2016 Summary of Key Professional Standards Changes

This summary highlights substantive issues and changes, but is not all-inclusive. For complete information detailing all the changes see the 2015 Professional Standards Committee Actions for Midyear and the Annual Convention on the Board Policy and Programs website (search on "Professional Standards Committee Actions").

Also review the shaded portions of the 2016 Code of Ethics and Arbitration Manual which highlights all the changes. You may also view previous years' summaries of changes.

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Change to the Code of Ethics and Standards of Practice

(underscoring indicates additions, ~~strikeouts~~ indicate deletions)

Standard of Practice 12-5

REALTORS® shall not advertise nor permit any person employed by or affiliated with them to advertise real estate services or listed property in any medium (e.g., electronically, print, radio, television, etc.) without disclosing the name of that REALTOR®'s firm in a reasonable and readily apparent manner either in the advertisement or in electronic advertising via a link to a display with all required disclosures. This Standard of Practice acknowledges that disclosing the name of the firm may not be practical in electronic displays of limited information (e.g., "thumbnails", text messages, "tweets", etc.). Such displays are exempt from the disclosure requirement established in this Standard of Practice, but only when linked to a display that includes all required disclosures.

Changes to the Code of Ethics and Arbitration Manual (Manual)

(underscoring indicates additions, ~~strikeouts~~ indicate deletions)

Policy Statement #44, Effective Dates of the Code of Ethics and Standards of Practice and the Code of Ethics and Arbitration Manual, was amended as follows:

All changes to the Code of Ethics and Standards of Practice carry an annual effective date of January 1 of the year following their approval by the Board of Directors of the National Association and, where necessary, by the Delegate Body.

To ensure consistent, uniform enforcement of the Code of Ethics nationwide, all changes in professional standards policy normally incorporated into the National Association's Code of Ethics and Arbitration Manual ~~should~~ become effective ~~only upon publication in a new edition of the Code of Ethics and Arbitration Manual~~ on January 1 of the year following their approval by the Board of Directors of the National Association. Unless specifically provided otherwise by the Board of Directors, associations shall have sixty (60) days from their effective date to adopt them ~~locally~~.

All new and amended Case Interpretations become effective upon approval by the National Association's Professional Standards Committee and publication on nar.realtor.

Policy Statement #33, Use of Panels in Place of Committees and the Board of Directors, was amended as follows:

Any matter brought before the Grievance Committee, Professional Standards Committee, or Board of Directors may be considered by a panel of members or Directors appointed by the President for that purpose (or, alternatively, by the Board's Executive Committee).

Three (3) or more members shall constitute a panel of the Grievance and Professional Standards Committees that can act on behalf of those committees. Five (5) Directors or a quorum of the Board of Directors, whichever is less, shall constitute a panel of the Board of Directors, that can act on behalf of the Board of Directors. The decision of the panel (or Executive Committee) shall be final and binding and shall not be subject to further review by the full Committee or the full Board of Directors, except as otherwise provided in this Manual.

Panel members should be experienced, knowledgeable persons of judicial temperament.

In appointing such a panel, the President should consider the following recommended criteria:

number of years as a REALTOR®
number of years in the real estate business
primary and secondary fields of real estate endeavor/expertise
participation in post-licensing real estate education
training in the Code of Ethics
position in firm (principal, nonprincipal)
size of firm
common sense
open-mindedness
familiarity with state(s) laws and regulations
receptiveness to instruction/training
other relevant professional or procedural training

~~Panel members should be mature, experienced, knowledgeable persons of judicial temperament.~~

Associations are also authorized to adopt policies and procedures assigning Grievance Committee functions to a panel of the Professional Standards Committee. Where Grievance Committee functions are delegated to a panel of the Professional Standards Committee, all provisions of this Manual applicable to Grievance Committees will apply to a panel of the Professional Standards Committee acting in that capacity. Three (3) or more members shall constitute a panel of the Professional Standards Committee to assume the responsibilities of the Grievance Committee.

When possible, panels should be strongly encouraged to use conference calls or alternative communication technologies for meetings other than hearings and appeals/procedural reviews to expedite the decision-making process. Use of conference calls or alternative communication technologies during the course of a hearing shall be governed by Professional Standards Policy Statement #56, "Remote" Testimony.

Policy Statement #50, Separate Subcommittees for Ethics, Arbitration, and Mediation, was amended follows:

Boards and Associations ~~are strongly encouraged to~~ can meet their professional standards enforcement responsibility ~~(ethics adjudication and dispute resolution)~~ through separate committees or subcommittees specifically delegated responsibility for arbitration, mediation, ~~and for~~ the conduct of hearings to resolve ethics complaints and alleged violations of other membership duties, and to conduct ombudsman programs.

New Policy Statement #61, Arbitration Procedures Governing Nonmembers, was adopted as follows:

Nonmembers arbitrating pursuant to an agreement to participate in a REALTOR® association owned and operated MLS shall be subject to all obligations under an association's arbitration procedures, including, but not limited to, the obligation to pay an award promptly or deposit a like amount in the event of a challenge pursuant to Section 53, The Award, Code of Ethics and Arbitration Manual.

Failure to pay arbitration awards or deposit a like amount in these circumstances may be a violation of the MLS rules and subject the nonmember to sanction.

Section 1 (s), Definitions Relating to Ethics, was added and (u) was deleted as follows:

(s) "Professional Standards Administrator" is the Board staff person primarily responsible for the administration of all professional standards processes.

~~(u) "Secretary" means the Executive Officer of any Board.~~

NOTE: These same changes were made in Section 26 (m) and (n). Additionally, the words "Executive Officer" and "Secretary" have been administratively deleted from the Code of Ethics and Arbitration Manual and instead the words "Professional Standards Administrator" have been inserted in their stead.

Sections 18 and 41, Function, were revised as follows:

The function of the Grievance Committee is clearly distinguishable from the function of the Professional Standards Committee. ~~The Professional Standards Committee is similar to a court. The court adjudicates matters that come before it.~~ The Professional Standards Committee makes decisions on matters involving ethics or arbitration.

If the function of the Professional Standards Committee is understood as similar to a court, the function of the Grievance Committee can then be understood as similar to that of the grand jury. A grand jury evaluates potential criminal conduct to determine whether the evidence and testimony presented warrants indictment and trial.

~~In a similar manner, t~~ The Grievance Committee receives ethics complaints and arbitration requests to determine if, taken as true on their face, a hearing is to be warranted. The Grievance Committee makes only such preliminary evaluation as is necessary to make these decisions. While the Grievance Committee has meetings, it does not hold hearings, ~~and it~~ does not decide whether members have violated the Code of Ethics, and does not dismiss ethics complaints because of a lack of evidence. Complainants are not required to prove their case upon submission of their ethics complaint or arbitration request. The Grievance Committee does not mediate or arbitrate business disputes. ~~Grievance Committees are encouraged to hold regularly-scheduled meetings. Meetings should be called often enough to ensure timely review of ethics complaints and arbitration requests.~~ The Grievance Committee will hold regularly-scheduled meetings and/or review complaints/arbitration requests not later than forty-five (45) days after receipt of the complaint/request.

In evaluating ethics complaints, the Grievance Committee may require a written response from the respondent(s) only if the committee is in need of additional information pertaining to the questions in Section 19, Grievance Committee's Review of an Ethics Complaint, Code of Ethics and Arbitration Manual, and the complainant cannot provide such information. In such instances the respondent(s) should be provided with a copy of the ethics complaint and advised that failure to respond may be the basis for a charge of having violated Article 14 of the Code of Ethics. (See Form #E-4, Grievance Committee Request for Information [Ethics Complaint] and Form #E-5, Response to Grievance Committee Request for Information, Part Six of this Manual). In evaluating arbitration requests, the Grievance Committee may request a written response to the arbitration request from the respondent(s) only if the Committee is in need of additional information pertaining to the questions in Section 42, Grievance Committee's Review and Analysis of a Request for Arbitration, Code of Ethics and Arbitration Manual, and the complainant cannot provide such information. (See Form #A-5, Grievance Committee Request for Information [Arbitration Request] and Form #A-6, Response to Grievance Committee Request for Information, Part Thirteen of this Manual.) If no response is filed within the time allotted, the Grievance Committee shall make its determination as to whether an arbitration hearing should be scheduled based upon the information set forth in the arbitration request.

Section 19, Grievance Committee's Review of an Ethics Complaint, was revised as follows:

A. Initial action upon receipt of an ethics complaint

Upon receipt of an ethics complaint from the Professional Standards Administrator, the Chairperson of the Grievance Committee shall review the complaint. Any evidence and documentation attached will be considered only to the extent necessary to determine whether a complaint will be referred for hearing. The Chairperson may assign one or more members of the Grievance Committee to review the complaint and to make any necessary evaluation. The member(s) may, if necessary, gather additional information on the matters complained of from the complainant if additional information is necessary to determine whether a complaint will be referred for hearing. The complaint shall be provided to the assigned members by the Professional Standards Administrator upon instruction from the Chairperson.

