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Membership Policy and Procedures Overview

The Importance of Appropriate and Responsible Membership Policy

The importance of appropriate and responsible membership policy by a business, trade, or professional association increases in proportion to the size and importance of the organization and its services and benefits to the membership.  If membership in an association is important to the ability of an individual to compete successfully in the business or trade it represents, it is imperative that membership in such association be available to all eligible and qualified individuals on reasonable and nondiscriminatory terms.  A business or trade association that does not provide membership access on such reasonable and nondiscriminatory terms is vulnerable to suit by those persons excluded arbitrarily and unreasonably from membership or arbitrarily and unreasonably expelled from membership in the association.

The law recognizes the right of a business, trade, or professional association to exist and operate to promote and elevate the professionalism, standards of conduct, and type of service provided by its members to the public (clients and customers).  Further, the law recognizes, generally, the right of an association to limit its rights, benefits, privileges and services to its membership, so long as membership is available on reasonable and nondiscriminatory terms and conditions. 

When associations fail to make membership available on reasonable and nondiscriminatory terms, and when individuals denied membership seek access to association services through the courts, such access often, if not invariably, is granted if the service sought is determined to represent a significant competitive advantage.  Further, in such cases, not only may access be granted, but damages may be awarded for injury suffered for any period of time during which services are denied.

How Policies Are Created

Membership policy of a business, trade, or professional association is created by the governing documents of the organization, such as its constitution and bylaws, rules and regulations, code of ethics, and other policies, practices, and procedures existing in written or unwritten form.  Membership policy is also created by "interpretations" of the governing documents of the association, and by resolutions or statements of policy approved and adopted from time to time in accordance with the procedures of the association for such approval and adoption.  Such policy may be "recommended" or "required" of association members.

How Membership Policy Is Established by the NATIONAL ASSOCIATION OF REALTORS®Membership policy of the National Association is established by:

  • the Constitution and Bylaws of the National Association
  • Official Interpretations of Article I, Section 2, Bylaws of the National Association
  • the Code of Ethics and its interpretations
  • policies approved and adopted, from time to time, by the Board of Directors of the association, such as multiple listing policy and the Membership Qualification Criteria of the National Association

The criterion by which the National Association is guided when adopting rules and regulations applicable to Member Boards is to limit such rules and regulations to those issues of common concern to the REALTOR® organization as a whole.  Issues of local impact are left for local resolution.

Membership Policy and Board Jurisdiction Committee

When questions of appropriate membership policy arise that do not appear to have clear and definitive answers in the Constitution and Bylaws of the National Association, or in other presently stated policies approved by the Board of Directors, such questions are referred to the Membership Policy and Board Jurisdiction Committee of the Association for consideration and recommendation to the Board of Directors.  The final determination regarding a policy is made by the Board of Directors.

Committee Purpose

The purpose of the Membership Policy and Board Jurisdiction Committee is to:

  • develop and recommend membership policies that affect members, local boards/associations, and state associations consistent with the Constitution and Bylaws of the National Association
  • direct the implementation of membership policy
  • upon request, interpret membership policy as approved by the Board of Directors
  • monitor and evaluate existing membership policies and recommend modifications thereof

The committee also considers jurisdictional issues, including:

  • applications for new member boards
  • disputes between member boards concerning their jurisdiction or name

Additionally, the committee considers fundamental organizational and structural issues affecting the association.

Committee Organization

There are seventy-five committee members, including:

  • chair
  • vice chair
  • immediate past chair
  • one representative from each state and territorial association
  • eighteen at-large members, appointed by the president-elect for three-year staggered terms

This committee meets during all meetings of the National Association, and reports its activities and recommendations to the Board of Directors.

Local Board and State Association Governance

Since its beginning in 1908, the NATIONAL ASSOCIATION OF REALTORS® has received applications from and granted charters to local member boards and to state associations of REALTORS®, entering into a written agreement with such boards and state associations.  By these written agreements, boards and state associations are licensed to use the terms REALTOR®, REALTORS®, and REALTOR-ASSOCIATE® in connection with their organizations and, further, are given the right to license the use of these terms by their members.  Also, each board and state association agrees to accept and abide by the Constitution and Bylaws, the Code of Ethics, and other rules and regulations and policies of the National Association. 

By reason of the agreements into which boards and state associations have voluntarily entered with the National Association, they are obligated to implement all policies, including the membership policies of the National Association, as stated and as amended from time to time.  State associations and local member boards have an obligation to establish and maintain reasonable and nondiscriminatory membership policies and to provide membership to all eligible and qualified individuals.  They have a responsibility to ensure that full due process is provided in all membership matters, and when denial of membership or suspension or termination of membership is contemplated, to act responsibly with the consultation and advice of legal counsel, to minimize any possible legal liability to the board or board multiple listing service.
State associations and member boards should remain aware of the provisions contained in the most recent edition of the Constitution and Bylaws of the National Association, as amended annually.  Also contained in this document are the Official Interpretations of Article I, Section 2 of the National Association's Bylaws.

Article I, Section 2 of the National Association's Bylaws obligates member boards to assure that their policies are consistent with the Constitution and Bylaws of the National Association and to avoid the adoption of any ". . . rule, regulation, practice or policy inconsistent with or contrary to any policy adopted by the Board of Directors."

How Local Boards and State Associations Adopt National Policies

The policies of member boards are established by the board and multiple listing service bylaws, board and multiple listing service rules and regulations, policies, practices, and procedures, as approved and adopted by each board (i.e., the board's governing documents), according to its established procedures.  Boards must agree to abide by the constitution and bylaws and other rules and regulations of the state association and National Association, and members of these boards have a similar commitment and obligation.  All boards and all board members, as a condition of membership, agree to adhere to the Code of Ethics of the National Association.

Pitfalls to Avoid When Establishing Policy

  • Board leadership must resist the temptation to overregulate the activities and conduct of the members.  Rules and regulations must be maintained at the absolute minimum necessary to function, and should never operate to inhibit innovation, initiative or competition.  In the past, some member boards have adopted multiple listing rules and regulations that seek to control or standardize such activities as advertising, financing, escrow, surveys, and title searches.  Such subjects do not properly fall within the purview of a board or board multiple listing service.
  • Another pitfall to avoid is failing to remain constantly aware of changes made in National Association policy, or to revise policy in a board's governing documents, then fail to advise the state association and National Association of such changes.  Boards should advise the state association and National Association of any policy changes and provide such revisions to the National Association for review and response.  This will ensure that the board remains in compliance with National Association policy and thus remain covered by the Master Professional Liability Insurance Policy.
  • Most dangerous is to have in place bylaws and rules and regulations that are in compliance with policies of the National Association, but to follow other policies, practices, and procedures contrary or inconsistent with National Association policy.

Governing Document Review

To determine the policy compliance of state associations and member Boards, a staff of policy specialists is maintained in the Member Policy Department to review the governing documents of these entities.  A governing document review by the National Association either results in a letter of approval confirming compliance with National Association policy, or information concerning revisions necessary to ensure compliance with National Association policy.

State associations and local boards should have their governing documents reviewed annually by staff of the National Association's Member Policy Department.  Such a review determines the compliance status of these governing documents with NAR policies.  Compliance with policies approved by the National Association's Board of Directors is an ongoing obligation of boards and associations.

Model Bylaws

The National Association has developed model bylaws for state associations and local boards that are recommended for adoption -- either verbatim or substantially so. Mandatory policies that must be adopted and followed by state associations and local boards are contained in these model bylaws, along with recommended policies.  By adopting such bylaws -- verbatim -- state associations and local boards can ensure that their governing documents are in compliance with the policies of the National Association, and that the state associations and local boards will be covered by the Professional Liability (blanket errors and omissions) Insurance Policy of the National Association.

Master Professional Liability (Errors and Omissions) Insurance Policy

The National Association maintains a Master Professional Liability (errors and omissions) insurance policy that is applicable to and provides coverage for the Association, its affiliated societies, institutes, and councils, state associations and local boards, and the approved programs, activities, and services of all of these entities.  The officers, directors, committee chairs, committee members, and employees of all of these entities are protected when acting in their official capacity on behalf of any of these entities, but are not covered when acting as individuals on their own behalf.

The Master Professional Liability (errors and omissions) insurance policy of the National Association states, as one of its conditions, that coverage is provided to state associations and local member boards of the National Association if they ". . . maintain strict compliance with Constitution and Bylaws, Rules and Regulations, and policy adopted by the Board of Directors of the National Association."

The NATIONAL ASSOCIATION OF REALTORS®

History

The NATIONAL ASSOCIATION OF REALTORS® is one of the nation's largest trade and professional groups.  The National Association was founded in Chicago in 1908 by one-hundred-twenty members representing nineteen boards and one state association.  Throughout its history, the association has remained constant in its dedication to its original goals:

  • create unity in the real estate profession
  • compile relevant information concerning real estate
  • protect and promote private ownership of real property
  • establish professional standards of practice in the interest of the public

Early in its history (1913), the NATIONAL ASSOCIATION OF REALTORS® adopted its Code of Ethics.  In 1916, the Association adopted the term REALTOR® to describe its members.  The term REALTOR® is now a service mark registered with the United States Patent Office and is the property of the NATIONAL ASSOCIATION OF REALTORS®, as sustained by many court decisions.  In 1917, the first legal step toward securing recognition of the professional status of those engaged in the real estate business occurred when California adopted the first real estate license law.  Today, all the states and the District of Columbia have enacted license laws governing the practice of real estate.

In 1923, the NATIONAL ASSOCIATION OF REALTORS® was instrumental in publishing one of the first real estate textbooks.  This leadership action by the National Association prompted a continuous and increased publication of books about real estate and the practice of the real estate business.  The National Association's REALTOR® Information Center is the largest real estate library in the United States.  It contains more than 30,000 books and its archives contains volumes of other valuable materials about real estate.

As our nation has grown, the real estate business has become increasingly complex and specialized.  The National Association has kept pace with the need for specialization by establishing seven affiliated societies, institutes, and councils, and three specialty sections.  These organizations and sections provide services to individuals engaged in diverse specialties of the real estate business, such as brokerage, marketing, management, counseling, farm and land specialization, appraisal, and international real estate. 

The National Association has increasingly acted as a spokesperson for real estate, both to the general public and before legislative and executive branches of government at all levels.  In addition, the National Association increasingly recognizes the importance of liaison with the various regulatory agencies of government and has expanded and increased its contact with such agencies.  It acts as an effective spokesperson for those engaged in the practice of real estate and for the property owners of America.  Indeed, it is The Voice for Real Estate®.

Historically, the NATIONAL ASSOCIATION OF REALTORS® has been active in the development of governmental programs to make home ownership possible for an increasing numbers of families.  The association has also been active in easing the impact of recurring shortages of mortgage money.  It carries on a continuing leadership program to develop and recommend ways and means at all levels of government, industry, and business to expand the resources available for home ownership. 

Leadership by the National Association has helped to develop the Home Owners Loan Corporation, the Home Loan Bank System, the Mortgage Insurance Program of the Federal Housing Administration, and the Federal National Mortgage Association.  Among its many contributions to the nation's well being, the NATIONAL ASSOCIATION OF REALTORS®, its state associations, its member boards of REALTORS®, and its REALTOR® and REALTOR-ASSOCIATE® members have played important roles in making it possible for more than sixty-five percent of all American families to own their own homes.  With participation by REALTORS® and REALTOR-ASSOCIATE®s, local boards of REALTORS® have been in the vanguard of the fight to help eliminate slums and blight in American cities and towns.  They have assisted in many ways with the search for solutions to the problems of the United States.

Purpose and Function of a Local Board of REALTORS®

A board of REALTORS® is the REALTOR® organization at the local level that exemplifies the REALTOR® concept and organizational intent.  The local REALTOR® organization is most visible and best known to the general public.  General excellence, effective leadership, cooperative effort, and responsible participation in community affairs makes it an important and respected organization in the community.  Sound policies reflected in a board's bylaws, rules and regulations, and in all practices, policies, and procedures, provide a valid basis of board operation that is productive and legally defensible.  Conversely, a lack of these characteristics will adversely affect the impression a community will have concerning its board of REALTORS®.  This, in turn, will reflect adversely on the image of the real estate profession.

Boards With All-REALTOR® Membership

History

An all-REALTOR® Board is a board of REALTORS® that provides only a REALTOR® class of membership to brokers, salespersons, and licensed or certified appraisers -- as distinguished from a board that generally classifies broker members and appraiser principals as REALTORS®, and salesperson members and nonprincipal appraisers as REALTOR-ASSOCIATE®s.

In an all-REALTOR® board, all brokers, salespersons, and licensed or certified appraisers deemed qualified for board membership are REALTORS®.  Such individuals include principals, partners, corporate officers, and trustees of real estate firms actively engaged in the real estate business within the state or a state contiguous thereto, and includes those individuals affiliated with such principals, partners, corporate officers, and trustees as employees or independent contractors as salespersons, or appraisers.

The concept of an all-REALTOR® board is not a recent development.  In some states, member boards have been all-REALTOR® for more than a quarter of a century.  Beginning in 1908, the founding date of the NATIONAL ASSOCIATION OF REALTORS®, member boards were comprised of REALTOR® members.  Later, as states were influenced to establish licensing and regulatory agencies, and as states began to license real estate salespersons affiliated with brokers, the dual license concept led local boards to establish a local category of membership -- as distinguished from REALTOR® membership.  However, this was only a local category of membership.  There were no "associate" members of the National Association until January 1, 1974 when the REALTOR-ASSOCIATE® program was implemented. 

Article 1, Section 3, Membership, as provided for in the Bylaws of the National Association, was approved by the board of directors in 1972.  This section provides that:

Unless qualified salesmen and independent contractors employed by or affiliated with a REALTOR® Member are eligible for REALTOR® Membership in Member Boards, such salesmen and independent contractors shall be eligible for REALTOR-ASSOCIATE® Membership in such Member Boards, and all Member Boards from and after January 1974 shall make provision for such REALTOR-ASSOCIATE® Membership.

In other words, this provision ensures that all member boards will either permit individuals other than principals to be REALTORS®, or to alternatively permit such individuals to be REALTOR-ASSOCIATE®s.

In recent years, an increasing number of member boards have adopted the all-REALTOR® board concept of operation.  This concept is not required by the National Association, nor does it enjoy favored status.  Adoption of the concept is a matter for local decision and determination by each local member board.

Concerning all-REALTOR® boards, it is noted that the REALTOR-ASSOCIATE® program, as mandated in 1972, was to require member boards to establish a REALTOR-ASSOCIATE® category of membership if those boards did not already permit real estate salespersons and brokers employed by or affiliated as independent contractors with REALTORS® to be REALTOR® members of the board.  Thus, if the board did permit such individuals to be REALTORS®, as many boards did, it was not required for such boards to establish a REALTOR-ASSOCIATE® category of membership. 

However, as described in the preceding paragraph, whether a board is all-REALTOR® or REALTOR® and REALTOR-ASSOCIATE®, it cannot require that individuals other than principals of a real estate firm, partnership, or corporation seek and accept REALTOR® or REALTOR-ASSOCIATE® membership as a condition of employment by or affiliation as an independent contractor with the REALTOR®.  This must remain the REALTOR®'s option as a proprietary prerogative.

Thus, it is mandated and required that member boards provide the opportunity for either REALTOR® or REALTOR-ASSOCIATE® membership to real estate salespersons, brokers, or licensed or certified appraisers other than principals of real estate firms, partnerships, or corporations who are employed by or affiliated as independent contractors with a REALTOR®.  By virtue of membership in such local board, REALTORS® and REALTOR-ASSOCIATES® are automatically members in good standing in the state and National associations.

The REALTOR-ASSOCIATE® Program

History

The Constitution and Bylaws of the National Association were amended during the November, 1972 association meeting to create a REALTOR-ASSOCIATE® membership classification.  The purpose of these amendments is to:

  • ensure that real estate salespersons have an opportunity to belong to local boards of REALTORS® and through local boards to the state and National associations of REALTORS®
  • encourage salespersons to become part of the local board, state and National associations, to place themselves directly under the Code of Ethics, and to share the cost and responsibilities of protecting and promoting the future and prosperity of the real estate business
  • provide a comprehensive and positive program to recruit the varied talents and substantial human resources of real estate salespersons to the service of local boards, the state and National Associations, the real estate profession, and the public
  • bring real estate salespersons closer and more directly into the National Association through membership in the local board, or state association in any area where there is no board having jurisdiction, hence establishing a direct obligation to the Code of Ethics and the highest concepts of professionalism; the participation of real estate salespersons employed by or affiliated as independent contractors with REALTORS® truly make the National Association spokesperson for the entire real estate profession.

Purpose and Function of a State Association of REALTORS®

A state association has two basic purposes:

  • to integrate more closely the work of local, state, and national bodies
  • to provide a means of permitting an individual in the real estate business, whose place of business is not located in the jurisdiction of a member board of REALTORS®, to become members of the National Association

By accepting conscientiously the great charge imposed upon them, state associations have established a record of outstanding service and leadership to their local member boards in their respective states.

State associations are invaluable links between the National Association and its member boards.  By providing the leadership and expertise at the state level, and by creating an effective liaison between local boards and the National Association, a state association renders great service to the REALTOR® cause, serving constantly to improve the organization of REALTORS®.

The NATIONAL ASSOCIATION OF REALTORS® Today

The NATIONAL ASSOCIATION OF REALTORS® is dedicated to providing sound, constructive, and effective guidelines for the policies and practices of America's more than 1,500 Member Boards of REALTORS® and 750,000 REALTORS® and REALTOR-ASSOCIATE®s who subscribe to the Code of Ethics of the National Association and to the policies set forth in its Constitution and Bylaws.

