Code of Ethics and Arbitration Manual

402 Pages·2012·4.21 MB·English

Code of Ethics and Arbitration Manual
This Manual is for use by Member Boards to ensure due process
in the conduct of hearings to enforce the Code of Ethics and in
the resolution of business disputes arising out of the real estate
business. Professional standards procedures must reflect
substantively the approved due process policies and procedures
in this Manual to ensure entitlement to coverage under the
National Association’s master professional liability insurance
program.
For ease of reference, all newly-amended provisions are shaded
to highlight additions.
This edition includes all Case Interpretations approved by the
Professional Standards Committee through 2012. New and
amended Case Interpretations are effective upon approval by
the National Association’s Professional Standards Committee
and publication on REALTOR.org.
For more information about the Code’s centennial go to:
www.realtor.org/topics/code-of-ethics-centennial
©2013NATIONALASSOCIATIONOFREALTORS® 166-876-13
AllRightsReserved. (01/13JBK)
Code of Ethics and CCOCEL
E D E
E B
N R
Arbitration Manual 1913TENOFETAHTIING
-2NICS
0 A
1
3 L
2013
Code of Ethics and
Arbitration Manual
A Manual for use by Member Boards of the National
Associationtoensuredueprocessintheconductofhearingsto
enforce the Code of Ethics and in the arbitration of business
disputes arising out of the real estate business. Professional
standards procedures of Member Boards must reflect
substantivelytheapproveddueprocesspoliciesandprocedures
ofthisManualinordertoensureBoardentitlementtocoverage
by the Professional Liability Insurance Policy of the National
AssociationinlitigationinvolvingtheBoardinconnectionwith
Board enforcement of the Code of Ethics, provided that such
policiesandproceduresareconsistentwithapplicablestatelaw.
For ease of reference, all amended provisions where content
haschangedareshadedtohighlightadditions.
NOTE: ThiseditionincludesallCaseInterpretationsapproved
by the Professional Standards Committee through 2012. All
new and amended Case Interpretations become effective upon
approval by the NationalAssociation’s Professional Standards
CommitteeandpublicationonREALTOR.org.
®
NATIONALASSOCIATION OF REALTORS
430 North MichiganAvenue
Chicago, Illinois 60611-4087
REALTOR®isaregisteredcollectivemembershipmarkwhich
maybeusedonlybyrealestateprofessionalswhoaremembersofthe
NATIONALASSOCIATIONOFREALTORS®andsubscribetoitsstrictCodeofEthics.
© 2013 NATIONALASSOCIATION OFREALTORS®
All Rights Reserved
This Manual is dedicated to the memory of
Chesley J. (“Chet”) Smith
(1921–2001)
Chet Smith servedAmerica in war and peace for nearly four decades
in the Army Air Corps and the U.S. Air Force, and he served
®
REALTORS fornearlyaquartercenturyatthelocal,state,andnational
®
levels. His dedication to the REALTOR organization was exceeded
onlybyhisdedicationtohisfamily,hisfaithinGod,andhiscommitment
totheCodeofEthics.

Table of Contents—
CodeofEthicsandArbitrationManual
Areas of the Manual Requiring Board/AssociationAction . . . . . . . . . . . i
®
The REALTOR ʼS Code of Ethics—AGift of Vision . . . . . . . . . . . . . . . . . . . v
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Code of Ethics and Standards of Practice . . . . . . . . . . . . . . . . . . . . . . . . 5
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ETHICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Statements of Professional Standards Policy
Applicable to Ethics Proceedings ............................... 21
Part One — General Provisions Relating to Ethics ................... 29
Section 1 — Definitions Relating to Ethics ........................ 29
Section 2 — Qualification forTribunal ............................ 30
Section 3 — Duty to Give Evidence ............................. 31
Section 4 — Right of Counsel toAppear ......................... 31
Section 5 — Witnesses ....................................... 32
Section 6 — Conduct of Hearing ............................... 32
Section 7 — Notices ......................................... 33
Section 8 — Interpretations of Bylaws ........................... 33
Section 9 — Waiver .......................................... 33
Section 10 — Communication and Clerical ....................... 33
Section 11 —Attempt to InfluenceTribunal ....................... 33
Part Two — Membership Duties and Their Enforcement ............... 35
Section 12 — Duties of Membership ............................ 35
Section 13 — Power toTake DisciplinaryAction ................... 35
Section 14 — Nature of Discipline .............................. 36
Section 15 — SelectionandAppointmentoftheGrievanceCommittee ... 37
Section 16 — Selection andAppointment of the
Professional Standards Committee ............................ 37
Part Three — The Grievance Committee ............................ 39
Section 17 —Authority ....................................... 39
Section 18 — Function ....................................... 39
Section 19 — Review of Ethics Complaint ........................ 39
Part Four — The Ethics Hearing................................... 43
Section 20 — Initiating an Ethics Hearing ......................... 43
Section 21 — Ethics Hearing .................................. 45
Section 22 — Decision of Hearing Panel ......................... 47
