint, proper notice must be given to all parties who are then given the opportunity to respond. An amended complaint supersedes the original complaint and begins the ethics process anew.

LEGAL COUNSEL:
All parties may be represented by legal counsel. If a party intends to have legal representation, the party must give written notice of the legal representative’s name, address and phone number to all parties and the undersigned at least fifteen (15) calendar days before the scheduled date of the hearing. Failure to comply with this notice requirement may result in a continuance being granted and a continuance fee assessed against the party. There are strict restrictions on who may represent a party.

The Association’s counsel or representative may be present at the hearing. Association Counsel’s primary functions will be to advise the Hearing Panel on procedural issues or legal questions that may come up during the hearing. If present, Association Counsel will not participate in the Hearing Panel's deliberation, other than to advise them of the procedures involved. Association Counsel will not engage in any questioning or participate in any other way except as an advisor to the Hearing Panel. The Hearing Panel or Hearing Panel Chair will make all decisions regarding evidence and outcome.

If you are represented by an attorney, that attorney may not confuse, coerce, intimidate, or harass the parties, witnesses or Hearing Panel members. Additionally, the Hearing Panel members need not accept the statements of the attorney as being the statements of his or her client if they desire direct testimony.

REMOTE TESTIMONY:
If remote testimony is required, strict guidelines must be followed. You should contact the Association at once if you believe remote witness testimony may be necessary, and the Policy approved by the Association will be provided to you and the opposing side. The Policy must be followed.

CONTINUANCES:
ARE NOT FAVORED and, in the event there is a change in the status of any Party or, in the event that a continuance is required for any legitimate reason, you must notify the undersigned at the earliest possible opportunity. Failure to notify the Association of your unavailability at an early point will cause inconvenience to all other participants, including Hearing Panel members. If a continuance is requested, it may be granted for extenuating circumstances. Continuance fees are generally imposed as a deterrent if the Hearing Panel Chair believes it appropriate. Common valid reasons for continuances are sudden verifiable illness, accident, death of a family member, improper notice of the hearing, improper notice of another party having legal counsel, or unavoidable attorney-court conflicts. Vacations, business meetings, intervening appointments, and other similar circumstances are not deemed justification for continuances. Appointments, such as depositions or other attorney activities that are scheduled after the hearing date is cleared are not deemed unavoidable conflicts.

WITNESSES:
If you wish to have witnesses present, it is your responsibility to inform them of the date, time and place of the hearing. Witnesses are sworn in by the Presiding Officer, usually at the beginning of the hearing with the parties, but no later than before the witness testifies. Witnesses, unless a named party are not allowed to attend or be present during the hearing except while testifying. All witnesses, except parties, will be excused from the hearing room except while testifying.

EVIDENCE:
All relevant evidence will be admitted. The Hearing Panel Chairperson may broadly construe the term "relevant." The Hearing Panel members or Chairperson will rule on the inadmissibility of evidence. The technical rules of evidence do not apply. The Complaint and all of the exhibits attached and the Response and all of the exhibits attached will be stamped as evidence at the hearing, unless objections are raised.

Although notarized declarations or affidavits may be considered, letters and other out-of-hearing statements are generally given little, if any, weight and may be rejected entirely. It is best, wherever possible to have witnesses present. They are excluded from the hearing until they testify.

You should make every effort, where possible, to file and exchange evidence and briefs, if any, prior to the hearing in order to avoid time delays to review late filed material. IF YOU BRING ADDITIONAL EVIDENCE AND BRIEFS ON THE DAY OF THE HEARING, YOU MUST BRING AT LEAST SEVEN (7) ADDITIONAL COPIES WITH YOU. OTHERWISE, IF COPYING MUST BE DONE ON THE DAY OF THE HEARING, YOU WILL BE CHARGED A $50.00 SERVICE FEE PLUS 50 CENTS PER COPY.

Unnecessary time delays caused by avoidable copying and reading of documents and briefs filed on the day of the hearing can be avoided by planning ahead and by filing and exchanging before the hearing. (Although not required, it is strongly suggested that you tab each document and create an index so that documents can be found quickly and to avoid confusion.)Although not required, it is generally a good practice to bring the entire transaction file to the hearing.

OPENING STATEMENTS:
The Complainant will have an opportunity to make a short opening statement and give a brief outline of his or her case. You will have an opportunity to expand on this during your Presentation of Evidence and after the Respondent makes their short Opening Statement.

PRESENTATION OF EVIDENCE:
The Complainant will state his or her case and present any witnesses who are present. Cross examination of the complainant’s witnesses by the respondent or his or her representatives will be allowed. The Respondent will then have the same opportunity to make his or her presentation of evidence.

CROSS-EXAMINATION:
Cross-examination of an opposing party is a time to ask questions, not make statements or accusations.

CLOSING STATEMENTS:
The complainant will now make his or her closing statement followed by the Respondent

TRANSLATOR:
If a translator is needed for any party or any witness, you should notify us immediately of the language or and if you intend to provide a translator. These are conditions that must be addressed before the hearing.

HEARING PANEL:
We ask that you appreciate the fact that our Panelists are volunteers and respect their time. The Hearing Panel members may ask questions they deem pertinent and significant of any person at any time during the hearing.

The Association's goal is to give each party a fair and impartial hearing. The Hearing Panel was selected through the approved process and is both qualified and unbiased. A person is automatically disqualified as a member of the Hearing Panel if they are a party or if related by blood or marriage to the fourth degree to any party to the matter, or an employer, employee, partner or other business associate of a party. Before the hearing commences, each Hearing Panel member will be asked to execute a document verifying that they are not disqualified. If you have any reason to believe any assigned member of the Hearing Panel should be disqualified, please notify the undersigned immediately.

Once the Hearing Panel reaches a decision, you will be notified by mail and advised of your review or appeal rights.

WITHDRAWAL:
A complaint may be withdrawn at any time prior to the hearing by the Complainant. Simply notify this office and the hearing will be canceled.

FAILURE TO APPEAR:
If a Complainant refuses or is unable to appear at the hearing, the complaint may be dismissed. If a Respondent fails to appear and no continuance or adjournment has been obtained, the Hearing Panel may go forward with the hearing and reach a decision based on the available evidence. Respondents are strongly encouraged to appear to protect their rights to a possible review or rehearing.

TRANSCRIPT/RIGHT TO RECORD:
All hearings are recorded. You may, for the purposes for filing a Request for Review, purchase a copy of the recording for the fee set by the Association. You may, at your expense, have a court reporter present; but you will not be allowed to independently record the hearing. If you have a transcript prepared, you must provide the Association a copy at your cost. The recording will generally be destroyed within a reasonable period after final action of the Directors.

We are hopeful you find this letter helpful in your preparation. If, after reviewing this letter, you require any additional information please notify our office and we will be pleased to cooperate. Any requested information by either side will be copied to the other. Assuming that you follow the simple rules that have been described herein, the hearing should go smoothly. It is rare that a hearing takes longer than one (1) day. If you believe that your hearing will take longer than one (1) day, please notify the undersigned.

September 2015

Why An Agent Might Refuse to Show a House

(The Low Commission)

It’s one of the dark corners of American real estate that doesn’t get much attention from consumers: When realty agents representing potential buyers don’t like the commission split offered on a particular listing, they might boycott it – simply not show the house to clients.

The net result: Houses get less exposure. They sit on the market longer than they would otherwise and the seller may end up with a lower price.

The practice – known as sell-to-the-commission – has surfaced recently as discount brokers in major markets advertise low fees on both sides of the transaction, and home sellers increasingly ask: Why am I paying 6% to agents when I know my well-priced, well-maintained house will sell quickly?

The issue bubbled up this month during a frank discussion among agents across the country on the industry website ActiveRain.com. Since agents described the practice as commonplace or even "rampant" in their areas.

One, Eve Alexander of Buyers Broker of Florida, in Orlando, said: "It is a fact that when the co-op fee is peanuts, less agents will show it and it will more than likely take longer to sell."

In a subsequent interview, Alexander deplored the practice, saying that "sellers usually don’t know" that their property is getting fewer showings because of the low fee for the buyer’s agent. And buyers don’t know what they’re not being shown.

Real estate commissions are all about splits. If you agree to list your home for a 6% total commission, frequently that means the listing agent and brokerage will take half at closing – 3% - and the buyer’s agent and brokers will get the other half.

Both brokerages split their fee with the individual agents involved, who may get half or more. If the listing agent offers the buyer’s agent what is seen as an inadequate split – or especially if there is a discounted fee involved – agents representing buyers may be much less interested in showing the property.

All real estate commissions are negotiable, so fee splits can vary widely. Some discount brokerages offer cut-rate fees to list and sell, and they tend to bear the brunt of agent boycotts.

Joshua Hunt, broker and chief executive at Denver’s Trelora realty agency, told me he has filed more than 100 complaints with real estate regulatory authorities about agents who said "they will not show" Trelora listings. Trelora charges a flat $2,100 service fee to list a house for sale and offers $3,000 in compensation to agents who bring in buyers, though fees can be adjusted in negotiations.

Some agents staunchly defend such selective showings.

Bill Reddington, an agent with RE/Max Southern Realty in Destin, Fla., said on ActiveRain that "the real question is how willing are you to work for free." With discounted fees on the rise, he said, he "prefer[s] not to show those."

Other agents argued that low splits to the buyer’s agent suggest that the listing agent did not explain the potential consequences to the seller of offering too little. Others said stingy sellers tend to be difficult in negotiations.

But what about the ethics of not showing houses based on commission splits?

The National Assn. of Realtors’ Code of Ethics prominently states that in representing a buyer or a seller, agents must "protect and promote the interests of their clients." If you’re not showing homes appropriate for your buyer, that doesn’t sound like good representation.

But hold on, things get more complicated.

I asked the industry’s widely acknowledged ethics guru – Bruce H. Aydt, senior vice president and general counsel for Berkshire Hathaway Home Services Alliance Real Estate – about the issue, and he said there’s considerable gray area here.

Without a formal written buyer-agent agreement that specifies compensation and creates a fiduciary duty between agent and client, no one can reasonably expect an agent to work for little or nothing, Aydt believes.

"At some point," he said, "the failure of a buyer’s agent to show properties because of a perceived ‘low’ commission" could violate a RELATOR’S® ethical duties "and perhaps state law."

Bottom line: Whether you are a seller or a buyer, be aware of the commission split issue.

If you are a seller and tempted to lowball the commission for the buyer’s agent, be aware that your house might not be shown as much.

If you are a buyer looking at what’s available with the help of an agent with whom you have no written agreement, consider nailing down compensation in advance with a formal agreement.

By Kenneth R. Harney

August 2015

YOUR SUPRA KEY AND LOCKBOXES

HOW TO SAVE $1,000

When you leased your key or downloaded application on mobile device, you contractually agreed not to share your key with anyone whether it be another member, an assistant or your clients.

We have received several calls recently of agents sharing their Supra Key with other members (or their clients) and other reports of an office having just one key to share with all the agents. This is an MLS violation and not a recommended practice for several reasons.

If PWR becomes aware you have shared your key , it will result in an immediate Fine of $1,000 payable to CRMLS based on the CRMLS Citation Policy (Tier Three) shown below. Further, you may be charged with a Code of Ethics and/or M.L.S. violation by another member or the seller and the results of that hearing may be published at the C.A.R. site along with your photo.

Additionally, your information is recorded as to when you opened the property. If you are loaning out your key, you will be held responsible for anything that may happen in that property. If your Broker is allowing key sharing in your office, they are in violation of the MLS Rules and the Code of Ethics.

For your own protection there is another matter I would like to bring to your attention. If you are viewing property DO NOT let another agent just walk in when the door is open. You should ask them to wait outside and re-lock the lockbox so their own information will show as a separate entry. If you should let them in and something gets stolen, damaged or the house key is not returned, the blame will fall to you since you opened the lockbox.

HOW TO SAVE $1,000? DON’T SHARE YOUR SUPRA KEY OR MOBILE DEVICE WITH ANYONE.

As a reminder to all, below are the MLS Rules regarding Passcodes and Keys. Please post in your office.

M.L.S. Violation Policy - Tier Three:
First Violation: $1,000
Second and Subsequent Violations: $2,500

Tier Three Offenses are as follows:

1. Failure to obtain sellers authority to list in MLS [Rule 8.1 (Listing Agreement and Seller’s Permission)]
2. Failure to be Present when Providing Access to a Listed Property to Buyers and Potential Buyers [Rule 9.9 (Presence of Participant or Subscriber)]
3. Failure to timely notify of DRE or OREA adverse action [Rule 12.1 (Notification of California Department of Real Estate (DRE) or California Office of Real Estate Appraisers (OREA) Action)]
4. Unauthorized Use of MLS Information [Rule 12.11 (Use of MLS Information)]
5. Unauthorized Sharing of MLS Information and Pass Codes; Use of MLS by Unauthorized Party [Rule 12.12 (Confidentiality of MLS Information)]
6. Unauthorized Clerical User Access and Use of MLS Information [Rules 12.12.1 (Clerical Users)]
7. Misuse of Reproduction of MLS Information [Rule 12.15 (Reproduction)]
8. Sharing the MLS compilation or portion thereof with any third party vendor not authorized by the MLS [Rules 12.11 (Use of MLS Information), 12.12 (Confidentiality of MLS Information) and 12.15 (Reproduction)
9. Unauthorized Reproduction of Confidential Fields and Information [Rule 12.15.2 (Confidential Fields)
10. Unauthorized Compilation Downloading or Transmission of Data; Failure to Restrict Access to Authorized Party [Rule 12.15.4 (Downloading onto Computers)]
11. Misuse of MLS Data on Public Website; Violation of IDX Rules [Rule 12.16 Use of Active Listing Information on the Internet]
12. Misuse of MLS Data on Public Website; Violation of VOW Rules [Rule 19 (VOW)]
13. Unauthorized Sharing of Lockbox Key [Rule 13.2 (Key Use and Service)]
14. Failure to Account for Lockbox Key [Rule 13.4 (Deemed Unaccountable)]
15. Failure to Obtain Seller’s Permission to Place a Lockbox [Rule 13.5 (Written Authority)]
16. Unauthorized Entrance into a Listed Property; Failure to Follow Showing Instructions [Rule 13.7 (Listing Broker’s Permission)]
17. Failure to Report Lost or Stolen Lockbox Keys [Rule 13.8 (Unaccountable Keys)]

MLS #13.1 Eligibility for Lockboxes. MLS Participants and Subscribers are eligible for lockbox privileges if they otherwise qualify under this section. Clerical Users are not eligible for lockbox privileges. MLS Participants and Subscribers shall be eligible to hold a lockbox key provided:

1. The key holder signs a lease agreement with the lockbox provider.
2. The Participant to which the key holder is licensed cosigns the lease agreement with the lockbox provider.
3. The key holder continues to comply with all MLS rules relating to lockbox keys.
4. The key holder and Participant to whom the key holder is licensed remain eligible for MLS services.

