CRECI Industry Standards & Ethical Practices 3 — Questions and Answers
Question 1: The NAR Code of Ethics Article 1 obligation for REALTORS® in commercial practice primarily requires:
- Maximizing commission income for the brokerage
- Protecting and promoting clients' interests while treating all parties honestly (Correct answer)
- Prioritizing the seller's interests over all other parties
- Avoiding dual agency in all commercial transactions
Correct answer: Protecting and promoting clients' interests while treating all parties honestly
Article 1 mandates that REALTORS® protect and promote their client's interests while simultaneously treating all parties to the transaction honestly.
Question 2: Under CRECI standards, a commercial broker who learns of environmental contamination on a listed property must:
- Disclose only if the buyer specifically asks
- Disclose only after the seller authorizes disclosure
- Disclose to prospective buyers regardless of seller instructions (Correct answer)
- Keep the information confidential as part of fiduciary duty
Correct answer: Disclose to prospective buyers regardless of seller instructions
Environmental contamination is a material fact that must be disclosed to prospective buyers even without seller authorization, as concealment could constitute fraud.
Question 3: A commercial real estate professional who knowingly submits a false comparative market analysis to support an inflated listing price is violating the ethical principle of:
- Loyalty
- Honesty and integrity (Correct answer)
- Confidentiality
- Reasonable care
Correct answer: Honesty and integrity
Submitting a knowingly false CMA violates the core ethical principle of honesty and integrity, which requires truthful communication in all professional dealings.
Question 4: Steering a commercial tenant toward or away from specific building types based on the tenant's national origin is:
- Legal if done to match the tenant's stated preferences
- A violation of the Fair Housing Act and professional ethics (Correct answer)
- Permissible in commercial transactions since Fair Housing only covers residential
- Acceptable if disclosed in the listing agreement
Correct answer: A violation of the Fair Housing Act and professional ethics
While the Fair Housing Act has limited commercial application, steering based on protected characteristics violates anti-discrimination laws and CRECI ethical standards.
Question 5: The ethical duty of 'obedience' in a commercial agency relationship requires the agent to:
- Follow all client instructions without question
- Follow lawful client instructions even if personally disagreeable (Correct answer)
- Obey instructions from the opposing party's broker
- Report client instructions to regulatory authorities
Correct answer: Follow lawful client instructions even if personally disagreeable
The duty of obedience requires following the client's lawful instructions; an agent is not required to follow illegal or unethical directives.
Question 6: When a commercial listing expires without a sale, the listing broker's obligations regarding confidential client information are:
- Eliminated because the agency relationship has ended
- Maintained — confidentiality survives expiration of the listing (Correct answer)
- Transferred to any new broker the client engages
- Limited to financial information only going forward
Correct answer: Maintained — confidentiality survives expiration of the listing
The expiration of a listing agreement does not extinguish the broker's duty of confidentiality; client information must remain protected.
Question 7: CRECI's standard of competency requires a commercial professional to:
- Only represent clients in property types where they hold prior transaction experience
- Acquire expertise or associate with a qualified professional when a transaction exceeds their knowledge (Correct answer)
- Decline all transactions in unfamiliar property sectors
- Disclose to clients that they lack experience and proceed without additional help
Correct answer: Acquire expertise or associate with a qualified professional when a transaction exceeds their knowledge
When facing a transaction outside their expertise, professionals must either develop the necessary competency or partner with someone who has it, rather than simply proceeding uninformed.
CRECI Industry Standards & Ethical Practices 3
The NAR Code of Ethics Article 1 obligation for REALTORS® in commercial practice primarily requires: