Ethics, Professional Conduct, and Recordkeeping
Fiduciary duties and the Code of Ethics
Fiduciary duties - care, obedience, loyalty, disclosure, accounting, confidentiality - set the floor. The REALTOR® Code of Ethics adds duties to the public and to other practitioners: protect and promote the client's interest (Article 1), avoid exaggeration and misrepresentation (Article 2), cooperate with other brokers (Article 3), do not conceal material facts (Article 9), do not solicit a listing exclusively listed with another broker (Article 16), and arbitrate certain disputes (Article 17).
Antitrust and fair dealing
Never discuss commission rates, fees, or cooperative splits with competitors; those conversations can be per se Sherman Act violations. Do not steer buyers based on protected class or use steering language in marketing. Present all offers promptly unless the seller has instructed otherwise in writing.
Recordkeeping
- Retain listing and buyer-broker agreements, agency disclosures, offers, counteroffers, inspection notices, closing statements, and advertising copy.
- Keep trust-account records - deposit slips, ledgers, and the three-way reconciliation - for the period the state requires, commonly three to five years.
- Electronic files must be legible and retrievable; back them up.
- Advertising records should show brokerage identification and internal approval.
Worked example
At a networking lunch, two brokers agree that "nobody should charge under 5% in this county." That is a horizontal price agreement - a per se antitrust violation, regardless of whether anyone was harmed and regardless of how informal the setting was. Both brokers and their firms face exposure, and the absence of a written record does not help them.
Traps that cost marks
- Assuming an ethics complaint requires an aggrieved client; the Code reaches conduct toward the public and other practitioners.
- Discarding transaction files right after closing when the retention clock has not run.
- Posting a client testimonial without the brokerage name in the advertisement.