International Real Property Foundation1 Ethics Presented by Judith Lindenau, CAE, RCE Traverse Area...

International Real Property Foundation

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Ethics

Presented byJudith Lindenau, CAE, RCETraverse Area Association of RealtorsMichigan, USA


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MTSKHETA

TRAVERSE CITY


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Day One: Learning Objectives To develop familiarity with the existing Code of

Ethics. To encourage understanding of the situational

applications of the existing code, particularly as the tenants relate to business within the real estate community and protection of the interests of the consumer of real estate services.

To present a classroom technique which can be used by subsequent trainers.

To prioritize those tenants which are the most influential in actual real estate practice, so that subsequent attention to training can be directed at these precepts.


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Caux Roundtable

We seek to begin a process that identifies shared values, reconciles differing values, and thereby develops a shared perspective on business behavior acceptable to and honored by all.


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Principals of Caux

1. Businesses should be responsible to their own community or country.

2. Businesses should respect the countries with which they conduct business.

3. Businesses should recognize principles sincerity, candor, truthfulness, the keeping of promises .


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Caux, part 2

4. Businesses should respect international and domestic rules.

5. Business should protect and, where possible, improve the environment

6. A business should not participate in or condone corrupt practices


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Caux: Ethical Treatment of Investors

Owners / Investors We believe in honoring the trust our investors place

in us. We therefore have a responsibility to: apply professional and diligent management in order

to secure a fair and competitive return on our owners' investment;

disclose relevant information to owners/investors subject to legal requirements and competitive constraints;

conserve, protect, and increase the owners/investors' assets; and

respect owners/investors' requests, suggestions, complaints, and formal resolutions.


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WHY SHOULD AN ASSOCIATION HAVE A CODE OF ETHICS?

To help the business of real estate become a profession, by establishing competencies and a body of common knowledge.

To assist in establishing rules of conduct for those involved in a real estate transaction, and define the expectations of performance and quality of all participants.

To serve as a guide by which professional conduct and competency is measured.

To protect buyers and sellers from unfair business practices, and to create a climate of confidence in real estate buying and selling.

To provide a system of dispute resolution for members.

To define the rights and responsibilities of membership in the professional association.


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WHY IS A CODE OF ETHICS IMPORTANT TO A COMPANY?

Business leaders increasingly recognize the direct relationship between fulfilling a company’s responsibilities and corporate survival. An effective business practices program ensures:

A Marketplace Advantage: Customers and investors cite corporate practices and values as primary considerations in their decision-making.

Superior Employee Performance: Companies with sound business practices and established values report improved employee morale, reduced employee turnover and increased productivity.


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Reputation Management: Once damaged by scandal or unethical behavior, a company’s reputation may never recover - resulting in lost revenue, low employee morale and increased governmental and public scrutiny. Emphasizing responsible business conduct is the surest means of preserving a company’s intangible assets.


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Powerful Legal and Financial Incentives: International regulatory developments provide strong legal and financial incentives to corporations that establish standards of conduct and provide ethics education and training to employees.


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THE HISTORY OF THE REALTORS CODE OF ETHICS IN THE UNITED STATES

Established in 1913 when the real estate business was already 150 years old.

No standard licensing requirements, and they varied from state to state.

Fraud was common, and buyers and sellers were victims.

“Buyer Beware” was the operational code.


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HISTORY OF THE REALTORS CODE OF ETHICS IN THE UNITED STATES, 2

First step was to define the common expectations about business behavior. Put them in writing, encourage membership agreement.

Second step is to establish a system of complaint, hearing, and resolution.

Third step, education of the membership.

Fourth step, public relations


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HOW IS THE CODE OF ETHICS EMBEDDED IN THE REAL

ESTATE ASSOCIATION?

1. Every member must agree in writing that he/she has read the code of ethics and will abide by it. The ultimate penalty is loss of membership.

2. The association must make sure that the code is consistently applied to all members, in all situations.

3. The process of enforcing the code and dealing with reported violations must be fair.


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HOW IS THE CODE OF ETHICS EMBEDDED IN THE REAL

ESTATE ASSOCIATION? -2

4. The code must be updated and changed to reflect the realities of the marketplace and the legal climate.

5. The code must be understood by members and those who are charged with enforcing it. The association must direct resources toward ongoing education for the members.

6. The public must be made aware of the performance standards which the code of ethics embraces. The association must consistently provide means of public awareness.


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How can the association make the public aware of the Code of Ethics and the membership adherence to it?

Print it everywhere—letterhead, posters, brochures, all advertising.

Develop a statement which goes at the bottom of all press releases and articles.

Write media articles.


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Statement on all US Realtor Communications

EXAMPLE “ The term REALTOR is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS and subscribes to its strict Code of Ethics.”


