What Does The Term "COE" Mean In Real Estate?

Real Estate has an entirely new language, one of which is the abbreviation that some people use, which is COE.

COE is the abbreviation for the National Association of Realtors (NAR) Code of Ethics. The COE, or the Code of Ethics, is considered one of the core guiding principles of the real estate industry. The Code of Ethics has seventeen different articles and a host of standards for each article that help guide and define the ethics of the real estate industry. The COE or Code of Ethics is essential for anyone in the real estate industry to understand.

COE – Real Estate Code of Ethics

Articles Review – NAR Code of Ethics Summary
Frequently Asked Questions

Related Questions
- Can You Take The Real Estate Exam Without Taking Any Classes?
- Why Is Real Estate Called ‘Real Estate’?

COE – Real Estate Code of Ethics

The National Association of Realtors has what is known as COE or Code of Ethics. The Real Estate Code of Ethics is a core principle for the real estate industry.

The Code of Ethics for realtors is set up to help ensure that consumers are protected and are served by realtors who will cooperate and work for the clients’ best interests.’

Here are a few aspects of the Real Estate Code of Ethics:

The Code of Ethics has a preamble
The Code of Ethics has 17 articles, each with a different standard of conduct.

The Code of Ethics ends with an explanatory note

Articles Review – NAR Code of Ethics Summary

The Code of Ethics is an essential document for any real estate agent. It is also important for any real estate buyer or seller to understand as it outlines the expected conduct of any real estate agent or broker.

The National Association of Realtors (NAR) Code of Ethics is a document that was first written in 1913; this makes it one of the oldest ethical documents adopted by any business group in the United States.

Articles one to nine concern the realtor’s duties to their clients and customers. Articles ten to fourteen concern the realtor’s responsibilities to the public. And articles fifteen to seventeen concern the ethics of the realtors.

Below is a basic summary of each of the NAR Realtors Code of Ethics and what is included in each article:

NAR Code of Ethics Article 1 – Protect and Promote Clients

The first article of the NAR Code of Ethics talks about the obligations and ways for realtors to protect and promote their client’s interests. It also states that all realtors are bound by the Code of Ethics when involved in a real estate transaction.

Article One states as follows:

“When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended 1/01).”
nAR Code of Ethics – Article 1

From the very beginning of the Code of Ethics, it states that all realtors and real estate professionals involved in real estate transactions must be honest with all parties and protect and promote their client’s interests. The article states that the client’s interests are vital in real estate.

NAR Code of Ethics Article 2 – Avoid Exaggeration or Misrepresentation

In Article Two, the NAR Code of Ethics discusses how a realtor should represent the property to prospective buyers. Article two has with it five additional standards of practice.

Article two states the following:

“REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law. (Amended 1/00).”
NAR Code of Ethics – ARticle 2

The code of ethics here states that realtors need to be honest, but at the same time, they do not need to point out any “latent defects” to the property. A latent defect, also known as a concealed defect, is one that a reasonable observation or inspection could not discover.

An example of a latent defect would be damage inside the walls (such as pipes), a leaking roof with no noticeable leak marks or electrical issues.

Article 3 of the Code of Ethics talks about when and how realtors should and are obligated to cooperate. This article lists eleven additional standards on what and how realtors should cooperate.

Article three of the NAR Code of Ethics states:

“REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95)“
NAR code of Ethics – Article 3

NAR Code of Ethics Article 4 – Realtor’s Obligations To Disclose Ownership Interest

A realtor can sell their property, but when doing so, they must state their ownership or interest. Article four of the Code of Ethics and the standard of an article provides that the disclosure of any interest be in writing.

Article four of the NAR Code of Ethics states:

“REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker.
In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00)”
NAR Code of Ethics – Article 4

NAR Code of Ethics Article 5 -Disclosing Professional Service

Article five of the NAR Code of Ethics is one of the shortest articles. There are no standards of practice attached to it. Still, the entire article deals with the professional services concerning the property or its value and the dissolving of any present or contemplated interest.

