by Robert Miller
"Always do right — this will gratify some and astonish the rest."
Brooklyn, New York
The consideration of ethics and its role in the business marketplace has received significant attention from regulators of the real estate profession and has increasingly become a required part of continuing education for real estate professionals to maintain their licensing. While we all strive to maintain ethical standards in our daily lives and work (see the sidebar for a good book on ethics), the real possibility exists that the increasingly dynamic real estate workplace of today may present real barriers to ethical decision-making for our business and our customers.To overcome those obstacles:
The Business Environment
In the real estate marketplace, acting in an ethical framework involves not only the general requirement of conforming our conduct to good and moral conduct but also acting within
The business environment of the real estate marketplace has become an incredibly stressful environment making the implementation of ethical decision-making more difficult, in part because of the compression of time in which to make business decisions. While there are multiple factors that have added to this stress level, there are three key areas.
1. Stress Level of Our Customers
We meet our customers at one of the most stressful times in their lives, and the context of our business relationship with them does little to reduce their anxiety. Numerous studies by psychologists have shown that in comparing the relative stress levels of specific life events, the process of buying or selling a home is as stressful as divorcing a spouse and only slightly less stressful than mourning the death of a loved one.
2. Declining Public Confidence
Despite the number of hours and years that real estate professionals labor at their profession, it is clear that the public perception of our honesty and ethics has dropped to surprisingly low levels. In an “Honesty and Ethics” poll conducted by CNN/USA Today/Gallop in November of 2003, only 18% of Americans ranked business people (and title professionals are business people) as engaged in a profession with very high or high standards of ethics and honesty. The most trusted professionals in the United States were nurses who, 83% of Americans believed, possess high or very high honesty and ethical standards. Not surprisingly, car salesman came in last at 7%. Lawyers came in at 16%, just above stockbrokers and just below congressmen.
3. Technological Advances The real estate industry has benefited from the dramatic technological advances of the Internet, allowing communication with our customers, lenders, and data sources to be almost real time rather than the snail mail of the 1970s to the early 1990s. With the rapidity with which we are required to receive and process information, it would appear that the real estate industry should be able to process information more quickly, more efficiently, and in a more secure fashion than the paper-filled offices of yesteryear. Unfortunately, a Chicago researcher has found that the average worker in 1994 was able to complete, on average, 75% of his/her daily work. That same worker 12 years later was only able to complete 66% of his/her daily work despite the technological advances. The study found that many workers were on information overload, attempting to make too many decisions in too short a time, and the technological advances of the Internet and email communication required them to multitask even though they were not adept at it.
It is clear that the stressful condition of our clients, the declining public perception of our industry, and advances in technology have all contributed to whirlwind work environments that make implementation of an ethical decision-making framework difficult. But the reality is the industry has no choice. Title companies need to implement an ethical framework as a corporate culture to ensure the company remains compliant with the myriad of laws and regulations that affect us.
An Ethical Framework for Business Decisions
Have you or your employees ever made any of these statements when deciding whether to accept a transaction that has some ethical concerns?
An Ethical Framework
It is easier than you might imagine to integrate personal ethics into the business place by asking the same questions of your business that you would of your personal life. When you or your employees must make a decision to take or decline a questionable transaction or to adopt a questionable business practice to compete in the marketplace, ask these questions.
Ethical Concerns Gramm-Leach-Bliley Act
The Government Response — 2006
The Disposal Rule
Spearheading the enforcement powers of the federal government, on June 1, 2005, the Federal Trade Commission adopted the FACTA Disposal Rule, establishing a company’s legal responsibility to implement an information disposal program to mitigate consumer fraud and identity theft.
The Disposal Rule applies to people and both large and small organizations that use consumer reports. Among those who must comply with the Rule are:
Ethical Concerns: Email Communications
The same mandate of the Gramm-Leach-Bliley Act to adopt secure environments for maintenance and preservation of sensitive and personal financial data also applies to the manner and extent of the dissemination of that information by email.
Hackers can access settlement files, personal passwords, and data collected and stored on your computer. If criminals or other malicious users steal this information, they can use your customer’s information to facilitate identity theft. Strive to create strong passwords and keep them well protected.
Security Measures You Should Adopt
Discuss with your employees the critical need for security in email communications. Managers and owners should maintain a log of all employee passwords and require a change of passwords at regularly scheduled intervals.
Check the security level of employee passwords. Microsoft has a free service where the relative strength or weakness of a password can be checked. The service can be accessed at: www.microsoft.com/athome/security/privacy/password_checker.mspx.
Always Do Right
Mark Twain’s admonition to “Always do right—this will gratify some and astonish the rest” can become the mantra of the modern settlement company owner in an increasingly complex technological age and more complex regulatory scheme. If we embrace the ethical requirements of complying with privacy issues and security of data, our customers will recognize and be willing to pay for superior and secure service. Marketing your firm as “secure” with a mandate for secure and confidential handling of sensitive customer information, retention of records in a secure electronic form, and embracing technology to deliver settlement documents in secure electronic media will separate your firm from your competitors and provide a much needed calming influence on your customers.
As the owner of your business, become the ethical sounding board for your customers and employees. Be able to say no and explain why a case cannot be accepted or handled in a way a customer requests, and suggest alternatives that might insulate your customers from liability.
Be the example of ethical leadership, not the exception. A reputation among your peers as ethical takes a lifetime to build and only moments to lose.
|Mark S. Lynch, Esquire, is vice-president, senior Maryland state agency counsel for First American Title Insurance Company, Baltimore, MD. This article is an excerpt from his presentation during ALTA®’s 2006 Annual Convention in San Francisco. Mark can be reached at email@example.com or 800-445-6024.|