Section 23 —Action of the Board of Directors ..................... 48
Section 24 — InitialAction by Directors .......................... 50
Section 25 — Preliminary Judicial Determination Prior to
Imposition of Discipline ..................................... 51
Appendix I to Part Four — Role of the Board of Directors in
Reviewing and Ratifying Ethics Hearing Panel Decisions ........... 52
Appendix II to Part Four —Appropriate Interpretation of
“Pertinent Facts” as Used inArticle 2 of the Code of Ethics ......... 53
Appendix III to Part Four — Responsibility of Member Boards with
Respect toArticle 10 of the Code of Ethics ...................... 54
Appendix IV to Part Four — Rationale of
Declaratory Relief Procedure ................................ 56
Appendix V to Part Four — Ethics Hearing Checklist with
AdministrativeTime Frames ................................ 57
Appendix VI to Part Four — Cooperative Enforcement of the
Code of Ethics ........................................... 63
Appendix VIIto Part Four—Sanctioning Guidelines ................ 65
Appendix VIIIto Part Four—Procedures for Consideration of
Alleged Violations ofArticle IV, Section 2, Bylaws,
®
NATIONALASSOCIATION OF REALTORS . .......................... 70
Appendix IX to Part Four—Presenting and
Negotiating Multiple Offers .................................. 71
Appendix X to Part Four—BeforeYou File an Ethics Complaint ...... 73
Part Five — Conduct of an Ethics Hearing ......................... 77
Outline of Procedure for Conduct of an Ethics Hearing ............. 77
Outline of Procedure for an Ethics Hearing Involving a
Complaint and Counter-Complaint ............................ 78
Chairpersonʼs Procedural Guide: Conduct of an Ethics Hearing ...... 80
Chairpersonʼs Procedural Guide:
Conduct of anAppeal Hearing (Ethics) ........................ 83
Part Six — Specimen Forms for Ethics ............................. 87
Form #E-1 — Ethics Complaint ................................ 88
Form #E-2 — Notice to Respondent ............................ 89
Form #E-3 — Reply ......................................... 90
Form #E-4 — Grievance Committee Request for Information
(Ethics Complaint) ........................................ 91
Form #E-5 — Response to Grievance Committee
Request for Information .................................... 92
Form #E-5.1 — Grievance Committee Report Form ................ 93
Form #E-6 — Notice of Right to Challenge
Tribunal Members ........................................ 94
Form #E-7 — Challenge to Qualification by Parties to
Ethics Proceeding ........................................ 95
Form #E-8 — Official Notice of Hearing ......................... 96
Form #E-9 — Outline of Procedure for Ethics Hearing .............. 97
Form #E-9a — Outline of Procedure for Ethics Hearing with
Complaint and Counter-Complaint ............................ 98
Form #E-10 — Certificate of Qualification ....................... 100
Form #E-11 — Decision of Ethics Hearing Panel ................. 101
Form #E-12 —Action of the Board of Directors .................. 103
Form #E-13 — Request forAppeal ............................. 105
Form #E-14 — Official Notice ofAppeal Hearing .................. 106
Form #E-15 — Checklist of Professional Standards Concerns ....... 108
Form #E-16 — SeatingArrangements for Hearings ................ 110
Form #E-17 — EthicsActivity Report ........................... 111
Form #E-18 — Outline of Content of Petition for
Declaratory Relief......................................... 112
Form #E-19 — SampleAgreement to Establish Multi-Board
(or Regional) Professional Standards Enforcement Procedures ..... 113
Form #E-20 — Notice to Respondent (Ethics) and
Optional Waiver of Right to Hearing .......................... 116
Form #E-21 — Sample Letter of Reprimand/Warning .............. 118
Form #E-22 —Appeal of Grievance Committee
Dismissal of Ethics Complaint ............................... 119
Form #E-23 —Action of theAppeal HearingTribunal
(Ethics Complaint) ........................................ 120
ARBITRATION ................................................... 123
Statements of Professional Standards Policy
Applicable toArbitration Proceedings ........................... 131
Part Seven — General Provisions Relating toArbitration ............. 131
Section 26 — Definitions Relating toArbitration ................... 131
Section 27 — Qualification forTribunal .......................... 131
Section 28 — Duty to Give Evidence ........................... 132
Section 29 — Right of Counsel toAppear ....................... 133
Section 30 — Witnesses ..................................... 133
Section 31 — Conduct of Hearing ............................. 133
Section 32 — Notices ....................................... 134
Section 33 — Interpretations of Bylaws ......................... 134
Section 34 — Waiver ........................................ 134
Section 35 — Communication and Clerical ...................... 134
Section 36 —Attempt to InfluenceTribunal ...................... 134
Part Eight — Membership Duties and Enforcement ................. 135
Section 37 — Duties of Membership ........................... 135
Section 38 — Selection andAppointment of the
Grievance Committee ..................................... 135