The full NAR Article 5 states the following:

“REALTORS® shall not undertake to provide professional services concerning a property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all affected parties.”
NAR Code of Ethics – Article 5

NAR Code of Ethics Article 6 – Recommended Services Ethics

Sometimes, the realtor may recommend some other services to their clients. If the realtor gets a commission for this, they must legally disclose this to all parties. Also, as the client, you must agree to that charge if the realtor charges you for something.

Article six has one standard of practice attached to it, and the article states as follows:

“REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.
When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation. (Amended 1/99)”
NAR Code of Ethics – ARticle 6

NAR Code of Ethics Article 7 – Double Compensation Ethics

Article seven of the NAR Code of Ethics continues with what kind of compensation the realtor can obtain and how they can obtain it. Realtors are not allowed to accept double compensation without letting everyone know.

NAR Code of Ethics, Article seven states:

“In a transaction, REALTORS® shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the REALTOR®’s client or clients. (Amended 1/93)”
NAR Code of Ethics – ARticle 7

NAR Code Of Ethics Article 8 – Realtor Financial Accounts

The NAR Code of Ethics Article 8 is about the obligation for realtors to keep money coming into their possession in separate accounts on behalf of other parties. This clearly states that personal cash should not be mixed with real estate money.

Article 8 of the Code of Ethics states:

“REALTORS® shall keep in a special account in an appropriate financial institution, separated from their own funds, monies coming into their possession in trust for other persons, such as escrows, trust funds, clients’ monies, and other like items.”
NAR Code of Ethics – ARticle 8

NAR Code of Ethics Article 9 – Obligations For Documentation

Realtors must ensure all the documentation and agreements are in clear language so that everyone can understand what the documentation means.

The NAR Code of Ethics Article nine states:

“REALTORS®, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases are in writing in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties. A copy of each agreement shall be furnished to each party to such agreements upon their signing or initialing. (Amended 1/04).”
NAR Code of Ethics – ARticle 9

NAR Code Of Ethics Article 10 – Discrimination Policy

Article ten of the NAR Code of Ethics discusses the discrimination policy for any realtor working in real estate.

Article ten of the NAR Code of Ethics states:

“REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14)
REALTORS®, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14).”
NAR Code of Ethics – ARticle 10

NAR Code Of Ethics Article 11- Practice and Competence

The NAR Ethics Code also talks about the standards of practice and competence that are reasonably expected for a real estate career. Real estate is a professional field and, as such, should be treated with professionalism,

The professionalism of real estate includes the rule that a real estate professional should not work outside their area of expertise or knowledge.

The NAR Code of Ethics Article 11 states:

“The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.
REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/10).”
NAR Code of Ethics – ARticle 11

NAR Code Of Ethics Article 12 – Honest and Truthful Communications

Real Estate professionals must be honest and truthful in all their communications; this includes clearly showing and stating that they are real estate professionals on their paperwork and organizations.

Article 12 of the Code of Ethics states:

“REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. REALTORS® shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional. (Amended 1/08).”
NAR Code of Ethics – ARticle 12

NAR Code Of Ethics Article 13 – No Unauthorized Practice

Real Estate professionals are not to engage in any unauthorized practices of law and, if needed, should refer to the appropriate legal counsel.

The NAR Code Of Ethics Article 13 states the following:

“REALTORS® shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.”
NAR CODE OF ETHICS – ARTICLE 13

AR Code Of Ethics Article 14 – Legal Witness Requirements

If real estate professionals are called into a court case to give evidence, they must give the correct and pertinent facts.

Article 14 of the NAR Code of Ethics states:

“If charged with unethical practice or asked to present evidence or to cooperate in any other way, in any professional standards proceeding or investigation, REALTORS® shall place all pertinent facts before the proper tribunals of the Member Board or affiliated institute, society, or council in which membership is held and shall take no action to disrupt or obstruct such processes. (Amended 1/99)”
NAR Code of Ethics – ARticle 14

NAR Code Of Ethics Article 15 – Conduct Towards Other Agents

Real estate professionals are obligated not to bad-mouth or talk badly about any other professional real estate agents, even their competitors.