The National Association grants to its member boards a license to use the term REALTOR®, and charges such boards with the authority and responsibility for assigning, regulating, and enforcing the proper use of the term REALTOR® and REALTOR-ASSOCIATES® among its members and within its assigned jurisdiction.  It also charges such member boards with the responsibility of enforcing the Code of Ethics.

REALTORS® and REALTOR-ASSOCIATE®s acknowledge an obligation to the American people.  The fact that the citizens of our nation enjoy the finest housing in the world, both in quality of housing and degree of private ownership, attests to the fact that REALTORS® and REALTOR ASSOCIATE®s have met the challenge of their obligations.  REALTORS® have organized themselves to elevate the profession through their commitment to the Code of Ethics and service to the public.  Continued and improved organization is by far the best possible means of continually meeting the special obligations assured by REALTORS®.  By recruiting, educating, and training, by providing inspirational guidance, and by retaining the confidence and support of REALTORS® and REALTOR-ASSOCIATE®s, the National Association, state associations, and local member boards assure the continued ethical and professional competence of those REALTORS® and REALTOR-ASSOCIATE®s in their communities.  As a consequence, the nation and its communities are served by the professionalism and high standards of the practices of REALTORS® and REALTOR-ASSOCIATE®s.

NAR Membership Policy

NAR Constitution, Bylaws, and Interpretations of Bylaws

Membership in the NATIONAL ASSOCIATION OF REALTORS® is defined and described in Article I of the Constitution of the National Association.  Membership in the National Association (as per Article III of the Constitution of the National Association, January 2002) consists of seven classes:

  • member boards
  • board members
  • individual members
  • national affiliate members
  • international members
  • affiliated institutes, societies and councils
  • distinguished service award recipients

For fuller definition and description of membership, refer to Article Ill and its sections in their entirety and current provisions, as may be amended from time to time.

Special reference is made to:

  • Article I -- Membership
  • Article II -- Dues
  • Article III -- Territorial Jurisdiction
  • Article V -- Use of The Terms REALTOR®, REALTORS® and REALTOR ASSOCIATE®

These provisions relate to the most frequently recurring areas of interest and concern by member boards and board members.

When licensing to member boards the right and duty to control the use of terms "REALTOR®" and "REALTOR-ASSOCIATE®" and determining those qualified to use the terms, the NATIONAL ASSOCIATION OF REALTORS® delegates to local boards the authority and responsibility of ascertaining an applicant's qualifications for membership in accordance with the membership qualification criteria.  It does not contemplate that member boards will impose arbitrary regulations contrary to practices governing professional or trade organizations or require members to conduct their business according to methods unrelated to ethical conduct.

The Three-way Agreement

A new member in a board of REALTORS® may find himself or herself perplexed when first hearing the term "Three-way Agreement" during a meeting of a board committee or a regular full membership meeting.  However, the basic concept is simple.  The term "Three-way Agreement" refers to the written agreement of the NATIONAL ASSOCIATION OF REALTORS® with the state association and the member boards of that state.  This written agreement among the National Association and the state associations and local boards grants the right to use the term REALTORS® in the name of each state association and local board.  The agreement also gives each association and board the right to grant the use of the terms REALTOR® and REALTOR-ASSOCIATE® within the territorial jurisdiction of each association and board to such individuals as deemed qualified for membership.  In turn, the state associations and local boards agree to:

  • accept the charge of properly granting and regulating the use of terms REALTOR® and REALTOR-ASSOCIATE®
  • subscribe to the Code of Ethics of the National Association
  • uphold and enforce the Code within the board's jurisdiction

Application Fees for Membership

Interpretation No. 2 of the Official Interpretations of Article 1, Section 2 of the Bylaws of the National Association provides that:  "An initiation fee in excess of three times the amount of the annual rate of dues is an inequitable limitation on its membership."

Explanation:  Member boards must not place unreasonable burdens on applicants for membership.  The requirements for membership must be reasonable and nondiscriminatory.

The initiation fee, if any, charged by a board must not constitute an unreasonable barrier to membership of a person otherwise qualified, nor should a board seek to finance its activities and operations from initiation fees.  Therefore, the National Association deems any initiation fee in excess of three times the amount of the annual rate of dues as inequitable.

Because under Interpretation No. 1, participation in a board multiple listing service is not mandatory, a board's initiation fee for membership, if any, must be separate from any participation fee that may be charged for the multiple listing service.

Local Board Dues

There are no membership dues payable directly to the National Association by REALTOR® and REALTOR-ASSOCIATE® members.  REALTORS® and REALTOR-ASSOCIATES® are deemed members of the National Association when the local board or state association has paid its current dues and certified such individuals as members in good standing in the board or state association.

The Designated REALTOR® Dues Formula

Most member boards and associations adopt and use the designated REALTOR® dues formula established in Article X of the National Association's Model Bylaws for Local Member Boards, because this is the formula used by the National Association to assess dues of member boards. 

Following is a reprinted article titled, "The REALTOR®'s Dues Formula -- A Fair Share," by William D. North, former General Counsel of the National Association of REALTORS®, from the June 1981 issue of The Executive Officer.  This article provides an in-depth discussion of the rationale for the dues formula.

The REALTOR® Dues Formula -- A Fair Share

The delegates to the 1972 Convention of the NATIONAL ASSOCIATION OF REALTORS®, meeting in Honolulu, Hawaii, overwhelmingly approved a new dues formula for computing the dues of REALTOR® Members.  This dues formula called for assessment of REALTOR® dues computed on the basis of the size of the REALTOR®'s organization, i.e., on the number of individuals licensed with the REALTOR®.

The number of individuals licensed with the REALTOR® was selected as the most accurate and equitable method of assessing dues proportional to the membership benefits and services accruing to the REALTOR® and through the REALTOR® to all individuals licensed with the REALTOR® in the practice of real estate.  Other possible methods of computing the REALTOR®'s dues that were considered included the sales volume of the REALTOR®'s firm, the number of offices, and other such measures.  However, after extensive and careful deliberation, it was determined that the number of individuals licensed with the REALTOR® was the fairest measure of benefits accruing to the REALTOR® from his Membership, and this was selected as the foundation for Membership dues in the Association.

At the same time, two contingent provisions were adopted and approved as a part of the REALTOR® dues formula.

First, it was recognized that if some or all of the individuals licensed with the REALTOR® also held REALTOR® or REALTOR-ASSOCIATE® Membership, and paid dues for such Membership, it would not be equitable to also charge the REALTOR® in respect to such persons; so a credit setoff against the REALTOR®'s dues obligation was provided for each individual licensed with the REALTOR® who voluntarily held REALTOR® or REALTOR-ASSOCIATE® Membership as a matter of personal option and election.

Secondly, in respect to any given firm comprised of more than one REALTOR® principal, it was specified that only one (1) of the principals designated by the firm would be charged on the basis of the size formula.  All other principals of the firm would be charged only a base amount of dues as determined and not charged any dues in respect to the number of individuals licensed with the firm.

Inasmuch as only one REALTOR® principal designated by the firm was obligated to pay dues based on the size of the firm, the size formula adopted has also been referred to as the "designated REALTOR® dues formula."  Since the designated REALTOR® is given a credit against his dues obligation for  each individual licensed with him who holds REALTOR® or REALTOR-ASSOCIATE® Membership, his dues are then ultimately computed on the basis of

  1. A base amount as determined by the local Board

  2. A further amount as determined times the number of individuals licensed with the REALTOR® who do not hold Membership in the Board.

Thus, in the final analysis, the designated REALTOR® pays dues (his own personal dues) for Membership benefits and services received by the REALTOR® which are proportional to the number of such persons affiliated with the REALTOR® who benefit from his REALTOR® Membership and its benefits and services, but do not personally hold Membership and pay no dues.

It must be clearly understood that the designated REALTOR® is not paying dues for individuals affiliated with him who elect not to be Board Members.  They are not Board Members and therefore have no dues payable to the Board.  Any benefits or Board services that such licensees realize accrue to them solely through their relationship with the designated REALTOR® and are not provided to them directly by the Board.  Rather, the REALTOR® pays his dues (his own and not the dues paid for others) as computed on the number of individuals licensed with him, but who are not Members of the Board.

It should be pointed out that this formula was adopted by the National Association in 1972 for REALTOR® Membership in the National Association and retained as the basis for REALTOR® Membership in the National Association until November 1978, when the National Association revised its Bylaws in respect to Membership dues.  In November, 1978, the National Association revised Article II of its Bylaws to require payment of dues only by Member Boards.

