A comprehensive 4-block-day unit preparing pre-licensing real estate students for the national licensing exam through mastery of the 2026 NAR Code of Ethics and Standards of Practice. Students examine fiduciary duties, public protections, inter-broker relationships, and dispute resolution through authentic case studies and exam-style scenarios.
✔ Broker compensation is not set by law and is fully negotiable.
✔ Full disclosure of company cooperation and compensation policies.
✔ Specific amount to be paid by client and potential for offsetting seller concessions.
Updated Practice: Written buyer representation agreements required prior to touring homes.
Articles 2 through 9: Operational Integrity
Duties to Clients & Property
Article 2
Pertinent Facts
Avoid exaggeration and misrepresentation. Must disclose known latent defects; not required to discover technical defects beyond license scope.
Articles 4 & 5
Ownership Interest
Must disclose in writing if buying/selling for self, family member, firm, or entity in which agent has legal interest prior to signing.
Articles 6 & 7
Rebates & Fees
No secret profits/rebates on client expenditures. Must disclose financial benefits from recommended vendors. No dual compensation without consent.
Article 8
Trust Accounts
Escrow and client funds must be maintained in dedicated special accounts. Zero commingling or conversion permitted.
Article 9
Agreements in Writing
All agreements, contracts, and extensions must be in clear, understandable writing with copies provided to parties upon signing.
SOP 1-16 & 3-9
Property Access
Never access or permit others to access listed property on terms other than those explicitly established by the seller/owner.
Case Studies Next: Apply these articles to evaluate agent conduct in 2 authentic scenarios.
Day 1 Review & Action Steps
Licensing Exam Checkpoint
3 Golden Takeaways
Client loyalty is primary, but honesty to all parties is absolute.
Compensation is never fixed and must be in written agreements beforehand.
Confidentiality never shields material adverse property defects.
Classroom Action Plan
Complete the Case Study Worksheet in triads (25 mins), followed by the 5-question exam quiz.
Target Bloom's Level: Analysis & Evaluation of ethical dilemmas.
Tomorrow: Day 2 — Public Trust Protections (Fair Housing, Digital Advertising, Competency).
2026 Code of Ethics Practical Application Series Page 2 of 2
D) Advise the seller to ignore Diaz's offer until all other prospective buyers have viewed the home.
5. Which scenario constitutes a violation of Article 8 regarding financial accounts?
A) Depositing earnest money funds into an escrow trust account separate from the brokerage's operating funds.
B) Depositing a client's security deposit check into the firm's general operational account to cover temporary payroll.
C) Maintaining detailed accounting ledgers for all funds held in trust for tenants and buyers.
D) Holding disputed escrow funds in a dedicated trust account pending mediation or interpleader action.
Day 1 Scenario Exit Ticket Bloom's: Analyze & Evaluate
Prompt: A seller tells you, "Do not tell buyers that the basement floods during spring thaws; it’s our private business." Based on Article 2 and Standard of Practice 1-9, how must you respond, and what are your disclosure duties?
2026 NAR Code of Ethics Licensing Exam Prep Page 1 of 1
Q2 Dual Agency Conditions: Under SOP 1-5 and SOP 9-2, Marcus could only represent both parties after full written disclosure of the dual agency relationship and obtaining informed written consent from both Evelyn and Rachel prior to contract execution.
Q3 Written Affirmation: Under SOP 1-7, upon written request from cooperating broker Chen, Marcus must provide as soon as practical a written affirmation that the offer was submitted to the seller (or written notification that seller waived presentation).
Case Scenario 2: Undisclosed Referral & Structural Crack
Q4 Violations (SOP 1-13 & Article 6):
Telling Priya services are "free" violates Standard of Practice 12-1 and SOP 1-13.
Recommending Peak Inspection Services without disclosing spousal ownership violates Article 6 and SOP 6-1. Accepting a $100 referral fee without Priya's informed written consent violates Article 6.
Q5 Latent Defect Defense: Jordan’s defense fails completely. SOP 1-9 explicitly states that information concerning latent material defects is NOT confidential. Foundation settling is a severe adverse material defect affecting property value and safety; under Article 2, it must not be concealed.
Q6 Escrow Commingling Rationale: Article 8 requires earnest money to be held in a segregated trust account to protect consumer funds from brokerage operational liabilities, lawsuits, and creditors. Intent to return funds later is irrelevant—commingling itself is an immediate violation.
2026 NAR Code of Ethics Answer Key Page 2 of 2
Key Answer: State clearly that fair housing laws and ethical codes prohibit agents from discussing religious or demographic makeup. Direct the client to objective third-party sources (e.g., municipal websites, census data, local directories).
2. True Picture in Digital Advertising (Article 12 / SOP 12-5 & 12-10):
"An agent creates an Instagram Reel featuring a new luxury listing. The agent includes their own name and phone number, but forgets to mention their brokerage firm name. Is this ethical?"
Key Answer: No. Under SOP 12-5, all real estate advertising in any medium must disclose the name of the REALTOR®'s firm in a readily apparent manner. Omission is a direct violation.
3. Drafting Complex Contingencies (Article 13):
"A buyer asks you to draft a custom clause releasing them from earnest money forfeiture if zoning approval isn't secured within 90 days. Can you write this clause?"
Key Answer: No. Licensees may not draft novel legal clauses. They must advise the client to have an attorney draft the contingency to avoid the unauthorized practice of law.
Advanced Challenge
Have students audit a real estate team website for compliance with SOP 12-9 (brokerage firm name disclosure and state of licensure) and SOP 12-10 (image manipulation policies).
Targeted Support
Provide students with a mnemonic for Article 10 protected classes (FRESH CRNS: Familial status, Race, Equal opportunity, Sex, Handicap/Disability, Color, Religion, National Origin, Sexual Orientation).
Licensing Exam Domain: Public Trust, Professional Practice, and Fair Housing.
2026 Code of Ethics Practical Application Series Page 2 of 2
C) Copy language from an online search and insert it into the contract without review.
D) Offer to represent the buyer as an attorney-in-fact for a separate fee.
Day 2 Scenario Exit Ticket Bloom's: Evaluate & Synthesize
Prompt: An agent advertises: "List with me and your buyer representation will be 100% FREE!" Explain why this claim violates Standard of Practice 12-1 and how it must be corrected.
2026 NAR Code of Ethics Licensing Exam Prep Page 1 of 1
SOP 10-1 Demographic & Steering Violation: Reassuring the buyer that the neighborhood has "almost no immigrants" constitutes illegal steering based on national origin.
Q2 Advertising Disclosure (Article 12 & SOP 12-5): Brandon completely omitted the name of his sponsoring real estate brokerage firm. Under SOP 12-5, all social media real estate marketing must disclose the firm name in a readily apparent manner.
Q3 Compliant Demographic Response: Brandon should have politely informed the buyer that under Fair Housing law and the NAR Code of Ethics, licensees cannot discuss the ethnic or national origin makeup of neighborhoods, and directed the buyer to official U.S. Census Bureau data.
Case Scenario 2: Commercial Opinion & Custom Clause
Q4 Valuation Deficiencies (Article 11 & SOP 11-1): Samantha violated Article 11 by undertaking work outside her competence without securing competent assistance. Under SOP 11-1, she failed to disclose: 1) a statement that the valuation is not an appraisal; 2) whether physical interior/exterior inspections were conducted; 3) her contemplated interest in securing the listing.
Q5 Unauthorized Law Practice (Article 13): Samantha directly violated Article 13. Licensees are only authorized to fill in standard pre-approved blank forms. Drafting a complex 400-word lease-option priority clause and rendering opinions on deed restriction enforceability constitutes illegal practice of law.
Q6 Tribunal Obstruction (SOP 14-3): Threatening defamation or libel lawsuits against complainants or witnesses to intimidate them violates Standard of Practice 14-3.
2026 NAR Code of Ethics Answer Key Page 2 of 2
Key Answer: No. SOP 16-2 allows general geographic mailings even if some recipients have exclusive agreements. It is only unethical when specifically targeted at listed properties.
2. Client-Initiated Discussions (SOP 16-6):
"A homeowner whose house is listed with another broker calls you directly saying they are dissatisfied and want you to take over. What can you legally discuss?"
