Understanding the Realtor® Code of Ethics: Article 9- Contract Behavior

In my quest to de-code the National Association of Realtors® Code of Ethics I now give you #7 in the series. In this post I will discuss Article 9. This article deals with how contracts are written, conveyed and “kept together” according to the National Association of Realtors®.

Article 9
REALTORS®, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases are in writing in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties. A copy of each agreement shall be furnished to each party to such agreements upon their signing or initialing.

Now, there are a 3 main parts to this Article that need to be addressed.

1. The Realtor® has the duty to keep current any documents that are pertaining to the real estate contract (purchase, sale, lease) through the use of written extensions or amendments. In other words, if there are any changes, additions or subtractions to a contract it must be in writing and kept as a part of the contract.

2. This is the new Standard of Practice – adopted January 2007. “When assisting or enabling a client or customer in establishing a contractual relationship (e.g., listing and representation agreements, purchase agreements, leases, etc.) electronically, REALTORS® shall make reasonable efforts to explain the nature and disclose the specific terms of the contractual relationship being established prior to it being agreed to by a contracting party.” We are doing more and more online, and sometimes what is and is not understood falls through the cracks. Realtors® are not allowed to let things “fall through the cracks” no matter what. So, before a consumer signs anything a Realtor® is obligated to explain and disclose (Hey! It’s that word again…) everything that the “contractual relationship” entails. The consumer has the right to know what they are entering into.

Those who may be interested, let me recommend a great book The Digital Paper Trail – by Oliver Frascona Esq.and Katherine Reece.

3. Finally, (and this one is my favorite) a Realtor® must use “clear and understandable language” when writing contracts, leases, addendums, extensions, agreements, etc. Here are some basic guidelines:

   a. Avoid creativity. No need to be creative in contract law.
   b. Fill in the blanks. Many
states offer great contracts that almost write themselves.
   c. Advise legal assistance. Der. This should be done ALL THE TIME, anyway.
   d. Use simplicity. Don’t complicate things.
   e. Do not use exculpatory language. (Click on the link.) There is no need to assign innocence or guilt to anything or anyone in a contract.
Don’t use flowery language. There is no need for a garden in a contract. Let’s save the flowers for this post, shall we?

Think about it this way… There is never a need to enter “guilt” or “innocence” to a contract. First, that is out of the scope of any Realtor® … and second, I would question the whole contract/deal if “guilt” or “innocence” had to be a part of it. Right?

What’s more? A Realtor® needs to use language that all parties of the contract can understand. A person should not have to have a GRI and a law degree to understand the contract. Further, if a contract dispute winds up before a jury, the jury will be made up of “common people” who will need to understand exactly what the contract is saying. If it is not simple, than there is a very good chance that it will be misunderstood. 

Finally, using flowery, bombastic jargon makes a Realtor® look like a magniloquent, pompous ass and does nothing for the reputation of integrity that a Realtor® stands for.

Please take a moment to read through my previous posts about the Code of Ethics:

Understanding the Realtor® Code of Ethics … Article 1
Understanding the Code of Ethics -Article 2: Disclosure
Understanding the Realtor® Code of Ethics – Article 3: Cooperating & Compensation
Understanding the Realtor® Code of Ethics: Articles 4 and 5- Disclosure of Ownership Interest
Understanding the Realtor® Code of Ethics: Articles 6 & 7 -Disclosing Compensation
Understanding the Realtor® Code of Ethics: Article 8 – Other People’s Money
Posted By: Springs Realty Scoop – Colorado Springs Real Estate


About Mariana

I am a Mom, Wife, Real Estate Agent Trainer and Mortgage Lender. Find me at http://www.marianawagner.com
This entry was posted in Buyer Info., Investor Info., Real Estate Consumer Info., Realtor® Code of Ethics, Seller Info.. Bookmark the permalink.

One Response to Understanding the Realtor® Code of Ethics: Article 9- Contract Behavior

  1. Ereen Howard says:

    Great Book I bought my book on January 11, 2011 on St. Croix, United States Virgin Islands.

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