The Bylaws as revised do not provide for any dues payable directly by REALTORS® and REALTOR-ASSOCIATE® s to the National Association.  Rather, when a Member Board has paid its Member Board dues, the REALTOR® and REALTOR-ASSOCIATE® Members of the Board as reported by the Board are automatically deemed to be REALTORS® and REALTOR-ASSOCIATE® s of the National Association.  (It is recommended to State Associations that they have similar dues requirements of Member Boards only, but this is a determination of the State Association and is determined as stated by their respective Bylaws.)

However, even though the National Association revised its Bylaws in 1978 to require dues of Member Boards only, the dues obligation of Member Boards is computed upon "...the number of REALTOR® Members of the Board and the number of individuals licensed with REALTOR® Members by the Board who are not themselves REALTOR® Members."  The phrase, ... the number of individuals licensed with REALTOR® Members of the Board and who are not themselves REALTOR® Members" includes both REALTOR-ASSOCIATE® s and those individuals licensed with REALTOR® Members of the Board who are not Board Members.  In other words, the Member Board dues obligation remains based upon the premise that the benefits and services which flow from the National Association to REALTORS® and those affiliated with them is most equitably measured by size of the REALTOR®'s organization (number of individuals licensed with the REALTOR®).

In turn, most Member Boards have adopted and utilized the designated REALTOR® dues formula (i.e., the size formula) on the local level and look to the designated REALTOR® for payment of dues calculated on the  number of licensees affiliated with the REALTOR®, with credit offsets for all affiliated licensees who hold Board Membership.  The dues provision of the Board Bylaws is applicable, of course, only to those licensees affiliated with the REALTOR® within the jurisdiction of the Board*, and is applicable in respect of those individuals licensed with the REALTOR® in any real estate firm in which the REALTOR® holds an ownership interest, provided that such dues obligation does not duplicate dues paid by another principal (designated REALTOR®) of any such firm.  (*Editor's note:  with the implementation of board of choice, the designated REALTOR® is accountable for all real estate firms within the state in which (s)he is a principal.)

To identify clearly the intent of the National Association Bylaws with respect to the dues obligation of the Member Board, and in turn to clarify the basis upon which the Member Board might appropriately establish its dues provision for designated REALTOR® Members of the Board, the National Association amended Article II, Section 1 (B) of the Bylaws of the National Association to contain the following provision:

"An individual shall be deemed to be licensed with a REALTOR® if the license of the individual is held by a REALTOR® or by an entity in which the REALTOR® has a direct or indirect ownership interest and which is engaged in soliciting and/or referring clients or customers to the REALTOR® for consideration on a substantially exclusive basis, provided that such licensee is now otherwise included in the computation of dues payable by the principal, partner, or corporate officer of the entity."

"Member Boards are advised that with respect to "direct ownership interest" specified above, this should be self-explanatory.  It is ownership, in whole or in part, by the REALTOR®, as the principal or a principal of a real estate firm.  The term, "indirect ownership" would include ownership held through a "holding company," a "trust," or other legal device which may provide effective ownership control.

The dues obligation does not apply to situations in which there is no ownership relation, direct or indirect, even though a beneficial interest or benefit may exist.

If a question should arise as to the application and enforcement of the local Board dues with respect to the dues obligation of a designated REALTOR® as related to a real estate firm, the following is recommended:

  1. Invite the REALTOR® to attend a meeting of the Membership Committee, and in a friendly, constructive atmosphere, as the REALTOR® to explain his relationship to any real estate firm about which the question has arisen.

  2. After a firsthand discussion with the REALTOR®, determine and explain the REALTOR®'s dues obligation.  If he agrees, the question is resolved.  If he does not agree, the matter should be reviewed by Board Legal Counsel prior to recommendation of the Membership Committee to the Board of Directors.  Board Legal Counsel should specifically review the dues provision of the Board Bylaws to ensure that they support any recommendation to be made to the Directors.

If it appears that the REALTOR® may challenge the recommendation of the Membership Committee, and may litigate against the Board, the Member Policy Division of the National Association should be informed immediately and no final action should be taken prior to a complete review by the State and National Associations.

Voluntary Nature of Membership

Membership in a board of REALTORS® is voluntary.  No individual is required to seek and maintain membership in a board of REALTORS®, and with one notable exception, all aspects of membership in a board of REALTORS® is completely voluntary.  The one exception to the voluntary nature of membership in a board of REALTORS® is stipulated in Article 111, Section 1.(C) 1 of the Constitution of the National Association which, with respect to the principals of real estate firms, partnerships, and corporations, states, in part, that:  ". . . Each principal, partner, or corporate officer actively engaged in the real estate business within its state shall be required to become REALTOR® Members if any other principal of such firm, partnership, or corporation is a REALTOR® Member."

The rationale of the single mandatory aspect of board membership is to ensure a complete commitment on the part of all principals (as described above) of any firm to the Code of Ethics of the National Association, and to the constitution and bylaws and rules and regulations of the local board, state association, and the National Association.  With respect to this complete commitment, it is contemplated that a firm, partnership, or corporation comprised of REALTOR® principals shall fully honor and abide by the same rights and obligations as the REALTOR® member or members comprising the firm, partnership, or corporation.

Availability of Membership on Reasonable and Nondiscriminatory Terms

Membership in a local board of REALTORS® must be available on reasonable and nondiscriminatory terms.  Member boards of REALTORS® may have no qualification of membership more "rigorous" than the  Membership Qualification Criteria of the National Association for applicants who are sole proprietors, partners or corporate officers, nor more "rigorous" than the Membership Qualification Criteria for applicants who are other than principals of a real estate firm, partnership or corporation. 

These criteria must be applied equally and without discrimination, and to the extent incorporated into the local board bylaws to all individuals, whether they are applicants for membership in the board or current members of the board.  With respect to the applicability of the membership qualification criteria to individuals who are presently members of the board, it is noted that the membership criteria are ongoing qualifications of membership.  When a member fails to maintain the qualifications of membership established in a board's bylaws, the board may reconsider the individual's membership status to determine if the individual is eligible for another category of membership, or whether that individual has ceased to possess qualifications for any category of membership in the board.

Membership Qualification Criteria of the National Association for Applicants for REALTOR® Members Who Are Sole Proprietors, Partners, Corporate Officers, or Branch Office Managers in a Real Estate Firm

The following Membership Qualification Criteria are the most rigorous qualifications that may be required by a board of REALTORS® when considering an applicant for REALTOR® membership who is a sole proprietor, partner, corporate officer, or branch office manager of a real estate firm.  They were developed by the Membership Committee of the National Association to provide "reasonable and nondiscriminatory written requirements for membership."  Boards may elect to adopt all, some, or none of the criteria, but those that are adopted must be included in a board's bylaws.  The criteria and each explanatory note were approved by the Legal Counsel of the National Association.  Approved by the Board of Directors of the NATIONAL ASSOCIATION OF REALTORS® February 5, 1974, the criteria were amended in 1982, 1985, 1987,1990, 1991, and 1996.

Applicants for REALTOR® membership who are sole proprietors, partners, corporate officers, or branch office managers in a real estate firm may be required to supply satisfactory evidence of the following criteria.

1.  A valid real estate license (and are actively engaged in the real estate business and its recognized branches)

Explanation:  "A valid real estate license" is intended to mean that applicants for REALTOR® membership who are sole proprietors, partners, corporate officers, or branch office managers of a firm engaged in the real estate business must maintain a current, valid real estate broker's or salesperson's license or must be licensed or certified by an appropriate state regulatory agency to engage in the appraisal of real property.

The term "actively engaged" in business contemplates that the licensed or certified applicants will have an office for the conduct of real estate business and shall hold themselves out to the public as being actively engaged in the real estate business, and shall actively seek and service real estate business.  It does not contemplate that applicants must devote all or even a majority of their time to the real estate business or derive any particular percentage of their income from such business.  It does not contemplate that applicants shall have no other job or occupation. 

When a question arises as to whether applicants are "actively engaged" in the real estate business, they shall be given the opportunity to present evidence concerning the actual and intended scope of their business activities.  In the event any applicant for membership is rejected on the basis of failure to be "actively engaged," a board should promptly seek a declaratory judgment from a court of competent jurisdiction affirming the propriety of such rejection.

2.  A place of business within the state or a state contiguous thereto
3. No record of official sanctions involving unprofessional conduct.

Qualification: “No record of official sanctions involving unprofessional conduct” is intended to mean that the Board may consider:

  1. judgments against the applicant within the past three (3) years of violations of
    1. civil rights laws;
    2. real estate license laws;
    3. or other laws prohibiting unprofessional conduct rendered by the courts or other lawful authorities
  2. criminal convictions if (1) the crime was punishable by death or imprisonment in excess of one year under the law under which the applicant was convicted; and (2) no more than ten years have elapsed since the date of the conviction or the release of the applicant from the confinement imposed for that conviction, whichever is the later date.
4.  Membership file

Qualification:  Associations may, at their discretion, also consider the following in determining an applicant's qualifications for membership:

  1. all final findings of Code of Ethics violations and violations of other membership duties in any other association within the past three years
  2. pending ethics complaints (or hearings)
  3. unsatisfied discipline pending
  4. pending arbitration requests (or hearings)
  5. unpaid arbitration awards or unpaid financial obligations to any other association or association MLS
  6. any misuse of the term REALTOR® or REALTORS® in the name of the applicant’s firm.

