N.J. Course Approval #P1000161
NJ Core Course 6 hrs. Ethics on-line credit hours
Section 1 Managing Risk Through Ethics Creating the foundation for ethical decision making and learning how to implement these traits in the everyday career of the licensee are the foundation for this course. By using strong ethical decision making practices the licensee decreases their potential risk, thereby managing it. Hence, the title to the first chapter! The term “ethics” is explored in depth in order to create the basis for recognizing the need for this type of behavior in a successful career. A discussion regarding principles and values is included as well. This discussion continues to bring the licensee to the understanding that basic principles and values will lead to ethical decision making and examples are abundant.
Moral reasoning brings up the steps along the way to ethical maturity. Moral reasoning has many steps and people proceed from one to the next.
There are complete explanations of terms and many examples pertaining to the subject being discussed at each point.
The agent has the opportunity to look at possible real life scenarios and learn how to handle them ethically and legally.
Reference is made in different sections to the NAR Code of Ethics and the foundation it provides for a satisfactory career. The Code is not included due to its size.
Section 2 Ethical Handling of Laws and Regulations New Jersey state license laws are explained so that the agent who was licensed a while ago has the opportunity to refresh his/her memory. By reinforcing the licensee’s knowledge of license law they become more aware of the need for ethical behavior. They have the opportunity to relate real life situations to their own experiences and can reconcile how they handled them in the past with how to handle them in the future if ethical decision making was not used. Another avenue that these discussions underscore is the need to act on behalf of the public rather than in the licensee’s favor.
References are made to when a transaction can be completed by a non-licensee (homeowner, etc.).
In order to protect the public, a great deal of time is spent exploring the different forms of advertising licensees use, the required use of the company name and anything else that must appear in an ad. An accurate property description is required as well as nothing that could be construed as illegal (two-family without proper permits). Once again, the chapter has many examples of advertising and the pitfalls that might prevail.
Fair Housing covers what is and is not permissible in advertising along with explanations of proper behavior based on covered classes.
Teams, web based advertising, and lawn signs are among the other topics covered in this section.
Proper handling of earnest money, trust accounts and commingling are explained and examples provide the opportunity for the licensee to see how small errors in ethical judgment can lead to huge fines and possibly even jail terms.
The handling of commission including how the rate is determined, who can collect it and procuring cause are presented, again, along with many examples. Contingency clauses and the handling of trust funds are included.
Explanations of purchasing property for the licensee’s own account conclude this chapter.
Section 3 Ethics, Agency and You begins with an explanation of “Agency”. It goes into expansive explanations of buyer, seller, agent, homeowner, principal, customer and client among others. Examples abound regarding how to handle typical agency situations that might create a need for ethical decision making. These include an agent not giving the owner the best offer from the buyer, presenting all pertinent facts to the seller before she accepts an offer, property manager making improper decisions, not presenting the buyer’s offer in a timely manner, making assurances to a buyer/customer that the seller/client did not agree to and many, many more. The fiduciary obligations of the licensees are discussed and explored, once again accompanied by many examples. Emphasis is placed on being aware of the different ways the same situation is handled if the party is a customer or a client.
Single and dual agency scenarios are offered as well as what occurs with transactional brokerage. Buyer brokerage is also explored. The role of the cooperating agent is included.
There is a heavy emphasis on the fiduciary responsibilities of the licensee in all phases of the transaction. Once these responsibilities are fully understood, the licensee will be more likely than not, be able to handle themselves and transaction details with an ethical priority.
We delve into the responsibilities of a general agency as opposed to a special agency and the decision making responsibilities of the licensee in both.
The section on agency disclosure covers the need to ascertain “who is my client” and how will we work together? The possibilities of undisclosed and unintentional dual agency are brought up along with the methodology of avoiding these situations. Many examples are included in areas such as; giving information to a customer that should be reserved for a client, the need for undivided loyalty, confidentiality and skill and care as well as a duty to account in order to protect our client.
A long list of statements to avoid is included as well as the reasons they should be avoided, which, of course, is to protect the proper use of the laws of agency and to avoid unethical behavior. This is followed by additional points to familiarize the licensee with in order to reduce risk which could be caused by a lack of ethics.
Section 4 Documents and disclosures include explanations of typical documents used in real estate transactions. These documents are heavily stressed as a means of handling all phases of the transaction for the benefit of the public. Most controversies occur when something is not documented. We stress the need for written documentation to prove that agreements have taken place. Obviously, once there is a written agreement it is difficult, in some cases impossible, to change the course of action without the approval of the parties named. The agent has a great deal of legal protection by using written documents rather than relying on oral agreements. Of greater importance, however, is the fact that the public has more legal protection with written documents.
Purchase offers are explained as being the initial document in writing which sets the offer in motion. The purchase offer often includes a home inspection clause and we discuss how this should be handled by the licensee. This includes do not hire the inspector, accompany the inspector, interpret the inspection report, pay for the inspection, or use the seller’s inspection report. The rationale for this is included.
