Ethics Newsletter

August 2018

ARTICLE 13 – Part 1: Preparation of Instrument Unrelated to Real Estate Transaction

The Complaint:

Client A dropped in to see his friend, REALTOR® B, who had recently provided professional services to Client A’s company. Client A said the company was sending him on business to the Far East; that the trip would involve a good deal of air travel in remote areas; and that he would like to leave a power of attorney with his wife while he was gone "just in case." He asked REALTOR® B if he would prepare a power of attorney for him and REALTOR® B said, "It’s a simple document. I’ll be glad to prepare one for you," and did.

The Hearing:

This action came to the attention of the Grievance Committee of the Board of REALTORS®, which, after review, filed a complaint with the Board’s Professional Standards Committee, charging REALTOR® B with a violation of Article 13 of the Code of Ethics.

REALTOR® B’s defense was that he understood Client A’s request to be, essentially, for a real estate service since from his general knowledge of Client A’s personal affairs, he knew that Client A could have no reason for giving his wife a power of attorney except to put her in a position to act in real estate transactions. He contended that because his preparation of a legal document was directly related to real estate matters, he had rendered real estate, not legal, services to Client A.

The Conclusion:

It was the judgment of the Hearing Panel that REALTOR® B’s defense was without merit; that by preparing the power of attorney, he had engaged in the practice of law in violation of Article 13 of the Code.


Real-life situations to help agents better understand The Code. Each month, the Professional Standards Department will bring you an Article of the Code of Ethics and an example of a case file related to that Article.

These interpretations of the Code of Ethics present specific situations involving charges of alleged unethical conduct by REALTORS®, which are reviewed by a peer panel of Association 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.


RED (Rapid Ethics Delivery)

There are times when our REALTOR® complaint process can feel too cumbersome or difficult to understand. The requirements of paperwork and attending the hearing tend to overshadow the feeling of wanting to be heard or wanting assistance in fixing the problem.

Sometimes disputes just need a facilitated conversation to get both parties on the same page. Our RED (Rapid Ethics Delivery) Program offers an attempt at resolution between the parties in conflict.

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.

Q: How do you report a violation?
A: To report a violation, the Reporting Party completes the RED Questionnaire found on PWR’s website.

Q: 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.

Q: 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.

Q: 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.

Q: 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.

Q: 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.

Q: 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.

If you have any questions about our RED Program, please contact Lori Smith with PWR directly at (714) 245-5525 or e-mail: