Rationale for Mid-Year SOP Changes

Dear Shannon: Thank you for your article last month about the Code of Ethics changes now in effect. I understand these changes went into effect June 5, 2025 but can you help explain the rationale behind some of them? I’m especially curious about any changes that may be settlement related but also want to know anything you can share. Just asking Why?

Dear Why: Changes to the Manual generally go into effect on Jan. 1st of each year. However, during NAR’s RLM this past June, changes became effective June 5, 2025, including 11 SOP changes, a major Policy Statement change and administrative changes. Here’s NAR’s rationale for a few of these changes.

Changes to SOP 10-5 provide clarity on interpretation. NAR’s Rationale: In its current form, Standard of Practice 10-5 presents a confusing application to Article 10 because SOP 10-5 is broadly written with language not otherwise defined in the Code of Ethics.

• This has resulted in legal challenges across the country challenging both the language and application of SOP 10-5 to Article 10.
• The changes create a more specific definition of “harassment,” which aligns with the definition in the NAR Member Code of Conduct and focus Article 10’s application on instances in which REALTORS® are operating in their professional capacity.
• The changes provide much needed clarity to members so that they can better understand and comply with Article 10, bring Article 10 in line with similar ethical requirements applied by other large trade associations across the country, and reduce risk to state and local associations and their volunteer leadership who administer and enforce Article 10.

Changes to SOP 1-12, 1-13, and 16-11 are settlement related. NAR’s Rationale: The amendments to SOP 1-12, 1-13 and 16-11 reiterate the commitments agreed to in the settlement agreement regarding cooperative compensation while plainly and clearly reaffirming the fact that broker compensation remains fully negotiable.

Changes to SOP 3-1 are settlement related. NAR’s Rationale: With offers of cooperative compensation no longer being communicated through the MLS, these amendments reflect the post-settlement reality that offers of compensation may be more difficult to ascertain in a timely fashion, especially in fast-moving transactions. These amendments allow for necessary flexibility while maintaining the ethical obligation for cooperating brokers to work with sellers and landlords to establish the terms of offers to cooperate.

Changes to SOP 3-2 and the deletion of SOP 16-16 are settlement related. NAR’s Rationale: SOP 16-16 remains one of the most misunderstood areas of the Code of Ethics, with many individuals wrongly assuming it prohibits negotiation of compensation at a certain point in a transaction.

• These amendments retain SOP 16-16’s ethical duty that prohibits delaying or withholding an offer while negotiating compensation and move these obligations to SOP 3-2, which similarly addresses negotiation of compensation.
• Additionally, with the settlement agreement’s requirements for written agreements and conspicuous language disclosing offers and amounts of compensation on both sides of a transaction, the specific situation that SOP 16-16 prohibits (a buyer representative using a purchase offer to attempt to modify the terms of a listing broker’s agreement with their client) is now extremely unlikely to happen.  
• Lastly, the amendments to SOP 3-2 reflect the fact that there are no longer unilateral offers of compensation communicated through the MLS while retaining an ethical obligation to communicate any change in compensation that was previously offered as promptly as possible.

Changes to SOP 1-16 offer clarity on SOP 1-16 & 3-9. NAR’s Rationale: This amendment clarifies the difference between two similar and often confusing Standards of Practice, plainly stating that Standard of Practice 1-16 applies to those acting as listing brokers or property managers, while Standard of Practice 3-9 applies to those acting as cooperating brokers or in capacities other than listing brokers or property managers. 

Changes to SOP 9-2 offer clarity on interpretation. NAR’s Rationale: Standard of Practice 9-2 was adopted in 2007 to address ethical concerns with doing business electronically, which was a relatively new practice at the time. These amendments clarify that a REALTOR’s ethical duty to make reasonable efforts to explain and disclose terms of a contractual relationship applies regardless of whether business is handled electronically or otherwise.

Changes to SOP 10-1 offer clarity on interpretation.  NAR’s Rationale: While Article 10 has always implicitly prohibited steering under the ethical duty to provide equal professional services, this amendment to Standard of Practice 10-1 states this clearly and explicitly.

Do not expect NAR to print updated hard copies of the Manual mid-year. Please frequently visit NAR’s 2025 Code of Ethics & Standards of Practice page for ongoing updates.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services

Note: Advice deemed accurate on date of publication

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