We include information on property condition disclosure emphasizing the need for it so that the buyer is fully aware of the condition in order to prevent lawsuits. It is not a requirement in New Jersey. Since New Jersey is a caveat emptor state the responsibility for determining property condition rests squarely on the buyer’s shoulders. However, a buyer’s agent would have the fiduciary responsibility of disclosure to his client. Recommended areas to be included in a property condition disclosure are included as well as a discussion on the pros and cons of its use by the seller.
Section 5 Liability In the liability chapter we define the different ways in which a licensee can find they are liable for an action that might result in a lawsuit. We discuss fraud, misrepresentation, negligence and suppression; what they are and how they will become the basis for the ensuing lawsuit. Intentional and unintentional misrepresentation is explained including how they occur, who they affect and the consequences to both the licensee and the public. Suppression occurs when an agency relationship exists and information is willfully withheld from the client. Many scenarios are included to more fully recognize the potential for liability on the part of the licensee when the letter of the law is not followed and unethical behavior results.
Vicarious liability is defined and situations where it can exist are included. A lengthy discussion regarding stigmatized properties follows with reference to the NAR Code of Ethics.
Listing agreements are the next topic with emphasis on avoiding legal problems and liability by committing everything possible to writing. What should be included in the agreement is described. Sub agency is discussed and the benefits to the seller are included. This chapter concludes with a cautionary discussion of the problems inherent in giving any legal advice beyond the scope of licensing.
Section 6 Lead Base Paint The chapter on Lead Paint covers all requirements for lead paint disclosure. An understanding of what lead paint is and why and how it creates medical problems is included. The history of lead paint disclosure law is explored as well as the problems that can occur upon exposure. Methods of testing and evaluation of the results are explored and discussed. Effects of lead on the body are included as well as ways of eliminating or minimizing exposure if lead is found present. Federal penalties for non-compliance are included. The agent’s responsibilities are stressed along with detailed explanations of how to handle different aspects of the transaction where lead paint is concerned. This includes the explanation and dissemination of the required lead paint disclosure pamphlet. There are checklists for sellers, lessors and agents which presents the ethical and legal handling of all aspects of lead paint and real estate.
Section 7 Disclosure, Misrepresentation and Anti-trust investigate many different aspects of disclosure requirements in a real estate transaction. The first aspect is latent defects, what they are and how they impact a transaction. This is followed by ethical actions a licensee should take in order to comply with the law. The difference between making a seeming statement of fact as opposed to making it clear that the licensee is giving their own opinion is explored.
Next, the histories of anti-trust laws are given and their impact on the way in which business must be conducted today. The enormous fines that are possible as a result of anti-trust violations are included. We have an in-depth study of the most common areas of anti-trust that cause problems in the real estate profession.
The first one is price fixing. Examples abound about different scenarios where price fixing occurs and the licensee may be hardly aware of the problem. Statements such as “everyone charges x percent” or “the Board requires us to charge x”, and so on. Any discussion around “standard or regular” commission rates is understood to be illegal. Proper verbiage is included in order to prevent these types of violations.
Next, boycotts are given consideration. Possible scenarios including negative statements about competitors and their reputations are discussed and the ethical way of handling these discussions is included.
Market allocation and tie-in arrangements and referral fees are included in the section with full explanations of all.
The enforcement of anti-trust laws and the penalties involved are included. A recommendation that the company develop a policy covering these areas is recommended followed by a synopsis of duties the agent owes to the client.
Section 8 Everything Else is a variety of subjects that have not been covered previously. The first subject we discuss is contracts. Since broker prepared contracts are frequently used, it is important for the agent to review periodically the essentials of a valid contract. Areas such as legal capacity, legal age and the authority to act are included. Also, the need for an offer and acceptance and consideration for a contract to be legal is recognized. The Statute of Frauds is stressed so that there is an understanding that a contract for the sale of real estate must be in writing. This includes understanding that while offers are often transmitted verbally; ultimately, the contract must be in writing in order to be enforceable. The contract must contain a statement regarding how Megan’s Law is handled in New Jersey. We follow with a recommended list of do’s and do not’s when preparing the sales contract.
The final section of this is an overview of the Fair Housing Laws that were not covered earlier in the course. The role of government in writing and enforcing these laws is explored. Explanations abound regarding the influence these laws have not only on housing, but life in general. Areas such as education and employment and how they are affected are included. Some antiquated laws are cited such as the right to discriminate based on race in housing and the paragraph in a NAR textbook explaining that “the inclusion of certain racial types would diminish the value of homes”. Statements made in the Code of Ethics such as “The Realtor® should not be instrumental in introducing into a neighborhood members of any race or nationality, whose presence will clearly be detrimental to property values in the neighborhood” are also included to further the understanding that fair housing is ever changing and the agent must be aware of any and all current laws under which we must act. Megan’s Law is reviewed.
We continue with exploration of the proper way to work with both buyers and sellers in an ethical and legal way where fair housing is concerned.
Steering is discussed as well as harassment. Both of these issues need to be fully understood in order to avoid acting in any way other than “under the law”.