Key Answer: Provided the agent did not initiate the contact, SOP 16-6 permits discussing the terms of a future listing agreement that will take effect upon expiration of the current exclusive listing.
3. Asking About Representation (SOP 16-13):
"Before drafting a purchase contract or presenting a CMA to a prospect, what question must you affirmatively ask under SOP 16-13?"
Key Answer: REALTORS® must ask prospects whether they are party to an exclusive representation agreement before providing substantive services.
Advanced Challenge
Have students critique SOP 16-20: When an agent switches brokerages, why are they prohibited from inducing former clients to cancel existing firm contracts?
Support Scaffold
Use a decision tree flow chart to determine whether communicating with a represented party is permitted under SOP 16-4, 16-5, 16-6, and 16-13.
Day 3 Materials Checklist
✓ Display "Realtor Rivalry Presentation Slides"
✓ Distribute Day 3 Case Study Worksheets
✓ Review Article 16 solicitation carve-outs
✓ Prepare Day 3 Licensing Exam Checkpoint Quizzes
2026 NAR Code of Ethics & Standards of Practice Curriculum Page 2 of 2
Client-Initiated Inquiries (SOP 16-6): When an owner contacts you unprompted, you may discuss a future agreement starting upon current listing expiration.
Refused Expiration Date (SOP 16-4/16-5): If a broker refuses to disclose listing expiration date, you may contact the owner directly for expiration details.
UNETHICAL POACHING
Targeted Yard Sign Solicitations: Calling or knocking on doors specifically identified by a competitor's "For Sale" sign.
Targeted MLS Scraping: Mailing solicitations exclusively to active MLS listings of other brokers.
Inducing Contract Cancellation (SOP 16-20): Persuading a seller/buyer to cancel an existing exclusive agreement to switch firms.
SOP 16-7 & 16-8: Prior past client relationships do NOT create permanent exclusivity for future deals.
Affirmative Duties & First Contact Disclosures
SOP 16-9, 16-10, 16-11, 16-12
SOP 16-9: Affirmative Inquiry Obligation
Prior to entering into a representation agreement, REALTORS® have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement.
Standard Question: "Are you currently working with another real estate agent under an exclusive agreement?"
First Contact Disclosures (SOP 16-10 to 16-12)
Buyer/Tenant Reps (SOP 16-10): Must disclose relationship to seller/landlord's representative at first contact; written confirmation before contract execution.
Unlisted Properties (SOP 16-11): Disclose buyer agency and request anticipated compensation at first contact.
Listing Brokers (SOP 16-12): Disclose seller agency to buyers/tenants as soon as practicable.
SOP 16-15: Cooperative compensation must be paid to principal brokers, never directly to affiliated agents.
Day 3 Summary & Exam Takeaways
Duties to REALTORS®
Core Takeaways
Do not publish or repeat false statements about competitors (Art. 15).
Respect exclusive agreements: never target listed properties directly (Art. 16).
Always ask prospects if they are under exclusive contract before working (SOP 16-9).
Classroom Action Plan
Complete the Day 3 Case Worksheet in pairs, then take the 5-question exam quiz and exit ticket.
Licensing Exam Domain: Agency Relationships & Inter-Broker Professional Standards.
6. Under Standard of Practice 16-10, when must Elena disclose her representation status to a listing broker when submitting an offer on behalf of a buyer client?
2026 Code of Ethics Practical Application Series Page 2 of 2
B) Standard of Practice 11-1 (opinions of value requirements).
C) Standard of Practice 1-14 (valuation contingency fee ban).
D) Standard of Practice 14-1 (multiple board jurisdiction).
Day 3 Scenario Exit Ticket Bloom's: Analyze & Evaluate
Prompt: A seller whose property is exclusively listed with Broker Vance calls you unprompted and says, "I want you to represent me because Vance hasn't gotten any offers." According to Standard of Practice 16-6, how can you ethically respond?
2026 NAR Code of Ethics Licensing Exam Prep Page 1 of 1
Q1 Article 15 Violations: Luke violated Article 15 and Standard of Practice 15-2. Making reckless, unverified assertions that Premier Realty has "financial trouble" and "rarely holds open houses" constitutes prohibited defamatory statements about a competitor's business practices.