The reviewer(s), if appointed, shall complete the assignment promptly and prepare a report and recommendation for the Grievance Committee. After reviewing the report, the Chairperson shall schedule a meeting of the Grievance Committee and may instruct the Professional Standards Administrator to provide members of the Grievance Committee with copies of the case file including the reviewer's report, if any. At the option of the Board, such file may be sent to the Grievance Committee members prior to the meeting or may be distributed at the meeting.

B. Consideration of an ethics complaint by the Grievance Committee

In reviewing an ethics complaint, the Grievance Committee shall consider the following:

(1) Is the ethics complaint acceptable in form as received by the Committee? If not in proper form, the Chairperson may request that the Professional Standards Administrator contact the complainant to advise that the complaint must be submitted in proper form.

NOTE: If deemed appropriate by the Chairperson, a member of the Grievance Committee may be assigned to contact the complainant and to provide procedural assistance to amend the complaint or resubmit a new complaint in proper form and with proper content. The Grievance Committee member providing such assistance shall ensure that only procedural assistance is provided to the complainant, and that the complainant understands that the member is not representing the complainant or advocating on behalf of the complainant.

(2) Are all necessary parties named in the complaint?

(3) Was the complaint filed within one hundred eighty (180) days of the time that the alleged offense and facts relating to it could have been known by the complainant in the exercise of reasonable diligence or within one hundred eighty (180) days after the conclusion of the transaction or event, whichever is later?

(4) Is the respondent named in the complaint a member of the Board, and was the respondent a member of any Board at the time of the alleged offense?

(5) Is litigation or any government agency investigation or other action pending related to the same transaction or event?

(a) If criminal litigation is pending related to the same transaction or event, the Grievance Committee shall cease its considerations and instruct the Professional Standards Administrator to hold the file pending until such time as the criminal litigation is concluded. A report shall be made to the Board President.

(b) If civil litigation is pending related to the same transaction or event, the Grievance Committee shall instruct the Professional Standards Administrator to have Board legal counsel review the complaint filed and advise if any hearing should proceed (presuming the matter would otherwise warrant a hearing), with counsel considering the following:

(1) similarity of factors giving rise to pending litigation or regulatory or administrative proceeding and the ethics complaint

(2) degree to which resolution of the pending civil litigation or regulatory or administrative proceeding could make consideration of the ethics complaint unnecessary

(3) degree to which pending litigation or regulatory or administrative proceeding would delay prompt disposition of the ethics complaint

(4) the nature of the alleged violation and the extent to which it could impact on cooperation with other Board Members

(5) the assurance of Board legal counsel that consideration of an ethics complaint would not deprive the respondent of due process

(6) Is there any reason to conclude that the Board would be unable to provide an impartial Hearing Panel?

(7) Are the specific Articles cited in the complaint appropriate in light of the facts provided? Should additional Articles be cited? Should certain Standards of Practice be cited in support of the Articles charged? Are any inappropriate Articles cited?

(8) If the facts alleged in the complaint were taken as true on their face, is it possible that a violation of the Code of Ethics occurred? Complainants are not required to prove their case when initially filing an ethics complaint. A complaint may not be dismissed for lack of evidence if the allegation(s), taken as true on their face, could constitute a violation of the Code of Ethics and the complaint is in an otherwise acceptable form.

If all relevant questions have been answered to the satisfaction of the Grievance Committee, and the allegations, if taken as true, could constitute a violation ~~facts given appear to indicate a possible violation~~ of the Code of Ethics, the Grievance Committee shall refer the complaint to the Professional Standards Committee for a hearing by an ethics Hearing Panel.

C. Appeal from the decision of the Grievance Committee related to an ethics complaint

If the Grievance Committee dismisses the complaint, the notice of dismissal shall specify the reason(s) for dismissing and the complainant may appeal the dismissal to the Board of Directors within twenty (20) days from transmittal of the dismissal notice using Form #E-22, Appeal of Grievance Committee (or Hearing Panel) Dismissal of Ethics Complaint. The complaint and any attachments to the complaint cannot be revised, modified, or supplemented. The complainant may, however, explain in writing why the complainant disagrees with the Grievance Committee's conclusion that the complaint should be dismissed. If the Grievance Committee deletes an Article or Articles from an ethics complaint, the complainant may also appeal to the Board of Directors using Form #E-22, Appeal of Grievance Committee (or Hearing Panel) Dismissal of Ethics Complaint. The Directors (or a panel of Directors or the Executive Committee) shall consider only the information and documents considered by the Grievance Committee, together with the complainant's rationale for challenging the dismissal, and render its decision, which shall be final. The parties are not present at the meeting at which the appeal is considered. Appeals of dismissals shall be heard at the Directors' next regularly scheduled meeting or a special meeting designated for that purpose, but no later than ten (10) days after the date of receipt of the appeal. The Directors' decision shall be transmitted to the parties within five (5) days from the date of the decision.

Section 42, Grievance Committee's Review and Analysis of a Request for Arbitration, was revised as follows:

A. Initial action upon receipt of a request for arbitration

Upon receipt of a request for arbitration, the Professional Standards Administrator shall refer the arbitration request to the Chairperson of the Grievance Committee. The Chairperson shall review the arbitration request and any evidence and documentation attached. The Chairperson may assign one or more members of the Grievance Committee to review the request and to make any necessary evaluation. The member(s) may, if necessary, gather additional information on the matters complained of from the complainant if additional information appears necessary to make a knowledgeable disposition of the arbitration request. The request shall be provided to the assigned members by the Professional Standards Administrator upon instruction from the Chairperson.

B. Consideration by the Grievance Committee of a request for arbitration

In reviewing a request for arbitration, the Grievance Committee shall consider the following:

(1) Is the request for arbitration acceptable in the form as received by the committee? If not in proper form, the Chairperson may request that the Professional Standards Administrator contact the complainant to advise that the request must be submitted in proper form.

NOTE: If deemed appropriate by the Chairperson, a member of the Grievance Committee may be assigned to contact the complainant and to provide procedural assistance to amend the request or resubmit a new request in proper form and with proper content. The Grievance Committee member providing such assistance shall ensure that only procedural assistance is provided to the complainant, and that the complainant understands that the member is not representing the complainant or advocating on behalf of the complainant.

(2) Are all necessary parties named in the request for arbitration? The duty to arbitrate is an obligation of REALTOR® principals. REALTOR® principals include sole proprietors, partners in a partnership, officers or majority shareholders of a corporation, or office managers (including branch office managers) acting on behalf of principals of a real estate firm.

(3) Was the request for arbitration filed within one hundred eighty (180) days after the closing of the transaction, if any, or within one hundred eighty (180) days after the facts constituting the arbitrable matter could have been known in the exercise of reasonable diligence, whichever is later?

(4) Are the parties members in good standing or otherwise entitled to invoke arbitration through the Board's facilities? Were the parties members at the time the facts giving rise to the dispute occurred?

(5) Is litigation concerning an otherwise arbitrable matter pending in connection with the same transaction?

NOTE: No arbitration shall be provided on a matter pending litigation unless the litigation is withdrawn with notice to the Board and request for arbitration, or unless the court refers the matter to the Board for arbitration.

(6) Is there any reason to conclude that the Board would be unable to provide an impartial Hearing Panel?

(7) If the facts alleged in the request for arbitration were taken as true on their face, is the matter at issue related to a real estate transaction and is it properly arbitrable, i.e., is there some basis on which an award could be based?

(8) If an arbitrable issue exists, are the parties required to arbitrate or is their participation voluntary?

(9) Is the amount in dispute too small or too large for the Board to arbitrate?

(10) Is the matter too legally complex, involving issues that the arbitrators may not be able to address in a knowledgeable way?

(11) Is there a sufficient number of knowledgeable arbitrators available?

If all of the relevant questions have been considered, and a majority of the Grievance Committee conclude that the matter is properly arbitrable by the Board, the Grievance Committee shall send the request for arbitration to the Chairperson of the Professional Standards Committee for arbitration by an arbitration Hearing Panel. Complainants are not required to prove their case when initially filing an arbitration request. An arbitration request may not be dismissed for lack of evidence if the arbitration request is otherwise arbitrable, timely filed, and the arbitration is one of the circumstances described in Section 44, Duty and Privilege to Arbitrate, Code of Ethics and Arbitration Manual.

C. Appeals from the decision of the Grievance Committee related to a request for arbitration

If the Grievance Committee determines that a matter should not be arbitrated by the Board (because of the amount involved or the legal complexity, or for any other valid reason specified in the Grievance Committee decision and written report), the reason(s) for dismissing the request will be stated in the notice of the dismissal. Any party may appeal the decision to the Board of Directors within twenty (20) days from transmittal of notice of the committee decision using Form #A-20, Appeal of Grievance Committee (or Hearing Panel) Dismissal or Appeal of Classification of Arbitration Request. The request for arbitration and any attachments cannot be revised, modified, or supplemented. The party appealing the dismissal may, however, explain in writing why they disagree with the Grievance Committee's conclusion that the request for arbitration should be dismissed. The Hearing Panel can also dismiss the arbitration request if the Hearing Panel concludes the matter is not arbitrable. Appeals of dismissals/classifications shall be heard at the Directors' next regularly scheduled meeting or at a special meeting designated for that purpose, but no later than ten (10) days after the date of receipt of the appeal. The Directors' decision shall be transmitted to the parties within five (5) days from the date of the decision.

The materials which were presented to the Grievance Committee when the Grievance Committee made its decision will be presented to the Board of Directors and considered with the appeal, together with any party's rationale challenging the Grievance Committee's dismissal. The parties to the arbitration (complainant and respondent) do not have the right to appear at the appeal hearing before the Directors. In the event a request for arbitration is dismissed, any deposit submitted by the complainant shall be returned to the complainant.

Section 20, Initiating an Ethics Hearing, was revised as follows:

The Professional Standards Administrator shall promptly refer any complaint to the Chairperson of the Grievance Committee, who may designate one or more members of the Grievance Committee to review the complaint and report their findings to the Grievance Committee for its determination as to whether to (1) dismiss the complaint as unworthy of further consideration, (2) refer it back to the complainant as appropriate for arbitration rather than disciplinary action, or (3) refer it back to the Professional Standards Administrator to schedule for hearing. This review process may include additional information from the complainant other than the written complaint itself only if necessary to determine whether a complaint will be referred for hearing. The Grievance Committee may, if it thinks it appropriate, send a copy of the complaint to the party complained of and require the respondent to furnish it with a response before making its determination only if the committee is in need of additional information pertaining to the questions in Section 19, Grievance Committee's Review of an Ethics Complaint, Code of Ethics and Arbitration Manual, and the complainant cannot provide such information (See Form #E-4, Grievance Committee Request for Information [Ethics Complaint] and Form #E-5, Response to Grievance Committee Request for Information, Part Six of this Manual). In such an instance, Tthe party complained of shall be advised that failure to respond to the Grievance Committee's request may result in the complaint being forwarded for a hearing and may subject the respondent to a charge of having violated Article 14 for failing to submit pertinent facts to an appropriate tribunal. The function of the Grievance Committee is to make only such preliminary review and evaluation of the complaint as are required to determine whether the complaint warrants further consideration by a Hearing Panel of the Professional Standards Committee. If the facts alleged in the complaint could constitute a violation of the Code of Ethics if taken as true on their face, the Grievance Committee is obligated to make a referral for hearing if the complaint is otherwise in acceptable form. The Grievance Committee does not conduct hearings, ~~and~~ does not determine if a violation of the Code of Ethics has occurred, and does not dismiss ethics complaints because of a lack of evidence. A complainant is not required to prove their case upon submission of their ethics complaint.

Section 47 (b), Manner of Invoking Arbitration, was revised as follows:

The Professional Standards Administrator shall promptly refer the request for arbitration to the Chairperson of the Grievance Committee for determination by the Committee within ____ days as to whether the matter is subject to arbitration.

The function of the Grievance Committee is to make only such preliminary review and evaluation of the request for arbitration as is required to determine (1) whether the matter is properly arbitrable; (2) whether arbitration is mandatory or voluntary based upon the requirements of Part Ten, Section 44 of this Manual; and (3) whether the proper parties are named in the request for arbitration. The Grievance Committee does not hold hearings, ~~and~~ does not determine entitlement to awards, and does not dismiss arbitration requests because of a lack of evidence. A complainant is not required to prove their case upon submission of their arbitration request.

The Grievance Committee may request the party(ies) named as respondent(s) in the request for arbitration to provide the Grievance Committee with a written response to the request for arbitration within ______ days only if the committee is in need of additional information pertaining to the questions in Section 42, Grievance Committee's Review and Analysis of a Request for Arbitration, Code of Ethics and Arbitration Manual, and the complainant cannot provide such information. (See Form #A-5, Grievance Committee Request for Information [Arbitration Request] and Form #A-6, Response to Grievance Committee Request for Information, Part Thirteen of this Manual.) If no response is filed within ~~the time allotted~~ fifteen days from transmittal of the request for the response, the Grievance Committee shall make its determination as to whether an arbitration hearing should be scheduled based upon the information set forth in the request for arbitration.

Sections 20 (c), Initiating an Ethics Hearing, was amended as follows:

Any action by the Grievance Committee dismissing the complaint as unworthy of further consideration may be appealed to the Board of Directors within twenty (20) days from transmittal of the dismissal notice using Form #E-22, Appeal of Grievance Committee Dismissal of Ethics Complaint. The materials and information which were available to the Grievance Committee when the committee made its decision will be presented to the Directors and considered with the appeal. The complainant and respondent do not have the right to appear at the hearing before the Directors. The complaint and any attachments to the complaint may not be revised, modified, or supplemented. The complainant may, however, explain in writing why the complainant disagrees with the Grievance Committee's conclusion that the complaint should be dismissed. Appeals of dismissals/classifications shall be heard at the Directors' next regularly scheduled meeting or at a special meeting designated for that purpose, but no later than ten (10) days after the date of receipt of the appeal. The Directors' decision shall be transmitted to the parties within five (5) days from the date of the decision. If the Directors determine that the complaint, or portions of the complaint ~~was~~ were improperly dismissed by the Grievance Committee, they shall refer it the complaint or the appropriate portions of the complaint to the Professional Standards Committee for a hearing. If referred for hearing, the Professional Standards Administrator shall at that time provide a copy of the response to the complainant if one had been submitted for review by the Grievance Committee.

The President may appoint a panel of Directors, acting on behalf of the Board of Directors, to hear the appeal. Any appeal panel so appointed must be composed of at least five (5) Directors or a quorum of the Board of Directors, whichever is less. (Alternatively, the appeal may be heard by the Board's Executive Committee.) The decision of the appeal panel (or the Executive Committee) is final and binding and is not subject to further review by the Board of Directors.

Sections 21 (f) (1) and (2), Ethics Hearing, were amended as follows:

(1) At any time prior to the hearing of the complaint, the complainant may file an amended complaint with the Professional Standards Administrator (excluding amendments pertaining to an Article previously dismissed by the Grievance Committee relating to previously charged respondents). If an amended complaint is filed prior to the hearing, the respondent shall be notified, given a copy, and provided the opportunity to file an amended response. ~~The Hearing Panel may disallow the amended complaint.~~ At any time prior to the hearing of the complaint, the Hearing Panel may name the REALTOR® principal as a respondent. Complaints cannot be amended to add, or substitute, other individuals as complainants except as mutually agreed to by the parties.

(2) At any time during the hearing, the complaint may be amended either by the complainant or upon motion of the Hearing Panel to add previously uncited Articles or additional respondents. Neither the complainant or the Hearing Panel may bar the other from making such amendments. Amendments to include Articles previously dismissed by the Grievance Committee may be made only on the motion of the Hearing Panel. In such event, the hearing, with the concurrence of the respondent, may proceed uninterrupted or be reconvened on a date certain, not less than fifteen (15) or more than thirty (30) days from the hearing date unless a "late" witness is allowed and then not less than five (5) days from the hearing date. If the respondent knowingly waives his right to the adjournment, the record should reflect the fact that the respondent was aware of the right to an adjournment but chose to proceed with the hearing without interruption on the basis of the amended complaint. If the hearing is adjourned to be reconvened at a later time, the amended complaint shall be filed in writing, signed by the complainant or by the Chairperson of the Hearing Panel, and shall be promptly served on the respondent as in all other cases provided herein. To prevent the appearance of bias, at no time during or after an ethics hearing may the Hearing Panel or any appellate body refer concerns regarding potentially unethical conduct to the Grievance Committee. This is based on the premise that the fundamental right and primary responsibility to bring potentially unethical conduct to the attention of the Grievance Committee rests with the parties and others with firsthand knowledge. This prohibition in no way limits or restricts the Hearing Panel from amending pending complaints as otherwise provided for in this section. However, in any instance where a Hearing Panel amends an ethics complaint pending before it, the respondent(s) shall be given the choice of proceeding before the same Hearing Panel (either without interruption or when reconvened pursuant to the procedures established elsewhere in this Section) or having the complaint considered in a new hearing before a different Hearing Panel.

Sections 23 (f), Action of the Board of Directors, was amended as follows:

The Directors shall transmit their written decision within five (5) days of the appeal hearing. Their decision may be to adopt or modify the recommendation of the Hearing Panel, including the discipline proposed, or the Directors will dismiss the matter if they conclude the findings of fact do not support the Hearing Panel's conclusion as to unethical conduct. The Directors, if concerned with a substantial procedural deficiency, ~~may~~ shall refer the decision back to the Professional Standards Committee for a new hearing and recommendation by a different Hearing Panel. If, however, the Directors are concerned with the appropriateness of the recommendation of sanction, they may impose alternative discipline that does not exceed that recommended by the Hearing Panel, or may refer the decision back to the original Hearing Panel for further consideration and recommendation accompanied by the Directors' concerns regarding the proposed discipline. In such matters, the advice of Board legal counsel should be requested and considered.

