In Which I Propose an Alternative to NAR’s New Speech Code

Recently, the NAR Professional Standards Committee announced that it had forwarded a set of recommendations to the Board of Directors for a vote in November at the (virtual) NAR Annual Meetings:

The NAR Professional Standards Committee met on October 5, 2020, to consider recommendations from its Interpretations and Procedures Advisory Board on the Code of Ethics’ applicability to discriminatory speech and conduct. The Committee approved the Advisory Board’s recommendations, therefore six of them will be presented to the NAR Board of Directors for a vote at their November 13, 2020 meeting.

The link above goes to the announcement/FAQ page, and the FAQ is also available in PDF form here.

Combined, the six recommendations essentially establish a Speech Code for REALTORS that bans speech that is deemed offensive against Protected Classes. And most controversially, the Speech Code would apply to what REALTORS say outside of a real estate context.

I think this is well-intentioned, and it comes from a good place of attempting to go beyond mere words. The Committee and NAR want to take action to right wrongs, both historical and contemporary. Their motives are to be lauded, and their hearts are in the right place.

However, a cursory glance at social media groups where REALTORS gather shows that the consequences of these changes are unlikely to be positive. Instead of the industry uniting to battle the problem of bias, discrimination, and unprofessionalism, REALTORS are at each others’ throats. We already have different areas of the country reacting not with solidarity and professionalism, but with rancor and name-calling.

But there is an alternative that can achieve everything that the proponents of these changes want, without creating unnecessary division and rancor. Rather than a divisive fight within the REALTOR ranks, the alternative can be a unifying Code of Ethics provision that strengthens the REALTOR movement. For the TL;DR crowd, scroll down to the section The Alternative: Conduct Unbecoming Clause.

I sincerely recommend abandoning the current course and implementing a Conduct Unbecoming clause, because I care deeply about the REALTOR movement, know too many good people who are both staff and volunteer leadership in Associations, believe that the Association does vital work in protecting private property rights, and do not wish to see us throw the baby out with the bathwater.

The Committee’s Recommendations

First, let’s look at what is actually being recommended because buried in the specific language, there are problematic words and phrases that may or may not be what the Committee intended. Again, this section is analysis, so if you just want to see the alternative, skip down below.

NAR Code of Ethics Applies to Non-Business Conduct and Speech

The most significant change is this one:

At present, Policy Statement 29 in the Code of Ethics and Arbitration Manual limits the applicability of the Code to real estate-related activities and transactions involving REALTORS®.

As such, members can engage in conduct and speech that is discriminatory and abhorrent, but unless it can be tied to a real estate-related activity or transaction, the Code of Ethics, specifically Article 10, does not apply.

The Committee recommends adoption of a revised policy that expands applicability to all of a REALTOR®’s activities. While the Code’s applicability would be expanded, most Articles and Standards of Practice remain specific to real estate transactions and other real estate-related activities. [Line breaks added for legibility]

This is a major change for NAR. Prior to this, the Code of Ethics only applied to real-estate activities. So if you commit fraud in your Ebay car sales business, NAR had nothing to say about that. If you cheated on your wife, that was a private issue between you and your wife.

After this change, NAR asserts that it can and will have something to say.

Now, it is true that the Committee says that most of the Code won’t apply outside of real estate because they are so connected to the real estate transaction… but like so much of what is proposed, that assumes future Committees and future Boards see things as they do today.

Just as an example, Article 1 of the Code contains an “obligation to treat all parties honestly.”

What prevents a future Committee from proposing that the obligation to treat all parties honestly applies to a REALTOR negotiating a car purchase? Or to the marriage vow? Or in filling out tax returns?

After all, by the logic of the proposal, that REALTOR is representing the REALTOR brand, and dishonesty outside of real estate surely affects the REALTOR brand.

New Standard of Practice

Then we get the new Standard of Practice 10-5:

The Committee recommends adoption of a new Standard of Practice under Article 10:

Standard of Practice 10-5

REALTORS® must not use harassing speech, hate speech, epithets, or slurs based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity.

