"When Article 6 was amended in 1999, it may have been reasonable to exclude real estate referral fees from the articles' disclosures obligations, Todd Beckstrom, the chair of the NAR committee that proposed the changes, said during the meeting Monday morning. However, the committee now sees no valid reason to continue this exclusion, and believes that clients and customers have the right to be aware of any financial benefits a Realtor may receive when recommending products and services."
"I can't remember a time any of my lawyers said NOT disclosing information decreases your risk of litigation or builds trust, he wrote. In case anyone hasn't noticed, there have been nonstop lawsuits filed the last few years that have gotten close to bankrupting the entire industry. Complete transparency is essential for our industry to survive long term and for the public to trust us."
The board approved an amendment to Article 6 requiring Realtors to obtain client consent when receiving any money, rebate, or profit from referrals, with 83.55% of directors in favor and 16.45% opposed. A few hours later, the Delegate Body rejected the proposal. The proposing committee stated that the 1999 exclusion of referral fees from disclosure obligations is no longer justified and argued that clients deserve to know about financial benefits tied to recommendations. Industry leaders warned that nondisclosure increases litigation risk, called for complete transparency to preserve public trust, and noted ongoing lawsuits affecting major firms.
Read at www.housingwire.com
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