Appendix X to Part Four, Before You File an Ethics Complaint, was amended in the following four paragraphs:

If, after discussing matters with your real estate professional or a principal broker in that firm, you are still not satisfied, you may want to contact the local Board or Association of REALTORS®. ~~Many~~ In addition to processing formal ethics complaints against it's REALTOR® members, many boards and associations ~~have~~ offer informal dispute resolving processes ~~available to consumers~~ (e.g., ombudsmen, mediation, etc.). Often, ~~Research shows that~~ parties are more satisfied with informal dispute resolution processes, as they are quicker, less costly, and often help repair damaged relationships.

Boards of REALTORS® can discipline REALTORS® for violating the Code of Ethics. Typical forms of discipline include attendance at courses and seminars designed to increase REALTORS®' understanding of the ethical duties or other responsibilities of real estate professionals. ~~Boards and associations of REALTORS® are limited by adopted policies in the disciplinary action they may impose for violation of the Code of Ethics.~~ Additional examples ~~REALTORS®~~ ~~may also be reprimanded, fined~~ of authorized discipline are a letter of reprimand, and appropriate fines. ~~, and, an order to cease or refrain from continued conduct deemed to be in violation of the Code.~~ For serious or repeated violations, a REALTOR®'s ~~or their~~ membership can be suspended or terminated ~~for serious or repeated violations.~~ Boards and Associations of REALTORS® cannot require REALTORS® to pay money to parties filing ethics complaints, cannot award "punitive damages" for violations of the Code of Ethics, and cannot suspend or revoke a real estate professional's license.

Refer to the procedures used by the local board or association of REALTORS® for detailed information on the bases and time limits for appealing decisions. Requesting a rehearing. Rehearings are generally granted only when newly discovered evidence comes to light (a) which could not reasonably have been discovered and produced at the original hearing and (b) which might have had a hearing on the bearing on the hearing panel's decision.

Many ethics complaints result from misunderstanding or a failure in communication. Before filing an ethics complaint, make reasonable efforts to communicate with your real estate professional or a principal broker in the firm. If these efforts are not fruitful, the local Board or Association of REALTORS® can ~~give you~~ share options for dispute resolution, including the procedures and forms necessary to file an ethics complaint.

The following two paragraphs were added to each of the following forms:

Parties are strongly encouraged to provide any and all documents and evidence they intend to introduce during the hearing to the other party(ies) and to the association prior to the day of the hearing. Providing documents and evidence in advance can expedite the hearing process and prevent costly, unnecessary continuances.

Although testimony provided in person before a Hearing Panel is preferred, parties and witnesses to ethics and arbitration hearings may be permitted to participate in hearings by teleconference or video conference at the discretion of the Hearing Panel Chair.

Part Five, Conduct of an Ethics Hearing, and Part Twelve, Conduct of an Arbitration Hearing
Outline of Procedure for Ethics Hearing Involving a Complaint and a Counter-Complaint and Outline of Procedure for an Arbitration Hearing Involving a Request and a Counter-Request
Part Six – Specimen Forms (ethics) and Part Thirteen – Specimen Forms (arbitration). NOTE: The second paragraph below was not added to Part Six or Part Thirteen.
Form #E-8, Official Notice of Hearing (Ethics)
Form #E-9, Outline of Procedure for Ethics Hearing (to be mailed in advance to both parties)
Form #E-9a, Outline of Procedure for Ethics Hearing Involving a Complaint and Counter-Complaint (to be mailed in advance to both parties)
Form #A-1, Request and Agreement to Arbitrate. NOTE: The second paragraph below was not added to #A-1.
Form #A-2, Request and Agreement to Arbitrate (Nonmember) NOTE: The second paragraph below was not added to #A-2.
Form #A-4, Response and Agreement to Arbitrate. NOTE: The second paragraph below was not added to #A-4.
Form #A-9, Official Notice of Hearing (Arbitration)
Form #A-10, Outline of Procedure for Arbitration (to be mailed in advance to both parties with arbitration guidelines and worksheet)
Form #A-10a, Outline of Procedure for Arbitration Hearing Involving a Request and a Counter-Request (to be mailed in advance to both parties with arbitration guidelines and worksheet)

Sections 45 (a) and (d), Board's Right to Decline Arbitration, were amended as follows:

(a) If either the Grievance Committee or the arbitration panel selected in the manner hereinafter provided determine that because of the amount involved or the legal complexity of the dispute the dispute should not be arbitrated, the arbitration shall automatically terminate unless either of the parties to the dispute appeals the decision to terminate the proceedings to the Board of Directors in writing within twenty (20) days of the date of notice that the Grievance Committee or the arbitration panel declined to continue the proceeding using Form #A-20, Appeal of Grievance Committee (or Hearing Panel) Dismissal or Appeal of Classification of Arbitration Request. The request for arbitration and any attachments cannot be revised, modified, or supplemented. The party appealing the dismissal may, however, explain in writing why they disagree with the Grievance Committee's conclusion that the request for arbitration should be dismissed. The Hearing Panel can also dismiss the arbitration request if the Hearing Panel concludes the matter is not arbitrable. The written appeal and those materials and information which were available to the Grievance Committee or the arbitration Hearing Panel when the decision to discontinue arbitration was made will be presented to the Directors and considered with the appeal at the Directors' next regularly scheduled meeting or a special meeting designated for that purpose, but no later than ten (10) days after the date of receipt of the appeal. The Directors' decision shall be transmitted to the parties within five (5) days from the date of the decision. The complainant and respondent do not have the right to appear at the hearing before the Directors. In the event of such an appeal, the Grievance Committee or the arbitration panel shall report its conclusions in writing to the Directors and, if the Directors concur, the arbitration shall terminate and the parties shall be relieved of their obligation to arbitrate. In this event, or in the case of no appeal, any deposits made by the parties shall be returned to them. However, if the Board of Directors decides that the arbitration should proceed, the matter shall be remanded to the Grievance Committee or the arbitration panel for further proceedings.

(b) The President may appoint a panel of Directors, acting on behalf of the Board of Directors, to hear the appeal. Any appeal panel so appointed must be composed of at least five (5) Directors or a quorum of the Board of Directors, whichever is less. (Alternatively, the appeal may be heard by the Board's Executive Committee.) The decision of the appeal panel (or Executive Committee) is final and not subject to further review by the Board of Directors.

(c) If an otherwise arbitrable matter is the subject of civil litigation, arbitration shall not take place unless the litigation is withdrawn or referred to the Board of Directors by the court for arbitration in accordance with Article 17. In instances where the arbitration is mandatory (as defined in Part Ten, Section 44 of this Manual), the failure to arbitrate may result in a charge alleging violation of Article 17

(d) If either party to an arbitration request believes that the Grievance Committee has incorrectly classified the issue presented by the request ("mandatory" or "voluntary" arbitration situation), the party has twenty (20) days from the ~~date of receipt of~~ transmittal of the Grievance Committee's decision to file a written appeal of the Grievance Committee's determination using Form #A-20, Appeal of Grievance Committee (or Hearing Panel) Dismissal or Appeal of Classification of Arbitration Request. The materials and information which were available to the Grievance Committee when the Committee made its determination will be presented to the Directors and considered with the appeal, together with any party's rationale challenging the Grievance Committee's classification of the request. Appeals of classifications shall be heard at the next regularly scheduled Directors' meeting or a special meeting designated for that purpose, but no later than ten (10) days after receipt of the appeal. The Directors' decision shall be transmitted to the parties within five (5) days from the date of the decision. The complainant and respondent do not have the right to appear at the hearing before the Directors. In the event of such an appeal, the Grievance Committee must report its written conclusions to the Board of Directors. If the Directors determine that the arbitration request was incorrectly classified, they shall reclassify the request as either "mandatory" or "voluntary" arbitration and refer it to the Professional Standards Administrator for appropriate processing.

Sections 47 (c), Manner of Invoking Arbitration, was amended as follows:

If the Grievance Committee finds the matter properly subject to arbitration, the Chairperson shall refer it back to the Professional Standards Administrator with instructions to arrange a hearing, notifying the parties of the Grievance Committee's decision, informing the parties as to whether the arbitration is mandatory or voluntary (and, if voluntary, of the date certain by which the respondent is requested to inform the Board of his decision) and informing the parties of their ability to challenge the classification (see Section 45[d], Board's Right to Decline Arbitration). The ~~Secretary~~ Professional Standards Administrator or Chairperson shall select a hearing date which will be transmitted to the parties within five (5) days of transmittal of the Grievance Committee's decision. The Professional Standards Administrator shall also notify the respondent within five (5) days of receipt of the Grievance Committee's instructions by transmitting a copy of the request for arbitration, the Notice to Respondent (Arbitration) (Form #A-3), and two (2) forms for response (Form #A-4, Response and Agreement to Arbitrate, Part Thirteen), with directions to complete and return the written response and deposit amount of $_________* within fifteen (15) days from the date of transmittal of the request for response to the respondent. The Professional Standards Administrator shall ~~concurrently~~ within five (5) days of transmittal of the Grievance Committee's decision transmit to each of the parties a list of names of members of the Professional Standards Committee (see Part Seven, Section 27, (a) through (f), Qualification for Tribunal; Part Thirteen, Form #A-7, Notice of Right to Challenge Tribunal Members; and Form #A-8, Challenge to Qualifications by Parties to Panel Members). The respondent's response and affirmative claim shall be transmitted to the complainant not later than five (5) days after receipt. Within five (5) days from the date the challenge forms are due (forms due within ten [10] days from the date the list of names was transmitted) ~~fifteen (15) days from the date the names are transmitted to the parties~~, the Professional Standards Committee Chairperson shall appoint from the names not successfully challenged by either party three (3) or more arbitrators who will hear the dispute. The Chairperson shall also select one of the panel members to serve as Chairperson of the Hearing Panel. Any Hearing Panel must have an odd number of members. At least two (2) shall be REALTORS®, and in the event a REALTOR-ASSOCIATE® or REALTOR® other than a principal has invoked the arbitration through the REALTOR® principal, or is affiliated with the respondent, and has a vested interest in the outcome of the proceeding, one (1) of the arbitrators must be a REALTOR-ASSOCIATE® or REALTOR® other than a principal. It shall be a membership duty of anyone so appointed to serve as an arbitrator unless disqualified. The Professional Standards Committee Chairperson shall select the Chairperson of the Hearing Panel, who shall possess the powers of the neutral arbitrator within the meaning of the _________ arbitration statutes.** A party will be deemed to have waived all objections to any person whose name he does not challenge. If challenge to members of the Professional Standards Committee results in an insufficient number of members to constitute a panel, the President may appoint other qualified Board Members to serve as panel members. No arbitration may proceed without three (3) or more arbitrators not disqualified pursuant to Part Seven, Section 27, Qualification for Tribunal.

When Grievance Committees refer ethics complaints and arbitration requests for hearing, hearing panel chairs can determine if questions about

(1) whether ethics complaints and arbitration requests are timely filed,

(2) whether arbitrable issues exist,

(3) whether arbitration requests are too legally complex to be fairly arbitrated, and

(4) other administrative issues

will be addressed through a pre-hearing meeting of the hearing panel or at the outset of the hearing prior to testimony relating to the ethics complaint or arbitration request commencing. If these matters rise during a hearing, the hearing panel will address them at that time.

Dismissals of ethics complaints and arbitration requests by hearing panels can be appealed to the Board of Directors on the same bases as dismissals by the Grievance Committee.

Where such issues are considered at a pre-hearing meeting of the hearing panel, the chair will determine whether the parties may be present, and the extent to which their participation will be permitted.

If the Grievance Committee dismisses the request as being unworthy of further consideration, the decision may be appealed to the Board of Directors within twenty (20) days from transmittal of ~~the date of the Board's notification of~~ the Grievance Committee's decision using Form #A-20, Appeal of Grievance Committee Dismissal or Classification of Arbitration Request; however, no additional information may be added or attached to the form.* Only those materials which were presented to the Grievance Committee when the committee made its decision will be presented to the Board of Directors and considered with the appeal, and the complainant and respondent do not have the right to appear at the hearing before the Directors. The appeal shall be heard at the next regularly scheduled meeting or a special meeting designated for that purpose, but no later than ten (10) days after the date of receipt of the appeal. The Directors' decision shall be transmitted to the parties within five (5) days of the date of the decision. In the case of a dismissed arbitration request, the deposit shall be returned to the complainant. If the Directors determine that the arbitration request was improperly dismissed they shall refer it to the Professional Standards Committee for hearing. If the Directors determine that the request was improperly classified, they shall reclassify it appropriately. Upon determination of the Directors that the arbitration request should be referred for hearing, the ~~Secretary~~ Professional Standards Administrator shall at that time provide a copy of the response to the complainant if one had been submitted for review by the Grievance Committee. In any event, the Directors' decision shall be transmitted to the parties within five (5) days of the date of the decision.

Section 51 (a), Arbitration Hearing, was amended as follows.

Not later than five (5) days after receipt of the response and affirmative claim, ~~sooner than fifteen (15) days not later than twenty-one (21) days after transmitting notice to the respondent of the request for arbitration, the Secretary~~ the Professional Standards Administrator shall transmit to the complainant a copy of the response and respondent's affirmative claim, if any.

Section 53, The Award, was amended as follows:

(a) The award of the arbitrators (Form #A-12, Award of Arbitrators, Part Thirteen) shall be made ~~as soon as possible after the evidence is presented~~ the day of the hearing, or no later than forty eight (48) hours following the conclusion of the hearing. The award shall be in writing and signed by the arbitrators or a majority of them, shall state only the amount of the award, and, when so signed and transmitted to each of the parties, shall be valid and binding and shall not be subject to review or appeal. The award shall be transmitted to the parties within five (5) days after the award is reduced to writing. Any award rendered may not be greater than the amount in dispute, may not include punitive damages, may not include attorney's fees unless expressly provided for in the agreement giving rise to the dispute, and may not include interest unless called for in the arbitration agreement and permitted by state law. Notwithstanding the foregoing, a party to an arbitration proceeding may appeal to the Board of Directors only with respect to such alleged irregularities occurring in the conduct of the proceeding as may have deprived the party of fundamental "due process."

(b) If an award has been rendered, the nonprevailing party must, within ten (10) days following transmittal of the award, either (1) pay the award to the party(ies) named in the award or (2) deposit the funds with the Professional Standards Administrator to be held in an escrow or trust account maintained for this purpose. Failure to satisfy the award or to deposit the funds in the escrow or trust account within this time period may be considered a violation of a membership duty and may subject the member to disciplinary action at the discretion of the Board of Directors.

~~(b)~~(c) After the award has been transmitted to each of the parties, they have twenty (20) days to request procedural review of the arbitration hearing procedure by the Board of Directors. The non-prevailing party shall also have the same twenty (20) days following transmittal of the award to notify the Professional Standards Administrator that a legal challenge to the validity of the award has been initiated.

If no such procedural review is requested, the award becomes final and binding following the twenty (20) day period. However, if procedural review is requested, the award is not considered final and binding until after the Board of Directors has concluded that the hearing was conducted in a manner consistent with the Board's procedures and the parties had been afforded due process.

NOTE: Adoption of Section 53(c)-(f) is at the option of each Member Board.

(c) If an award has been rendered, the nonprevailing party must, within ten (10) days following transmittal of the award, either (1) pay the award to the party(ies) named in the award or (2) deposit the funds with the Board Secretary or Board Executive Officer to be held in a special Board escrow account maintained for this purpose. Failure to satisfy the award or to deposit the funds with the Board within this time period may be considered a violation of a membership duty and may subject the member to disciplinary action at the discretion of the Board of Directors.

The nonprevailing party shall have twenty (20) days following transmittal of the award to request procedural review of the arbitration hearing procedure or to have legal counsel notify the Board Secretary or Executive Officer that a legal challenge to the validity of the award has been initiated.

(d) If a request for procedural review of the arbitration procedure is received within twenty (20) days, the funds deposited ~~with the Board~~ shall be retained in the ~~Board's~~ escrow or trust account until the review is completed. If the arbitration award is confirmed by the Board of Directors following the conduct of the limited procedural review, the nonprevailing party shall have an additional fifteen (15) days from transmittal of the Directors' decision to institute an appropriate legal challenge to the validity of the arbitration award. In such case, the nonprevailing party shall also cause legal counsel to advise the Board in writing that a suit challenging the validity of the arbitration award has been filed during this additional fifteen (15) day period. After fifteen (15) days from transmittal of the Directors' decision, if written notice of a suit challenging the validity of the arbitration award has not been received by the Board, the funds shall be released from the escrow or trust account and paid to the prevailing party. If written notification is received during the fifteen (15) day period, the funds will be held in the escrow or trust account pending the determination of the matter by a court of competent jurisdiction.

If the nonprevailing party does not request the Board to conduct a procedural review of the arbitration hearing process during the twenty (20) day period following transmittal of the award, then written notification that a legal challenge has been instituted must be received within the twenty (20) days following transmittal of the award. Failure to provide written notification that a suit challenging the validity of the award has been filed within twenty (20) days following transmittal of the award will result in the award being paid from the ~~Board's~~ escrow or trust account to the prevailing party.

(e) Any failure to make the necessary deposits ~~with the Board~~ shall be referred to the Board of Directors for action at their next meeting or at a special meeting called for that purpose. The party failing to make the deposit on a timely basis shall be advised of the date, time, and place of the meeting and shall have an opportunity to explain why the required deposits were not made on a timely basis. The Board of Directors may, at its discretion, impose discipline or may give the party an additional period to make the required deposits. The Directors may also stipulate appropriate discipline to be automatically imposed if the party fails to make the deposit within the time established by the Directors.

(f) Any interest accrued on the escrowed funds shall become the property of the party to whom the funds are ultimately released ~~by the Board~~.

NOTE: Escrowing of arbitration awards to secure timely payment as addressed in Section 53(b-c) is not required in states where escrowing awards by associations is prohibitively expensive, and where the state association recommends alternative aggressive and cost-effective enforcement procedures that maximize enforcement/payment under state law, and local associations adopt those procedures, provided that nothing in those procedures is prohibited by National Association policy.