"Provisional" membership may be granted in instances where ethics complaints or arbitration requests (or hearings) are pending in other associations or where the applicant for membership has unsatisfied discipline pending in another association (except for violations of the Code of Ethics, see note below) provided all other qualifications for membership have been satisfied.  Associations may reconsider the membership status of such individuals when all pending ethics and arbitration matters (and related discipline) have been resolved or within six months from the date that provisional membership is approved if such matters have not been resolved.  Provisional members shall be considered REALTORS® (or REALTOR-ASSOCIATES®, if applicable) and shall be subject to all of the same privileges and obligations of REALTOR® or REALTOR-ASSOCIATE® membership.

If a member resigns from another association with an ethics complaint or arbitration request pending, the association may condition membership on the applicant's certification that he/she will submit to the pending ethics or arbitration proceeding (in accordance with the established procedures of the association to which applicant has made application) and will abide by the decision of the hearing panel.

NOTE:  Article IV, Section 2, of the NAR Bylaws prohibits Member Boards from knowingly granting REALTOR® or REALTOR-ASSOCIATE® membership to any applicant who has an unfulfilled sanction pending which was imposed by another Board or Association of REALTORS®  for violation of the Code of Ethics.

5.  No recent or pending bankruptcy

Qualification:  No recent or pending bankruptcy is intended to mean that the applicant or any real estate firm in which the applicant is a sole proprietor, general partner,  corporate officer  or branch office manager is not involved in any pending bankruptcy or insolvency proceedings or has not been adjudged bankrupt in the past three years.  If a bankruptcy proceeding as described above exists, membership may not be rejected unless the board establishes that its interests and those of its members and the public could not be adequately protected by requiring that the bankrupt applicant pay cash in advance for board and multiple listing service fees for up to one year from the date that membership is approved or from the date that the applicant is discharged from bankruptcy (whichever is later).  In the event that an existing member initiates bankruptcy proceedings, the member may be placed on a "cash basis" from the date that bankruptcy is initiated until one year from the date that the member has been discharged from bankruptcy.

6.  Completed the board indoctrination course

Qualification:  It is presumed that an indoctrination course to be completed as a prerequisite for membership is confined to the subjects of the constitution, bylaws, policies, and rules and regulations of a local board, state association, and the National Association, and the Code of Ethics of the National Association.  It is not contemplated that completion of the indoctrination course covering topics included in the licensing examination will be required for qualification.

7.  Signified their intention to abide by the NATIONAL ASSOCIATION OF REALTORS® Code of Ethics
8.  Signified their intention to abide by the Constitution, Bylaws, policy, and rules and regulations of the local Board, State Association, and the NATIONAL ASSOCIATION OF REALTORS®.

Explanation:  By such agreement in the application, applicants assume a continuing membership obligation.

Important Note to Member Boards:  When a board declines to accept an applicant on the basis of failure to satisfy Point 1 (actively engaged), Point 3 (no record of official sanctions involving unprofessional conduct), and/or Point 5 (no recent or pending bankruptcy), it is recommended that the board seek a declaratory judgment in the civil courts, affirming its decision.  Board legal counsel will advise as to the proper form and procedures in seeking a declaratory judgment.  A sample form that may be used for this purpose is included in the Code of Ethics and Arbitration Manual.  No petition should be prepared except by board legal counsel.

Membership Qualification Criteria of the National Association for Applicants for REALTOR® and REALTOR-ASSOCIATE® Membership Other than Sole Proprietors, Partners, Corporate Officers, or Branch Office Managers in a Real Estate Firm

The following criteria of membership are identical in purpose with the Membership Criteria for REALTORS® who are principals in a real estate firm.  They are the most rigorous qualifications which may be required by a board of REALTORS® in the consideration of applicants for REALTOR® membership who are other than sole proprietors, partners, corporate officers, or branch office managers of real estate firms, and applicants for REALTOR-ASSOCIATE® membership.  These were developed by the Membership Committee of the National Association to provide "reasonable and nondiscriminatory written requirements for membership."  The board may elect to adopt all, some, or none of the criteria, but those which are adopted must be included in a board's bylaws.  The following criteria and explanatory notes have the approval of legal counsel, National Association, and were approved by the Board of Directors of the NATIONAL ASSOCIATION OF REALTORS® in November, 1974, and amended in 1983, 1990, and 1996.

Applicants for REALTOR® membership who are other than sole proprietors, partners, corporate officers, or branch office managers of a real estate firm or applicants for REALTOR-ASSOCIATE® membership may be required to supply satisfactory evidence of the following.

1.  A valid real estate license (and are actively engaged in the real estate business and its recognized branches)

Explanation:  "A valid real estate license" is intended to mean that applicants for REALTOR® membership who are other than sole proprietors, partners, corporate officers, or branch office managers in a firm engaged in the real estate business must maintain a current, valid real estate broker's or salesperson's license or must be licensed or certified by an appropriate state regulatory agency to engage in the appraisal of real property.

The term "actively engaged" in business contemplates that the licensed or certified applicants will have an office for the conduct of real estate business and shall hold themselves out to the public as being actively engaged in the real estate business, and shall actively seek and service real estate business.  It does not contemplate that applicants must devote all or even a majority of their time to the real estate business or derive any particular percentage of their income from such business.  It does not contemplate that applicants shall have no other job or occupation. 

Where question arises as to whether or not applicants are "actively engaged" in the real estate business, they shall be given the opportunity to present evidence concerning the actual and intended scope of their business activities.  In the event  any applicant for membership is rejected on the basis of failure to be "actively engaged," the board should promptly seek a declaratory judgment from a court of competent jurisdiction affirming the propriety of such rejection.

2.  Employed by or affiliated with a REALTOR® as an independent contractor

Explanation:  The basic qualification is employment or affiliation with a REALTOR®.  The qualification is met by individuals regardless of whether they operate out of the principal office of the REALTOR® or a branch office. 

3.  No record of official sanctions involving unprofessional conduct.

Qualification:  “No record of official sanctions involving unprofessional conduct” is intended to mean that the Board may consider:

  1. A. judgments against the applicant within the past three (3) years of violations
    1. civil rights laws;
    2. real estate license laws;
    3. or other laws prohibiting unprofessional conduct rendered by the courts or other lawful authorities
  2. B. criminal convictions if (1) the crime was punishable by death or imprisonment in excess of one year under the law under which the applicant was convicted; and (2) no more than ten years have elapsed since the date of the conviction or the release of the applicant from the confinement imposed for that conviction, whichever is the later date.
4.  Must make written application for REALTOR® or REALTOR-ASSOCIATE® Membership in the board  (Such application must be a voluntary act by applicants, and cannot be a requirement of a board.)

Explanation:  A board may not require that salespersons affiliated with a REALTOR® be members of the board.  Neither can a board require that the REALTOR® have such a requirement.

5.  Membership file

Qualification:  Associations may, at their discretion, consider the following when determining an applicant's qualifications for membership:

  1. all final findings of Code of Ethics violations and violations of other membership duties in any other association within the past three years
  2. pending ethics complaints (or hearings)
  3. unsatisfied discipline pending
  4. pending arbitration requests (or hearings)
  5. unpaid arbitration awards or unpaid financial obligations to any other association or association MLS
  6. any misuse of the term REALTOR® or REALTORS® in the name of the applicant’s firm.

"Provisional" membership may be granted in instances where ethics complaints or arbitration requests (or hearings) are pending in other associations or where the applicant for membership has unsatisfied discipline pending in another association (except for violations of the Code of Ethics, see note below) provided all other qualifications for membership have been satisfied.  Associations may reconsider the membership status of such individuals when all pending ethics and arbitration matters (and related discipline) have been resolved or within six months from the date that provisional membership is approved if such matters have not been resolved.  Provisional members shall be considered REALTORS® (or REALTOR-ASSOCIATES®, if applicable) and shall be subject to all of the same privileges and obligations of REALTOR® or REALTOR-ASSOCIATE® membership.

If a member resigns from another association with an ethics complaint or arbitration request pending, the association may condition membership on the applicant's certification that he/she will submit to the pending ethics or arbitration proceeding (in accordance with the established procedures of the association to which applicant has made application) and will abide by the decision of the hearing panel.

NOTE:  Article IV, Section 2, of the NAR Bylaws prohibits Member Boards from knowingly granting REALTOR® or REALTOR-ASSOCIATE® membership to any applicant who has an unfulfilled sanction pending which was imposed by another Board or Association of REALTORS®  for violation of the Code of Ethics.