MLS #13.2 Key Use and Service. Keys may not be used under any circumstances by anyone other than the key holder, including, but not limiting to, lending, borrowing or sharing keys with others. The AOR/MLS is not obligated to provide service on keys or lockboxes to an individual who is not the registered lessee or owner of the component. The key will only be used for the purpose of facilitating the sale/lease of a property.

MLS #13.3 Accountability. Key holders must account for keys upon request by the AOR/MLS. Key holders who cease to participate or subscribe to the MLS shall return all keys in their possession to the MLS.

MLS #13.4 Deemed Unaccountable. Keys shall be deemed unaccounted for if a key holder refuses or is unable to demonstrate that the key is within the key holder’s physical control.

MLS #13.5 Written Authority. Participants and Subscribers shall not place a lockbox on a property without written authority from the seller(s) and occupant if other than the seller(s). A lockbox shall be removed from a listed property within 1 business day after the close of escrow or upon expiration/cancellation of the listing (unless written agreement to the contrary is obtained from all parties). Inclusion in MLS compilations cannot be required as a condition of placing lockboxes on listed property.

MLS #13.6 Lockbox Requirements. If any lockbox or other device giving access to an On-Market listed property for Participants, Subscribers, and/or real estate professionals is authorized by the seller and/or occupant and is placed on or present on property listed through the MLS, such lockbox or device must be one that is approved by the MLS where the listing has been submitted. The authorized lockboxes sold by, leased by or otherwise offered through the local Association or MLS where the listing is submitted have been approved by the MLS. Unless expressly indicated otherwise by the MLS, for any other lockbox or device to be considered "MLS-approved," use of it must provide reasonable, timely access to listed property such that (1) it allows all Participants and Subscribers timely access to listed property by reliance solely on data submitted to and residing on the MLS; (2) complete, accurate and stand-alone instructions are provided for accessing the listed property in the appropriate agent section on the MLS; and (3) it ensures that the lockbox or device will provide reasonable access to listed property with any information, code or key needed to access the contents of the lockbox or device to be made available or access to the property otherwise scheduled within 4 hours of initial contact in the event the lockbox or device requires the participating member to obtain additional information to enable access (ex: "call listing agent for entry code") with said 4 hour response obligation in effect every day from 8am to 6pm. The MLS reserves the right to require that the device be submitted in advance for approval. The MLS also may revoke the approval and/or subject the Participant to discipline if the device is used in a manner that fails to continue to satisfy this requirement. Failure to provide reasonable and timely access as required by this section will subject the listing agent to discipline and potential fines. More than one lockbox or access device may be used on a property as long as one of them is MLS-approved where the listing is submitted. It is incumbent upon the MLS Participant or Subscriber to verify the validity of the requesting party prior to providing the access information.

MLS #13.6.1 Approved Lockboxes. The following are approved lockboxes: Supra, Sentrilock, Combo Lockbox, Programmable Electronic Deadbolt and all AOR/MLS contracted lockboxes

MLS #13.7 Listing Broker’s Permission. No MLS Participant or Subscriber may enter a property with or without a lockbox without the Listing Broker’s permission. Such permission may be granted by the Listing Broker by specifying permission to use the lockbox through the MLS. Appraiser Participants are expressly prohibited from using lockbox keys to enter a property without either the owner’s or Listing Broker’s permission.

MLS #13.8 Unaccountable Keys. Key holders and Participants cosigning with a key holder shall immediately report lost, stolen, or otherwise unaccountable keys to the AOR/MLS.

MLS #13.9 Removal. The lockbox must be removed with one (1) day after the close of escrow or expiration/cancellation of the listing.

MLS #13.10 Rules Violations. Failure to abide by rules relating to lockboxes as set forth in this section or failure to abide by the key lease agreement may result in discipline as provided in Sections 14 and 15 of these rules, in addition to loss of or restriction on all lockbox and key privileges

MLS #13.11 Right to Limit Access. The AOR/MLS reserves the right to refuse to issue a key or limit access to lockboxes if, in its sole discretion, it determines the security of the system would be compromised by issuing such keys or granting access to lockboxes.

July 2015

FIDUCIARY DUTY

A real estate broker who becomes an agent of a seller or buyer, either intentionally through the execution of a written agreement, or unintentionally by a course of conduct, will be deemed to be a fiduciary. Fiduciary duties are the highest duties known to the law. Classic examples of fiduciaries are trustees, executors, and guardians. As a fiduciary, a real estate broker will be held under the law to owe certain specific duties to his principal, in addition to any duties or obligations set forth in a listing agreement or other contract of employment. These specific fiduciary duties include:

Loyalty

A duty of loyalty is one of the most fundamental fiduciary duties owed by an agent to his principal. This duty obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of all other interests, including the broker’s own self-interest. A corollary of this duty of loyalty is a duty to avoid steadfastly any conflicts of interest that might compromise or dilute the broker’s undivided loyalty to his principal’s interests. Thus, a real estate broker’s duty of loyalty prohibits him from accepting employment from any person whose interests compete with, or are adverse to, his principal’s interests.

A classic example of breach of this duty of loyalty by a real estate broker is a broker who purchases property listed with his firm and then immediately resells it at a profit. Such conduct ordinarily is perfectly appropriate and lawful by persons acting "at arm’s length." But a fiduciary will be deemed to have "stolen" a profit opportunity rightfully belonging to his principal and thus to have breached his duty of loyalty.

Confidentiality

An agent is obligated to safeguard his principal’s confidence and secrets. A real estate broker, therefore, must keep confidential any information that might weaken his principal’s bargaining position if it were revealed. This duty of confidentiality precludes a broker representing a seller from disclosing to a buyer that the seller can, or must, sell his property below the listed price. Conversely, a broker representing a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more for a property than has been offered.

CAVEAT: This duty of confidentiality plainly does not include any obligation on a broker representing a seller to withhold from a buyer known material facts concerning the condition of the seller’s property or to misrepresent the condition of the property. To do so would constitute misrepresentation and would impose liability on both the broker and the seller.

Disclosure

An agent is obligated to disclose to his principal all relevant and material information that the agent knows and that pertains to the scope of the agency. The duty of disclosure obligates a real estate broker representing a seller to reveal to the seller:

• All offers to purchase the seller’s property.
• The identity of all potential purchasers.
• Any facts affecting the value of the property.
• Information concerning the ability or willingness of the buyer to complete the sale or to offer a higher price.
• The broker’s relationship to, or interest in, a prospective buyer.
• A buyer’s intention to subdivide or resell the property for a profit.
• Any other information that might affect the seller’s ability to obtain the highest price and best terms in the sale of his property.

A real estate broker representing a buyer is obligated to reveal to the buyer:

• The willingness of the seller to accept a lower price.
• Any facts relating to the urgency of the seller’s need to dispose of the property.
• The broker’s relationship to, or interest in, the seller of the property for sale.
• Any facts affecting the value of the property.
• The length of time the property has been on the market and any other offers or counteroffers that have been made relating to the property.
• Any other information that would affect the buyer’s ability to obtain the property at the lowest price and on the most favorable terms.

CAVEAT: An agent’s duty of disclosure to his principal must not be confused with a real estate broker’s duty to disclose to non-principals any known material facts concerning the value of the property. This duty to disclose known material facts is based upon a real estate broker’s duty to treat all persons honestly and fairly. This duty of honesty and fairness does not depend on the existence of an agency relationship.

Obedience

An agent is obligated to obey promptly and efficiently all lawful instructions of his principal. However, this duty plainly does not include an obligation to obey any unlawful instructions; for example, an instruction not to market the property to minorities or to misrepresent the condition of the property. Compliance with instructions the agent knows to be unlawful could constitute a breach of an agent’s duty of loyalty.

Reasonable Care and Diligence

An agent is obligated to use reasonable care and diligence in pursuing the principal’s affairs. The standard of care expected of a real estate broker representing a seller or buyer is that of a competent real estate professional. By reason of his license, a real estate broker is deemed to have skill and expertise in real estate matters superior to that of the average person. As an agent representing others in their real estate dealings, a broker or salesperson is under a duty to use his superior skill and knowledge while pursuing his principal’s affairs. This duty includes an obligation to affirmatively discover facts relating to his principal’s affairs that a reasonable and prudent real estate broker would be expected to investigate. Simply put, this is the same duty any professional, such as a doctor or lawyer, owes to his patient or client.

Accounting

An agent is obligated to account for all money or property belonging to his principal that is entrusted to him. This duty compels a real estate broker to safeguard any money, deeds, or other documents entrusted to him that relate to his client’s transactions or affairs

June 2015

UNDERSTANDING THE FACTORS CONTRIBUTING TO ARBITRATORS' DECISIONS IN COMMISSION DISPUTES

When you find yourself in a commission dispute with another agent, NAR requires that REALTORS® from different firms arbitrate certain disputes arising out of their relationship as REALTORS®. The majority of disputes among members are commission disputes between two brokers involving the issue of "procuring cause" The term "procuring cause" comes from the MLS Rule that the cooperating broker that procures a successful buyer for a property is entitled to the commission offered by the listing broker. When there is a dispute about who’s entitled to the cooperating broker’s commission, the questions is, "who was the procuring cause of the sale?" Since there is no hard and fast rule that is a difficult question to answer. As defined by NAR, "procuring cause" is "the uninterrupted series of casual events that result in the successful transaction".

The Procuring Cause Guidelines and the Arbitration Worksheet for your review below are some of the factors utilized by the Arbitration Panel in determining an Arbitration Award.

May 2015

ADVERTISING GUIDELINES & UNLAWFUL DISCRIMINATION

If you haven’t thought about advertising issues lately, now would be a good time to review the advertising words you can and cannot say when advertising a property "for lease/rent" or "for sale"

Download the Fair Housing Advertising Word/Phrase List

Additionally, from the California Department of Consumer Affairs, below is an outline the public would see if they felt discriminated against when renting or buying property and contacted the California Department of Consumer Affairs about filing a complaint.

California Department of Consumer Affairs - Unlawful Discrimination

WHAT IS UNLAWFUL DISCRIMINATION?

A landlord cannot refuse to rent to a tenant, or engage in any other type of discrimination, on the basis of group characteristics specified by law that are not closely related to the landlord’s business needs. Race and religion are examples of group characteristics specified by law. Arbitrary discrimination on the basis of any personal characteristic such as those listed under this heading also is prohibited. Indeed, the California Legislature has declared that the opportunity to seek, obtain and hold housing without unlawful discrimination is a civil right.

Under California law, it is unlawful for a landlord, managing agent, real estate broker, or salesperson to discriminate against a person or harass a person because of the person’s race, color, religion, sex (including pregnancy, childbirth or medical conditions related to them, as well as gender and perception of gender), sexual orientation, marital status, national origin, ancestry, familial status, source of income , or disability. California law also prohibits discrimination based on any of the following:

• A person's medical condition or mental or physical disability; or
• Personal characteristics, such as a person's physical appearance or sexual orientation that are not related to the responsibilities of a tenant; or
• A perception of a person's race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability or medical condition, or a perception that a person is associated with another person who may have any of these characteristics.

Under California law, a landlord cannot use a financial or income standard for persons who want to live together and combine their incomes that is different from the landlord's standard for married persons who combine their incomes. In the case of a government rent subsidy, a landlord who is assessing a potential tenant's eligibility for a rental unit must use a financial or income standard that is based on the portion of rent that the tenant would pay. A landlord cannot apply rules, regulations or policies to unmarried couples who are registered domestic partners that do not apply to married couples. Nor can a landlord inquire as to the immigration status of the tenant or prospective tenant or require that a tenant or prospective tenant make any statement concerning his or her immigration or citizenship status. However, a landlord can request information or documents in order to verify and applicant's identity and financial qualifications.

It is illegal for landlords to discriminate against families with children under 18. However, housing for senior citizens may exclude families with children. "Housing for senior citizens" includes housing that is occupied only by persons who are at least age 62, or housing that is operated for occupancy by persons who are at least age 55 and that meets other occupancy, policy and reporting requirements stated in the law.

Limited exceptions for single rooms and roommates

If the owner of an owner-occupied, single-family home rents out a room in the home to a roomer or a boarder, and there are no other roomers or boarders living in the household, the owner is not subject to the restrictions listed under "Examples of unlawful discrimination".

However, the owner cannot make oral or written statements, or use notices or advertisements which indicate any preference, limitation, or discrimination based on race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, familial status, source of income, or disability. Further, the owner cannot discriminate on the basis of medical condition or age.

A person in a single-family dwelling who advertises for a roommate may express a preference on the basis of gender, if living areas (such as the kitchen, living room, or bathroom) will be shared by the roommate.

