Codes of ethics
The real estate industry has developed a code of professional standards and ethics as a guideline in serving the real estate needs of consumers. This professional code has emerged from three primary sources:
- federal and state legislation
- state real estate licensing regulation
- industry self-regulation through trade associations and institutes
Federal legislation focuses primarily on anti-discrimination laws and fair trade practices. State laws and licensing regulations focus on agency and disclosure requirements and regulating certain brokerage practices within the state jurisdiction. Real estate trade groups focus on professional standards of conduct in every facet of the business.
By observing professional ethics and standards, licensees will serve clients and customers better, foster a professional image in the community, and avoid regulatory sanctions and lawsuits.
Today’s professional ethics are not only important for one’s career; they are also legal imperatives. Unethical practice, such as misrepresentation of material facts, fraud, and culpable negligence, is prohibited and punishable in all aspects of real estate practice.
Culpable negligence. Culpable negligence occurs when a person, such as a real estate broker, does not perform his or her required duties and responsibilities as the broker knows he or she should. The failure to perform need not be intentional to be considered negligent. It is more of a disregard of the duties and consequences of not performing them. Remember, one fiduciary duty of brokers is skill, care, and diligence. Failure to perform real estate activities with skill, care, and diligence may be ruled culpable negligence. In Florida, culpable negligence is not only unethical but is also a misdemeanor of the second degree.
Professional conduct excludes disparagement of competitors. Real estate professionals also
- forgo pursuit of unfair advantage
- arbitrate rather than litigate disputes
- respect the agency relationships of others
- conform to accepted standards of co-brokerage practices