6.  Signified their intention to abide by the NATIONAL ASSOCIATION OF REALTORS® Code of Ethics
7.  Signified their intention to abide by the constitution, bylaws, policy and rules and the regulations of the local board, the state association, and the NATIONAL ASSOCIATION OF REALTORS®

Explanation:  By such agreement in the application, applicants assume a continuing membership obligation.

8.  Completed the board indoctrination course

Explanation:  It is presumed that an indoctrination course to be completed as a prerequisite for membership is confined to the subjects of the constitution, bylaws, policies, rules and regulations of the local board, state association, and the National Association, and the Code of Ethics of the National Association.  It is not contemplated that completion of the indoctrination course covering topics included in the licensing examination will be required for qualification.

9.  Associations may require that applications for membership submitted by non-principal brokers, sales licensees, and licensed or certified appraisers be "acknowledged" by a REALTOR® who is a sole proprietor, partner, corporate officer, or branch office manager of the firm.

Important Note to Member Boards:  When a board declines to accept an applicant on the basis of failure to satisfy Point 1 (actively engaged), it is recommended that the board seek a declaratory judgment in the civil courts, affirming its decision.  Board legal counsel will advise as to the proper form and procedures in seeking a declaratory judgment.  A sample form that may be used for this purpose is included in the Code of Ethics and Arbitration Manual.  No petition should be prepared, except by board legal counsel.

Board of Choice and Board of Choice Across State Lines

Background Information

During the 1994 Midwinter Meetings of the National Association, the Board of Directors and Delegate Body approved amendments to the National Association's Constitution to implement board of choice.  Prior to this change in policy, a REALTOR® was required to join the board where his or her principal place of business was located, before becoming eligible to join any other board.

Simply stated, board of choice gives a REALTOR® the freedom to join the board that provides him or her with the services and programs he or she finds most valuable.  Board of choice became mandatory as of January 1, 1996. 

The original board of choice policies authorized a REALTOR® to join any board within the state where his or her office is located.  Based on amendments approved by the Board of Directors and Delegate Body during the 1995 Annual Convention, the board of choice policies were expanded to authorize REALTORS® to join a primary board across contiguous state lines.  State association membership is in the state where primary board membership is held.  Board of choice across state lines policies are mandatory as of July 1, 1996, but local boards may voluntarily adopt the policies prior to that date.

Board of Choice Key Implementation Concepts

NOTE:  As used herein, the term "board" refers to local boards and associations.  As used herein, "licensee" refers to individuals licensed or certified to engage in real estate practice, including but not limited to brokerage, appraisal, property management, counseling, etc.

Primary Membership

The primary board of affiliation elected by a REALTOR® must be in the state where the REALTOR® is licensed and maintains his or her principal place of business or in a state contiguous thereto.  Licensees affiliated with a REALTOR® firm may choose as a "primary" board any board in the state where the firm maintains a "designated" REALTOR®. 

Membership of All Principals

Each principal, partner, corporate officer, or branch office manager acting on behalf of a principal, who is actively engaged in the real estate business within the state, must be a REALTOR® if any other principal of such firm, partnership, or corporation is a REALTOR® member. 

Discussion:  Prior to board of choice being in effect, each sole proprietor, corporate officer, or branch office manager acting on behalf of the firm's principal(s) within a particular board's jurisdiction, who was actively engaged in the real estate business in that board's jurisdiction, was required to be a REALTOR® or institute affiliate member of the board if any other principal in the firm was a REALTOR®.  This was to ensure a full commitment by all principals to the Code of Ethics and other membership duties.

The board of choice policies expanded this requirement to a statewide basis.  For example, if a real estate firm maintains branch offices, the designated REALTOR® of each branch office selects a primary board of affiliation, which may or may not be the same as the board selected by other principals in the firm.  Similarly, if a REALTOR® (principal) establishes a second real estate firm within the state, he or she remains a REALTOR® in connection with both (all) firms.

A REALTOR® cannot divide himself or herself in the practice of real estate as a REALTOR® within a particular state.  He or she either is or is not a REALTOR®.  If that person chooses to be a REALTOR®, then he or she is accountable for all real estate firms within the state in which he or she is a principal. 

Secondary Membership

Non-resident membership has been replaced by "secondary" membership.

Discussion:  While the board of choice concept eliminates the need to hold multiple memberships in boards to have access to board services, individuals may want to maintain membership in more than one board to network, to become politically involved, or for other reasons.  Consequently, membership is available in a secondary board on terms and conditions no more stringent than the requirements established in that board's bylaws for REALTOR® (and REALTOR-ASSOCIATE®, where applicable) membership.

Membership is granted to a non-principal licensee who holds REALTOR® or REALTOR-ASSOCIATE® membership in his or her primary board, without any requirement that the designated REALTOR® with whom that person is licensed or affiliated holds membership in the secondary board. 

MLS services are available only to a secondary member if his or her designated REALTOR® participates in the MLS.  Board dues only are assessed for those members who join a secondary board on a voluntary basis.  No national allocation is included because NAR dues are already paid through a member's primary board.  A state allocation is included only if a member's primary board is located in a different state.

Board Services and the MLS

A REALTOR® is entitled to purchase services from boards other than his or her primary board without the necessity of holding membership in those boards.  Service fees are determined by each individual board. However, as a condition of MLS participation, a board may require a REALTOR® principal to be licensed in the state.

Discussion:  Under board of choice, services from other boards are available, irrespective of where a REALTOR® seeking those services holds his or her primary membership.  This is subject only to a REALTOR®'s agreement to abide by any related rules and regulations of the board from which a service is being sought, and to pay the necessary cost for the service.

The Code of Ethics

Complaints alleging violations of the Code of Ethics and requests for arbitration may be filed at any board in which a REALTOR® holds membership or participates in the board's MLS.

Discussion:  Traditionally, Code of Ethics enforcement was limited to the board where an individual held REALTOR® membership.  However, the universal access to services element of board of choice creates the potential for disputes between REALTORS® and the public in areas outside of a REALTOR®'s primary board of affiliation.  Consequently, one of the conditions of access to a board's MLS is a participant's agreement to submit to ethics hearings and arbitration requests filed at a board from which the REALTOR® obtains MLS access but is not a member.  Boards may impose an administrative processing fee (not to exceed $500), in addition to any discipline imposed (which may include fines), when such individuals are found in violation of the Code of Ethics.

NOTE:  Additional, detailed information about board of choice and board of choice across state lines is provided in the Board of Choice Implementation Kit.

Local Board Membership Categories

A board of REALTORS® determines by the provisions of its bylaws the categories of membership available in the board.  Member boards must make REALTOR® membership available to the  principals, partners, and corporate officers of real estate firms actively engaged in the real estate business within the state or a state contiguous thereto, and a board must provide REALTOR® membership to real estate salespersons, brokers, and licensed or certified appraisers employed by or affiliated as independent contractors with REALTOR® members of the board or, alternatively, make a category of REALTOR-ASSOCIATE® membership available to such individuals. 

A board must also make available institute affiliate membership to individuals who hold a professional designation awarded by an  institute, society, or council affiliated with the National Association that addresses a specialty area other than residential brokerage, or to individuals who otherwise hold a class of membership in such institute, society, or council that confers the right to hold office.

REALTOR® and REALTOR-ASSOCIATE® members, in good standing in a local board of REALTORS®, are automatically deemed to be REALTOR® and REALTOR-ASSOCIATE® members, respectively, in good standing with the state and National associations. 

Other categories of membership in a local board may include:

  • affiliate members
  • public service members
  • honorary members
  • student members

The preceding categories of membership are identified and described in the Model Bylaws for Local Member Boards of the National Association and are generally those categories of membership available in member boards of REALTORS®.  However, member boards are not precluded from offering other categories of membership not inconsistent with the membership policies of the National Association.

Membership Application

The National Association has approved and made available to member boards a model application for membership in a board of REALTORS®.  The form elicits that information from the applicant which is deemed relevant for consideration by the Membership Committee and the Board of Directors.  These forms may be ordered in any quantity from Customer Service of the National Association at 1-800-874-6500. 

Indoctrination Courses

A member board of REALTORS® may require applicants for membership in the board to complete an indoctrination course, as stated in Interpretation No. 18, Official Interpretations of Article 1, Section 2 of the Bylaws of the National Association, which provides that:

A Board rule which seeks to attain the objectives of Articles 1, 2 and 3 of the Code of Ethics by requiring, as a condition of Board membership, completion of an objective and nondiscriminatory Indoctrination course with a stated passing grade in an examination thereon is not an inequitable limitation on its membership."

EXPLANATION:  Each applicant may reasonably be expected to be thoroughly conversant with the requirements of the Code of Ethics and of the Bylaws, Rules and Regulations of the NATIONAL ASSOCIATION OF REALTORS®, the State Association, and the Member Board.  Hence, a Board rule requiring that an applicant satisfactorily complete an objective and nondiscriminatory Indoctrination Course covering such requirements is not an inequitable limitation.