Q2 Article 16 Poaching Violations: Luke violated Article 16. Standard of Practice 16-2 explicitly classifies as unethical any mailings directed specifically to property owners identified through "For Sale" signs or MLS active compilations. Luke targeted only listed homes rather than conducting a general geographic canvass.
Q3 Inducing Contract Breach: Yes. Luke directly solicited the owners to terminate their existing exclusive listing agreements with Premier Realty, which directly contradicts Article 16's mandate to respect competitors' exclusive contractual relationships.
Case Scenario 2: Walk-In Buyer & Refused Expiration Date
Q4 Part A Representation Inquiries (SOP 16-9 & 16-13): Elena violated both standards. Under SOP 16-9, she had an affirmative obligation to inquire whether Carlos had an exclusive representation agreement before drafting an offer (a substantive service). By failing to ask, she interfered with Agent Brooke's exclusive representation.
Q5 Part B Direct Contact Justification (SOP 16-4): Elena acted ethically in Part B. Under SOP 16-4, when a listing broker refuses upon request to disclose the expiration date of an exclusive listing, the competing REALTOR® is specifically permitted to contact the owner directly to obtain expiration details and negotiate a future agreement.
Q6 First Contact Agency Disclosure (SOP 16-10): Elena must disclose her buyer representation status to the listing broker at first contact and provide written confirmation of that disclosure no later than execution of the purchase contract.
2026 NAR Code of Ethics Answer Key Page 2 of 2
Step 2: Check for Abandonment. Did the first broker walk away or fail to maintain reasonable communication with the buyer?
Step 3: Check for Estrangement. Did the buyer feel alienated due to poor service or misconduct by the first broker?
Step 4: Award Calculation (SOP 17-4). Awards between cooperating brokers are limited to the amount paid or the amount specified in a valid written buyer agreement (whichever is less).
High-Level Socratic Questions for Debrief
1. Mediation vs. Arbitration:
"Why do REALTOR® associations strongly encourage mediation before arbitration?" (Mediation is non-adversarial, preserves professional relationships, saves costs, and allows mutual win-win settlement).
2. Civil Courts vs. Board Arbitration:
"Can a broker take another broker to civil court over a commission dispute before arbitrating?" (No. Under Article 17 and SOP 17-1, doing so is a refusal to arbitrate and violates the Code of Ethics).
Day 4 Materials Checklist
✓ Display "Dispute Resolution Slides"
✓ Distribute Procuring Cause Hearing Dockets
✓ Administer Cumulative Ethics Mastery Exam
✓ Review Master Answer Key & Rationales
2026 NAR Code of Ethics & Standards of Practice Curriculum Page 2 of 2
Filter & Screening Gate
Step 2
Hearing Panel
Conducts formal due-process hearing with testimony, evidence, witnesses, and cross-examination. Determines violation of specific Articles and recommends discipline.
Fact-Finding Tribunal
Step 3
Board of Directors
Reviews hearing panel recommendations and hears procedural appeals. Imposes sanctions: Letter of Warning, Reprimand, Fine, Mandatory Training, Suspension, or Expulsion.
Day 1 (Articles 1–9): Primary fiduciary fidelity to clients; honest dealing to customers; lifelong confidentiality (SOP 1-9); fully negotiable compensation in writing (SOP 1-12/13); no escrow commingling (Art 8).
Day 2 (Articles 10–14): Equal professional services across 9 protected classes; anti-harassment (SOP 10-5); valuation/BPO disclaimers (Art 11); True Picture digital ads with firm name (Art 12); no unauthorized law practice (Art 13).
Day 3 (Articles 15–16): Prohibition against false/misleading competitor statements across social media; strict respect for exclusive representation agreements; affirmative inquiry obligations (SOP 16-9/16-13).
Day 4 (Article 17): Mandatory mediation/arbitration; procuring cause causal chain; award limits; Grievance vs. Hearing Panel enforcement structures.
Next: Mock Hearing Panel Simulation followed by the Master Licensing Prep Exam.
Licensing Exam Ready!
Ethical Agent Capstone
Your Exam Mindset
✔ Always prioritize client interests while treating all third parties honestly.