Examples of Unlawful Discrimination

Unlawful housing discrimination can take a variety of forms. Under California's Fair Employment and Housing Act and Unruh Civil Rights Act, it is unlawful for a landlord, managing agent, real estate broker, or salesperson to discriminate against any person because of the person's race, color, religion, sex (including pregnancy, childbirth or medical conditions related to them, as well as gender and perception of gender), sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, medical condition, or age in any of the following ways:

• Refusing to sell, rent, or lease.
• Refusing to negotiate for a sale, rental, or lease.
• Representing that housing is not available for inspection, sale, or rental when it is, in fact, available.
• Otherwise denying or withholding housing accommodations.
• Providing inferior housing terms, conditions, privileges, facilities, or services.
• Harassing a person in connection with housing accommodations.
• Canceling or terminating a sale or rental agreement.
• Providing segregated or separated housing accommodations.
• Refusing to permit a person with a disability, at the person with a disability's own expense, to make reasonable modifications to a rental unit that are necessary to allow the person with a disability "full enjoyment of the premises." As a condition of making the modifications, the landlord may require the person with a disability to enter into an agreement to restore the interior of the rental unit to its previous condition at the end of the tenancy (excluding reasonable wear and tear).
• Refusing to make reasonable accommodations in rules, policies, practices, or services when necessary to allow a person with a disability "equal opportunity to use and enjoy a dwelling" (for example, refusing to allow a person with a disability's companion or service dog).38

Resolving housing discrimination problems

If you are a victim of housing discrimination (for example, if a landlord refuses to rent to you because of your race or national origin), you may have several legal remedies, including:

• Recovery of out-of-pocket losses.
• An injunction prohibiting the unlawful practice.
• Access to housing that the landlord denied you.
• Damages for emotional distress.
• Civil penalties or punitive damages.
• Attorney's fees.

Sometimes, a court may order the landlord to take specific action to stop unlawful discrimination. For example, the landlord may be ordered to advertise vacancies in newspapers published by ethnic minority groups, or to place fair housing posters in the rental office.

A number of resources are available to help resolve housing discrimination problems:

• Local fair housing organizations (often known as fair housing councils). Look in the white (business) and yellow pages of the phone book. The National Fair Housing Alliance maintains a searchable database of local organizations that advocate for fair housing.
• Local California apartment association chapters. Look in the white (business) and yellow pages of the phone book. The California Apartment Association maintains a list of local apartment association chapters.
• Local government agencies. Look in the white pages of the phone book under City or County Government Offices, or call the offices of local elected officials (for example, your city council representative or your county supervisor).
• The California Department of Fair Employment and Housing investigates housing discrimination complaints (but not other kinds of landlord-tenant problems). The department's Housing Enforcement Unit can be reached at (800) 233-3212 TTY (800) 700-2320. You can learn about the department's complaint process on their website.
• The U.S. Department of Housing and Urban Development (HUD) enforces the federal fair housing law, which prohibits discrimination based on sex, race, color, religion, national origin, familial status, and handicap (disability). To contact HUD, look in the white pages of the phone book under United States Government Offices, or visit their web site.
• Legal aid organizations provide free legal advice, representation, and other legal services in noncriminal cases to economically disadvantaged persons. Legal aid organizations are located throughout the state. Look in the yellow pages of the phone book under Attorneys, or go to http://lawhelpca.org/. The Legal Aid Association of California also maintains a directory of legal aid organizations at www.calegaladvocates.org.
• Private attorneys. You may be able to hire a private attorney to take legal action against a landlord who has discriminated against you. For the names of attorneys who specialize in housing discrimination cases, call your county bar association or an attorney referral service.

You must act quickly if you believe that a landlord has unlawfully discriminated against you. The time limits for filing housing discrimination complaints are short. For example, a complaint to the Department of Fair Employment and Housing must be filed within one year from the date of the discriminatory act. First, write down what happened, including dates and the names of those involved. Then, contact one of the resources listed above for advice and help.

April 2015

IMPORTANT INFORMATION REGARDING USE OF ELECTRONIC SIGNATURES

In March 2011, our office produced a Newsflash that highlighted several important aspects of using electronic signatures in a real estate transaction (click the link above for the original article). Three of those points have recently come up in two important California Court of Appeals decisions, and real estate agents should pay close attention to how those decisions might affect their business.

The points at issue:

1. Consent to use electronic signatures from both the buyer and seller is required in advance, prior to using electronic signatures in transactions, even if only one party is using electronic signatures.
2. Although consent can be oral or inferred by conduct, it is better that agreements be memorialized in some type of writing, particularly in light of Article 9 of the Code of Ethics. If you are involved in a transaction where electronic signatures are proposed, have evidence of consent in writing, even if only confirming emails.
3. There may be authenticity issues with electronic signatures, so good documentation is strongly recommended.

CONSENT TO USE ELECTRONIC MEANS

The case that pertains to points 1 & 2 (JBB Investment Partners, Ltd. v. Fair, 232 Cal. App. 4th 974 (2014)) involves two parties who were negotiating a settlement agreement. In that process, multiple communications were exchanged in electronic, written and oral formats. The case turned on whether one of the parties had actually accepted the settlement when he sent an email from his phone expressing agreement and typing his name at the end of the message. Later, the other party sought to enforce that settlement agreement, arguing that the typed name was a sufficient electronic signature. The Trial Court agreed, but the Court of Appeals did not. That Court made some important statements that brokers and agents should consider when using electronic signatures. The Court reasoned that:

• Before there is any consideration given to whether a certain act, such as typing a name, is a sufficient electronic signature, it must first be shown that the parties agreed that electronic means can be used to conduct the transaction.
• If there is no written agreement as to use of electronic means, then the parties’ conduct can be examined to see if they had such an agreement.
• In this case, there was no prior written agreement, so the Court looked at the conduct of the parties accordingly.
• Since there were actions taken later in the communication process that made it unclear as to whether the settlement agreement had actually been completed when the crucial email was sent, the Court could not find an agreement to use electronic means based on conduct.
• This means that it did not matter if the typed name was good enough to qualify as an electronic signature. Because there was no agreement to use electronic means, the settlement could not be enforced.

So what does this mean for agents and brokers using electronic signatures?

It means that points 1& 2 above are extremely important. As this case illustrates, if you don’t get written consent up front from all parties to use electronic signatures in the transaction, and later one of the parties challenges some part of the contract, you could very well lose your deal if you are left to rely on the conduct of the parties to show that everyone was OK with using electronic signatures. In a long, complicated transaction, there are so many communications and exchanges of information that a competent lawyer can make a case that certain conduct means something other than what the other party says it means.

Put another way, relying on conduct to show agreement is a huge risk. You should avoid that argument whenever possible. Be extremely careful, and get written consent to use electronic means from all parties at the beginning of the transaction.

Confusion is the enemy in Court, so stay out of Court by making things clear!

AUTHENTICATION OF ELECTRONIC SIGNATURES

The case that pertains to point 3 (Ruiz v. Moss Bros. Auto Group, Inc., 232 Cal. App. 4th 836 (2014)) involves an employer’s attempt to enforce an arbitration agreement against an employee. That agreement was supposedly entered into by the employee when he signed it electronically. However, when the employee claimed that he could not remember doing so, it fell to the employer to authenticate the electronic signature. The employer’s business manager failed to properly authenticate the signature, and ultimately the arbitration agreement was found to be unenforceable against the employee. Important aspects of the Court’s reasoning were:

• Authentication of electronic signatures is not difficult, and under the law can be done in any reasonable manner.
• The problem for the employer is that the business manager made a summary statement in support of authentication. This means she simply told the Court, "that is the employee’s (electronic) signature."
• The Court pointed out that the business manager could have, and should have, shown that the signature was that of the employee in any manner, including "a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable." In this case the employee had to log on with a unique lD and password to access the document. If the business manager had shown that fact, the agreement would have been enforceable.

Again, what does this mean for agents and brokers?

It means that you should only use electronic signing systems or software that has authentication procedures that can be pointed to as evidence. Most of the popular programs do have such procedures, and there is an "audit trail" as to who accesses the system, and by what means. As long as that type of evidence is available, then any signatures produced should be capable of authentication. This matters a great deal if a party at a later date claims not to have signed the subject document. In the event that a signature is contained in an email, there must be some sort of record as to the accounts involved, sufficient to meet the requirements of authentication.

The conclusion is that you must use credible and secure systems, and keep good records of all communications. This is not a new concept, but it is important to keep in mind as the cited case result indicates.

March 2015

INTERPRETATIONS OF THE CODE OF ETHICS

The Code of Ethics of the National Association of REALTORS^® establishes a public and professional consensus against which the practice and conduct of REALTORS^® may be judged. In joining a Board of REALTORS^®, REALTORS^® signify their intention to abide by the Code and thereby enhance the public and professional image of themselves and all other REALTORS^®. Adherence to the Code is the first great bond between REALTORS^® throughout the country.

Interpretations of the Code of Ethics has been developed by the Professional Standards Committee of the National Association of REALTORS^® to help REALTORS^® understand the ethical obligations created by the Code of Ethics, and as a reference work for Grievance Committees, ethics and arbitration Hearing Panels, and Boards of Directors.

Interpretations of the Code of Ethics presents specific situations involving charges of alleged unethical conduct by REALTORS^® which are reviewed by a peer panel of Board Members and in which decisions as to ethical conduct are reached. Each case provides the Hearing Panel's decision based on the facts and the rationale for the decision, but does not specify a specific sanction or discipline to be imposed. There are two reasons for this. First, any sanction imposed must always fit the offense and must involve every consideration of justice, equity, and propriety. Second, a Hearing Panel may base its recommendation for discipline on a Member's past record of ethics violations.

BELOW ARE THREE EXAMPLES OF CASE INTERPRETATIONS OF ARTICLE 12

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.

CASE #12-1:

Absence on Name on sign

REALTORS^® may use the term "free" and similar terms in their advertising and in other representations provided that all terms governing availability of the offered product or service are clearly disclosed at the same time.

Prospect A observed a sign on a vacant lot reading: "For Sale—Call 330-5215." Thinking he would be dealing with a For Sale by Owner, he called the number on the sign. He was surprised and offended that the lot was exclusively listed by REALTOR^® A, and the telephone number on the sign was the home number of REALTOR-Associate^® B in REALTOR^® A's office.

Prospect A filed a complaint against REALTOR^® A and REALTOR-Associate^® B. REALTOR^® A and REALTOR-Associate^® B alleging a violation of Article 12 of the Code of Ethics.

At the hearing, REALTOR^® A stated that he permitted REALTOR-Associate^® B to put up the sign. REALTOR-Associate^® B's defense was that the sign was not a "formal" advertisement, such as a newspaper advertisement, business card, or billboard, to which he understood Article 12 to apply.

The Hearing Panel determined that the sign was an advertisement within the meaning of Article 12; that its use violated that Article of the Code; and that both REALTOR^® A and REALTOR-Associate^® B were in violation of Article 12.

Case #12-5:

True Picture in Use of "Sold" Sign REALTORS^® shall not advertise nor permit any person employed by or affiliated with them to advertise real estate services or listed property in any medium (e.g., electronically, print, radio, television, etc.) without disclosing the name of that REALTOR^®'s firm in a reasonable and readily apparent manner. This Standard of Practice acknowledges that disclosing the name of the firm may not be practical in electronic displays of limited information (e.g., "thumbnails", text messages, "tweets", etc.). Such displays are exempt from the disclosure requirement established in this Standard of Practice, but only when linked to a display that includes all required disclosures. (Adopted 11/86, Amended 1/11)

REALTOR^® A, the listing broker, was charged by REALTOR^® B with giving a false picture in his advertising by putting up a "sold" sign on property that had not been sold. REALTOR^® A was notified of the complaint and of the date of a hearing on it scheduled before a Hearing Panel of his Board's Professional Standards Committee.

Undisputed testimony offered during the hearing revealed that REALTOR^® A was an exclusive agent, offering Client C's home for sale. An offer to buy was obtained from Prospect D and a counter proposal by Client C was accepted. An earnest money deposit was made, and a date for settlement was agreed upon. At that point, REALTOR^® A put up his "sold" sign. Several days later, Prospect D received an unexpected notice from his employer that he was to be transferred to another city. Prospect D immediately contacted REALTOR^® A and Client C about his predicament. In an amicable discussion it was agreed that everyone had acted in good faith; that the property was readily marketable; that the earnest money deposit would be refunded; and that REALTOR^® A would put the property on the market again. A week later, when REALTOR^® B was showing a number of houses to a prospective buyer, they drove by Client C's property, and the prospect casually said that she didn't understand the "sold" sign, since she had been taken to see the house that morning by REALTOR^® A.

REALTOR^® B contended that a "sold" sign is a measure of a REALTOR^®'s advertising, and that it cannot give a true picture if it is put up prior to the settlement and actual transfer of ownership.

The Hearing Panel's decision agreed with REALTOR^® B's contention that the use of a "sold" sign constitutes advertising by a REALTOR^® but did not agree that a "sold" sign could be put up only after the actual settlement and transfer of ownership. The decision indicated that after the client's acceptance of a bona fide offer, REALTOR^® A could consider that he had brought about a sale and would not be in violation of the requirement to give a "true picture" by putting up a "sold" sign. However, once it was clear that the sale had fallen through, the "sold" sign should have been immediately removed since allowing the sign to remain in place no longer provided a "true picture."

REALTOR^® A was found by the panel to have violated Article 12.

Case #12-6:

Misleading Advertising REALTORS^®, when advertising unlisted real property for sale/lease in which they have an ownership interest, shall disclose their status as both owners/landlords and as REALTORS^® or real estate licensees.

REALTOR^® A's business included real estate brokerage, property management, and home building. In one of his newspaper advertisements of his home building activities, in which he identified himself as a REALTOR^®, there was prominently featured the words, "Buy Direct and Save." REALTOR^® B sent a copy of the advertisement to the Board of REALTORS^® as the basis of a complaint that REALTOR^® A in his advertising was, through use of the quoted phrase, seeking to take unfair advantage of other REALTORS^®.

At the hearing, it was brought out that REALTOR^® A's properties had been listed with his real estate firm and processed through the MLS. He defended his advertising by asserting that it was no more than reasonable for him to seek the sale of houses in his subdivision through his own brokerage office to the greatest extent possible. He was not able to show the Hearing Panel any instances of reduced prices on direct sales even though several such sales had occurred.