Section 39 — Selection andAppointment of the
Professional Standards Committee ........................... 135
Part Nine — The Grievance Committee ............................ 137
Section 40 —Authority ...................................... 137
Section 41 — Function ...................................... 137
Section 42 — Grievance Committee's Review andAnalysis of a
Request forArbitration ..................................... 137
Part Ten —Arbitration of Disputes ............................... 139
Section 43 —Arbitrable Issues ................................ 139
Section 44 — Duty and Privilege toArbitrate ..................... 140
Section 45 — Boardʼs Right to DeclineArbitration ................. 141
Section 46 — Duty toArbitrate Before StateAssociation ............ 142
Section 47 — Manner of InvokingArbitration ..................... 142
Section 48 — Submission toArbitration ......................... 144
Section 49 — InitialAction by Directors ......................... 145
Section 50 — Preliminary Judicial Determination
Prior to Imposition of Discipline .............................. 145
Section 51 —Arbitration Hearing .............................. 145
Section 52 — Settlement .................................... 146
Section 53 —TheAward..................................... 146
Section 54 — Costs ofArbitration .............................. 147
Section 55 — Request for Procedural Review .................... 147
Section 56 — Enforcement ................................... 148
Appendix I to PartTen —Arbitrable Issues ...................... 149
Appendix II to PartTen —Arbitration Guidelines .................. 153
Appendix II to PartTen —Arbitration Worksheet .................. 161
Appendix III to PartTen — Rationale of Declaratory Relief and of
Judicial Enforcement in Matters ofArbitration ................... 165
Appendix IV to PartTen — Rationale for No Findings of Fact
inAwards ............................................... 166
Appendix V to PartTen —Arbitration Hearing Checklist with
AdministrativeTime Frames ................................ 167
Appendix VI to PartTen — Mediation as a
Service of Member Boards ................................. 172
Part Eleven — InterboardArbitration Procedures ................... 183
Part Twelve — Conduct of anArbitration Hearing ................... 187
Outline of Procedure for Conduct of anArbitration Hearing .......... 187
Outline of Procedure for anArbitration Hearing Involving a
Request and a Counter-Request ............................. 188
Chairpersonʼs Procedural Guide: Conduct of anArbitration Hearing ... 190
Chairpersonʼs Procedural Guide:
Conduct of an InterboardArbitration Hearing ................... 193
Chairpersonʼs Procedural Guide:
Conduct of a Procedural Review Hearing (Arbitration) ............ 196
Chairpersonʼs Procedural Guide:
Conduct of a Procedural Review Hearing (InterboardArbitration) ... 199
Part Thirteen — Specimen Forms forArbitration .................... 203
Form #A-1 — Request andAgreement toArbitrate ................ 204
Form #A-2 — Request andAgreement toArbitrate (Nonmember) ..... 206
Form #A-3 — Notice to Respondent ........................... 208
Form #A-4 — Response andAgreement toArbitrate ............... 209
Form #A-5 — Grievance Committee Request for Information ........ 211
Form #A-6 — Response to Grievance Committee
Request for Information .................................... 212
Form #A-7 — Notice of Right to ChallengeTribunal Members ....... 213
Form #A-8 — Challenge to Qualifications by
Parties toArbitration Proceeding ............................. 214
Form #A-9 — Official Notice of Hearing ........................ 215
Form #A-10 — Outline of Procedure forArbitration Hearing ......... 216
Form #A-10a — Outline of Procedure forArbitration Hearing
Involving a Request and a Counter-Request ................... 217
Form #A-11 — Certificate of Qualification ........................ 219
Form #A-12 —Award ofArbitrators ............................ 220
Form #A-13 — Request for Procedural Review .................. 221
Form #A-14 — Official Notice of Procedural Review ............... 222
Form #A-14a — Decision of the
Procedural Review HearingTribunal ......................... 223
Form #A-15 — Checklist of Professional Standards Concerns ....... 224
Form #A-16 — SeatingArrangements for Hearings ................ 226
Form #A-17 — Mediation ResolutionAgreement .................. 227
Form #A-18 —ArbitrationActivity Report ........................ 228
Form #A-19 — SampleAgreement to Establish Multi-Board
(or Regional) Professional Standards Enforcement Procedures ..... 229
Form #A-20 —Appeal of Grievance Committee
Dismissal or Classification ofArbitration Request ................ 232
Form #A-21 —Action of theAppeal HearingTribunal
(Arbitration Request) ...................................... 233
Part Fourteen — StateAssociation
Professional Standards Committee ............................. 235
Questions andAnswers .......................................... 239
Statements of Professional Standards Policy
(Complete Listing) ............................................. 243
Professional Standards Training Guide ............................ 253
Pathways to Professionalism ..................................... 262
Index ............................................................ 372