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Code of Ethics Case Studies

Case #4-4: Responsibility for Subordinates

REALTOR-ASSOCIATE® B, a sales associate in REALTOR® A's office, exclusively listed a suburban house and subsequently convinced the seller to accept $20,000 less than the listed price. Several weeks after the transfer of title, the seller filed a written complaint with the Board, charging REALTOR-ASSOCIATE® B with a violation of Article 4 in that REALTOR-ASSOCIATE® B had sold the property to his mother without disclosing this relationship to his client, the seller, and that REALTOR-ASSOCIATE® B got the price reduced for his mother's benefit.

The complaint was reviewed by the Grievance Committee which, with the complainant's concurrence, named REALTOR® A as an additional respondent.

At the hearing, REALTOR-ASSOCIATE® B stated that he saw nothing wrong in selling the property to his mother and that the seller would have accepted the contract at the reduced price, even if the buyer had not been REALTOR-ASSOCIATE® B's mother. REALTOR® A stated that REALTOR-ASSOCIATE® B was an independent contractor licensed with him. REALTOR® A acknowledged that he was accountable under the Code for the actions of other REALTORS® and REALTOR-ASSOCIATES® associated with him but shared with the panel information on his firm's orientation program. He noted that he required each licensee joining his firm to complete board-sponsored Code training. In addition, he required everyone in his firm to read Professionalism in Real Estate Practice, and produced a form signed by REALTOR-ASSOCIATE® B stating that he had carefully read and understood his personal obligation under the Code of Ethics.

The panel found that REALTOR-ASSOCIATE® B should have made his relationship to the buyer, his mother, unmistakably clear to the seller. He should have disclosed in writing that the buyer was his mother so there would have been no misunderstanding.

Based on your understanding of the Code of Ethics Article 4, what do you think the hearing panel concluded? Show Answer