It was the conclusion of the panel that REALTOR^® A had violated Article 12. The panel's decision indicated that just because he engaged in home building he could not be exempted from the standards that apply to REALTORS^® generally; and that the phrase "Buy Direct and Save" in his advertising was an attempt to convince prospective buyers that a lower price would be offered those purchasing direct rather than through cooperating brokers when, in fact, he had maintained the same prices and there was no saving by buying direct.

If you have any questions or would like to see additional Interpretations of the Code of Ethics, contact Lori Smith, Professional Standards Manger with Pacific West Association of REALTORS^®

February 2015

WANT TO FILE A COMPLAINT BUT THINK IT'S TOO MUCH TROUBLE?

I often hear the same complaint from members that it’s too much trouble to file a complaint and nothing happens anyway so why should I bother.

PWR has taken many steps to make the process easier for you to file and encourages you to file a complaint when you see something wrong. Since PWR cannot actively look for violations against our members, we depend on our members to report violations and start the necessary steps to stop the violations. If the violation is not reported, it will continue.

There are many ways PWR can help you with the filing of your complaint. Today we’ll take a look at two of the most popular steps you can take to report a violation.

RED COMPLAINT:

A typical example of the filing of a RED Complaint

• You have attempted to contact an agent to resolve an issue, but the offending agent is not cooperating and you don’t want to file a formal complaint, you just want the issue resolved.
• Flyer violations
• Missing paperwork
• Lack of return phone calls, e-mails or texts
• No proof of presentation of offer
• Listing not entered into the MLS but is shown on Zillow and other websites
• Sign in yard and no listing in the MLS

You can simply complete the RED Questionnaire Form with the details or e-mail to PWR the offending flyer. The RED complaint can often be anonymous so the offending party will not know who filed the complaint.

What happens after you file a RED Complaint?

• PWR will contact the Agent and their Broker informing them of the violation.
• We will ask them to reply acknowledging the violations and what steps they will take to correct the violation.
• The reporting party will be notified of the action taken by the offending party.
• All RED complaints are tracked and if we see a pattern developing, PWR will forward to the Grievance Committee for their review and recommendations for a full disciplinary hearing.
• If the reporting party is not satisfied with the results of the RED complaint filed, they can file a Formal Disciplinary Action and present their case to a hearing panel.

FORMAL DISCIPLINARY COMPLAINT:

A typical example of the Filing of a Formal Complaint

• There has been a clear violation of the Code of Ethics or M.L.S. Rules
• You have supporting documents to support your case
• You are willing to come in for a hearing to have discipline imposed

What happens after you file a formal complaint?

• The Grievance Committee will review the complaint and make recommendations if additional Code of Ethics or M.L.S. Rules should be added or deleted.
• A written response will be requested from the Respondent
• A hearing date will be scheduled
• You will present your case to the Hearing Panel
• After the Hearing Panel hears the testimony of both sides, they have the ability to impose Disciplinary Action against the offending party or dismiss the charges if they feel they are unfounded.

Form D-12 is typical of what the panel will use to impose Disciplinary Action against the offending party.

January 2015

RED (Rapid Ethics Delivery)

Over the last year PWR has experienced great success with our RED Program (RAPID ETHCS DELIVERY)

Our RED Program is used when you have attempted to contact an agent to resolve an issue and are not getting any cooperation from the offending agent but you are not yet ready to file a formal complaint.

If you believe that a PWR member has acted inappropriately and may be in violation of a Code of Ethics and/or MLS Rule, prior to filing a Formal Disciplinary Complaint you, (the "Reporting Party"), can report the matter to PWR and that member (the "Offending Party") may be put on notice. RED does not impose any formal fines or charges unless certain criteria are met.

QUESTION: How do you report a violation?

A: To report a violation, the Reporting Party completes the RED QUESTIONnaire found on PWR's website.

QUESTION: What will PWR do with the report?

A: When PWR receives a completed RED QUESTIONnaire, the Professional Standards Department may contact the Offending Party and his or her broker to let them know that there is reason to believe the Offending Party is in violation of the COE and/or MLS Rules.

QUESTION: How does the Offending Party defend itself?

A: When contacted by PWR, the Offending Party will have the opportunity to submit a written response to the alleged violations. The response will tell the Offending Party's version of what took place.

QUESTION: What if the Offending Party doesn't respond, either satisfactorily or at all?

A: If the Offending Party doesn't respond satisfactorily or at all, PWR will strongly encourage the Reporting Party to file a Formal Disciplinary Complaint. If appropriate, PWR may refer the matter to PWR's Grievance Committee, who may file a Formal Disciplinary Complaint.

QUESTION: What if the Responding Party wants to file a Formal Disciplinary Complaint anonymously?

A: The Reporting Party may stay anonymous if the facts of the alleged violation meet certain criteria. If they do, PWR may ask the Grievance Committee to act as the Complainant in a Formal Disciplinary Complaint.

QUESTION: Will violations be tracked?

A: PWR will track all reported violations through the RED Program. If there is a pattern of violations, the complaints may be sent to the Grievance Committee to file a Formal Disciplinary Complaint.

QUESTION: How long does it take to process a Red Complaint?

A: It depends on the type of issue that is in violation. Generally, you will know within 2 days to 2 weeks if filing a RED Complaint will resolve your complaint.

January 2014

What makes a REALTOR^® unique?

REALTORS® are different from non-member licensees in that they voluntarily subscribe to a strict Code of Ethics. If someone believes that a REALTOR® has violated one or more Articles of the Code of Ethics, they are free to file an ethics complaint alleging a violation(s) through any local board of REALTORS® where the REALTOR® holds membership, or participates in a REALTOR®-owned/operated MLS. In addition, REALTORS® agree as a condition of membership to arbitrate contractual disputes and specific non-contractual disputes as provided for in Article 17 of the NAR Code of Ethics.

Every year the N.A.R. Professional Standards Committee reviews and updates the Code of Ethics to make it more relevant to today’s business environment. For example, one important change increases the amount of a fine for a Code of Ethics violation from $5,000 to $15,000.

Review the entire Code of Ethics

2014 Summary of Key Professional Standards Changes

Changes to the 2014 Code of Ethics and Standards of Practice (underscoring indicates additions, strikeouts indicate deletions)

• Standard of Practice 3-2 revised
  To be effective, aAny change in compensation offered for cooperative services must be communicated to the other REALTOR® prior to the time that REALTOR® submits an offer to purchase/lease the property. After a REALTOR® has submitted an offer to purchase or lease property, the listing broker may not attempt to unilaterally modify the offered compensation with respect to that cooperative transaction.
  (Amended 1/14)
  
  
• Article 10 revised
  REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, or sexual orientation, or gender identity. 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, national origin, or sexual orientation, or gender identity.
  (Amended 1/14)
  
  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, national origin, or sexual orientation, or gender identity.
  (Amended 1/14)
  
  
• Standard of Practice 10-3 revised
  REALTORS® shall not print, display or circulate any statement or advertisement with respect to selling or renting of a property that indicates any preference, limitations or discrimination based on race, color, religion, sex, handicap, familial status, national origin, or sexual orientation, or gender identity.
  (Amended 1/14)
  
  
• Standard of Practice 11-1 revised
  When REALTORS® prepare opinions of real property value or price, they must:
  
  
  1. be knowledgeable about the type of property being valued,
  2. have access to the information and resources necessary to formulate an accurate opinion, and
  3. be familiar with the area where the subject property is located
  unless lack of any of these is disclosed to the party requesting the opinion in advance.
  
  When an opinion of value or price is prepared other than in pursuit of a listing or to assist a potential purchaser in formulating a purchase offer, such the opinions shall include the following unless the party requesting the opinion requires a specific type of report or different data set:
  
  
  1. identification of the subject property
  2. date prepared
  3. defined value or price
  4. limiting conditions, including statements of purpose(s) and intended user(s)
  5. any present or contemplated interest, including the possibility of representing the seller/landlord or buyers/tenants
  6. basis for the opinion, including applicable market data
  7. if the opinion is not an appraisal, a statement to that effect
  8. disclosure of whether and when a physical inspection of the property’s exterior was conducted
  9. disclosure of whether and when a physical inspection of the property’s interior was conducted
  10. disclosure of whether the REALTOR® has any conflicts of interest
  (Amended 1/14)

If you would like to file a formal complaint or have questions about other services offered by the PWR Professional Standards Department, please contact Lori Smith (714) 245-5525; or email loris@pwr.net.

---

Pathways to Professionalism

These professional courtesies are intended to be used by REALTORS® on a voluntary basis, and cannot form the basis for a professional standards complaint. Please post in your office or discuss at your office meetings

Respect for the Public

1. Follow the "Golden Rule" — Do unto others as you would have them do unto you.
2. Respond promptly to inquiries and requests for information.
3. Schedule appointments and showings as far in advance as possible.
4. Call if you are delayed or must cancel an appointment or showing.
5. If a prospective buyer decides not to view an occupied home, promptly explain the situation to the listing broker or the occupant.
6. Communicate with all parties in a timely fashion.
7. When entering a property, ensure that unexpected situations, such as pets, are handled appropriately.
8. Leave your business card if not prohibited by local rules.
9. Never criticize property in the presence of the occupant.
10. Inform occupants that you are leaving after showings.
11. When showing an occupied home, always ring the doorbell or knock—and announce yourself loudly—before entering. Knock and announce yourself loudly before entering any closed room.
12. Present a professional appearance at all times; dress appropriately and drive a clean car.
13. If occupants are home during showings, ask their permission before using the telephone or bathroom.
14. Encourage the clients of other brokers to direct questions to their agent or representative.
15. Communicate clearly; don’t use jargon or slang that may not be readily understood.
16. Be aware of and respect cultural differences.
17. Show courtesy and respect to everyone.
18. Be aware of—and meet—all deadlines.
19. Promise only what you can deliver—and keep your promises.
20. Identify your REALTOR® and your professional status in contacts with the public.
21. Do not tell people what you think—tell them what you know.

Respect for Property

1. Be responsible for everyone you allow to enter listed property.
2. Never allow buyers to enter listed property unaccompanied.
3. When showing property, keep all members of the group together.
4. Never allow unaccompanied access to property without permission.
5. Enter property only with permission even if you have a lockbox key or combination.
6. When the occupant is absent, leave the property as you found it (lights, heating, cooling, drapes, etc.). If you think something is amiss (e.g., vandalism) contact the listing broker immediately.
7. Be considerate of the seller’s property. Do not allow anyone to eat, drink, smoke, dispose of trash, use bathing or sleeping facilities, or bring pets. Leave the house as you found it unless instructed otherwise.
8. Use sidewalks; if weather is bad, take off shoes and boots inside property.
9. Respect sellers’ instructions about photographing or videographing their properties’ interiors or exteriors.

Respect for Peers

1. Identify your REALTOR® and professional status in all contacts with other REALTORS®.
2. Respond to other agents’ calls, faxes, and e-mails promptly and courteously.
3. Be aware that large electronic files with attachments or lengthy faxes may be a burden on recipients.
4. Notify the listing broker if there appears to be inaccurate information on the listing.
5. Share important information about a property, including the presence of pets, security systems, and whether sellers will be present during the showing.
6. Show courtesy, trust, and respect to other real estate professionals.
7. Avoid the inappropriate use of endearments or other denigrating language.
8. Do not prospect at other REALTORS®’ open houses or similar events.
9. Return keys promptly.
10. Carefully replace keys in the lockbox after showings.
11. To be successful in the business, mutual respect is essential.
12. Real estate is a reputation business. What you do today may affect your reputation—and business—for years to come.

If you would like to file a formal complaint or have questions about other services offered by the PWR Professional Standards Department, please contact Lori Smith (714) 245-5525; or email loris@pwr.net.

February 2014

Do you know the "FAQs" for Print Advertising?

All REALTORS^® must comply with certain advertising rules when it comes to referencing listings that belong to another agent, such as in a REALTOR’s^® "Neighborhood Update" type of print advertising. For example, a REALTOR^® cannot reference or show another agent’s properties in the REALTOR’s^® Neighborhood Update report without that other agent’s prior permission, unless the referenced property is a closed sale. And even when referencing only closed sales, certain disclosures are required unless all closed sales belonged to the REALTOR^®. This "FAQ’s for Print Advertising" should address most of your questions related to this topic. Failure to comply with these rules can result in the offending REALTOR^® receiving an Ethics Violation, an M.L.S. Violation and a fine of up to $15,000. Any further questions or offending advertisements should be addressed to the Professional Standards Department at PWR.

FAQs for Print Advertising

1. What are some examples of Print Advertising?
   
   1. Mailings to residents in a certain geographical area
   2. Hand delivered flyers
   3. Other print advertisements being sent to non-clients
2. What is not covered by these FAQ’s?
   CMA’s and Appraisals prepared by you for your existing clients
   
   
3. Can I advertise On-Market and Off-Market listings in Print Advertising?
   Yes. However there are restrictions:
   • You may advertise your own listings
   • If you advertise other agents’ listings in active, back-up, pending, withdrawn, or hold statuses, you must get their permission to advertise those listings.
   • You must not make any misrepresentations regarding the listings or mislead the recipient of the advertisement.
   • Do not use street names and street numbers because if they can be interpreted as advertising a specific listing, the use of those identifying marks may violate the MLS Rules and Code of Ethics.
4. Can I advertise sold listings in Print Advertising?
   Yes. However there are some restrictions:
   • Unless you sold the property you cannot claim that you "Sold" the property.
   • You must not use language that may mislead the recipient of the print advertisement into thinking you sold the property.
   • If you did not sell the properties, us a phrase like: "I do not represent to have listed or sold the above referenced properties" to indicate that the properties listed in the Print Advertising were based on geography and are not your individual listings.
   • Present a True Picture.
5. Do I need to put a Disclaimer on my Print Advertising?
   
