Filing Ethics and Arbitration

Filing Ethics Complaints and Arbitration Requests

 

Lancaster Board of Realtors®

 

Preface

 

The National Association of REALTORS® adopted its Code of Ethics in 1913. Since then, REALTORS® everywhere have pledged to meet its high professional standards upon becoming members of the Board.

 

The professional standards process plays a very important role in our Board. It helps ensure honorable, faithful and competent service to our members’ clients, customers and other member of the public by enforcing the Code of Ethics.

 

The Lancaster Board of REALTORS® has prepared this brochure to help you understand the professional standards process. This brochure summarizes portions of a more detailed procedures manual which is updated yearly by the National Association. To the extent this brochure conflicts with that manual and any of its subsequent revisions, the Association must follow the requirements of the National Association’s Code of Ethics and Arbitration Manual.

 

Is your complaint against a REALTOR®?

 

Not all real estate agents are REALTORS®. Only those who belong to their local Board/Association of REALTORS® and have agreed, as a continuing condition of membership, to abide by a strict, enforceable Code of Ethics may use the term REALTOR®. It is because of this obligation that you can file a complaint with a Local Board/Association of REALTORS®

 

Any Local Board/Association of REALTORS® will assist you in determining whether the agent involved is a current, active REALTOR® member or was a REALTOR® at the time of the alleged violation.

 

Does it concern Ethics or Arbitration?

 

You should determine whether this is an ethics matter or an arbitration of a business dispute, or both.

 

Ethics: In an ethics complaint, you are alleging that a REALTOR® violated one or more of the 17 Articles of the Code of Ethics.

 

Arbitration: Arbitration is the process for resolving a contractual business dispute growing out of a real estate transaction that the parties have been unable to solve themselves.

 

An arbitration request usually involves one REALTOR® Principal in disagreement with another REALTOR® Principal in another firm over distribution of a commission. However, REALTORS® are obligated to arbitrate with a member of the public if that person is their client. In real estate, the “client” is usually the seller, but could be the buyer if the broker was under a separate contract to represent the buyer as a buyer’s broker. All other instances require both sides to voluntarily agree to arbitrate.

 

If your situation concerns both ethics and arbitration, the Board will handle the arbitration first. The ethics complaint, if filed, is considered after final judgment is rendered in the arbitration.

 

What powers does the Board have?

 

1.      A Board of REALTORS® has limited authority regarding its members. Please note carefully the following limitations:

2.      In ethics complaints, the Board cannot require members to pay complainants any monetary damages or punitive awards such as “pain and suffering” or “mental anguish”, or payment for repairs or replacement. Complainants seeking monetary awards must seek action in civil court.

3.      The Board cannot try a member for violations of Ohio real estate law or regulations, or other alleged violations of the law, its jurisdiction covers only violations of member duties and the Code of Ethics.

4.      The Ohio Division of Real Estate and Professional Licensing alone controls the agent’s license to sell real estate. If you think the person has violated the law, you should contact the Division of Real Estate and professional Licensing at 614-466-4100.

 

1.      For the same reason, the Board cannot suspend or terminate the real estate license of one of its members.

2.      The Board can administer discipline for an ethics violation, but only after a thorough investigation and due process ethics hearing. The Board can use one or more of the following methods:

3.      Issue a letter of warning or reprimand;

4.      Require attendance at ethics refresher courses or other appropriate training;

5.      Find the member up to $2,500. NOTE: Fines are not awarded to the complainant under any circumstances;

6.      Place the member on probation or suspend membership for period up to a year;

7.      Expel the member from membership for up to three years.

8.      REALTORS® must arbitrate in certain situations and may arbitrate in others at their discretion. However, a member of the public must agree in writing to arbitrate and to be bound by the decision of the hearing panel.

9.      An arbitration award may not be more than the amount in dispute. Again, in no circumstances does the Board award actual or punitive damages.

10.  If the complainant is also seeking civil remedies in the courts or has filed a complaint with the Ohio Division of Real Estate and Professional Licensing, the Board will usually await the outcome of those proceedings before moving ahead with an ethics complaint.

 

Who may file an Ethics complaint?

