NAR Board OKs Stepped-up Ethics Enforcement, Dues Increase

The NAR Board of Directors at its meeting in Washington May 19 took a major step toward increasing professionalism in real estate by giving associations new teeth for enforcing Code of Ethics violations, and it also positioned REALTORS® for the future by adopting the association’s first dues increase in eight years.

Under changes to Sections 23(j) and (n) of the NAR Code of Ethics and Arbitration Manual, local associations that choose to adopt the policy can publicize the names of members and the nature of their violations after a second violation of the Code of Ethics. They can also release a photograph of the member as part of that public disclosure.

“This is a huge shift that members have been asking for,” said Colin Mullane, broker-owner of Full Circle Real Estate in Ashland, Ore. Mullane is an NAR regional vice president. “Up to this point we’ve been reluctant to point the finger at people who really violate the Code of Ethics. Now there are real consequences if you’re a repeat offender.”

The stepped-up enforcement option is based on a pilot program of the California Association of REALTORS®.

In another big change, to Standard of Practice 1-7, a listing broker or agent is required to respond in writing that an offer was submitted to the seller if the cooperating broker who submitted the offer so requests. The listing broker or agent must respond in the affirmative unless the seller has provided written notification waiving the obligation to have the offer presented.

“There’s been real frustration by a lot of brokers, especially in busy markets, that they’re not sure if their offers were even looked at,” said Mullane. “That kind of thing breaks down the spirit of cooperation. This is a way to restore that.”

Another change, to Section 13(d) of the Code of Ethics and Arbitration Manual, clarifies the rights and role of REALTOR® principals in an ethics hearing.

“We have heard from members about strengthening professionalism, and today we took an important step forward,” said NAR President Elizabeth Mendenhall. “The changes will bring invaluable benefit to consumers and allow Realtors® to serve them to the best of our abilities.”

S.M.A.R.T. Budget approved

In a major move to keep REALTORS® positioned for success into the future while ensuring NAR no longer needs to use reserves to cover expenses, the board approved a budget that sets national association dues at $150 per year per member beginning in 2019.

That’s a $30 increase. Seventeen dollars of the increase is for REALTOR® Party advocacy programming. The remaining $13 will fund programs such as the new Commitment to Excellence professionalism initiative, the popular forms and transaction management benefit, and upkeep of the association’s buildings.

The new package of measures, called the S.M.A.R.T. Initiatives (for Strategic Measures Advancing REALTORS® to Tomorrow), was approved by NAR’s Budget Review Committee in March and association leaders have been getting member feedback on them since then.

The NAR budget underwent a comprehensive review after Bob Goldberg became CEO of the association last August. The spending plan for 2019-2021 reflects more than $2 million in annual savings, achieved by reducing association staff, cutting global travel, and making across-the-board cuts.

NAR is also realizing savings from a decision Goldberg made earlier this year to end the Advanced Multi-List Platform (AMP), formed in 2015 by NAR’s wholly owned Realtors Property Resource® (RPR®) subsidiary to provide customized back-end technology services for small- to mid-size multiple listing services. The elimination of the program saves NAR $1.7 million in 2018 and, along with other reductions at RPR®, will save $5.25 million in 2019.

A key element of the financial blueprint involves replenishing NAR’s reserves, which have fallen 45 percent since 2015. In recent years, NAR used savings to fund activities such as a popular forms and transaction management platform benefit and for creation of Upstream, an innovative data management platform for brokers.

The increase also funds needed upgrades and repairs to the association’s Washington and Chicago office buildings. In addition, the board voted to establish a reserve fund to cover maintenance costs for the buildings in the future.

Board elections

The board elected 2019 officers: Charles Oppler, AHWD, of Franklin Lakes, N.J., first vice president; Vince Malta of San Francisco, president-elect; and John Flor, ABR, CRS, ePRO, GRI, RSPS, of Chetek, Wis., 2019-20 treasurer. John Smaby of Edina, Minn., was earlier elected 2019 president.

Federal policy positions

To advance NAR’s efforts in Washington, the board adopted a number of tax and finance policy positions. Among them:

• Index caps on state and local tax deductions for inflation. The major tax reform law enacted last year places a $10,000 cap on the amount of state and local tax deductions households can itemize on their return. Without indexing the cap for inflation, taxpayers will effectively see tax increases each year as inflation erodes the value of the deductions.

• Eliminate the marriage penalty in the state and local tax deduction cap. The $10,000 limit doesn’t differentiate between single taxpayers and married couples filing a joint return.

• Provide tax relief to student debt holders and employers who assist with their employees’ student loan debt burdens. In addition, NAR supports policies that provide tax relief to those borrowers with forgiven student debt.

• Provide compliance relief to smaller community banks and credit unions so they can continue to offer safe and affordable mortgage credit to consumers.