The National Association of Realtors’ elected leaders will soon have to meet some minimum financial requirements that are not unlike those that their clients face when taking out a mortgage.
Under an overhaul of NAR’s elections process, candidates may no longer run for or remain in office if they have had a personal bankruptcy or foreclosure within the last seven years; if their credit score is not above the baseline required for a mortgage backed by the Federal Housing Administration (FHA); or if they have any current delinquent federal, state, or local tax filings or payments.
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Had such limits been in place a few years ago, NAR’s 2013 president, Gary Thomas, would likely not have made it to the million-member trade group’s highest office. (The office of president is not an elected position; president-elects are automatically elevated to president every year.)
At the time Thomas was elevated to president, some Realtors objected to his appointment because he had filed for personal and corporate bankruptcy protection from creditors who were owed millions in debts, the Orange County Register reported.
“There is a need for clearer rules and stricter oversight on credentials and campaign activities, as well as a need for strict enforcement and consequences for violations,” NAR’s leadership team said in a report to NAR’s board of directors.
In a change intended to make the election process more “open and inclusive,” NAR is also doing away with a system in which a committee that reviews candidates for high-ranking leadership positions — including president-elect, first vice president, treasurer and NAR regional vice presidents — would nominate a single person for each office to NAR’s board of directors.
Instead of nominating a single candidate for each office, the Credentials and Campaign Rules Committee (formerly the Nominating Committee) will simply evaluate each applicant to make sure they meet the new minimum financial requirements, and forward the list of all eligible candidates to the board for a vote.
Candidates must agree to a financial, criminal and legal background check in order to be considered. Those deemed ineligible will have the right to appeal.
NAR spokeswoman Sara Wiskerchen told Inman News an exception to the four criteria could “absolutely” be granted for extenuating circumstances, such as bankruptcy due to medical costs.
In addition to the minimum financial requirements, the committee may consider other issues, including liens, Code of Ethics violations resulting in the suspension or termination of membership, delinquent child support payments, and compliance with NAR campaign rules.
Criminal convictions, regulatory investigations, pending litigation and legal judgments would also be pertinent, but only if they “could reasonably represent a source of embarrassment or liability to NAR or would present a conflict with the policies of NAR which the potential candidate would be called upon to uphold in their capacity as an officer,” according to a report from a presidential advisory group that developed recommendations for the new elections process.
For each office, the candidate receiving a majority vote from the board will be deemed the winner. Both eligible candidates and sitting NAR officers will be required to file quarterly reports verifying that they continue to meet the required criteria. Those who no longer meet the criteria will be required to withdraw their candidacy or step down from office.
The board also chose to shorten the election and campaign process to 10 months, from Aug. 1 through the following May. In the past, the process has sometimes stretched to three or four years.
A less lengthy process would reduce the amount of time, association resources and money spent on election campaigns, and therefore allow more members the opportunity to campaign, the presidential advisory group said.
The shorter time frame, as well as the committee name change and the quarterly report stipulation, requires amendments to the NAR Constitution. They therefore need to be approved by NAR’s Delegate Body, which is composed of the presidents of member boards, at the trade group’s annual meeting in November.
Pending that approval, the new process will go into effect Jan. 1, 2015.
Editor’s note: This story has been updated with a comment from NAR noting that extenuating circumstances, such as bankruptcy due to medical costs, could be grounds for an exception to the four required criteria.