 

Anyone can file and ethics complaint. However, the complaint must:

 

1.      Allege violations of specific Article(s);

2.      Be in writing, dated and signed by the complainant;

3.      State the facts surrounding the case;

4.      Include all necessary supporting documentation, such as listing agreements, letters, purchase offers, etc.; and

5.      Be filed within 180 days after the facts became known using reasonable diligence.

 

A complaint must be filed with the Board having jurisdiction over the individual named in the complaint. Each Local Board/Association has jurisdiction only over its REALTOR® members and/or those REALTORS® and non-members who are participants and subscribers to the Boards/Association Multiple Listing Service.

 

How do you file on Ethics complaint?

 

Follow these steps:

 

1.      Complete, sign and date the Ethics Complaint form #E-1 which requires you to name the REALTOR®(S) in question as the “Respondent(s)”.

2.      List the Article(s) of the Code you believe the REALTOR® has violated. The Code of Ethics and its related Standards of Practice are enclosed.

 

NOTE: A Standard of Practice may be cited only in support for the Article being charged. Standards are not an integral part of the Code, but rather are used to clarify the ethical obligations imposed by the Articles.

 

1.      Attach an explanation of the circumstances and facts surrounding the complaint. Be as specific as possible. State what, when, where, why and how you think an Article was violated.

2.      Attach legible copies of all pertinent documents such as listing agreements, sale and purchase agreements, letter, contract addendum’s etc. If you have notarized statements from witnesses, include those also. Always keep a copy for yourself.

3.      Send the entire package (marked confidential) to the Association’s Executive Officer or Professional Standards Coordinator. In accordance with the Board’s due process procedures, a copy of your complaint shall be forwarded to the person complained about for their written response. The complaint will then be reviewed and evaluated by the Grievance Committee as explained later in this booklet.

Who may file an Arbitration request?

 

The following individuals may request arbitration:

 

1.      REALTOR® members who are principal brokers.

2.      REALTOR® members who are not the principal, provided their principal broker joins in the request.

3.      Clients or customers of the REALTOR®

 

NOTE: REALTORS® are obligated by the Code of Ethics to arbitrate with their clients and other REALTORS®, but must voluntarily agree to arbitrate with customers. Again, members of the public wishing to arbitrate with a REALTOR® member must agree in writing in advance to be bound by the decision of the hearing panel. Ohio courts recognize the REALTOR® arbitration process as being both fair affording due process. Therefore, the courts generally agree that it is binding upon those who agree to it and will enforce an arbitration award through a declaratory judgment if necessary.

 

Arbitration and arbitration facilities are a service to members of a Board/Association of REALTORS®. Arbitration is not a disciplinary proceeding, not does it award punitive damages. By becoming and remaining a member of a Board, each REALTOR® binds himself to arbitrate certain types of disputes.

 

How are Ethics and Arbitration cases processed?

 

The Grievance Committee and the Professional Standards Committee handle these matters. Their functions are described below:

 

Role of the Grievance Committee

 

Ethics: Once the written complaint and reply from the Respondent(s) have been received, the Committee then conducts its review to determine whether the complaint has sufficient merit to be referred for a Professional Standards hearing, somewhat like a grand jury.

 

The Grievance Committee does not determine guilt or innocence, its option are:

 

1.      Forward the case for a hearing by the Professional Standards Committee.

2.      Dismiss the case if it’s determined to be unfounded, frivolous, harassing, or not applicable under the REALTOR® Code of Ethics:

3.      Postpone its decision to await more information from the Complainant or Respondent; or, defer action pending the outcome of civil litigation or Ohio Division of Real Estate and Professional Licensing investigation.

4.      Determine that the case may be more appropriate as arbitration.

 

If your complaint is dismissed, you have the right to appeal the dismissal to the Board of Directors. In an appeal, the Directors may examine only those materials submitted to the Grievance Committee and can either uphold or overturn the Committee’s decision. The Board will provide further details should it be necessary.

 

If the complaint is worthy of further consideration, it will be forwarded to the Professional Standards Committee and a hearing will be scheduled.

