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NAR makes sweeping changes to governance policy during 2021 REALTORS® Conference & Expo

NAR makes sweeping changes to governance policy during 2021 REALTORS® Conference & Expo

The National Association of REALTORS® Board of Directors and the NAR Delegate Body 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 changes, which go into effect immediately, focus on the governance structure, process, people, resources, and culture of NAR.

These changes required that the organization’s Constitution and Bylaws be amended. The work was done November 15 during back-to-back meetings of NAR’s Board of Directors and the NAR Delegate Body, which capped off the REALTORS® Conference and Expo in San Diego, California.

The approved recommendations were the work of Governance Game Changer Presidential Advisory Group, which was appointed in 2018 and charged with creating a more efficient and transparent governance operation for the 1.5 million–member organization. The 50-member PAG was appointed for a three-year term by NAR’s 2018 leadership team under then-President Elizabeth Mendenhall. NAR’s 1999 President Sharon Millett, a broker from Maine, served as PAG chair and Virginia REALTORS® CEO Terrie Suit served as vice chair.

The organizational changes include:

  • A requirement that NAR’s volunteer leaders—directors, Executive Committee members, committee liaisons, committee chairs and vice chairs, and RVPs—satisfy specific qualifications and performance expectation.
  • Changes to the composition of the Board of Directors.
  • Changes to the composition of the Executive Committee, as well as more frequent meetings and decision-making authority for the Executive Committee.
  • More specific duties for NAR Regional Vice Presidents and an electronic voting process, to be devised by NAR’s Campaign Credentials & Rules Committee, in which NAR directors in a region elect their RVP candidates.
  • That Article IV of the NAR Constitution be deleted and replaced with language that reflects the new?qualifications and composition of the Board of Directors.
  • That Article V of the NAR Constitution be deleted and replaced with new language that reflects the authority, qualifications, and composition of the new Executive Committee.
  • That Executive Committee members be reimbursed by NAR for their travel expenses related to attending Executive Committee meetings consistent with NAR’s member travel policy.

NAR’S 2021 leadership team endorsed the PAG’s recommendations prior to the 2021 REALTORS® Conference & Expo, which took place in San Diego November 12–15.

See details on these approved recommendations, learn more about the PAG, and read the PAG’s Govern Forward report.

Other changes made by the NAR Board of Directors include:

1. MLS Policy

The 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. These policies take effect January 1, 2022, though MLSs could implement them earlier if they choose. Read more about MLS policy at nar.realtor/mls. At nar.realtor, an expanded “MLS Best Practices” is posted. New voluntary practices for MLSs, which didn’t require approval by the Board of Directors, focus?on rule enforcement, data, and governance.

2. REALTORS® Relief Foundation

The directors approved a budget adjustment request from?NAR Treasurer Nancy Lane that NAR provide a second year of fundraising support for the REALTORS® Relief Foundation. Directors funded a successful fundraising campaign in 2021 that met its $8.5 million goal for the year. Since inception, NAR has provided all administrative support for RRF, reflecting NAR’s commitment to the importance of the charitable work carried out by the Foundation. RRF has helped more than 17,000 families in need at the time of a disaster.

3. Defining Employer-Employee Relationship

The directors voted to support a clear joint-employer standard that clearly defines the employer-employee relationship, provides predictability in business relationships, 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 this 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 that NAR is monitoring closely, including an expansion of the current joint-employer standard that could impact real estate brokerage franchisors.

4. NAR Campaign Rules

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

Also amended was 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 (1) complete an application for NAR Elected Office; (2) meet the required criteria set forth in Section C.1 of the manual; and (3) 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.

5. Federal Finance and Housing Policy

Also approved was a motion supporting suspension of the Federal Housing Administration (FHA) anti-flip rule until December 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. A suspension-end date of December 31, 2025, was set with the idea that it 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.

6. Federal Taxation

The governing bodies also 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 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.

They also approved a motion that NAR oppose tax-law enforcement policies that would require banks and other financial institutions to provide certain account-holder information to the Internal Revenue Service. Congress and the Biden administration are reportedly considering such a requirement on financial institutions. The directors said such a requirement, in pursuit of high-income and high-wealth individuals who are suspected of not reporting all their taxable income, is an overreach that would saddle individuals with extra tax-compliance costs, loss of time in responding to fruitless requests, and the risk of loss of privacy and theft of confidential information.

7. Legal Action

Approved were 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 seeking to expand a listing broker’s responsibilities as “possessor” of a listed property.
  • A Missouri case supporting real estate professionals facing 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 is claiming 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 with the Legal Action Committee that the case is important to support in order to preserve the ability of real estate professionals to continue to be classified as independent contractors.

8. Local Bylaws

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

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

9 . Professional Standards

The directors 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.

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