Does the Code of Ethics obligate a REALTOR® to verify a seller’s identity prior to listing?

QUESTION: The North Carolina Real Estate Commission’s monthly eBulletin has included descriptions of several cases where licensed agents were disciplined for failing to discover what has been called “seller impersonation fraud” or a “fake seller scam.” In addition to facing potential discipline by the Real Estate Commission, could the failure of a REALTOR® to discover such a scam also result in discipline under the Code of Ethics?

ANSWER: While the outcome of any ethics proceeding will ultimately depend on the facts of that particular case, we believe that there are several articles of the Code of Ethics that could apply if an agent listed a property for sale without taking reasonable steps to verify that their client is actually the owner of that property. We have previously written here and here about strategies and best practices REALTORS® can use to avoid becoming a victim of such a scam.

Article 2. Article 2 of the Code of Ethics obligates REALTORS® to avoid misrepresentation of material facts relating to the property or the transaction in which they are involved. While REALTORS® are not expected to discover latent defects in the property, ownership of real property is not “latent”; it is almost always a matter of public record. Failure to verify a known fact could therefore lead to an Article 2 violation in some cases.

Article 11. Article 11 of the Code states that 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.” Given the proliferation of fake seller scams and their prevalence throughout the industry, a professional standards hearing panel could conclude that failure to conduct due diligence as to a seller’s alleged identity constitutes incompetence.

Article 12. Article 12 of the Code requires REALTORS® to be honest and truthful in their real estate communications and to present a “true picture” in their advertising, marketing, and other representations. Standard of Practice 12-4 is perhaps most directly on point: “REALTORS® shall not offer for sale/lease or advertise property without authority.” If a REALTOR® fails to use reasonable diligence to confirm whether their seller-client is the true owner of the property they are listing, Article 12 may also apply.

Scammers are becoming more sophisticated every day, and so this article should not be read to cast blame on any REALTOR® who becomes a victim of a scam. It should also be noted that other articles of the Code could apply depending on the circumstances. All that said, listing agents are expected to be vigilant and take reasonable steps to verify a seller’s true identity. Failure to do so may not only violate the License Law, but also the Code of Ethics.

Release Date: 3/5/2026

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