Denial of Membership

A real estate board is a membership association or corporation.  It is also a business or trade association.  It is an association organized for the purpose of improving the business in which its members engage through education, cooperation, exchange of information, and by the establishment and enforcement of ethical standards of practice for the benefit of the public.

In view of this, membership becomes a valuable right and can only be denied, revoked, or modified for good cause and only under circumstances that allow due process.  An association of business competitors must admit to membership all qualified applicants. 

If an applicant is excluded from membership, the grounds upon which he or she is not accepted should be clear, not speculative.  No one should be excluded from membership because of a vigorously competitive manner of conducting business.  There can be no arbitrary restrictions on membership, not only because of Article 1, Section 2 of the National Association's Bylaws, but also because of cogent legal reasons.

Qualifications should be limited to those directly relevant to the legitimate interest of a board.  Permissible, valid criteria for REALTOR® and REALTOR-ASSOCIATE® membership in a board of REALTORS® is set forth in NAR’s Membership Qualification Criteria.

Whenever an application for membership is denied, the body acting on the application should maintain a full record of proceedings, sufficiently detailed to demonstrate, should the occasion arise, the specific basis or bases of disqualification.

Expulsion from Membership

Expulsion from membership, as defined in the Code of Ethics and Arbitration Manual of the National Association, means expulsion from membership in the board for a period not less than one, but not more than three years, with reinstatement to membership by application only as a new member after the end of the period of expulsion with the application for membership considered on its merits.

Because expulsion of a member may be subject to judicial review, the legal requirements of "due process" must be followed in any such proceeding.  The fundamental elements of due process are:

  • notice
  • hearing
  • an opportunity to defend before an impartial body

When a board contemplates denial of membership or expulsion of a member and has reason to believe the individual may resort to litigation, with guidance of board's legal counsel, the board should consider seeking declaratory judgment in the appropriate court of the state where the board is located.  (A sample Petition for Declaratory Relief is provided in the Appendices.)

Suspension of Membership

"Suspension of membership" means suspension of all Board/Association provided membership rights, privileges and services (including those provided by the State and National Association) not available to nonmembers for a period not less than thirty (30) days and not longer than one (1) year on terms and conditions expressly stated for an established period of time including use of the terms REALTOR® and REALTOR-ASSOCIATE®, with automatic reinstatement of all withdrawn membership rights and privileges and services at the end of the  period of suspension.  The thirty (30) day minimum and one (1) year maximum do not apply where suspension is imposed for a remediable violation of a membership duty (e.g., failure to pay dues or fees or failure to complete educational requirements).   Although membership rights, privileges, and services are withdrawn as specified in the notice of suspension, membership, per se, continues and the suspended member remains obligated to pay membership dues and to abide by the Code of Ethics during the period of suspension.  The suspended member shall not be obligated for payment of other fees or charges except for continued optional services of the board.  Any failure to abide by the terms and conditions of the suspension or by the finding of a violation of the Code of Ethics after a hearing as provided by the professional standards procedures in the board bylaws shall be grounds for consideration as to possible extension of the suspension or expulsion from membership. (Revised 05/04)

MLS Participation and Board Membership

It is reasonable that if a business, trade, or professional association makes membership available to all eligible and qualified individuals on reasonable and nondiscriminatory terms and conditions, the rights, benefits, privileges, and services can be limited to only members of the association.  Conversely, non-members of such an association should not be able to "pick and choose" and accordingly demand access to one or more of such rights, benefits, privileges, or services, such as the multiple listing service of a board of REALTORS®.  To have a sound legal basis for asserting and defending this principle, a member board of REALTORS® must have "open doors" of board membership on "reasonable and nondiscriminatory" terms.  This can be assured by employing the following safeguards.

  • Impose no membership qualification requirements more "rigorous" than the  Membership Qualification Criteria of the National Association for REALTOR® members and REALTOR-ASSOCIATE® members, respectively.
  • Have no membership policies that are inconsistent with or in violation of the official interpretations of Article 1, Section 2 of the Bylaws of the National Association in place.
  • Arrange to have the board bylaws, rules and regulations, or any other policies, practices, and procedures of the board reviewed and approved by the Member Policy Department of the National Association every two years.
  • Ensure due process in any and all considerations of membership matters, especially with respect to denial, suspension, or expulsion from membership.  Such denial, suspension, or expulsion should only be done with consultation and advice of board legal counsel.  In each such case, the possible use of a petition for declaratory relief (or similar legal procedure in a state not having declaratory relief procedures) should be considered to confirm the propriety of the board's actions and to minimize any legal liability which might accrue to the board and its members from such denial, suspension, or expulsion.
  • Seek information and assistance from the state association and National Association about unusual or difficult matters relative to membership.

If all of the safeguard procedures described above are in place, a board should have a solid and defensible basis for asserting and defending the right of the board to require membership in the board as a reasonable prerequisite to participation in the board's multiple listing service.  However, even if it follows the safeguard practices, a board may encounter an individual or individuals who demand access to the multiple listing service without board membership.  If this occurs, the board's leadership should request advice from the state and National associations and board legal counsel.

Procedures to Follow in States Other Than California, Florida, Georgia, and Alabama, Upon Demand for MLS Access by Non-Members

If a member board is faced with a demand for MLS participation without board membership, the state association and the Member Policy Department of the National Association should be notified promptly of such demand and be informed of the details surrounding the matter.  Further, upon notification and request, the Member Policy Department will provide any further possible assistance that may be required.
A detailed explanation of each step follows.

  • Explain that the multiple listing service is a board service, and invite application by any individual or individuals for such membership.  Explain and emphasize the many rights, benefits, privileges, and services of the board.
  • Process any board membership application received from such an individual or individuals promptly.  Or, in absence of any application for board membership and upon continued demand for access to the multiple listing service, advise that any request by an individual or individuals will be presented to the board of directors for consideration.
  • Upon the continued demand for access to the board multiple listing service without board membership, the board of directors of the board, with advice of counsel, may consider directing the board to:
    • file a petition for declaratory relief (or the use of a similar legal procedure in any state not having declaratory relief procedure)
    • seek a judgment to confirm the board's right to condition participation in the multiple listing service on board membership when such membership is available on reasonable and nondiscriminatory terms and conditions to all eligible and qualified individuals
  • If civil suit is to be filed by the board, the board should seriously consider providing the multiple listing service to the individual or individuals demanding access to it, pending any final judgment in the suit.  However, the board should document that it does not agree with the individual's alleged legal rights to participate in the its multiple listing service without board membership, and that the service is being provided as an interim measure until the legal question is adjudicated.

MLS Access Under Board of Choice

Under board of choice, MLS participation is available to any REALTOR® (principal) or any firm comprised of REALTORS® (principals), irrespective of where they hold primary membership, subject only to:

  • their agreement to abide by any MLS rules and regulations
  • agreement to arbitrate contractual disputes with other participants
  • payment of any MLS dues, fees, and charges

The universal access to services component of board of choice is interpreted as requiring MLS participatory rights to be available to REALTOR® principals, or to firms comprised of REALTOR® principals, irrespective of where primary or secondary membership is held, on the same terms and conditions as MLS is available to primary/secondary members of the local board/association.  This does not preclude an MLS from assessing REALTORS® who are not local primary or secondary members additional fees to offset actual expenses incurred in providing MLS services such as courier charges, long distance phone charges, etc., or for charging any participant specific fees for optional additional services.  None of the foregoing shall be construed as requiring a board to grant MLS participatory rights under board of choice, where such rights were previously terminated by the action of that board's board of directors.

Organizational Standards for Boards and Associations

Background and History

At the 1992 Annual Convention, the NAR Board of Directors established the “Minimum Services Criteria” for local boards and associations. These were the result of efforts by a joint working group of the Association Executives Committee and the Membership Policy and Board Jurisdiction Committee charged to identify minimum service standards for boards and associations, together with an ongoing certification process that would be administered by the respective state association. The fundamental purpose of the Minimum Services Criteria was to ensure that each board and association is a viable entity providing valuable service to its members.

In August 1995 the Leadership Team requested that these two Committees convene a second working group to reassess the Minimum Services Criteria Program in light of the adoption of Board of Choice, and recommend changes to the program if deemed appropriate. It was the strong consensus of this Working Group that the program retains its current form (i.e., at least 1/3 of all boards and associations in each state certified by year end 1994, 2/3s by year end 1995 and the remaining 1/3 by year end 1996; with each board and association being recertified triennially thereafter). Among the reasons cited for recommending continuation of the program were:

All of the states represented on the Working Group (ten states from different regions of the country) reported extremely positive results attributable directly to the program.

The program has encouraged boards and state associations to examine their organizational structures and the service needs of their members. This has resulted in a significant increase in mergers of local boards and associations and increased the number of boards involved in multi-management programs, strengthening both local boards and state associations.

Based on geography and other factors, Board of Choice is not a viable solution in many parts of the country.