NOTE: Similar changes were also made to Appendix V to Part Ten, Arbitration Hearing Checklist; Part Eleven, Interboard Arbitration Procedures; Form #A-1, Request and Agreement to Arbitrate; Form #A-2, Request and Agreement to Arbitrate (Nonmember); Form #A-12, Award of Arbitrators; and Form #E-19 and Form #A-19, Sample Format of Agreement Between Boards of REALTORS® to Establish Multi-Board or Regional Professional Standards Enforcement Procedures; and Part Fourteen, State Association Professional Standards Committee

Section 55, Request for Procedural Review by Directors, was amended as follows:

(a) A written request for procedural review of the arbitration hearing procedures must be filed with the President within twenty (20) days after the award has been transmitted to the parties and be accompanied by a deposit in the sum of $_______ (not to exceed $500). The request for procedural review should cite the alleged procedural deficiencies or other irregularities the party believes constitute a deprivation of due process (e.g., fraud, coercion, bias, prejudice, evident partiality, etc.) on the part of Hearing Panel members or others acting on behalf of the Board. The request for procedural review shall be reviewed within ten (10) days of receipt of the request by the Board President or the President's designee only for the purpose of determining whether the request states any legitimate basis for consideration by the Board of Directors. If determined to be insufficient, it shall be returned to the requester accompanied by an explanation and a request for additional detail to be received by the Board within ten (10) days of notice. This initial administrative review is not a decision on the merits of the request for procedural review but is intended only to ensure compliance with the requirement that the request cite the alleged procedural deficiency or irregularity on which the request is based and which will be presented to the Board of Directors for its consideration. All requests for procedural review received by the Board must be considered by the Board of Directors, and only the bases raised in the written request for procedural review may be raised during the review before the Directors.

(b) When a request for procedural review (as originally filed if in proper form, or as originally filed if no amendment is submitted, or as amended even if still deemed to be lacking) is received, the ~~Secretary~~ Professional Standards Administrator shall ~~immediately~~ within one (1) day of receipt of the request or within one (1) day of receipt of additional detail, if provided, or the date that the period to provide additional detail has elapsed, send a copy to the other party, notify all parties of the time and place of the review hearing by the Directors at least ten (10) days in advance (including challenge Forms #A-7 and #A-8, Part Thirteen of this Manual), and bring the matter before the Directors for review at their next regular meeting or at a special meeting called by the ~~Secretary~~ Professional Standards Administrator for that purpose, but not later than thirty (30) days after the date of receipt of the procedural review. The ~~Secretary~~ Professional Standards Administrator shall provide to the Directors, in advance, a copy of the request for procedural review or the amended request for procedural review, if any, and the President's correspondence, if any. The Directors shall be advised that the information provided is confidential and not to be discussed with others at any time.

(c) The request for procedural review may be heard by a panel of Directors appointed by the President for that purpose (or, alternatively, by the Board's Executive Committee). Five (5) Directors or a quorum of the Board of Directors, whichever is less, shall constitute such panel, which shall act on behalf of the Board of Directors. The decision of the panel (or Executive Committee) shall be final and binding and shall not be subject to further review by the Board of Directors.

(d) At the procedural review hearing, the party filing the request will have an opportunity to explain the bases on which the party is requesting that the award of the arbitrators be overturned. The Chairperson of the arbitration panel (or the Chairperson's designee) will have an opportunity to respond to the allegations. The other party shall have the opportunity to present to the Directors reasons why the arbitration Hearing Panel's award should not be overturned.

(e) The Board of Directors shall not hear an appeal with respect to the merits of an arbitration award, and shall not, on appeal, review such evidence offered with respect to the merits of that award, except as such evidence may bear upon a claim of deprivation of due process. The Directors shall ~~render~~ transmit their decision ~~promptly~~ within five (5) days from the date of the procedural review hearing. This decision may be to adopt the award of the arbitrators or to overturn the award based on a substantial procedural error in the arbitration hearing process that resulted in a denial of due process or on a determination that the member was otherwise deprived of due process.

Appendix III to Part Ten, Rationale of Declaratory Relief and of Judicial Enforcement in Matters of Arbitration, was amended as follows:

With respect to arbitration awards rendered by Member Boards, it is important that the Board utilize the powers of local courts to support and enforce its arbitration awards and any Board actions contemplated in connection with arbitration by the Board. Both the Petition for Declaratory Relief and Petition for Judicial Enforcement should be employed by the Board where it will confirm the propriety of the Board's actions and will minimize legal vulnerability and liability to the Board and its members. These legal procedures, or similar legal devices available in a given state, should be employed in the following circumstances:

(1) Refusal to Arbitrate: If a membership obligation to arbitrate disputes is permitted by applicable law, it is required of members in accordance with the Board's professional standards procedures. Refusal of a member to arbitrate, or mediate if required by the Board, shall be determined by a hearing by the Board of Directors as specified in Part Ten, Section 49, Initial Action of Directors.

Upon determination of the sole question of fact that a Board Member has refused to arbitrate or mediate a properly arbitrable matter, the Board of Directors may direct the implementation of appropriate sanction, and should, if it has reason to believe that the imposition of sanction will become the basis of litigation and a claim for damages consequent to such sanction, delay the effective date of implementing the sanction to a date following receipt by the Board of a judicial decision in a petition for declaratory relief filed by the Board to confirm the propriety of its action.

(2) Refusal to Abide by an Award in Arbitration: However, in respect to a member agreeing and submitting to arbitration but then refusing to abide by the award, the Board should not, in the first instance of such refusal by a member, initiate a disciplinary proceeding except where an Association has adopted procedures requiring non-prevailing parties to pay awards or deposit an equivalent amount with the Association within a specified time (see Section 53[c]-[f]). Rather, the Board should encourage the award recipient to seek enforcement of the award in the courts, and suggest that a request be made for payment of legal costs incurred in seeking judicial enforcement. (Amended 11/11)

In such a first instance, the Board shall not initiate any disciplinary proceeding. If an individual repeatedly refuses to abide by awards in arbitration for reasons which, in the reasonable judgment of the Board, reflect a willful purpose to frustrate the intent of Article 17 rather than a purpose to ensure due process, the Board may initiate disciplinary proceedings for violation of Article 17. Such proceedings will be in addition to and not in lieu of Board support of judicial enforcement of the award by the award recipient. Again, as with declaratory judgment proceedings, some reluctance may be expressed by Member Boards and their members with respect to judicial enforcement of the award.

However, the reasons for a policy under which the primary responsibility for the enforcement of the award rests with the beneficiary of that award (with the support, financial or otherwise, of the Board) are as follows:

First, although arising out of voluntary membership, the mandatory membership obligation imposed by the Code inherently involves some limit on a Realtor®'s right to redress in the courts. Therefore, the policy is justified only in instances where state law recognizes the right to enter into binding arbitration agreements and only on terms consistent with state law.

Second, in instances where binding arbitration is authorized by law, the law provides that the person against whom the arbitration award is made is entitled to certain limited defenses against efforts to enforce the award. These defenses include lack of procedural due process, refusal to allow counsel to be present at the hearing, etc. Although courts are generally reluctant to set aside awards in arbitration, they will do so in instances where the arbitration procedure is found to be defective.

Third, efforts by the Board to use suspension or termination of membership to induce a participant in an arbitration procedure to abide by that award can be and frequently are viewed as effective foreclosure of the defenses available under the arbitration laws; that is, the member against whom the arbitration award is entered is faced with the choice of either acquiescing to an arbitration procedure which he/she deems procedurally or legally defective or suffering serious injury through the deprivation of valuable membership services.

~~Board action to suspend or terminate a member for failure to abide by an arbitration award creates an unnecessary risk of serious legal liability.~~

Thus, if a member is suspended and ultimately the member's claim of defective arbitration is upheld by the court, then the suspension was unwarranted, the denial of Board services unjustified, and the damage suffered thereby is the responsibility of the Board. On the other hand, if arbitration was valid, then a simple proceeding in court by the recipient of the arbitration award will produce a judicially enforceable award with no risk to the Board. If a Board is concerned about vindicating its arbitration procedures at a minimal cost, it

(2) Refusal to, Within Ten (10) Days of Transmittal of Award, Abide by Award or Deposit a Like Amount with Board Staff: Consistent with Section 53, The Award, the non-prevailing party must, within ten (10) days following transmittal of the award, either pay the award to the party(ies) named in the award or deposit the funds with the Professional Standards Administrator to be held in an escrow or trust account maintained for that purpose. Failure to satisfy the award or deposit the funds in the escrow or trust account within the time specified bay be considered a violation of a membership duty and may subject the member to disciplinary action at the discretion of the Board of Directors, consistent with Section 53, The Award.

Requiring the non-prevailing party to, within ten (10) days, either pay the award or deposit the funds with the Board reduces instances of non-prevailing parties refusing to pay arbitration awards by shifting the burden of initiating litigation from the prevailing party to the non-prevailing party.

With respect to a party agreeing and submitting to arbitration but then refusing to abide by the award, the Board should encourage the award recipient to seek enforcement of the award in the courts, and suggest that the request be made for payment of legal costs incurred in seeking judicial enforcement.