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Logo


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Classroom Activities

Exercise: Review of the Existing Code of Ethics from the Georgia Association. Development of Case Scenarios/Standards of Practice from this Code of Ethics.

This will be a working session, with the goal of developing two or three “Standards of Practice” for each article in the existing code. Participants may make recommendations for future modifications to the existing code, and suggest enhancements to the existing statement. The scenarios will form the basis for future ethics instruction by the association.


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Day Two: Learning Objectives

Understand the difference between ethics and acceptable protocol. Develop examples of protocol expectations.

Review the ethics enforcement procedures presented in the 2002 Seminar.

Analyze the extent to which the association has utilized these suggestions, and the effectiveness of the enforcement procedures.

Suggest necessary adjustments and procedures.


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DEFINING THE DIFFERENCE BETWEEN ETHICS AND BUSINESS

PROTOCOL.

What actions are truly unethical, and which are merely good business behavior?

Make a list of protocols


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ETHICS ENFORCEMENT PROCESS IN US

File a written complaint Grievance Panel Professional Standards Panel

Decision Board of Directors Decision

Appeal at every step


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Component 1: GRIEVANCE COMMITTEE-

This committee appointed by the President of the Association receives ethics complaints and arbitration complaints in writing, to determine that if taken as true, a hearing is warranted. The Grievance Committee has meetings but does not hold hearings.

It does not decide whether members have violated the Code of Ethics. The Grievance Committee does not mediate or arbitrate business disputes, but it may decide whether a problem can be solved immediately.


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Grievance Committee’s Review of an Ethics Complaint

. Is the complaint in writing on the proper form?

Are all the necessary parties named in the complaint?

Are the parties named members of the association?

Are the Articles cited in the complaint appropriate in light of the facts presented?

Are the charges documented? Can this complaint be considered frivolous

and vengeful?


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Component 2: The Professional Standards Committee

This committee is appointed by the President of the Association, with the approval of a majority vote of the Board of Directors. Members of this committee should have a balanced representation of all members who are mature, experienced, and knowledgeable and have positive business reputation.

To avoid a conflict of interest it is best that members of the Professional Standards Committee not serve on the Grievance Committee or the Board of Directors.

The members of the Professional Standards Committee shall be selected to serve on hearing panels as needed to hear cases of alleged violations of the Code of ethics or to provide arbitration as requested.


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COMPONENTS OF A RESPONSIBLE ETHICS ENFORCEMENT:

Training program: Members must identify an ethical issue when they confront it.Reporting system for potential violations

Must be responsible Must be easy to use Must be fair

Hearing Process Must be fair and impartial Must have notices to all concerned Punishment must fit the offence Appeal process available Historical perspective: have a system for repeat

offences.


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Accusation made

Member Notified of Complaint

Hearing 20 Days after Member Notice

Punishment: Rebuke, Probation, Suspension, Expulsion by 2/3 majority of votes

Deliberation and Findings

Hearing ( Respondent, witnesses, barrister) and Ethics or Arbitration Committee

GREA Procedure as indicated in the Code of Ethics.


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Day 3: Developing a Practical Enforcement Process for the Association

Situational enactment of a grievance to show how the process can and should work.

Development of learning standards for membership ethics education.

Final course evaluation and class recommendations for association action items.


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Summary

To encourage ethical behavior, real estate associations must develop an ethics program. A reasonable compliance program for preventing ethical misconduct involves:

A Code of Ethics prepared and approved by the membership

Oversight of the program (staff and volunteer)

Member training in the Code and its situational applications

Clearly codified procedures for filing a complaint or requesting arbitration

A resolution process in which disciplinary action is fair and appropriate

A method for addressing consumer complaints.


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CLASS EXERCISE:

The class will take the principles of resolution of an ethics complaint (fairness of notification and appeal, judgment by knowledgeable peers, appeal process, and appropriate censure, and construct a complaint resolution process for their association.

They will then role play the process, including a hearing and judgment, and discuss modifications. The emphasis will be on developing a workable prototype within their culture and community, which can be implemented by the association.


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CONTINUAL REVIEW AND RENEWAL OF THE CODE OF ETHICS:

Continual changes in markets and corporate policies necessitate cyclical review of corporate codes and the training programs that support an organization’s business ethics initiatives. Such pertinent questions should be asked as: A. Have our values changed as our organization has

evolved? B. Are our standards in line with the current

environment? C. Do our standards meet the needs of our members? D. Does the code document sufficiently communicate

our values and standards to our members and other stakeholders?

E. Have members recently expressed confusion about any one standard?


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Thank you!

Please don’t hesitate to contact me if you ever have questions or need assistance! My email is [email protected].

International Real Property Foundation1 Ethics Presented by Judith Lindenau, CAE, RCE Traverse Area...

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