State associations have considerable flexibility and discretion in how the program is administered giving states considerable control over costs.

Both the state associations and the National Association have a fundamental obligation to ensure that boards and associations remain viable and conduct business in accordance with the requirements of their charter as well as state and federal law.

The Working Group concluded, however, that the focus of the criteria should be on organizational/administrative standards rather than on capacity to provide prescribed services to members. It was the consensus of the Working Group that member demand dictates the type and level of services that individual boards/associations provide and that it would be difficult for the National Association or state association to identify, let alone mandate, “service standards” that would satisfy the needs of particular members. This conclusion was consistent with the findings of a different Working Group of the Member Services PAG which also reviewed the Minimum Services Criteria Program.

Consequently, the Working Group recommended that the name of the program be changed to “Organizational Standards for Boards and Associations,” and that various modifications be made to the criteria. These changes were approved by the Association Executives Committee, the Membership Policy and Board Jurisdiction Committee and the NAR Board of Directors at the 1995 Annual Convention.

In 2002, a joint work group of the Association Executives Committee and Membership Policy & Board Jurisdiction Committee was appointed to consider the continued viability of the Organizational Standards program. A survey was distributed in March 2003 to all state and local association Presidents and Association Executives to obtain feedback on the program. Based on a comprehensive review of the survey results and the existing Organizational Standards program, the work group concluded that operational standards for local associations should be retained; increased efforts should be instituted to educate Presidents and Association Executives concerning the program; and that an electronic certification process should be developed to ease the administrative burden of the state and local associations.

Organizational Standards Criteria

  1. Governing Documents

    Association's Bylaws, MLS Bylaws and/or Rules and Regulations (if applicable) and professional standards procedures are consistent with NAR policy; elections and membership/business meetings are conducted in accordance with the Bylaws; and membership is available on reasonable and nondiscriminatory terms (i.e., on terms and conditions no more rigorous than NAR's Membership Qualification Criteria).
  2. Legal Status

    Association maintains, has access to, or will have legal counsel available, and maintains policies and procedures that conform with local, state and federal laws, including the filing of necessary reports and documents (e.g. corporate documents, state and federal tax returns, etc.).
  3. Dues Collection

    Association enforces the dues formula to assure that every licensee affiliated with a firm comprised of REALTOR® principals is either a member or that the "designated" REALTOR® pays dues based on the number of non-member licensees affiliated with the firm.
  4. Administrative Support

    Association maintains, has access to, or will have staff support available. (This may be accomplished through a variety of methods, including paid staff on site, multi-board management, staff support furnished through the state association, etc.)
  5. Communications Process

    Association provides some form of regular communication to its members. (Examples include a monthly newsletter, computer-based information service, periodic notices on educational offerings and other key services, etc.)
  6. Orientation

    Association maintains an orientation process to inform new members of the privileges and obligations of membership.
  7. Enforcement of the Code of Ethics

    Association maintains a viable professional standards process to enforce the Code of Ethics and provide arbitration as a member service. Boards and associations must have a fully functioning professional standards committee with administrative capability to conduct the program, or must administer professional standards enforcement through a multi-board (or regional) professional standards agreement with other associations or the state association.

    Enforcement of the Code of Ethics includes administration and enforcement of the REALTOR® Code of Ethics Training Requirement.

Certification Procedures

  • Using the Organizational Standards Database, local associations will complete an on-line “Electronic Certification” form. (Associations have 90 days to complete)
  • The form confirms the association’s compliance and provides relevant information for each of the organizational standards criteria.
  • A copy of the completed form is then saved for the state association's review and acceptance.
  • The state association will have a specified timeframe (60 days) for reviewing and accepting a local association’s certification form.
  • State association review:
    • The state association may, at its discretion, request written documentation from a local association if a reasonable question of compliance exists. (Note: With respect to criterion # 2 of the Organizational Standards, local association certification that corporate documents or tax returns have been filed with the appropriate authorities is sufficient without submitting copies of such documents to the state association.)
    • Sample letters requesting written documentation are available in the database.
    • State association review and acceptance is required before the local association is added to the “certified” section of the database.
    • State association may recommend dissolution of any board failing to achieve certification. For more information on dissolution proceedings please refer to the State Association Review page on REALTOR.org.

Membership Policy Statements
Approved by the Board of Directors
of the NATIONAL ASSOCIATION OF REALTORS®

Statements of Membership Policy Related to Implementation of Board of Choice

That, effective upon approval by the Board of Directors, the following statements of membership policy and amendments to the Model Board Bylaws to implement the board of choice proposal be adopted.

The primary board of affiliation elected by a REALTOR® must be in the state where the REALTOR® is licensed and maintains his/her principal place of business. Licensees affiliated with a REALTOR® firm may choose as their "primary" board any board in the state where the firm maintains a "designated" REALTOR®.

Membership shall be available in a secondary board on terms and conditions no more stringent than the requirements established in the board's Bylaws for REALTOR® and (REALTOR-ASSOCIATE® where applicable) membership. The privileges of membership shall be the same including the right to vote and hold office. Membership will be granted to individuals who hold REALTOR® or REALTOR-ASSOCIATE® membership in their primary board without any requirement that the designated REALTOR® they are licensed or affiliated with hold membership in the secondary board. However, MLS services will only be available if the designated REALTOR® participates in the MLS. Board dues shall not include a national allocation since NAR dues have been paid through the member's primary board. A state allocation may only be included if the member's primary board is located in a different state.

REALTORS® shall be entitled to purchase services from boards other than their primary board without the necessity of holding membership in those boards. Service fees will be determined by the individual boards. However, the board may require that a REALTOR® (principal) be licensed in the state as a condition of MLS participation. (Adopted 2/1994, Amended 11/1996)

Concerning Board of Choice Across State Lines

That the membership choices currently provided under Board of Choice be expanded across state lines as follows:

Members may join a primary board across contiguous state lines. State association membership would be in the state where primary board membership is held. To become effective July 1, 1996, with optional local board adoption sooner. (Adopted 11/1995)

Portability of Membership Records (Files)

In order to facilitate timely processing of applications for membership and to assist associations in determining an applicant's qualification for REALTOR® or REALTOR-ASSOCIATE® membership, associations shall, based on a request from another association, share information about current or former members. Minimum "core" member information shall include:

  1. Previous applications for membership
  2. All final findings of Code of Ethics violations and violations of other membership duties in this or any other REALTOR® association within the past three (3) years (when available)
  3. Pending complaints alleging violations of the Code of Ethics or alleging violations of other membership duties
  4. Incomplete or (pending) disciplinary measures
  5. Pending arbitration requests (or hearings)
  6. Unpaid arbitration awards or unpaid financial obligations to this or any other REALTOR® association or its MLS
  7. Any misuse of the term REALTOR® or REALTORS® in the name of the applicant’s firm

An association may, at its discretion, consider information received from other associations when determining whether an applicant satisfies the association's membership requirements as established in the association's bylaws (not to exceed NAR's Membership Qualification Criteria). (Adopted 2/1996, Amended 11/2009)

Clarification of the Term "Principal"

The term "principal" as used in the NAR Constitution and Bylaws and in other relevant policies, includes licensed or certified individuals who are sole proprietors, partners in a partnership, officers or majority shareholders of a corporation, or office managers (including branch office managers) acting on behalf of principals of a real estate firm. (Adopted 11/1996)

Secondary Membership in a Board/Association

When a member has joined a primary association and paid local, state, and national dues, secondary membership may be held in a local association in another state (provided the applicant meets all of the qualifications for membership) without holding membership in that state association, or alternatively, secondary membership may be held directly in the state association without holding membership in a local association in that state. (Adopted 11/1996)

Membership Requirements Related to Multiple Office Locations

When considering an applicant for REALTOR® membership who is a principal in a real estate firm, associations have an obligation to determine that all of the principals of the real estate firm who are actively engaged in the real estate business in the state are either applying for or already hold REALTOR® membership (or Institute Affiliate membership, if applicable) in a board or association. (Adopted 11/1996)

If an association (local, state, national) is notified by another association that a REALTOR® member has an office location elsewhere in the state that is not functioning as a "REALTOR®-office" (i.e., licensees affiliated with the office are not members or are not accounted for under the DR dues formula) the association where the REALTOR® holds primary membership shall be responsible, in cooperation with the state and national associations, for ensuring compliance with applicable membership policies (i.e., that said licensees hold membership in the REALTOR®'s primary association -- or some other association in the state where the firm maintains a designated REALTOR® presence -- or that dues have been paid to an association based on non-member licensees affiliated with the office. (Adopted 11/1996)

Association Satellite Offices in Other Association Jurisdictions

NAR policy does not prohibit associations from establishing satellite offices (service centers) in other association jurisdictions. (Adopted 05/2008)

Membership Recruitment Dues Incentives

NAR policy does not prohibit associations from offering membership recruitment dues incentives. (Adopted 05/2008)

(Revised 02/2012)