Although the primary responsibility for the enforcement of the award rests with the beneficiary of that award (with the support, financial or otherwise, of the Board), the Board may consider reimbursing the recipient of the award for any cost incurred in seeking the judicial enforcement, when such costs are not reimbursed by the court.

Appendix XI to Part Four, Ethics Mediation, was amended as follows:

Adoption of ethics mediation procedures

Ethics mediation is a process that may be adopted at the discretion of boards and associations. Ethics mediation will require adoption of these procedures (either verbatim or as amended locally) by action of the local board of directors (or as otherwise provided in the local bylaws).

Appointment of mediators

The chair of the Professional Standards Committee and/or the Board President will select one or more ethics mediators to act on behalf of the committee. Mediators should be thoroughly familiar with the Code of Ethics, state real estate regulations, and current real estate practice.

Complaints that may be mediated

Complaints brought by the public or by other REALTORS® may be mediated under these procedures. Complaints brought by the Grievance Committee and complaints alleging a violation of the public trust (as defined in Article IV, Section 2 of the NAR Bylaws) may not be mediated.

Initiation of ethics mediation procedures

The ethics mediation process can be initiated in two ways. First, through filing a written ethics complaint. Second, through a personal, telephone, or written inquiry or complaint generally alleging potentially unethical conduct but which (a) is not filed on the appropriate form or (b) is not specific as to which Article(s) may have been violated.

Where a written ethics complaint in the appropriate form is received, it will be reviewed by the Grievance Committee so a determination can be made whether a possible violation may have occurred or, alternatively, whether the complaint should be dismissed as not requiring a hearing. Where an informal inquiry or general letter of complaint that does not allege a potential violation of the public trust is received, it will not be reviewed by the Grievance Committee, but will be referred to an ethics mediator.

Participation in ethics mediation is voluntary

Persons inquiring about the process for filing ethics complaints will be advised that ethics mediation is available as an alternative to a formal ethics hearing provided that all parties agree to participate, and also be advised they may decline or withdraw from mediation and have their complaint considered at a formal ethics hearing. Similarly, REALTORS® complained about have the right to decline or withdraw from mediation and to have complaints against them considered at a formal ethics hearing.

Referral of complaints to the mediator

When either a written ethics complaint in the appropriate form is reviewed by the Grievance Committee and the Grievance Committee concludes that a hearing is warranted, or when a general letter of inquiry or complaint is received, and the matter(s) complained of do not involve a possible violation of the "public trust", the materials received will be referred to the ethics mediator who will contact the parties to schedule a meeting at a mutually agreeable time. "Public trust" refers to misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm.

During the mediation session the mediator will encourage all parties to openly and candidly discuss all issues and concerns giving rise to the inquiry or complaint, and to develop a resolution acceptable to all of the parties. In the event the mediator concludes that a potential violation of the public trust may have occurred, the mediation process shall be immediately terminated, and the parties shall be advised of their right to pursue a formal ethics complaint; to pursue a complaint with any appropriate governmental or regulatory body; to pursue litigation; or to pursue any other available remedy.

Nature of the mediated resolution

The mediator and the parties have considerable latitude in fashioning a mutually acceptable resolution. Resolutions can include, but are not limited to, payment of disputed funds, repairs or restoration of property, written or oral apology, or acknowledgement of a violation of the Code of Ethics. In cases where a REALTOR® acknowledges that the Code has been violated, that admission may be sufficient to resolve the matter or, alternatively, the parties may agree that discipline should be imposed. The discipline may, at the agreement of all parties, include any of the forms of discipline established in the Code of Ethics and Arbitration Manual and may also include payment of monies to the complainant or to a third party. Also, the parties may agree that the complainant will withdraw a complaint or agree not to file a formal, written ethics complaint in return for the respondent's action or acknowledgement. Again, any discipline imposed must be agreed to by all of the parties.

Referrals to the Grievance Committee or to state regulatory bodies

Ethics mediators cannot refer concerns they have regarding the conduct of any party to mediation to the Grievance Committee, to the state real estate licensing authority or to any other regulatory body. This prohibition is intended to ensure impartiality and avoid the possible appearance of bias. Mediators are, however, authorized to refer concerns that the public trust may have been violated to the Grievance Committee.

Refusal to comply with agreed upon discipline

Failure or refusal of a respondent to comply with the terms of any mutually agreed on resolution shall entitle the complaining party to resubmit the original complaint or, where a formal complaint in the appropriate form had not been filed, to file an ethics complaint. The time the matter was originally brought to the board or association's attention shall be considered the filing date for purposes of determining whether an ethics complaint is timely filed.

Associations will continue to process filed ethics complaints until withdrawn by the complainant.

Confidentiality of mediation process

The allegations, discussions, and decisions rendered in ethics mediation proceedings are confidential and shall not be reported or published by the board, any member of a tribunal, or any party under any circumstances except those established in the Code of Ethics and Arbitration Manual of the National Association as from time to time amended.

The Chairperson's Procedural Guide: Conduct of an Arbitration Hearing and Chairperson's Procedural Guide: Conduct of an Interboard Arbitration Hearing, Part 12, Conduct of an Arbitration Hearing, were revised, in pertinent part, to add the following:

The parties are encouraged to settle their dispute at any time during or after the hearing. If the parties wish to discuss settlement during the hearing, they may ask for a recess. The parties, with the assistance of their respective counsel, if any, will determine the terms of their settlement agreement. The parties should be advised that the arbitration will continue to be processed until formally withdrawn by the complainant.

NOTE: Similar changes were made to the Outline of Procedure for Arbitration Hearing and the Outline of Procedure for an Arbitration Hearing involving a Request and Counter-Request and additionally to forms #A-10 and #A-10a.

There were numerous ethics and arbitration forms amended to incorporate the changes to policy contained in this summary. Please see the shaded language in the Manual for details for the following forms:

Form #E-1, Ethics Complaint

Form #E-8, Official Notice of Hearing (Ethics)

Form #E-9, Outline of Procedure for Ethics Hearing

Form #E-9a, Outline of Procedure for Ethics Hearing Involving a Complainant and Counter-Complaint

Form #E-10 and #A-11, Certificate of Qualification and Affirmation of Confidentiality

Form #E-11, Decision of Ethics Hearing Panel of the Professional Standards Committee

Form #E-14, Official Notice of Appeal Hearing (Ethics)

Form #E-19 and #A-19, Sample Format of Agreement Between Boards of REALTORS® to Establish Multi-Board (or Regional) Professional Standards Enforcement Procedures

Form #E-23, Action of the Appeal Hearing Tribunal (Ethics Complaint)

Form #A-1, Request and Agreement to Arbitrate

Form #A-2, Request and Agreement to Arbitrate (Nonmember)

Form #A-4, Response and Agreement to Arbitrate

Form #A-9, Official Notice of Hearing (Arbitration)

Form #A-10 Outline of Procedure for Arbitration Hearing

Form #A-10a, Outline of Procedure for Arbitration Hearing Involving a Request and a Counter-Request

Form #A-12, Award of Arbitrators

Additional Points of Interest

1. There were no changes to the Case Interpretations.

2. Associations that hold arbitration hearings after January 1, 2016 will require the non-prevailing party to, within ten (10) days from transmittal of the award, either pay the award to the prevailing party(ies) or deposit a like amount with the association consistent with Section 53, The Award. This is true even if the case arose out of a 2015 dispute.

3. The National Association's Professional Standards Education Seminar will be held in Chicago August 18 and 19, 2016. For more information in mid-January, please go to:

https://www.nar.realtor/events/mediation-training.

4. The National Association's Mediation Training Seminar will be held in Chicago September 7, 8 and 9. For more information in mid-January, please go to:

https://www.nar.realtor//events/professional-standards-education-seminar.

5. At the November 2014 Convention in New Orleans, the Board of Directors of the National Association of REALTORS® amended the four year time frame for Code of Ethics training to a two year time frame. The change goes into effect following conclusion of the current four year cycle on December 31, 2016. Consequently, beginning January 1, 2017, all REALTORS® will be required to complete Code of Ethics training every two years. The National Association's Model Board Bylaws and Professional Standard Policy Statement #48, REALTORS® Code of Ethics Training, will be amended in 2017 to incorporate a two year time frame.

6. Staff primarily responsible for administration of professional standards processes must successfully complete training consistent with Professional Standards Policy Statement #49. If staff has not successfully completed such training, they must do so before becoming primarily responsible for the administration of professional standards processes. If staff has previously completed such training, they have until December 31, 2018 to complete another training. Once staff completes their training, they have four years from that specific date to complete their next training.

7. The complete listing of all Statements of Professional Standards Policy, in chronological order, is available on-line at nar.realtor. Policy Statements applicable to ethics and arbitration remain in the Code of Ethics and Arbitration Manual in their respective sections, but the complete listing now appears on-line:

https://www.nar.realtor/policy/statements-of-professional-standards-policy

8. The Professional Standards Training Guide is also on-line:

https://www.nar.realtor/policy/professional-standards-training-guide

9. Associations interested in adopting a citation policy, a citation schedule of potential violations, and specific fines that apply to those violations may view the National Associations revised Model Citation Policy online:

https://www.nar.realtor/policy/nar-model-citation-policy-and-schedule-of-fines

The policy is amended as shown in Appendix I of this summary.