✔ Never compromise on Fair Housing, disclosures, or written contract clarity.
✔ Respect fellow licensees and arbitrate disputes professionally.
Final Master Exam Instructions
10 comprehensive, four-choice exam items covering Bloom's Levels 1 through 4 + 1 Capstone Case scenario.
Total Time: 25 Minutes • Passing Standard: 80%+
Best of luck on your National Real Estate Licensing Exam!
C) Refusing to represent a buyer whose requested purchase price is below the agent's minimum threshold.
D) Specializing in luxury residential properties while referring commercial inquiries to an outside specialist.
2026 NAR Code of Ethics Mastery Exam Page 1 of 2
Mastery Exam • Part 2
Articles 11–17 & Capstone Synthesis
6. When preparing a Comparative Market Analysis (CMA) or opinion of price not in pursuit of a listing, Standard of Practice 11-1 requires the licensee to:
A) Disclose whether and when a physical inspection of the exterior and interior was conducted and state it is not an appraisal.
B) Guarantee that the property will appraise at or above the estimated value within 6 months.
C) Submit the report for mandatory pre-approval by the state licensing commission.
D) Charge a fee contingent upon the final sale price achieved by the owner.
7. Under Article 12 and Standard of Practice 12-5, all real estate advertising in any medium (print, web, social media) must:
A) Display the licensee's personal home address and cell number.
B) Disclose the name of the REALTOR®'s firm in a reasonable and readily apparent manner.
C) Feature at least three photographs of the property interior.
D) State the exact commission split shared between listing and cooperating brokers.
8. Under Standard of Practice 16-4, which action is considered unethical poaching?
A) Sending general newsletters to an entire geographic neighborhood.
B) Telephoning a homeowner whose property is currently listed exclusively with another broker after seeing their lawn sign.
C) Discussing future listing terms with an owner who initiated contact unprompted (SOP 16-6).
D) Soliciting a past client whose previous exclusive agreement expired two years ago (SOP 16-7).
9. Under Article 17 and Standard of Practice 17-1, if two REALTOR® principal brokers have a contractual commission dispute and one broker files a civil lawsuit instead of arbitrating:
A) The filing of litigation and refusal to withdraw from it constitutes a refusal to arbitrate and violates Article 17.
B) Civil lawsuits always supersede Board arbitration procedures under federal antitrust rules.
C) The filing broker is awarded treble damages if they prevail in court.
D) The Board must immediately revoke the broker's real estate sales license.
10. In a procuring cause arbitration between two cooperating brokers under Standard of Practice 17-4, how is the maximum potential resulting award calculated?
A) The total listing commission paid to both the listing firm and the cooperating firm combined.
B) Limited to the amount paid to the respondent, or the amount in the complainant's valid written buyer agreement, whichever is less.
C) Automatically 50% of the disputed fee divided equally between the brokers.
D) Set by statutory treble damages determined by the Grievance Committee.
Scenario: Agent Maya represents Seller Dan. Dan tells Maya that the furnace is broken and must be replaced, but instructs Maya: "Keep quiet about the furnace; the buyer can inspect it themselves." Maya agrees and conceals this fact. When the buyer's agent submits an offer, Maya holds the offer for 3 days hoping her own buyer client will bid higher. Identify the two specific Articles violated by Maya and explain why.
2026 NAR Code of Ethics Mastery Exam Page 2 of 2
Q3 Panel Ruling & Award (SOP 17-4): The Hearing Panel awards the $18,000 cooperating compensation to Oakridge Realty. Under SOP 17-4(1), respondent Summit Properties (who received the fee at closing) must pay the $18,000 to complainant Oakridge Realty.
Q4 Litigation as Refusal to Arbitrate: If Brett files a civil court action rather than paying the binding award, Brett violates Article 17 and SOP 17-1.
Q5 Grievance Committee vs. Hearing Panel:
• Grievance Committee: Screens complaints for jurisdiction, proper form, and timeliness (acts like a grand jury; does not hold hearings).
• Hearing Panel: Conducts formal due-process evidentiary hearings, evaluates witness testimony, and renders findings of ethical violations or arbitration awards.