This new SOP would “extend” the meaning of Article 10 of the Code of Ethics, but in an unprecedented way.

Let’s begin with what Article 10 and existing SOPs actually say.

Article 10 of the Code of Ethics

REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14)

REALTORS® , in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14)

That’s what Article 10 states. Seems pretty straightforward. Don’t discriminate on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (We’ll call these things collectively “Protected Classes” because the Committee does so.)

Importantly, SOP 10-1 to 10-4 are fairly limited to real estate matters:

• 10-1 disallows volunteering information related to race, religion or ethnic composition of a neighborhood, and disallows encouraging panic selling.
• 10-2 says REALTORS can provide demographic information as long as it isn’t within a transaction, and is from a reliable, independent and impartial third-party source.
• 10-3 says REALTORS can’t be party to any advertising that indicates any preference, limitation or discrimination based on a Protected Class.
• 10-4 says REALTORS can’t discriminate in hiring.

Critically, all four SoP’s are related to actual legislation — Fair Housing Act and various labor laws, such as Title VII of the Civil Rights Act.

A REALTOR engaging in any of the prohibited conduct in 10-1 through 10-4 can be brought up on Code of Ethics violations, but he is also quite likely guilty of violating one or more laws.

10-5 is different.

First, there is no (and there cannot be any) law that prohibits the behavior that 10-5 is attempting to get at, because of the First Amendment. The government can’t pass any laws regulating speech like this, but as a private organization, NAR can.

Second, 10-5 has nothing to do with the real estate transaction or real estate activities. It applies to a REALTOR’s non-real estate activities, including personal activities. The changes to Policy Statement 29 above are intended to let 10-5 affect a REALTOR’s speech and conduct outside of real estate.

Third, the actual word in 10-5 is “use” — not “publish” or “advertise” or “communicate” but “use.” I think that is significant.

The Public Trust Definition Change

In addition, the Committee recommends changing the definition of “Public Trust” with these changes:

The Committee recommends that the definition of “public trust” be expanded to include all discrimination against the protected classes under Article 10 of the Code of Ethics and all fraud.

At present, the definition of “public trust” includes demonstrated misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm. This recommendation would expand the definition to include all discrimination against the protected classes under Article 10, and all fraud.

As a result, associations would be required to share with the state real estate licensing authority final ethics decisions holding REALTORS® in violation of the Code of Ethics in instances where there is reason to believe the public trust, as expanded, may have been violated. This is recommended so the real estate licensing authority, and other governmental agencies as recommended by the Association, are made aware of any findings of a violation of the Code of Ethics involving discrimination. [Emphasis and line break added]

The term is defined in the Code of Ethics and Arbitration Manual, to be used by local REALTOR Associations when imposing discipline or arbitrating disputes.

Removing the all-important word “willful” from discrimination is quite a big deal. So is removing the “substantial economic harm” requirement from discrimination and from fraud.

As far as I can tell, going forward, any kind of discrimination, intentional or not, willful or an innocent mistake, malicious or uneducated, causing substantial economic harm or not, is actionable against a REALTOR as an ethics violation. Telling someone, “I really can’t stand the smell of kimchi” is likely actionable… which puts my wife Sunny in deep trouble.

Furthermore, by removing the “substantial economic harm” requirement, as far as I can tell a REALTOR is violating the Code of Ethics if she tells any kind of white lie. For example, the common practice of sending out emails saying, “I have many buyers looking for a property in your neighborhood; please contact me if you’re interested in selling” is an ethics violation unless you in fact have many buyers looking for a property in that neighborhood, and you can prove it. It doesn’t matter that the seller actually made a huge profit, because there is no economic harm requirement. The “fraud” itself is actionable, no matter how harmless.

