NAR Approves Policy Changes at Its 2021 Convention

SAN DIEGO – On Monday, the National Association of Realtors®’ (NAR) Board of Directors and the NAR Delegate Body met in back-to-back meetings – the final day of the 2021 Realtors Conference and Expo that took place in San Diego. The groups made a number of changes.

National governance

The two groups approved nine “sweeping” changes to NAR governance policy, including new qualifications for NAR volunteer leaders and a newly constituted Board of Directors and Executive Committee. The recommendations that required a change to the Constitution & Bylaws then came before the NAR Delegate Body.

The recommendations were the work of a multi-year presidential advisory group, appointed in 2018 and charged with creating a more efficient and transparent governance operation for the 1.5 million-member organization.

MLS policy

Directors approved six recommendations of the Multiple Listing Issues and Policies Committee designed to “create transparency for consumers and bring consistency in services for brokers nationwide.” The policies take effect Jan. 1, though MLSs could implement them earlier if they choose.

NAR posted expanded information about its MLS policy at nar.realtor/mls. At nar.realtor, you’ll also find an expanded “MLS Best Practices.” New voluntary practices for MLSs, which didn’t require approval by the Board of Directors, focus on rule enforcement, data, and governance.

Realtors Relief Foundation fundraising

NAR’s board approved a budget adjustment request from Treasurer Nancy Lane that NAR provide a second year of fundraising support for the Realtors Relief Foundation (RRF). A successful 2021 fundraising campaign met its $8.5 million goal. Since inception, NAR has provided all administrative support for RRF, reflecting NAR’s commitment to the importance of its charitable work – more than 17,000 families in need at the time of a disaster.

Defining employer-employee relationships

The board voted to support a clear joint-employer standard that defines the employer-employee relationship, provides business relationship predictability, and does not result in one business entity bearing employment liability for another business entity’s employees unless it exerts substantial direct and immediate control over those employees.

The Business Issues Policy Committee recommended the policy in response to legislation called the “Protecting the Right to Organize (PRO) Act,” which was introduced primarily to provide gig workers with greater rights and protections. The legislation has a few provisions NAR is monitoring, including an expansion of the current joint-employer standard that could impact real estate brokerage franchisors.

NAR campaign rules

The board amended the Campaign and Election Rules Manual to include a process for evaluating Eligible Candidates and Elected Officers who no longer meet the criteria set forth in the manual.

Specifically, it amended the Campaign and Election Rules Manual to require the President-Elect’s appointees for Vice President of Association Affairs and Vice President of Advocacy to:

• Complete an application for NAR Elected Office
• Meet the required criteria set forth in Section C.1 of the manual
• Submit to the same audit and review process as potential candidates for NAR elected office and require the Candidate Audit Work Group to report the results of its review to the President-Elect by March 15

There will be no public announcement of these appointments until this process has been completed.

Federal finance and housing policy

Approved a motion supporting suspension of the Federal Housing Administration (FHA) anti-flip rule until Dec 31, 2025. Suspending the rule will increase the pool of homes available to FHA borrowers and improve their chances to become homeowners. The board acknowledged concerns regarding protecting the FHA borrower and the finances of FHA as it relates to properties being resold within 90 days. The suspension end date of Dec. 31, 2025, aligns with the belief that the market will have a chance to normalize within the proposed timeframe and the pool of available homes will increase.

Federal taxation

The board reinforced NAR support for existing law that allows the use of all self-directed retirement vehicles – including but not limited to those that invest in real property.

Proposed tax law changes would, if passed, “represent an unjustified overreaction to perceived abuses,” the directors said with their vote; such a proposal would financially harm investors who have relied on present law and would harm the real estate sector by removing a significant avenue for investment in real property.

The board also approved a motion calling for NAR to oppose tax-law enforcement policies that, if enacted, would require banks and other financial institutions to provide certain account-holder information to the Internal Revenue Service (IRS). Directors said such a requirement – in pursuit of high-income and high-wealth individuals suspected of not reporting all their taxable income – is an overreach. It would saddle individuals with extra tax-compliance costs and loss of time responding to fruitless requests. It’s also a privacy risk and could include the theft of confidential information.

Legal action

The board approved six Legal Action Committee motions, including that the association purchase a Patent Infringement Liability Policy for NAR, Realtor association-owned MLSs, and state and local associations, and that NAR provide funding in: 

• An Iowa case to oppose a plaintiff who seeks to expand a listing broker’s responsibilities as “possessor” of a listed property.
• A Missouri case supporting real estate professionals who face accusations that they violated copyright on architectural home design and related technical drawings owned by the plaintiff. Should the plaintiff prevail, real estate professionals nationwide could be threatened with copyright infringement claims over the creation of floorplans in connection with property listings.
• New Jersey Realtors’ support of a real estate brokerage’s appeal in a suit in which the plaintiff claims salespeople are misclassified as independent contractors. The issue of independent contractor status in the real estate industry is of national concern, and the board agreed that supporting the case is important in order to preserve the ability of real estate professionals to continue to be classified as independent contractors.

Local bylaws

The board amended the Mandatory Bylaw Provisions for Local Associations to define “good standing” as it relates to Realtor association membership. Changes “concisely express the privileges and obligations of Realtor members,” and assist associations by more clearly defining the behaviors that can lead to Realtor member disciplinary actions.

It also amended the Code of Ethics and Arbitration Manual to provide guidance for virtual ethics and arbitration hearings.

Professional standards

The board amended Standard of Practice 12-1 to clearly prohibit members from advertising their services as “free” unless the members will receive no compensation from any source for the services.

It also amended NAR’s Local and State Association Ombudsman Services policy to authorize ombudsmen and ethics mediators to hear disputes involving the public trust.

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