   1. Yes. If you are providing any data from another broker or from the MLS on listings that you do not own, the following disclaimer, which must include the date the data was obtained, must appear on at least a 9 point font (Section 12.9 of the MLS rules): "Based on information from CRMLS as of (date the CRMLS data was obtained) and/or other sources. Display of MLS data is deemed reliable but is not guaranteed accurate by CRMLS. The Broker/Agent providing the information contained herein may or may not have been the listing and/or selling Agent."
   2. You must also put a date range on the Print Advertising to show the time period related to the listings and statuses shown.
6. Must every real estate licensee include his or her BRE license number on all advertisements?
   Every licensed real estate broker and salesperson must display his or her 8-digit BRE license number on all solicitation materials intended to be the first point of contact with a consumer and on all real property purchase agreements if acting as the agent for the consumer.
   
   
7. What are examples of "solicitation materials intended to be the first point of contact with a consumer?
   The following advertising materials must contain the BRE license number:
   • business cards,
   • stationery,
   • Web sites owned, controlled, and/or maintained by the licensee,
   • promotional and advertising fliers,
   • promotional and advertising brochures,
   • promotional and advertising e-mail,
   • promotional and advertising leaflets,
   • "any marketing or promotional materials designed to solicit the creation of a professional relationship between the licensee and consumer or is intended to induce or entice a consumer to contact the licensee about any service for which a license is required."
8. Is a real estate broker or office required to disclose licensed status in all advertising?
   Yes, for all BRE Licensees. Any time a broker advertises services for which a real estate license is required, the broker is required to indicate, by use of terms such as broker, agent, real estate licensee or REALTOR^®, or abbreviations such as bro. or agt., that the advertising is being done by a real estate licensee. This requirement applies to all real estate salespersons, not only brokers. However, see next question and answer if BRE licensee is also a REALTOR^®
   
   
9. Must a salesperson also use the broker's name in an advertisement when using the salesperson's name and/or telephone number?
   For REALTORS©, Yes. According to the NAR Code of Ethics, the "name of the firm" must be present in any advertising of real estate services or of property listed with the firm; therefore it follows that all REALTORS^®' advertisements of real estate services or property listed by the office must contain the office name.

March 2014

Raise Your Standards

The PWR Board of Directors is committed to raising the level of professionalism for all members of PWR. Staff has their full support in bringing you timely seminars, great education programs, technical tools and personal assistance when you have to deal with agents who make your job more difficult and frustrating.

Both the PWR Grievance Committee and Professional Standards Committee have been very busy these past few months listening to and sorting out the complaints being submitted.

In an effort to help you better understand how your Association works and what my job entails, I am going to keep you informed throughout the year about the Code of Ethics, the role of the Grievance Committee, the role of the Professional Standards Committee and the types of calls I receive each day (from members of the public and association members). Please let me know via e-mail if there is anything in particular you would like to hear about. As an example, listed below are the top complaints I hear about most often:

Top Complaints From the Public:

• My own agent is not retuning my calls
• Agents are entering my property when the MLS clearly states "By Appointment Only"
• Improper or missing paperwork
• Leaving the door open after a viewing
• Not presenting me with all offers.

Top Complaints by Agents against Agents:

• Not returning calls, e-mails or texts
• Incorrect contact numbers and e-mails.
• Not presenting offers as soon as possible
• Advertising another agents Active listing without their permission
• Not entering a new listing into the MLS within 2 business days.
• Changing Compensation in the MLS when an offer is on the way or after opening escrow.
• Improper status in the M.L.S.
• Contacting clients when they are still under contract with another Broker
• Advertising on Internet sites without entering the property into the MLS

All of these violations can now add up to hefty fines from $500 up to $15,000 as imposed by the hearing panel.

We have about 20 members on the Grievance Committee who meet monthly to review any disciplinary complaints submitted. Their role is to review any complaints alleging a violation of the Code of Ethics or MLS duty to determine whether or not the complaint should be forwarded to Professional Standards for a hearing. It does not, however, determine a member's guilt or innocence or mediate between the parties. Its primary function is to determine whether or not a disciplinary complaint is appropriate for hearing. Members of the Grievance Committee are required to serve 3 years before moving to the Professional Standards Committee. Members tell me they love this committee because they learn so much about their industry and the Code of Ethics due to the (sometimes lively) discussions at our meetings.

The Professional Standards Committee is made up of REALTOR® members who have special training (provided by PWR) in ethics and arbitration disputes. These are unpaid volunteers giving up their time as an act of public service. Their objective at a hearing is to be fair, unbiased and impartial; to determine, based on evidence presented to them, what actually occurred; and then to determine whether the facts as they find them support a finding that the Article(s) charged have been violated or rule on an arbitration award. We have on average of 30 hearings per year. The panel is made of one chairman, two panelists and an alternate. Each panelists is asked to serve on about 2-3 hearings per year.

If joining the Grievance Committee or the Professional Standards Committee is of interest to you, please contact me and I will add you to the waiting list for the 2015 Committee.

April 2014

A shortage of properties on the market in Southern California can mean bidding wars

Here’s a useful Guide to Multiple Offer Negotiations for Buyers and Sellers:

• In some situations sellers will have several competing purchase offers to consider. Sellers have several ways to deal with multiple offers. Sellers can accept the "best" offer; they can inform all potential purchasers that other offers are "on the table"; they can "counter" one offer while putting the other offers to the side awaiting a decision on the counter-offer; or they can "counter" one offer and reject the others.
• While the listing broker can offer suggestions and advice, decisions about how offers will be presented – and dealt with – are made by the seller - not by the listing broker.
• There are advantages and disadvantages to the various negotiating strategies you can employ in multiple offer negotiations. A low initial offer may result in buying the property you desire for less than the listed price – or it may result in another buyer’s higher offer being accepted. On the other hand, a full price offer may result in paying more than the seller might have required. In some cases there can be several full price offers competing for the seller’s attention – and acceptance.
• Your buyer-representative will explain the pros and cons of these (and possibly other) negotiating strategies. The decisions, however, are yours to make.
• Purchase offers generally aren’t confidential. In some cases sellers may make other buyers aware that your offer is in hand, or even disclose details about your offer to another buyer in hope of convincing that buyer to make a "better" offer. In some cases sellers will instruct their listing broker to disclose an offer to other buyers on their behalf.
• Listing brokers are required to follow lawful, ethical instructions from their clients in the same way that buyer-representatives must follow lawful, ethical instructions from their buyer-clients. While some REALTORS^® may be reluctant to disclose terms of offers, even at the direction of their seller-clients, the Code of Ethics does not prohibit such disclosure. In some cases state law or real estate regulations may limit the ability of brokers to disclose the existence or terms of offers to third parties.
• You may want to discuss with your buyer-representative the possibility of making your offer confidential, or of establishing a confidentiality agreement between yourself and the seller prior to commencing negotiations.
• Realize that as a represented buyer, your broker likely has other buyer-clients, some of whom may be interested in the same properties as you are. Ask your broker how offers and counter-offers will be presented and negotiated if more than one of her buyer-clients are trying to buy the same property.
• Appreciate that your buyer-representative’s advice is based on past experience and is no guarantee as to how any particular seller will act (or react) in a specific situation.

Information for Sellers

• It’s possible you may be faced with multiple competing offers to purchase your property. Your listing broker can explain various negotiating strategies for you to consider. For example, you can accept the "best" offer; you can inform all potential purchasers that other offers are "on the table" and invite them to make their "best" offer; you can "counter" one offer while putting the other offers to the side awaiting a decision on your counter-offer; or you can "counter" one offer and reject the others.
• If you have questions about the possibility of multiple offers and the way they can be dealt with, ask your listing broker to explain your options and alternatives.
• Realize that each of these approaches has advantages and disadvantages. Patience may result in an even better offer being received; inviting buyers to make their "best" offers may produce an offer (or offers) better than those "on the table" – or may discourage buyers who feel they’ve already made a fair offer resulting in them breaking off negotiations to pursue other properties. Your listing broker will explain the pros and cons of these strategies (and possibly other) negotiating strategies. The decisions, however, are yours to make.
• Appreciate that your listing broker’s advice is based on past experience and is no guarantee about how any particular buyer will act (or react) in a specific situation.

Information for Buyers and Sellers

Perhaps no situation facing buyers or sellers is more potentially frustrating or fraught with potential for misunderstanding and for missed opportunity than presenting and negotiating multiple, competing offers to purchase the same property. Consider the following issues and dynamics:

• Sellers want to get the highest price and best terms for their property.
• Buyers want to buy at the lowest price and on the most favorable terms.
• Listing brokers – acting on behalf of sellers – represent sellers’ interests.
• Buyer representatives represent the interests of their buyer-clients.
• Will a seller disclosing information about one buyer’s offer make a second buyer more likely to make a full price offer? Or will that second buyer pursue a different property?
• Will telling several buyers that each is being given a chance to make their "best offer" result in spirited competition for the seller’s property? Or will it result in the buyers looking elsewhere?
• What’s fair? What’s honest? Why isn’t there a single, simple way to deal with multiple competing offers?

Knowledgeable buyers and sellers realize there are rarely simple answers to complex situations. But some fundamental principles can make negotiating multiple offers a little simpler.

• Realize the listing broker represents the seller – and the seller’s interests, and the buyer-representative represents the buyer – and the buyer’s interests. Real estate professionals are subject to state real estate regulation and, if they are REALTORS^®, to the Code of Ethics of the National Association of REALTORS^®.
• The Code of Ethics obligates REALTORS^® to be honest with all parties; to present offers and counter-offers quickly and objectively; and to cooperate with other brokers. Cooperation involves sharing of relevant information.
• Frequently frustration and misunderstanding results from cooperating brokers being unaware of the status of offers they have presented on behalf of their buyer-clients. Listing brokers should make reasonable efforts to keep buyer-representatives up-to-date on the status of offers. Similarly, buyer-representatives should keep listing brokers informed about the status of counter-offers their seller-clients have made.

Finally, buyers and sellers need to appreciate that in multiple offer situations only one offer will result in a sale, and the other buyers will often be disappointed their offers were not accepted. While little can be done to assuage that disappointment, fair and honest treatment throughout the offer and negotiation process, coupled with prompt, ongoing and open communication, can enhance the chances that all buyers – successful or not – will feel they were treated fairly and honestly.

May 2014

WHEN AN OFFER ARRIVES…SPEAK UP!

Question:
How much time does the listing agent have to present an offer to the seller on a property once a buyer makes an offer? Can the listing agent hold the offer knowing another offer might be coming in?

Answer:
Standard of Practice 1-6 speaks directly to the timing of the presentation of an offer. "REALTORS® shall submit offers and counter-offers objectively and as quickly as possible."

While there can be different perspectives on what "as quickly as possible" means, it’s clear from the Code of Ethics that the listing agent doesn’t have the right to decide unilaterally when an offer is presented. The listing agent must always keep the key concepts of Article 1 in mind. "When representing a buyer, seller, landlord, tenant, or 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."

The presentation of offers is one of the ways in which a listing agent "protects and promotes" the interests of the seller, so the agent should take instructions from the seller on how the offer is presented.

It’s possible the listing agent and seller jointly agree on a negotiation strategy in which the seller decides to wait for other offers to be presented. However, the seller should be told the risk of doing this. State contract law may allow a buyer to withdraw an offer before a valid acceptance, so the seller could be left with nothing to consider. As a courtesy and as part of the negotiation, the seller and listing agent should discuss and decide whether to tell the offering buyer of the seller’s decision to wait for another possible offer.

In my view, "as quickly as possible" means the listing agent should notify the seller immediately of an offer so a dialogue can begin between them about when, where, and how to present it and other offers. Certainly, with today’s array of technology, there are few barriers to communicating an offer to the seller as soon as it has arrived.

(With Permission by Bruce Aydt, REALTOR® Magazine)

BEFORE YOU PRESENT YOUR OFFER

• Call the listing agent and tell them you are about to fax or e-mail over an offer.
• Review the Private Remarks section of the MLS to ensure you are providing standard items as requested by the Listing Agent.
• Print out and keep a copy of the MLS showing the commission. You can’t go back to see the old commission once it has been changed in the MLS
• No need to use a separate CBC unless the agent is not a member of your MLS
• Maybe you want to present your offer in person to the seller. The listing agent has to allow that unless he/she has written instructions from the seller stating otherwise. See MLS Rule 9.6 below.

MLS 9.6 Right of Cooperating Broker in Presentation of Offer. The Cooperating Broker has the right to participate in the presentation of any offer to purchase he or she secures. The Cooperating Broker does not have the right to be present at any discussion or evaluation of that offer by the seller(s) and the Listing Broker. However, if the seller(s) give written instructions to the Listing Broker requesting that the Cooperating Broker not be present when an offer the Cooperating Broker secured is presented, the Cooperating Broker shall convey the offer to the Listing Broker for presentation. In such event, the Cooperating Broker shall have the right to receive a copy of the seller’s(s’) written instructions from the Listing Broker. Nothing in this section diminishes or restricts the Listing Broker’s right to control the establishment of appointments for offer presentations.

View C.A.R.’s Sample Letter "Request to Participate in Presentation"


If you are going to submit your offer by e-mail, view C.A.R.’s Sample Letter "Demand that Offer be Presented to Seller" which was created to help ensure your offer is presented to the seller by the Listing Agent.

9.1 Showings and Negotiations. Appointments for showings and negotiations with the seller(s) for the purchase of listed property filed with the MLS shall be conducted through the Listing Broker except under the following circumstances:

1. the Listing Broker gives the Cooperating Broker specific authority to show and/or negotiate directly with the seller(s), or
   
   
2. after reasonable effort and no less than 24 hours, the Cooperating Broker cannot contact the Listing Broker or his or her representative. However, the Listing Broker, at his or her option, may preclude such direct negotiations by the Cooperating Broker by giving notice to all Participants through the MLS. In the event all showings and negotiations will be conducted solely by the seller(s), the Listing Broker shall clearly set forth such fact in the listing information published by the MLS.

Bottom Line to all Listing Brokers: Return the calls, e-mails and texts from Cooperating Brokers within a reasonable time (within 24 Hours) or the Cooperating Broker can go directly to your seller. Listing Brokers cannot misrepresent the availability of access to show or inspect property.