Appendix XII

Since everybody and his uncle knew that the biggest outcry was going to be around how this new policy will be enforced, and by whom, and who will define what is and is not harassing speech, or hate speech, or whatever, the Committee proposes to add Appendix XII to the Code of Ethics and Arbitration linked to above. You can find the full text of Appendix XII here.

The idea is that local Grievance Committees of the local Association who have to enforce the Code of Ethics can refer to Appendix XII when dealing with a hate speech violation charge.

I won’t dissect Appendix XII line by line here, but let me just say that I find the claim that Appendix XII has “great specificity” to be something of a false promise. Maybe it’s my legal training, but there’s nothing about Appendix XII that has “great specificity.”

Need an example? Here’s a classic sketch from the great Chris Rock (NSFW!!!):

If Chris Rock were a REALTOR, and brought up on charges under SOP 10-5, and you’re on the Grievance Committee of the local Association deciding whether he’s in violation or not… what in Appendix XII will help you decide?

Chris Rock is using a clear slur, a clear epithet. It is intended to denigrate and be hostile. It is based on race.

“Oh, but he’s a comedian and he was making a joke.”

Well, every single actually racist REALTOR who actually hates black people just decided he is an amateur comedian. Now the Grievance Committee has to prove that he’s not a comedian. How does Appendix XII help with that?

What’s more, Appendix XII contains this clarifying language:

Under Statement of Professional Standards Policy #29, REALTORS® are subject to the Code of Ethics’ standards in all of their activities. Thus, a violation of Article 10, as supported by Standard of Practice 10-5, can occur when a REALTOR® uses harassing speech, hate speech, epithets and slurs based on the protected classes in any media or context, regardless of whether related to their activities in the real estate business or their identification as a REALTOR®. [emphasis added]

Once again, I find that phrase “or context” supremely discomfiting.

The Broad Reach of the Changes

Like the word “use” in SOP 10-5, this “or context” poses a problem.

Judging by early reactions, both public on social media and private from my friends, clients and colleagues, the vast majority of people seem to think that this policy restricts what a REALTOR can post on personal social media accounts. I don’t think so; I think the policy’s reach is incredibly broad.

As Appendix XII makes clear, a REALTOR may not use epithets and slurs in any context. There is no publication requirement. Add to that changes in the Public Trust section, which removes willful and economic harm requirements, and what NAR is suggesting is that you can be sanctioned for innocent, harmless private use of an epithet in any context.

So a REALTOR at karaoke singing Tupac’s “Hit ‘Em Up” or sharing the Chris Rock comedy video above is technically in violation of SOP 10-5, because he “used” an epithet that is intended to disparage and insult, and did so in “any context” and must be reported to the state licensing authorities as a racist.

Yes, that is ridiculous, and yes, that is unlikely to happen… but the point is that it could happen under the wording of the current proposal.

If that is not NAR’s intent, at a minimum, I’d suggest taking another look at cleaning up the specific language being used. Because as the speech code itself makes clear, words have meaning and consequences.

The Committee’s Rationale

So why would the Committee, and by extension NAR, do this?

It has to do with the appearance of bias, and ultimately, with the public perception of REALTORS… or if you will, the REALTOR brand. The Committee itself noted that this was the primary motivation for the recommendation in the FAQ:

I should be able to say whatever I want on my personal social media profile. It doesn’t impact my ability to do my job. Why is what I say there now subject to the Code? This is going too far.

The Committee felt strongly that a REALTOR®’s speech and conduct reflect on the REALTOR® organization whether said publicly on a business social media profile, or privately on a personal one. According to the Preamble of the Code of Ethics, REALTORS® should be guided by the spirit of the Golden Rule of treating others as one would like to be treated. When a REALTOR® pledges to abide by the Code of Ethics, the highest principles and ethics of REALTORS® must followed in all their activities, and cannot be abandoned in a profession dedicated to protecting the best interests of consumers.