Article 15 of the NAR Code Of Ethics states:

“REALTORS® shall not knowingly or recklessly make false or misleading statements about other real estate professionals, their businesses, or their business practices. (Amended 1/12)”
NAR Code of Ethics – ARticle 15

NAR Code Of Ethics Article 16 – Uphold Agreements

When a real estate professional has an exclusive agreement with another real estate professional or individual, they are to hold to that agreement.

Article 16 of the NAR Code Of Ethics states:

“REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients. (Amended 1/04“
NAR Code of Ethics – ARticle 16

NAR Code Of Ethics Article 17 – Mediation and Arbitration

The final article of the NAR Code of Ethics refers to disputes among members of the National Association of Real Estate, how they are to be handled, and the process for mediation and arbitration.

Article 17 of the NAR Code of Ethics states:

“In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between REALTORS® (principals) associated with different firms, arising out of their relationship as REALTORS®, the REALTORS® shall mediate the dispute if the Board requires its members to mediate. If the dispute is not resolved through mediation, or if mediation is not required, REALTORS® shall submit the dispute to arbitration in accordance with the policies of the Board rather than litigate the matter.
In the event clients of REALTORS® wish to mediate or arbitrate contractual disputes arising out of real estate transactions, REALTORS® shall mediate or arbitrate those disputes in accordance with the policies of the Board, provided the clients agree to be bound by any resulting agreement or award.
The obligation to participate in mediation and arbitration contemplated by this Article includes the obligation of REALTORS® (principals) to cause their firms to mediate and arbitrate and be bound by any resulting agreement or award. (Amended 1/12)”
NAR Code of Conduct – ARticle 17

The NAR Code of Ethics is a comprehensive ethics code that is a guide for any real estate professional. If you are buying or selling real estate property, it is also suitable for you to understand the code of ethics that all real estate professionals must live by.

If you want to download the full copy of the National Association of Realtors Code of Ethics, you can download your free copy by clicking here.

Real Estate Crunch gives you real property and real estate information and advice. We offer a free monthly newsletter; you can sign up for our newsletter by clicking here.

We also have a weekly podcast called “Real Estate Crunch,” found on all major podcast platforms. Listen to our podcast by clicking here.

Frequently Asked Questions

What does the term “COE” stand for in real estate?

“COE” stands for “Close of Escrow” in real estate.

What is the Close of Escrow?

The Close of Escrow refers to the final stage of a real estate transaction when all necessary documents are signed, funds are transferred, and ownership of the property is officially transferred to the buyer.

What happens during the Close of Escrow?

During the Close of Escrow, the buyer completes the payment of the purchase price, the seller transfers the property’s title, and all necessary legal documents are recorded.

Why is the Close of Escrow an important milestone in real estate?

The Close of Escrow is a significant milestone as it finalizes the purchase or sale of a property and marks the official transfer of ownership from the seller to the buyer.

Who coordinates the Close of Escrow?

The Close of Escrow is typically coordinated by an escrow officer or a title company that ensures all necessary legal and financial aspects of the transaction are properly handled.

When does ownership officially transfer during the Close of Escrow?

Ownership officially transfers during the Close of Escrow when the deed is recorded with the appropriate government agency, typically the county recorder’s office.

Are there any fees associated with the Close of Escrow?

Yes, there are typically fees associated with the Close of Escrow, such as escrow fees, recording fees, and other miscellaneous charges. These fees are typically shared between the buyer and the seller as outlined in the purchase agreement.

Can You Take The Real Estate Exam Without Taking Any Classes?

Becoming a Real Estate agent in the United States requires you to take a real estate exam for the state or area where you want to sell real estate. Each state will have some slightly different real estate laws.

By clicking here, you can read more about Can You Take The Real Estate Exam Without Taking Any Classes?

Why Is Real Estate Called ‘Real Estate’?

The word Real Estate comes from the Latin word realis, but it refers ideally to the physical and economic characteristics of real estate or real property. The word Real Estate dates back to the 17th Century. Real Estate is a legal term used in many English-speaking jurisdictions worldwide.

By clicking here, you can read more about Why Is Real Estate Called ‘Real Estate’?.