June 2014

C.A.R. To Publish Names of Code of Ethics Violators

In an effort to make ethics violations and the disciplinary process more transparent, starting August 1, 2014, C.A.R. will be publishing the names – and the other information listed below – of members who are found in violation of the Code of Ethics. If a member is found in violation of the Code, and the discipline is anything other than a letter of warning or stand-alone education, the following information will be published by C.A.R.:

1. The name and photo of the member found in violation If the member’s name is similar to another member’s, their real estate license number and/or office address may also be included in the publication;
2. A list of the Articles of the Code of Ethics that were violated and possibly the applicable standards of practice;
3. A brief factual synopsis of the matter, with the names of other parties removed;
4. The discipline imposed;
5. The effective date and duration of discipline imposed; and
6. The hearing Panel’s rationale for the discipline imposed, if applicable.

The name of the real estate firm will not be published. The name of the responsible broker will be published, only if the broker was also named and found in violation. This information will be published on the members-only section of car.org and local associations will be free to republish the information in their local members-only publications. Local associations will begin requiring respondents named in an ethics complaint to submit a photo at the time of filing a response to the complaint, or allow their picture to be taken before the hearing begins.

Now is the time to make sure you know the rules. There are three free or low cost options for becoming more familiar with the requirements of the NAR Code of Ethics. First, you can take an ethics course as part of your 12 FREE Hours of Online CE Courses as a member benefit from C.A.R. This satisfies the Ethics requirement for your CA license renewal, http://store.car.org/12freece. Or, if you have already used your 12 free hours, you can purchase the California Ethics course in the CE Catalog or through C.A.R. Education at OnlineEd at a member price of $19.99, http://store.car.org/careducation/onlineed/licenserenewal/ethics.html. Another option, is the free Code of Ethics Course through NAR, however it does not offer CE credit and does not fulfill the CA license renewal requirement, http://www.realtor.org/code-ofethics/code-of-ethics-training-home.

Did you know that most violations are related to advertising violations? However, members surveyed overwhelmingly cite problems with failure to cooperate with other agents (unavailability to show, misrepresent availability, give their buyers priority, failure to present all offers, etc.). Make sure you know the rules, so your name is not on the list!

July 2014

No Cooperation = Violation

The Pacific West Association of REALTORS® Grievance Committee is experiencing a large increase of complaints involving members not cooperating with other members. Per the Chairman, Rob Feldman, "The complaints coming in are alarming since the basic core of the association is cooperation among members. Be warned that if you are not presenting all offers to your seller, not returning calls to agents, purposely not making the property available for preview or not inputting the listing into the MLS, you are in violation of the Code of Ethics and M.L.S. Rules and can be fined up to $15,000.00." One agent was even told directly, "It is our office policy not to cooperate with other agents, our Broker will only allow offers to be presented from agents in his own office." The agent replied, "But what about your fiduciary duty to your client?" His reply, "We don’t care." This particular case is still being reviewed.

The Grievance Committee wants to encourage members who are experiencing these types of violations to file formal complaints against the agents and the broker and be prepared to come in for a hearing to present your case. It’s the only way these agents can be formally charged. The Grievance Committee is hearing it loud and clear from our members they are tired of the violations and want you to know the committee does not take these complaints lightly. If you have any questions please feel free to contact Rob Feldman, Grievance Chairman at info@debbieandrobfeldman.com or Lori Smith with PWR at loris@pwr.net. Please review the NAR Fiduciary Duties to make sure you are on the right path.

August 2014

NEW! Enforcement Advocacy Program

WHAT IS IT?

The CalBRE has initiated the Enforcement Advocacy Program which attempts to resolve simple disputes or minor issues between consumers and licensees or subdividers as a potential alternative to setting up formal investigations into such matters. The program includes advocates from the Enforcement, Subdivisions, and Mortgage Loan Activities sections.

IS THIS PROGRAM FOR YOU?

The mission of the Advocacy Program is to respond quickly and informally to concerns of consumers and members of the real estate industry by serving as an informal mediator or facilitator to resolve conflicts and/ or to mitigate or prevent Real Estate Law violations. Over the last 7 months, the program has proven effective in resolving disputes, and in reducing workloads by adressing issues up front as opposed to at the conclusion of a lengthy investigative process.

Many of the issues that advocates work to resolve involve a breakdown in communication between licensees and their principals. It is important to note that, in many of these instances, advocates endeavor to reestablish and facilitate communication, thus solving the issue. The types of cases that have been handled through the Advocacy Program have included small monetary disputes where there did not appear to be a violation of the Real Estate Law. Examples of issues that have been handled through the Advocacy Program are as follows:

• Consumers who needed copies of their documents and had been unable to secure a response.
• Consumers who needed assistance in contacting their agent or broker on a current transaction.
• Consumers who needed information that they had not been able to obtain from their agent for escrow, lenders, or inspectors.
• Consumers questioning commission demands by agents (inside and outside of escrow).
• Consumers trying to cancel transactions or loans.
• Consumers who wanted to know where their earnest money was.
• Consumers who were asked to sign documents or do something they did not understand or did not feel is appropriate.
• Consumers having difficulty with a subdivider.
• Consumers having homeowner association issues while CalBRE still has jurisdiction over a subdivider.
• Consumers having timeshare operators.
• Trouble with tenants who were being evicted following foreclosure without being provided the appropriate 90-day notice period.
• Short sale where one of the agents involved were demanding terms or provisions that were questionable or potentially unlawful. While the CalBRE cannot interfere with an ongoing transaction, we can place a call to the licensee to discuss possible consequences of proceeding.
• Licensees questioning whether offers have been presented to sellers, or to lenders in REO transactions.
• Consumers requesting return of illegally-collected advance fee payments.

FOR MORE INFORMATION, PLEASE CONTACT

Advocates in Orange/San Bernardino Counties: (213) 576-6967
Mortgage Loan Activities Unit: (916) 263-8941
Subdivisions Southern Region: (213) 576-6927

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ALSO NEW... CalBRE’s Cite & Fine Program

Effective July 1, 2014, the California Bureau of Real Estate (CalBRE) can now issue citations and fines to both licensed and unlicensed violators of the Real Estate Law. The "cite-and-fine" program is outlined in detail in California Business and Professions Code § 10080.9 and Commissioner’s Regulations 2907.

What you need to know:

• Citations are generally for minor violations that do not involve fraud, dishonesty, or loss or injury to a consumer.
  Examples:
  • Failure to notify CalBRE of a change in address
  • Failure to disclose a real estate license identification number in their first point of contact advertising material
  • Failure to notify CalBRE of newly employed salespersons who were hired and added to office staff
  • Late or failure to submit required threshold or periodic business activity reports
• Citations may also include an Order of Correction as well as an administrative fine.
• An Order of Correction is a demand to fix or correct the cited violation(s) within a certain amount of time, usually 30 days. Upon correction, the licensee will submit a Statement of Correction/Compliance to CalBRE.
• The maximum fine that can be assessed on a licensee is $2,500 per citation.
  • Fine amounts will vary based upon the type of violation and other criteria, such as if the violation was willful or negligent, or if this is the licensee’s first offense.
  • A licensee typically has 30 days from receipt of the citation to pay the fine.
• Unlicensed individuals are also subject to citations and fines, which are not subject to a cap.
  • The maximum fine for an unlicensed individual is $2,500 per unlicensed act or transaction.
  • CalBRE hopes that the citation authority, and what it could cost, will deter unlicensed activity.
• Failure to pay a fine or comply with the terms of the citation shall subject that person to disciplinary action by the Commissioner.
• A license will not be renewed if an unpaid fine remains outstanding or the terms of a citation have not been complied with.
• There is a review process to contest citations.
  • First level is the Citation Review Conference, which is an informal review of the citation conducted by CalBRE.
  • If the first level review fails, an administrative hearing may be appropriate to remedy the matter.
• CalBRE will not post specific information regarding citations or fines to its website, nor will the information be attached to an individual’s public licensee website record. However, the information is still public and can be obtained through a request submitted to CalBRE pursuant to the Public Records Act.
• Fines received will go into the Recovery Account of the Real Estate Fund, which is used to assist victims of real estate fraud committed by licensed agents and brokers.

According to CalBRE, the intent of the cite-and-fine program is "to help educate both licensees and nonlicensees alike and to encourage and reinforce compliance with Real Estate Law." Given the amount of fraud and unlicensed activity that CalBRE has been seeing in recent years, this program will be beneficial to the real estate community at large. If all goes according to plan, the program will assist in maintaining the integrity of the real estate profession.

September 2014

NEW 2015 LAWS AFFECTING REALTORS® - part 1

No record retention requirement for text messages and tweets - C.A.R. sponsored legislation
Under existing law, a broker must retain for three years copies of all documents executed by him or her or obtained by him or her in connection with any transactions for which a real estate broker license is required. This new law, sponsored by C.A.R., excludes from this record retention requirement electronic messages of an "ephemeral nature" such as text messages, instant messages, and tweets (unless designed to be retained or to create a permanent record). The new law, however, does not clearly exclude emails from record retention requirements. Therefore, per CalBRE's instructions from the Real Estate Bulletin - Spring 2013, emails sent and received in connection with a transaction should still be retained.

AB 2136 (codified as Business and Professions Code §10148 and Civil Code §1624) (effective January, 2015).

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Agency disclosure expanded
Existing law requires listing and selling agents to provide the seller and buyer in a residential one to four real property transaction, including a lease of more than one year, with a prescribed disclosure form containing general information on real estate agency relationships. Existing law also requires the listing or selling agent to confirm their agency relationship by disclosing to the buyer and seller whether he or she is acting as the buyer’s agent exclusively, the seller’s agent exclusively, or as a dual agent representing both the buyer and the seller.

This law extends these disclosure requirements to include transactions involving the sale or lease for more than one year of commercial real property. Commercial property as defined includes vacant land, industrial property or any residential property, even if containing more than four dwelling units.

SB 1171 (codified as Civil Code §2079.13) (effective January 1, 2015).

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Email address collection by CalBRE - C.A.R. sponsored legislation
This C.A.R. sponsored law allows CalBRE to communicate with licensees in a cost-effective and efficient manner by requiring real estate brokers and agents to provide the commissioner with his or her current office or mailing address, current telephone number, and current electronic mail address that he or she uses to perform any activity that requires a real estate license, at which the bureau may contact the licensee. The broker or agent must keep the information current and update it no later than 30 days after making a change. The law also exempts a violation of this requirement from criminal penalties.

This law provides that CalBRE is not required to post or publish electronic mail addresses or telephone numbers collected pursuant to the above provisions, and if this information is released by CalBRE, would require that the information be released in a way that discourages its use in unauthorized or unsolicited commercial electronic mail advertisement programs.

AB 2540 (codified as Business and Professions Code §§10150, 10151, 10162 and 10165.1) (effective January 1, 2105).

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Document bundling is prohibited by HOAs as part of required common interest development disclosures. Seller to pay HOA fees
This C.A.R. sponsored law prohibits the practice of "document bundling" in the sale of units in a common interest development. ("Document bundling" means requiring the purchase of a package of documents together with the legally mandated disclosures.)

Current law requires delivery of various common interest disclosure documents ("mandated CID disclosures"). These disclosures include the CC&Rs, Bylaws, Operating Rules, rental and age restrictions, budget reports, regular and special assessments, etc. Under the new law the fees for these mandated CID disclosures must be individually itemized for each document. Additionally, the fees for all mandated CID disclosures must be separately stated and separately billed from all other fees, fines, or assessments. Only mandated disclosures may appear on the statutory form. Once a written request for the mandated CID disclosures is made, the HOA must estimate the cost of the mandated CID disclosures prior to processing the request. Where there is no hard copy delivery of documents, the HOA may not charge an additional fee for electronic delivery in lieu of the hard copy. The statutory form has been modified to reflect these changes.

This law would also require a seller to provide a prospective purchaser with all mandated CID documents that the seller possesses -- free of charge. If a seller confirms in writing that the document is a current document then the HOA may not bill for it. The association may collect a reasonable fee based upon the association’s actual cost for the procurement, preparation, reproduction, and delivery of the documents – but only from the seller. It is the responsibility of the seller to pay the association, person, or entity that provides the mandated CID disclosures.

As a result of this law, C.A.R. will modify its standard purchase agreements to require that the seller alone will pay for the mandated CID disclosures, but the cost for other contractual disclosures will remain negotiable. Additionally, C.A.R. form HOA will be modified to reflect the required changes by dividing it into three forms: one to request from the HOA the common interest disclosures; one for mandated CID disclosures (per the revised statutory form); and one for additional contractual disclosures as required under the C.A.R. standard purchase agreements.

AB 2430 (codified as Civil Code §§4528 and 4530) (effective January 1, 2015).

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Exclusions from taxation of mortgage debt forgiveness – state law conformed to federal through the end of 2013
This measure extends California’s exclusions of taxation of mortgage debt forgiveness for qualified principal residence indebtedness but only through the end of 2013 in partial conformity with the federal Mortgage Forgiveness Debt Relief Act of 2007 (which sunset at the end of 2013 as well). Qualified principal residence indebtedness is limited to $800,000 ($400,000 for taxpayers filing separately). Forgiven debt will not be treated as cancellation of debt income, but will instead be capital gains. Taxpayers may exclude from capital gains up to $500,000 ($250,000 for taxpayers filing separate) of qualified mortgage debt forgiven.

For information regarding taxation of forgiven mortgage debt for sales after 2013 see C.A.R.’s Realegals® from December 5, 2013 and May 23, 2014, and C.A.R’s Q&A "Taxation of Foreclosures and Short Sales."

AB 1393 (codified as Revenue and Taxation Code §17144.5) (effective on July 21, 2014).

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Affordable Care Act for small employers delayed until 2016. Internal Revenue Service bulletin confirms real estate sales agent’s non-employee status
This law allows small employers to continue to offer their current health plans to employees through December 31, 2015, essentially conforming state law to the federal extension of the Patient Protection and Affordable Care Act (ACA) until January 1, 2016.