Put simply, when one REALTOR® engages in discriminatory speech and conduct, those actions demonstrate to consumers that they represent the actions of REALTORS® collectively. [Emphasis added]

I truly believe that the Committee was motivated by supremely good intentions: trying to do our part to rid the country and society of the evils of racism, sexism, and hate. I genuinely think the Committee was trying to do more than virtue signal, so that NAR and REALTORS could make a real difference.

But as noted, these particular proposals create far more problems than they solve, and create division within REALTOR ranks. Thankfully, there is an alternative.

The Alternative: Conduct Unbecoming Clause

The alternative to this policy is something I have personally been involved in pushing in the past. I don’t recall if I ever wrote about it, but a couple of years back, I was involved in something called the Second Century Code of Ethics project. It involved some of the best and brightest minds in the industry coming up with what we saw as needed improvements to the Code.

We have already sent along our suggestions to NAR, and they were (maybe still are) making their way through the system. Nonetheless, NAR leadership is already fully aware of the group’s efforts and suggestions.

One of the provisions we put forth was the Conduct Unbecoming clause. It was a direct copy of Article 21 from the REALTOR Code of the Canadian Real Estate Association (CREA), NAR’s sister Association north of the border:

For those who might be using some kind of a reader, and can’t see the picture, here’s what it says:

Article 21. Conduct Unbecoming

A REALTOR® shall not engage in conduct that is disgraceful, unprofessional or unbecoming of a REALTOR®.

The Interpretation says:

21.1 This Article is intended to deal with conduct that, having regard to all of the circumstances, is egregious in nature and goes beyond simple error.

21.2 “Conduct” in this Article is not restricted to conduct in the course of providing real estate services.

I genuinely believe this is the way out of the mess we are in.

Just about every situation that the new SOP 10-5 is intended to address can be addressed by this new Conduct Unbecoming clause:

• A REALTOR posts racist epithets on Facebook;
• A REALTOR engages in horrible name-calling and insults against a transgendered individual on that basis;
• A REALTOR in a commission dispute launches into a profanity-laden rant starting with “You stupid whore….”

No one would disagree that these things are in fact conduct that is disgraceful, unprofessional and unbecoming of a REALTOR. There would be complete unanimity that this kind of Conduct Unbecoming clause does in fact raise the bar on professionalism within the industry.

Conduct Unbecoming obviously protects the Protected Classes, because we all acknowledge that there is something different about dropping the N-bomb vs calling someone a prick. But that doesn’t make calling someone a prick professional. If the conduct is egregious enough, and the REALTOR has truly gone off the rails, then that REALTOR should be sanctioned for conduct unbecoming the REALTOR brand.

By removing identity politics from the policy, we focus on the action itself. There’s nothing professional about going on a rant and calling someone names, or publishing disgraceful epithets and slurs on social media. It does not matter if that someone is a straight white male, or a gay black woman. The action itself is unprofessional and disgraceful.

The general language of Article 21 is, I think, a benefit. It is simple, so everyone can understand it. There aren’t a lot of odd words or clauses that cause confusion. The generality of the language does give more discretion to the Associations to enforce, but that would be the case with the SOP 10-5 anyhow because we are fundamentally talking about judgment calls.

Easy to Implement

One of the advantages of implementing Conduct Unbecoming is pragmatic. The Professional Standards Committee has made a proposal; it has to be voted on in November. We don’t have a lot of time.

Normally, NAR needs to carefully consider all aspects of a proposal as important as changing the Code of Ethics and the Manual. But we likely don’t have the time to do all of that.

The Conduct Unbecoming clause is already part of CREA’s REALTOR Code. CREA has already done the heavy lifting of all of the analysis and considerations and the wordsmithing. I do not believe a single person in NAR believes that REALTORS in Canada are somehow so different from REALTORS in the U.S. that Article 21 cannot apply.

Accordingly, the Committee can simply reach out to CREA’s leadership and ask them about their considerations with Article 21. NAR can reach out to CREA to see how Article 21 was implemented, is enforced, and what the problems might be. The Leadership Team and the Board of Directors can act on it quickly in November, with full advice from their colleagues in Canada.