 

Arbitration: The Committee’s role in arbitration is different from ethics complaints. Its only duty is to determine if the matter is subject to arbitration by the Board, i.e. and “arbitrable matter”. Depending on the circumstances, not every situation may be arbitrated by the Board. Conditions and limitations exist which you must consider. The Board will explain these as the process continues.

 

How do you file an Arbitration Request?

 

Follow these steps:

 

1.      List the REALTOR®(S) involved as the Respondent(s) on the Request to Arbitrate form #A-1 provided by the Association. Sign and date the form. If you are not a REALTOR®, this form also contains your commitment to abide by the decision of the Hearing Panel.

2.      State the specific dollar amount in dispute (no commission percentages or other criteria may be used).

3.      Files the request within 180 days after the facts became known.

4.      Include an explanation of the situation. State why you believe you are entitled to an award of some kind. Remember, do not include allegations of unethical conduct in your argument. If you believe there may have been an ethics violation, you must file this separately in an ethics complaint.

5.      Attach legible copies of any and all pertinent documents which support your claim, such as listing agreements, sales and purchase contracts, closing statements, letters, phone and contact logs, working papers, etc. plus any notarized statements from witnesses.

6.      Include an arbitration deposit of (up to $500.00 depending on the Association policy). This must be a check form the broker/client made out to the Board.

 

NOTE: In an arbitration, the state association retains both parties’ deposits in order to defray the administrative expenses in processing the request.

 

1.      Send the package to the Association’s Executive Officer or Professional Standards Coordinator, keeping a copy for yourself. Your request will then be viewed by the Grievance Committee to determine if it meets the Board’s criteria for an “arbitrable matter” as outlined later in this booklet.

 

Arbitration is sometimes a duty and sometimes a privilege for REALTORS®. The Committee must determine whether you situation fits into the duty or privilege category. It does this by determining:

 

1.      Whether you are allowed, under the rules, to invoke arbitration.

2.      Whether the controversy you describe may be properly resolved by arbitration;

3.      Whether the arbitration is mandatory for the REALTOR® Respondent or voluntary to the parties involved; or,

4.      Whether the amount in dispute is too small or too large, or the matter is too legally complex for the Board to properly handle it.

 

Such a review could result in the release of Board members from their obligation to arbitrate, and thus free you to seek other avenues in resolving your dispute.

 

Mediation: If the Grievance Committee determines that a matter is arbitrable, it may notify the parties that an informal mediation procedure is also available as a preliminary, voluntary alternative to arbitration. Mediation is a means of helping people negotiate a settlement of a dispute. No binding decision or award is made except by the mutual agreement of the parties. Many arbitration cases are settled at this stage.

 

In either ethics or arbitration cases, you will be promptly informed of the Grievance Committee’s decision.

 

As with ethics complaints, you may also appeal a dismissal of an arbitration request to the Board’s Board of Directors. The Directors review the materials submitted to the committee and can uphold or overturn the committee’s dismissal. The Board will provide you with further details should they become necessary.

 

Role of the Professional Standards Committee

 

This committee’s function is to hold ethics and arbitration hearings. Hearings provide an opportunity for the Complainant and Respondent to explain their sides of the story by presenting testimony, evidence and witnesses, if any. The principal parties to a hearing are notified at least 21 days in advance of the date, time and place for a hearing.

 

Once all the facts have been presented, the Hearing Panel, composed of 3 or 5 trained members of the Board selected on the basis of their experience, temperament, impartially, and objectivity, will determine whether the Code of Ethics has been violated or, in an arbitration, how the dispute should be resolved.

 

Naturally, all parties are informed about each step of the process as it occurs. You will also be given instructions about the hearing procedures prior to the hearing.

 

Role of the Board Staff

 

Throughout the ethics or arbitration processes, the Board’s paid professional staff is responsible for maintaining the confidential case files and ensuring that the paperwork, notifications, correspondence, and other administrative work flows smoothly.

 

Members of the Board staff are not licensed real estate practitioners, nor are they allowed to dispense legal advice or otherwise advise or counsel you on your case. Therefore, you should not attempt to discuss the allegations, facts or particulars of your case with them. Of course, should you have questions regarding the basic steps or other information regarding the ethics or arbitration processes, the staff will be pleased to provide that information.

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