Additionally, the Internal Revenue Service issued regulations in February of 2014 clarifying that real estate sales agents are not treated as employees for purposes of the ACA. Accordingly many, if not most real estate brokerage offices, may never reach the number of employees to trigger the employer obligations under the ACA.

Because real estate sales agents will not be counted as employees for ACA, the extension for employer compliance may be a nonissue for most REALTORS®. Nonetheless, REALTORS® are reminded that their membership allows them access to several health plan options as members of the CALIFORNIA ASSOCIATION OF REALTORS®.

SB 1446 (codified as Health and Safety Code §1367.012 and Insurance Code §10112.300) (effective July 7, 2014).

Internal Revenue Bulletin: 2014-9 (TD 9655, "Shared Responsibility for Employer Regarding Health Coverage") (effective February 12, 2014).

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Documentary transfer tax - Purchase price cannot be kept secret
This law repeals the right of a principal to demand that the transfer tax be shown on a separate document. Previously, a seller or buyer of real property could demand from the county that the documentary transfer tax (the DTT) be stated apart from the recorded document. This enabled some principals to effectively keep the purchase price secret, since the amount of the transfer tax can be reliably used to deduce the purchase price. (Although the information could be obtained through a California Public Records Act request.) Now every document subject to the DTT when it is submitted for recordation must show on its face the amount of the tax due. These rules have little impact on listings input into an MLS since MLS Model Rules require the reporting of the selling price within two days after the final closing.

AB 1888 (codified as Revenue and Tax Code §§11932 and 11933) (effective January 1, 2015).

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Property tax exclusion for construction or addition of active solar energy system is extended
This law extends a solar tax exemption for new active solar energy systems until 2025. An existing law, set to expire in 2017, bars property tax increases based upon the construction or addition of a solar system. (Without this exemption, such an improvement would add value to the property and thus result in an increase in the property taxes assessed.)

SB 871 (codified as Revenue and Tax Code §73) (effective June 20, 2014).

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The California Legislature expresses opposition to any reduction in conforming loan limits and urges the President to join in opposition
The Federal Housing Finance Agency has requested comments on a proposal to decrease national conforming loan limits. C.A.R. sponsored this joint resolution declaring the California State Legislature’s support to preserve existing federal loan limits.

This law expresses the Legislature’s opposition to any reduction in the current national and high-cost conforming loan limits for Fannie Mae and Freddie Mac by the Federal Housing Finance Agency (FHFA) and urges the FHFA to continue to resist implementation of any such reductions. It also urges the President and Congress of the United States to join California in opposing any reduction of the national and high-cost conforming loan limits.

SJR 19 filed with Secretary of State August 18, 2014.

New 2015 Laws Affecting Realtors® Part Two in October In September many bills are sent to the Governor, who has until October to act on them. Look for the Realegal®, New 2015 Laws Affecting Realtors® Part Two, in mid October for more new laws.

October 2014

NEW 2015 LAWS AFFECTING REALTORS® - PART 2

Team Names and Fictious Business Names

This C.A.R. sponsored law provides that team names are now authorized for use under the California Business and Professions Code. The use of a team name does not require application to CalBRE for a separate license to be issued for that name. Additionally, sales agents may contract with their broker to file for and to maintain ownership of a fictitious business name, although registered with CalBRE under the name of the broker.

Team Names

• The name is used by two or more real estate licensees
• The name includes a licensee’s surname in conjunction with the term "associates," "group," or "team"
• And the name does not include any term or terms that imply or suggest the existence of a real estate entity independent of a responsible broker.

Despite the above, a team name may still have to be recorded with the county recorder. Advertising that contains a team name, including print or electronic media and "for sale" signage, must adhere to the following:

• The licensee’s name and license number shall be displayed in a conspicuous manner.
• The responsible broker’s identity shall be displayed as prominently and conspicuously as the team name.
• The advertising material shall not contain terms that imply the existence of a real estate entity independent of the responsible broker.

Fictitious Business Names Owned by a Salesperson

This law confirms that a sales agent may maintain ownership of a fictitious business name if permitted by contract with the broker. Additionally, the broker may, by contract, permit the agent to file an application for a fictitious business name with the county clerk on the broker’s behalf, deliver to CalBRE an application signed by the broker for use of the fictitious business name, and pay for any associated fees to the county or CalBRE. Nonetheless a salesperson using a fictitious business name shall use that name only as permitted by his or her responsible broker.

Marketing and solicitation materials using a fictitious business name owned by a sales person, including business cards, print or electronic media and "for sale" signage, shall include:

• The responsible broker’s identity in a manner equally as prominent as the fictitious business name, and
• The salesperson’s name and license number

Assembly Bill 2018 (codified as Business and Professions Code §§10159.5, 10159.6 and 10159.7) (effective January 1, 2015).

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No Shill Bidding - Auction companies must disclose bids placed on seller's behalf and neither lender nor auction company working for a lender may require indemnification by the homeowner or listing agent as a condition of lender approval of sale

This law, on and after July 1, 2015, with respect to an auction that includes the sale of real property, prohibits a person from causing or allowing any person to bid at a sale for the sole purpose of increasing the bid on any real property being sold by the auctioneer. The law, however, does allow an auctioneer or another person to place a bid on the seller’s behalf during an auction of real property if notice, as specified, is given that liberty for that bidding is reserved. The law also requires in this regard that the person placing that bid contemporaneously disclose to all auction participants that the particular bid has been placed on behalf of the seller.

The law exempts a credit bid made by a creditor with a security interest in the property that is the subject of auction when the credit bid can result in the transfer of title to property to the creditor.

Finally, this law prohibits a lender or an auction company that is retained to control aspects of a residential real property transaction from requiring, as a condition of receiving a lender’s approval of the transaction, a homeowner or listing agent to defend or indemnify the lender or auction company from any liability alleged to result from the actions of the lender or auction company and declares a clause, provision, covenant, or agreement in violation of this prohibition to be against public policy, void, and unenforceable.

Assembly Bill 2039 (codified as Civil Code §§ 2079.23 and 1812.610) (effective July 1, 2015).

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Owners in three California cities can register vacant real property to protect against squatters

This law allows an owner of residential property in the Cities of Palmdale and Lancaster in the County of Los Angeles or the City of Ukiah in the County of Mendocino, or an agent of the property owner, to register vacant real property with the local law enforcement agency and to execute, under penalty of perjury, a Declaration of Ownership of Residential Real Property.

Further, an owner or an agent of the property owner, can file the Declaration of Ownership of Residential Real Property with the local law enforcement agency of the jurisdiction in which the property is located. The property owner must post the filed declaration on the property listed in the declaration. The law requires the local law enforcement agency with which the property is registered to respond as soon as practicable after being notified that an unauthorized person has been found on the property and to take specified action, including requiring a person who is found on the property to produce written authorization to be on the property or other evidence demonstrating the person’s right to possession, and to notify any person who does not produce that authorization or other evidence that the owner or owner’s agent may seek to obtain a court order and that the person will be subject to arrest for trespass if he or she is subsequently found on the property in violation of that order.

The property owner, or an agent of the property owner, can file an action for a temporary restraining order and injunctive relief against a person who is found on the property not less than 48 hours after that person has been so notified. However, a property owner, or an agent of the property owner, who files a declaration that includes false information regarding the right to possess the property is liable to any person who, as a result of the declaration, vacates the property, for damages, as specified. The provisions of this law apply only to 1 to 4-unit residences in the Cities of Palmdale and Lancaster in the County of Los Angeles and the City of Ukiah in the County of Mendocino. This bill would provide that its provisions would be operative until January 1, 2018.

Assembly Bill 1513 (codified as Code of Civil Procedure §§ 527.11 and 527.12).

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Judgment Debtor retains equitable right to redeem real property after execution sale even beyond 90 day statutory period

In 1982 the legislature codified the Enforcement of Judgments Law which provides that a sale of real property pursuant to execution sale regarding enforcement of judgments is absolute and may not be set aside. As a procedural safeguard, that same law states that if the sale was improper because of irregularities in the proceedings, because the property sold was not subject to execution among other reasons, the judgment debtor may commence an action within 90 days after the date of sale to set aside the sale if the purchaser at the sale is the judgment creditor.

However, the Enforcement of Judgments Law was not originally intended to affect the equitable right of redemption. This is the right that a judgment debtor has to redeem property from a sale where there may be a grossly inadequate price, or where the purchaser is guilty of unfairness or has taken undue advantage, or in other circumstances which could merit an equitable right to redeem beyond the 90 day period. This law declares that these provisions of existing law do not affect, limit, or eliminate a judgment debtor’s equitable right of redemption.

Assembly Bill 2317 (codified as Code of Civil Procedure §701.680) (effective January 1, 2015).

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Security Deposits - Landlords and tenants may agree to use electronic communications regarding the security deposit generally. Delivery of the itemization of deposit still requires "personal receipt" or by mail.

This omnibus law, among other things, permits landlords and tenants to agree to the use of electronic communications for some notices and agreements pertaining to the establishment and handling of security deposits, including the Notice of Right to Inspection Prior to Termination of Tenancy (C.A.R. form NRI). Nonetheless, handling of the security deposit law itself, Civil Code § 1950.5, requires that the itemization of the security deposit and notice to the tenant of its disposition must still be made be either personal delivery or first class mail. This law may potentially impact the use of electronic signatures for lease agreements.

Assembly Bill 2747 (relevant section codified as Civil Code §1633.3) (effective January 1, 2015).

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Seller/Borrower has right to request suspension of HELOC during escrow

Presently, if a borrower has a home equity line of credit (HELOC) secured by a lien on his or her house, the HELOC loan is supposed to be closed and not drawn on during the sale or refinancing of the house. If the lender fails to close the HELOC during escrow and money is drawn on, the underlying lien and loan may become the debt of the innocent buyer.

This law facilitates the seller’s/borrower’s request to suspend the HELOC by creating a form for the seller/borrower to sign in escrow, the ultimate purpose being to avoid the mistake of drawing upon a HELOC during the escrow or immediately following the sale of the house.

Assembly Bill 1770 codified as Civil Code §2943.1. Effective on July 1, 2015 to remain in effect only through July 1, 2019.

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Employers required to provide their employees paid sick leave

This law enacts the Healthy Workplaces, Healthy Families Act of 2014 to provide that an employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the commencement of employment is entitled to paid sick days for prescribed purposes, to be accrued at a rate of no less than one hour for every 30 hours worked. An employee is entitled to use accrued sick days beginning on the 90th day of employment. It authorizes an employer to limit an employee’s use of paid sick days to 24 hours or 3 days in each year of employment, and prohibits an employer from discriminating or retaliating against an employee who requests paid sick days. This law requires employers to satisfy specified posting and notice and recordkeeping requirements.

It also authorizes the Labor Commissioner to impose specified administrative fines for violations and would authorize the commissioner or the Attorney General to recover specified civil penalties against an offender who violated these provisions on behalf of the aggrieved, as well as attorney’s fees, costs, and interest.

Assembly Bill 1522 (codified as §§245 et seq. and 2810.5 of the Labor Code) (effective January 1, 2015).

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Employers’ training and education of supervisory employees regarding sexual harassment must include prevention of abusive conduct. This law applies to employers who employ 50 or more employees with persons providing services pursuant to contract as "employees" – a definition which may include agents.

Existing law requires employers, as defined, with 50 or more employees to provide at least 2 hours of training and education regarding sexual harassment to all supervisory employees, as specified. Existing law requires each employer to provide that training and education to each supervisory employee once every 2 years.

This law additionally requires that the above-described training and education include, as a component of the training and education, prevention of abusive conduct, as defined.

For purposes of this law only, "employer" means any person regularly employing 50 or more persons or regularly receiving the services of 50 or more persons providing services pursuant to a contract, or any person acting as an agent of an employer, directly or indirectly, the state, or any political or civil subdivision of the state, and cities.

Assembly Bill 2053 (codified Government Code §12950.1) (effective January 1, 2015).

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Licensing – Criminal Conviction

This law prohibits boards and bureaus within the Department of Consumer Affairs, which includes CalBRE, from denying a professional license to an applicant based solely on a prior conviction that was dismissed by a court either because the individual completed the terms of his or her sentence without committing any additional offenses or because a dismissal would serve the interests of justice. Obtaining an order of dismissal in this way is referred to as expungement which may be granted upon petition to a person who successfully serves and completes all the terms of their sentence including payment of restitution and fines. Expungement is not available to persons who were sentenced to prison or who committed certain sex or other offenses.

Assembly Bill 2396 (codified as Business and Professions Code §480) (effective January 1, 2015).

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Licensing – Citizenship or Immigration Status This law prohibits CalBRE (amongst other licensing boards under the Department of Consumer Affairs) from denying a license based on citizenship or immigration status. It also requires the applicant to provide an individual taxpayer identification number or a social security number for an initial or renewal license.

Senate Bill 1159 (amending §§ 30, 2103, 2111, 2112, 2113, 2115, 3624, and 6533 of, and adding § 135.5 to, the Business and Professions Code, amending § 17520 of the Family Code, and amending § 19528 of the Revenue and Taxation Code) (effective January 1, 2015).

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HOAs and landlords must permit personal agriculture

Existing law regulates the terms and conditions of residential tenancies, and prohibits a landlord from interfering with a tenant’s quiet enjoyment of the premises. This law requires a landlord to permit a tenant to participate in personal agriculture in portable containers approved by the landlord in the tenant’s private area if certain conditions are met.

Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments and authorizes the board of directors of the association that manages the development to adopt and amend the operating rules for the development. This law makes void any provision of a governing document of a common interest development that effectively prohibits or unreasonably restricts the use of a homeowner’s backyard for personal agriculture.

Assembly Bill 2561 , (codified as Civil Code §§ 1940.10 and 4750 to the Civil Code) (effective January 1, 2015).

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HOAs prohibited from fining members for reducing water use

This law prohibits a homeowner’s association from imposing a fine or assessment against a member who reduces or eliminates watering of vegetation or lawns during any period during which the Governor or local government has declared an emergency due to drought. In January of 2014 Governor Brown declared a State of Emergency to exist in California due to severe drought conditions.