Furthermore, with the CREA formulation, there is  no need to expand the meaning of Public Interest, since the article itself clearly states that it is an exception to the general rule of the Code being limited to real estate matters. So rather than a broad change to Policy Statement 29, NAR can implement a new Code of Ethics article that simply states that it and it alone is an exception to Policy Statement 29.

Finally, with the CREA formulation, it is clear that the conduct must be intentional and egregious; it has to go beyond simple error. There can be no paranoia that you will be hauled up in front of the Grievance Committee because you said kimchi smells bad, or because you made some honest mistake with no ill-intent. No, you get sanctioned for egregious willful misconduct that brings shame on the REALTOR name.

I have been informed that to add an actual article to the Code of Ethics, the NAR Delegate Body would need to do so. Delegates must be notified at least 30 days in advance. I think the Board of Directors can approve sending the Conduct Unbecoming clause to the Delegate Body after its vote on November 13 (which means rejecting or tabling the Professional Standards Committee proposals) and have a special virtual meeting of the Delegate Body in mid-December, to take effect on January 1, 2021.

True Professionalism

Additional bonus with the Conduct Unbecoming clause is that it actually goes beyond mere speech codes about Protected Classes; it can and should reach actual unprofessional conduct that reflects badly on the REALTOR brand. For example, this:

This is a broadcast news story. If you think this helps the image of REALTORS in the Houston area, I got some beachfront property in Nevada to sell you.

The proposed speech code would not reach this conduct, and would not reach any of the hundreds if not thousands of other egregious conduct that shovel shame on the REALTOR brand. None of that disgraceful behavior may be actionable under any law, but all of it brings dishonor to the REALTOR name, to the REALTOR brand.

The new speech code is both too broad in application and too narrow in scope to address the problem of unprofessional, disgraceful conduct by REALTORS who represent the REALTOR brand.

If the Committee is motivated by protecting the REALTOR brand, then a Conduct Unbecoming clause does far more than the SOP 10-5 and related changes.

Unity, not Division

Plus, Conduct Unbecoming clause is something that conservative REALTORS can get behind, without feeling as if they are the target. Rather than dividing REALTORS, it creates a far more unifying discussion among all REALTORS about what conduct is and is not so egregiously unprofessional and disgraceful as to deserve sanction.

There is no question that posting insults and epithets online to denigrate people on the basis of any of the protected classifications is disgraceful. I cannot believe that any REALTOR anywhere in the country would accept such behavior. At the same time, insulting other REALTORS as racist bigots or commie scum simply because of a political disagreement is also disgraceful and unprofessional.

Perhaps the extremists on both sides would be unhappy with a unifying alternative to the speech code. Let them be unhappy. What we need to consider is how the vast majority of REALTOR members in between the extremist ideologues want to see.

Conclusion

I realize I am not a REALTOR, and you all have no reason to listen to me. But I hear from people that I have some limited influence with REALTORS.

If that be true, I urge you with all my strength to change course before it’s too late. Instead of the series of changes put forth to the Board of Directors, institute the Conduct Unbecoming clause instead. It won’t be difficult, because CREA has already done it. All you have to do as NAR is listen to CREA, and adopt Article 21 in its entirety. Nothing else needs to change in the Code or in the Manual; you do not need to publish Appendix XII.

You will still achieve what you want, protect the REALTOR brand better than SOP 10-5 ever could, defuse a brewing civil war within REALTOR ranks, and instead bring REALTORS together and unite them in a real effort against unprofessional and disgraceful conduct that brings shame on the REALTOR name.

I urge all of the leadership at NAR, any of the Directors, Delegates, or any REALTOR who has any influence on this upcoming vote, to consider dropping (or at least tabling) the current proposed policy changes and swapping them out for a Conduct Unbecoming clause instead. Please.

It is, I believe, the only way out of this mess. NAR is not broken, just bent right now. REALTORS can learn to come together again.

-rsh