Maryland Real Estate Ethics and Standards Exam Guide
Last updated: April 2026
For aspiring real estate professionals in the Free State, understanding the rules of professional conduct is about much more than passing a test—it is the foundation of a sustainable and legally compliant career. The Maryland Real Estate Commission (MREC) places a heavy emphasis on ethical behavior to protect consumers and maintain the integrity of the profession. As you prepare using our Complete Maryland Exam Guide, mastering the nuances of Maryland real estate ethics and standards is absolutely critical.
The Regulatory Framework: MREC and COMAR
In Maryland, real estate ethics are not just guidelines; they are codified into state law. The Code of Maryland Regulations (COMAR) Title 09, Subtitle 11, Chapter 02 outlines the specific Code of Ethics that every licensed broker, salesperson, and associate broker must follow.
Unlike the National Association of REALTORS® (NAR) Code of Ethics—which applies only to dues-paying members of the association—the COMAR Code of Ethics is legally binding for all real estate licensees in Maryland. The MREC is the governing body responsible for enforcing these regulations, investigating complaints, and issuing disciplinary actions.
The Three Pillars of the Maryland Code of Ethics
The COMAR Code of Ethics is divided into three primary categories. Exam questions frequently test your ability to categorize specific behaviors into these three pillars.
1. Relations to the Public
A licensee's primary obligation to the public is absolute honesty and the protection of consumer interests against fraud, misrepresentation, and unethical practices. Key requirements include:
- Disclosure of Material Facts: Licensees must disclose any known material facts about a property's physical condition to all parties.
- Clear Pricing: Licensees cannot offer a property for sale or lease at a price other than the one explicitly authorized by the owner.
- Accurate Advertising: All marketing must present a true picture of the property and the licensee's status. (For more on this, review our guide on Maryland Advertising Regulations).
2. Relations to the Client
This pillar governs the fiduciary duties owed to the principal (the client). In Maryland, these duties are easily remembered using the acronym OLD CAR:
- Obedience: Following all lawful instructions of the client.
- Loyalty: Putting the client's interests above your own and all others.
- Disclosure: Informing the client of all relevant information that might impact their transaction.
- Confidentiality: Keeping the client's personal and financial information secret (this duty survives the termination of the agency relationship).
- Accounting: Accurately tracking and reporting all funds entrusted to the licensee.
- Reasonable Care: Using professional skill and diligence in all transactions.
3. Relations to Fellow Licensees
Professional courtesy and fair dealing are mandated by law. This includes:
- Not interfering with the exclusive agency agreements of other licensees.
- Cooperating with other brokers when it is in the best interest of the client.
- Avoiding making false or misleading statements about competitors or their business practices.
Common Ethical Violations and Disciplinary Actions
When licensees fail to uphold these standards, the MREC has the authority to issue reprimands, suspend or revoke licenses, and impose financial penalties. Fines can reach up to $5,000 for a first violation, $15,000 for a second, and $25,000 for a third or subsequent violation.
The chart below illustrates the most common types of ethics violations investigated by the MREC, based on recent regulatory data:
Common MREC Ethics Violations (%)
The Maryland Real Estate Guaranty Fund
If a consumer suffers a financial loss due to the unethical or illegal actions of a licensee (such as theft, embezzlement, or forgery), they may file a claim with the Maryland Real Estate Guaranty Fund. The maximum payout per claim is $50,000. If the fund pays out a claim on behalf of a licensee, that individual's license is automatically suspended until they repay the fund in full, plus interest.
Practical Scenario: Navigating an Ethical Dilemma
The state exam will frequently use scenario-based questions to test your application of ethical standards. Consider the following situation:
The Ethical Application: As a licensee, you owe the duty of Obedience to your client. However, you also owe a duty of Honesty to the public and are legally required to disclose known material facts regarding the physical condition of the property. In Maryland, the duty to disclose material defects to the public overrides the duty of obedience to the client. You must inform the seller that you are legally obligated to disclose the flooding. If the seller refuses, you must withdraw from the listing.
Related Study Resources
Ethics is just one piece of the Maryland real estate regulatory puzzle. To ensure you are fully prepared for exam day, be sure to review these related topics:
Frequently Asked Questions (FAQs)
What is the difference between the MREC Code of Ethics and the NAR Code of Ethics?
The MREC Code of Ethics is part of Maryland state law (COMAR) and applies to every licensed real estate professional in the state. The NAR Code of Ethics is a set of rules established by a professional trade association and applies only to REALTORS® (members of the association). While they share similar principles, a violation of the MREC code can result in the loss of your real estate license.
Does Maryland law require me to disclose if a death or suicide occurred on the property?
No. Under Maryland law, a homicide, suicide, or natural death occurring on a property is not considered a material fact relating to the physical condition of the property. Licensees are immune from liability for failing to disclose such events. However, if a buyer asks directly, you must either answer truthfully or state that you are not authorized to discuss it, depending on your client's instructions.
How does the duty of confidentiality apply after a transaction closes?
The fiduciary duty of confidentiality survives the termination of the agency relationship. Even after a transaction closes or a listing agreement expires, you may never disclose your former client's personal, financial, or motivational information unless legally required to do so by a court order.
What happens if I forget to present an offer to my seller because I think it is too low?
Failing to present an offer is a severe violation of COMAR ethics and the fiduciary duty of Disclosure. In Maryland, licensees must promptly present all written offers and counteroffers to their clients, regardless of the price or terms, right up until the point of closing, unless the client has explicitly instructed otherwise in writing.
Can I pay a "finder's fee" to an unlicensed friend who refers a buyer to me?
No. Under Maryland real estate law and ethical standards, it is strictly prohibited to pay a commission, finder's fee, or any valuable consideration to an unlicensed individual for performing acts that require a real estate license, including referring clients.
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