Assembly Bill 2100 (codified as Civil Code §4735) (effective July 21, 2014).

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Emergency regulation restricting use of water for outdoor landscapes adopted by State Water Resources Control Board

In January of 2014 Governor Brown declared a State of Emergency to exist in California due to severe drought conditions. Since then, other executive orders by the Governor cleared the way for the state water board’s adoption of emergency regulations to prevent the waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion of water, to promote water recycling or water conservation.

On July 15, the state water board adopted emergency regulations restricting water use for outdoor landscapes. The regulations prohibit using potable water outdoors, such as watering your lawn, in a manner that results in runoff water on sidewalks, driveways, roadways and your neighbor’s property; washing a car with a hose unless the hose is fitted with a shut-off nozzle; watering down your driveway and sidewalk; and using water in a decorative fountain unless it recirculates. Violation of the regulations is an infraction and may result in a fine of up to $500 for each day the violation occurs.

C.A.R.’s form "Statewide Buyer and Seller Advisory" (SBSA) (an optional disclosure form) advises potential buyers of the possibility of governmental limitations on the amount of water available to the property, restrictions on the use of water, and an increasingly graduated cost per unit of water use, including penalties for excess usage.

Article 22.5 Drought Emergency Water Conservation §864 (effective July 15, 2014).

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Energy Use Disclosure (Assembly Bill 1103) Requirements for Commercial Property: Compliance On or after July 1, 2014 total gross square foot area measuring 5,000 square feet up to 10,000 square feet delayed to July 1, 2016

The sale or lease of commercial property meeting certain square footage measurements requires the delivery of energy use disclosure to the prospective buyer or tenant. The disclosure trigger was to become effective for the sale of lease or commercial property measuring between 5,000 and 10,000 square feet on July 1, 2014. The California Energy Commission amended subdivision (c) of section 1682 of title 20 of the California Code of Regulations as an emergency regulatory action to change the effective date from July 1,2014 to July 1,2016 when the disclosure requirements of Public Resources Code section 25402.10 apply for a nonresidential building with a total gross square foot area measuring 5,000 square feet up to 10,000 square feet. The Office of Administrative Law approves this emergency regulatory action pursuant to sections 11346.1 and 11349.6 of the Government Code.

This emergency regulatory action became effective on 9/2/2014 and will expire on 3/3/2015.

www.energy.ca.gov/ab1103/documents/2014-09-03_emergency_reg_notice.pdf

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Expanded educational requirements for certain mortgage loan originators (MLOs)

This law does not change the education requirements for applicants of CalBRE-issued MLO licenses. It only applies to agents licensed under the California Finance Lenders Act and the California Residential Mortgage Licensing Act. For those agents it requires completion of an additional two hours of approved education related to relevant California law as part of pre-license education or continuing education.

Senate Bill 1459 (codified as Financial Code §§22109.2, 22109.3, 22109.5, 50142, 50143 and 50145) (effective January 1, 2015).

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Los Angeles County - separate notification of notice of default or sale sent by county recorder as anti-fraud measure

This law is specific to Los Angeles County. It extends to 2020 a previous measure that directs the L.A. County recorder to notify by mail the owner of a property and the occupants or tenants of a notice of default or a notice of sale. Notices of default and notices of sale are already required to be mailed to the property owner and posted under state law, so this additional notice may appear redundant. However, the intent of this law is to alert an owner to potential fraud, since someone recording fraudulent notices of default or sale would likely not mail out the state-law mandated notice of default or sale.

Senate Bill 827 (codified as Government Code §§27297.6 and 27387.1) (effective January 1, 2015).

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California Red-Legged frog declared state amphibian This law designates the California red-legged frog as the "State Amphibian." Presently, the frog is subject to protection under both federal and state laws passed in 1996. Additionally, in 2010 the US Fish and Wildlife Service announced 1,600,000 acres of protected land as a critical habitat for the species throughout California which has implications regarding development and use of such land. Although the designation does not provide any further legal protection to the frog as a threatened species, it does highlight the importance that California places on the frog’s preservation.

Assembly Bill 2364 (codified as Government Code §422.7) (effective January 1, 2015).


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FOR MORE INFORMATION, PLEASE CONTACT

Advocates in Orange/San Bernardino Counties: (213) 576-6967
Mortgage Loan Activities Unit: (916) 263-8941
Subdivisions Southern Region: (213) 576-6927

November 2014

PRESENTING AND NEGOTIATING MULTIPLE OFFERS

"When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their clients. This obligation to the client's interests is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly."

"REALTORS® shall submit offers and counter - offers objectively and as quickly as possible."

Perhaps no situation routinely faced by REALTORS® can be more frustrating, fraught with potential for misunderstanding and missed opportunity, and elusive of a formulaic solution than presenting and negotiating multiple purchase or lease offers and/or counter-offers on the same property. Consider the competing dynamics. Listing brokers are charged with helping sellers get the highest price and the most favorable terms for their property. Buyers' brokers help their clients purchase property at the lowest price and on favorable terms. Balanced against the Code's mandate of honesty is the imperative to refrain from making disclosures that may not, in the final analysis, be in a client's interests.

Will disclosing the existence of one offer make a second potential purchaser more likely to sign a full price purchase offer—or to pursue a different opportunity? Will telling several potential purchasers that each will be given a final opportunity to make their best offer result in spirited competition for the seller's property or in a table devoid of offers?

What is fair? What is honest? What is to be done? Who decides? And why is there not a simple way to deal with these situations?

As REALTORS® know, there are almost never simple answers to complex situations. And multiple offer presentations and negotiations are nothing if not complex. But, although there is not a single, standard approach to dealing with multiple offers, there are fundamental principles to guide REALTORS®. While these guidelines focus on negotiation of purchase offers, the following general principles are equally applicable to negotiation of lease agreements.

• Be aware of your duties to your client — seller or buyer—both as established in the Code of Ethics and in state law and regulations.

The Code requires you to protect and promote your client's interests. State law or regulations will likely also spell out duties you owe to your client.

• The Code requires that you be honest with all parties. State law or regulations will likely spell out duties you owe to other parties and to other real estate professionals. Those duties may vary from the general guidance offered here. REALTORS® need to be familiar with applicable laws and regulations.

Be aware of your duties to other parties — both as established in the Code of Ethics and in state law and regulation.

• Remember that the decisions about how offers will be presented, how offers will be negotiated, whether counter offers will be made and ultimately which offer, if any, will be accepted, are made by the seller — not by the listing broker.
• Remember that decisions about how counter offers will be presented, how counter offers will be negotiated, and whether a counter offer will be accepted, are made by the buyer—not by the buyer's broker.
• When taking listings, explain to sellers that receiving multiple, competing offers is a possibility. Explain the various ways they may be dealt with (e.g., acceptance of the "best" offer; informing all potential purchasers that other offers are on the table and inviting them to make their best offer; countering one offer while putting the others to the side; countering one offer while rejecting the other offers, etc.).

Explain the pluses and minuses of each approach (patience may result in an even better offer; inviting each offeror to make their "best" offer may produce a better offer[s] than what is currently on the table—or may discourage offerors and result in their pursuing other properties).

Explain that your advice is just that and that your past experience cannot guarantee what a particular buyer may do.

Remember—and remind the seller—that the decisions are theirs to make — not yours, and that you are bound by their lawful and ethical instructions.

• When entering into buyer representation agreements, explain to buyers that you or your firm may represent more than one buyer client, that more than one of your clients or your firm's clients may be interested in purchasing the same property, and how offers and counter offers will be negotiated if that happens.

Explain the pluses and minuses of various negotiating strategies (that a "low" initial offer may result in the buyer purchasing the desired property at less than the listed price—or in another, higher offer from another buyer being accepted; that a full price offer may result in the buyer purchasing the desired property while paying more than the seller might have taken for the property, etc.).

Explain to the buyer that sellers are not bound by the Code of Ethics. Sellers, in multiple offers situations, are not prohibited from "shopping" offers. Real estate brokers may unless prohibited by law or regulation "shop" offers. Therefore, REALTORS® assisting purchasers in formulating purchase offers should advise those purchasers it is possible that the existence, terms and conditions of any offer they make may be disclosed to other purchasers by sellers or by sellers’ representatives except where such disclosure is prohibited by law or regulation.

Remember—and remind the buyer—that the decisions are theirs to make—not yours, and that you are bound by their lawful and ethical instructions.

• If the possibility of multiple offers—and the various ways they might be dealt with — were not discussed with the seller when their property was listed and it becomes apparent that multiple offers may be (or have been) made, immediately explain the options and alternatives available to the sellers—and get direction from them.
• When representing sellers or buyers, be mindful of Standard of Practice 1 6's charge to ". . . submit offers and counter offers objectively and as quickly as possible."
• While the Code of Ethics does not expressly mandate "fairness" (given its inherent subjectivity), remember that the Preamble has long noted that ". . . REALTOR® has come to connote competency, fairness, and high integrity. . . ." If a seller directs you to advise offerors about the existence of other purchase offers, fairness dictates that all offerors or their representatives be so informed.
• Article 3 calls on REALTORS® to ". . . cooperate with other brokers except when cooperation is not in the client's best interest." Implicit in cooperation is forthright sharing of information related to cooperative transactions and potential cooperative transactions. Much of the frustration that occurs in multiple offer situations results from cooperating brokers being unaware of the status of offers they have procured. Listing brokers should make reasonable efforts to keep cooperating brokers informed. Similarly, buyer brokers should make reasonable efforts to keep listing brokers informed about the status of counteroffers their seller clients have made.
• Realize that in multiple offer situations only one offer will result in a sale and one (or more) potential purchasers will be disappointed that their offer was not accepted. While little can be done to assuage their disappointment, fair and honest treatment throughout the process; coupled with prompt, ongoing and open communication, will enhance the likelihood they will feel they were treated fairly and honestly. In this regard, ". . . REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, 'Whatsoever ye would that others should do to you, do ye even so to them.' "(from the Preamble to the Code of Ethics).

FOR MORE INFORMATION, PLEASE CONTACT

Advocates in Orange/San Bernardino Counties: (213) 576-6967
Mortgage Loan Activities Unit: (916) 263-8941
Subdivisions Southern Region: (213) 576-6927

December 2014

NOTICE FOR LOCALS TO SEND TO MEMBERS

Changes to California Code of Ethics and Arbitration Manual for 2015

The California Code of Ethics and Arbitration Manual, which is incorporated into your Association Bylaws and is therefore binding on you, has been extensively revised for 2015. This notice describes the key changes that have been made to the Manual.

New Procedure for Obtaining Member Photos for Publication of Ethics Discipline

The current C.A.R. policy is to publish photos of members who are disciplined for ethics violations with a fine, reprimand, probation, suspension, or expulsion. The process for obtaining this photo has been changed as follows:

• After being found in violation of a publishable offense, a disciplined member will provide a photo to C.A.R. and the local Association within 10 calendar days after final adoption of the discipline recommendation by the local Association’s Board of Directors.
• The member will provide a photo that is current, accurate and at least the size and quality of a passport photo along with a restatement of the authorization to use the photo in the new Form D-24.
• Members may simply take a digital photo, as long as it is of sufficient quality and size, and email it to the association along with Form D-24.
• Failure to provide the authorization with a photo in a timely manner will result in suspension of membership until the authorization form and photo are provided.
• The disciplined member must own or have right to use the submitted photo, and must provide a license to use the photo consistent with the Manual’s publication requirements.
• C.A.R. will publish a discipline summary without a photo if the photo has not been received in time and will include a note with the summary that the member was suspended for refusal to provide a photo.

The 2015 Code of Ethics and Arbitration Manual has been revised to incorporate this procedure, and the disciplinary forms have also been revised.

Starting January 1, 2015, the new disciplinary forms will be used for all ethics cases, including for cases that were initiated prior to that date.

Timeframes in the Manual Expedited as Required by NAR

This is a partial list of timeframe changes made to the Manual based on NAR’s mandates. The deadlines for many steps in the ethics discipline process have been shortened or added where the Manual provided no specific deadlines.

• Time for the Grievance Committee to review a complaint: no later than 45 days after receipt of complaint.
• Hearing date selected no later than 20 days after the Grievance Committee forwards the complaint for a hearing.
• Response provided to complainant within 15 days of the Association’s receipt.
• The written hearing panel decision is provided to the Association no later than 48 hours after the hearing.
• The hearing panel decision is transmitted to the parties within 5 days.
• The request for review is heard no later than 30 days after receipt of the request for review by the Association.
• The review Panel decides within 5 days after the review hearing.
• Absent a request for review, final action by the Board of Directors must take place no later than 30 days after the date the hearing Panel’s decision is transmitted to the parties.

Additionally, a local association may choose to adopt a "fast track" process for receipt, consideration and resolution of ethics complaints. The differences between the regular disciplinary process and the "fast track" process are described in a document included in a supplement to the Manual. If an association chooses to adopt the "fast track" process, it must be used for all disciplinary complaints received by the association.

Continuances: Parties Must Agree to a New Date to get a Continuance
Both the Discipline and Arbitration portions of the Manual now require that requests for continuances shall only be granted when all parties mutually agree to a subsequent specified date, or when the hearing panel chair determines that denying the request for a continuance would deny the requesting party a fair hearing.

Rehearings Eliminated
Rehearings have been completely eliminated from the disciplinary process. Only requests for review are now available to a party who wishes to challenge the decision of the hearing panel.

Remote Testimony and Appearances
Language has been added clarifying that parties and their witnesses may request permission to participate in proceedings remotely (i.e., via teleconference or videoconference). Only parties eligible to attend the entire hearing in person are entitled to participate "remotely" for the entirety of the hearing. Witnesses may only participate remotely for their own testimony.

Other Changes
All changes to the Manual (including all of the changes discussed above) are marked in red underlinedfont in the Manual.

The complete 2015 Code of Ethics and Arbitration Manual can be downloaded from the C.A.R. website at: www.car.org/legal/MLSproStandards/pro-standards-materials/.