10. Associations interested in adopting an optional "fast track" process for receipt, consideration, and resolution of ethics complaints may view an on-line supplement to the Code of Ethics and Arbitration Manual at:

https://www.nar.realtor/policy/fast-track-supplement-to-ceam

11. Enhanced ombudsman resources are also available online:

https://www.nar.realtor/ae/manage-your-association/local-and-state-association-ombudsman-services

The ombudsman procedures have been amended as shown in Appendix II of this summary.

January 8, 2016

NAR Model Citation Policy

(NOTE: This document includes legislative changes approved by the NAR Board of Directors and Professional Standards Committee in May 2015 that go into effect January 1, 2016; underscoring indicates additions, strikeouts indicate deletions.)

Associations adopting this Citation Policy model must also adopt a "Citation Schedule" of potential violations covered, and must specify the fines that apply to those violations. Information about the Ethics Citation Program, including the Citation Schedule, will be provided as part of the information sent to potential complainants considering filing ethics complaints with the association.

Associations adopting this Citation Policy shall establish a Citation Panel, comprised of at least three (3) individuals, who will review complaints to determine eligibility for the citation program and the appropriate citations. It is recommended that the Citation Panel be a subset of the association's Professional Standards Committee, and that the individuals on the Citation Panel have a high level of experience in hearing professional standards cases.

Complaints must be filed within one hundred eighty (180) days after the facts constituting the matter complained of could have been known in the exercise of reasonable diligence or within one hundred eighty (180) days after the conclusion of the transaction or event, whichever is later.

Any citation policy adopted by local or state associations after approval of this policy by the NAR Board of Directors cannot cite violations based on Articles or Standards of Practice other than those spelled out in this policy, cannot impose fines in excess of those in the policy, and cannot be utilized more frequently than provided for in this policy.

Initial Review by Grievance Committee and Citation Panel

I.When a Grievance Committee receives a written ethics complaint, it will review the complaint consistent with Sections 19 and 20 of the current NAR Code of Ethics and Arbitration Manual. The Grievance Committee may add or delete articles or respondents at this stage in the proceedings.

II.If the Grievance Committee determines that the complaint should be forwarded for a hearing, the Grievance Committee will first forward the complaint to the Association's Citation Panel to determine if it includes allegations covered by the Citation Schedule, i.e., if it is a "citable offense".

A. If the complaint does not include alleged violations included in the Citation Schedule, or it includes some covered by the Citation Schedule and some that are not, the complaint shall be referred to the Professional Standards Committee for hearing consistent with the policies and procedures set forth in the Code of Ethics and Arbitration Manual for ethics hearings.

B. If the complaint includes only allegations of violations included in the Citation Schedule, the Citation Panel will issue a citation and impose discipline consistent with the association's Citation Schedule. In the event the members of the Citation Panel determine the conduct described in the complaint is sufficiently egregious to warrant a hearing rather than a citation, the complaint shall be referred to the Professional Standards Committee for hearing consistent with the policies and procedures set forth in the Code of Ethics and Arbitration Manual for ethics hearings.

C. When an ethics complaint and an arbitration request arising out of the same facts and circumstances are filed at the same time, the arbitration hearing shall be held first, and the citation(s) issued or ethics hearing held after the conclusion of the arbitration hearing consistent with Professional Standards Policy Statement #35, Separation of Ethics Complaint and Arbitration Request, Code of Ethics and Arbitration Manual.

Issuance of Citations

I.Citations will be sent to respondents. A copy of the citation shall also be sent to the REALTOR® principal of respondents' office. If the respondent changes firms before or after the complaint is filed but before the citation is issued, both the former and current REALTOR® principal will receive a copy of the citation.

A. Staff will prepare a written summary of the complaint and the summary will be included with the citation to give the respondent sufficient information to understand the basis of the citation.

B. At the option of the association, the complaint itself may be provided to the respondent, including the identity of the complainant. Alternatively, the complaint itself and the identity of the complainant may be kept confidential and unavailable to the respondent. The practice of the association should be established in advance and followed consistently. If an association has adopted the practice of allowing the identity of the complainant to be kept confidential, the complainant shall be advised when filing a complaint that their identity will not remain confidential should the respondent request a hearing.

II.The respondent will have twenty (20) days from ~~receipt~~ transmission of the citation to request a full due process hearing on the complaint.

A. If the respondent does not reply within ten (10) days of ~~receiving~~ transmission of the citation, a notice shall be ~~issued~~ transmitted to the respondent reminding the respondent of the deadline for requesting a hearing.

B. If the respondent accepts the citation, or if the respondent does not request a hearing within twenty (20) days of ~~receipt~~ transmission of the citation, this shall be deemed to be a final resolution of the complaint, which shall not be appealable or subject to any further review.

C. If the respondent accepts the citation, or if the respondent does not request a hearing within twenty (20) days of ~~receipt~~ transmission of the citation, payment must be received by the association no later than _____ days (to be established by the association, but in any instance not more than five [5] days) after the date of acceptance or time period to request a hearing has elapsed.

1. The case will be deemed to be closed upon receipt of payment, and notice will be provided to the complainant that a citation has been issued and paid.

2. Failure to pay the citation amount within ____ days (to be established by the association, but in any instance not more than five (5) days) after the date of acceptance or after the time period to request a hearing has expired will result in the automatic suspension of membership until the citation has been paid.

D. If the respondent requests a hearing within the time specified, the complaint shall be referred for hearing. The complainant who initially filed the complaint shall be given the option to proceed as the complainant for the purposes of the hearing, and will be afforded all due process rights provided for in the Code of Ethics and Arbitration Manual. Should the complainant be a member of the public who refuses or is unable to participate in the hearing, or should the complainant be a REALTOR® member who refuses or is unable to participate in the hearing, the provisions of Section 21(f)(3) in the NAR Code of Ethics and Arbitration Manual shall apply.

E. Associations should determine in advance what information will be provided to complainants prior to citations being issued and paid, or respondents requesting a hearing, including the point at which complainants will be notified of the status of their complaint, and what information will be provided to complainants about citations issued, including the amount of any fine. These procedures should be established in advance and followed consistently.

Limitations

Any REALTOR® is limited in the number and type of citations that he/she may receive, according to the following rules:

A. No more than two (2) citations will be issued to a member within a consecutive twelve (12) month period, starting on the date the first complaint was filed, at the same association.

B. No more than three (3) citations will be issued to a member within a consecutive thirty-six (36) month period, starting on the date the first complaint was filed, at the same association.

C. No additional citations are permitted where the cumulative fine for the citations issued would be more than $______ (not to exceed $5,000) in any three (3) year period at the same association.

D. Associations may, at their discretion, adopt an escalating fine schedule for repeat citations. If an escalating fine schedule is used, the citation panel may only consider the past citations for the particular conduct alleged in the complaint.

The fact that a respondent has previously been issued a citation for any violation – whether or not it was paid – shall not be admissible in any ethics or arbitration hearing, including a hearing to consider a complaint where the respondent rejected a citation and requested a hearing. A hearing panel may consider citations previously issued to the respondent for the purpose of determining appropriate discipline as provided in Subsection IV below.

Citations will not be considered in any publication of violations should such rules be adopted by the association.

Where a hearing panel finds a violation of the Code of Ethics after a hearing, it may consider past citations in determining an appropriate sanction only if the citation was issued for the same violation at issue in the hearing. By way of example, if a citation was issued for failure to disclose a dual or variable rate commission under Standard of Practice 3-4, that citation could not be considered if a hearing panel later found a violation of Article 3 on some other grounds. Hearing panels will not be informed of past citations for other violations.

Association staff will track the number of citations issued, the number of citations paid, and the violations for which citations were issued. This information may be provided in the aggregate to the Board of Directors, but will not include details about the complaints, nor identify the complainants or respondents.

The allegations, discussions and decisions made in the citation process are confidential and shall not be reported or published by the board, any member of a tribunal, or any party under any circumstances except those established in Limitations, Section V of this policy and the Code of Ethics and Arbitration Manual of the National Association as from time to time amended.

Model Citation Schedule of Fines

	Applicable Article and Standard of Practice	Fine	Ethics Training available in lieu of or in addition to fine?
Article 1
Failure to fully disclose and obtain consent from both parties when representing both the seller/landlord and buyer/tenant in the same transaction	Article 1, supported by Standard of Practice 1-5
Failure to submit offers and counter-offers objectively and as quickly as possible	Article 1, supported by Standard of Practice 1-6
Failure to advise sellers/landlords of information specified in Standard of Practice 1-12 prior to entering into a listing contract	Article 1, supported by Standard of Practice 1-12
Failure to advise buyers/tenants of information specified in Standard of Practice 1-13 prior to entering into a buyer/tenant agreement	Article 1, supported by Standard of Practice 1-13
Accessing or using, or allowing others to access or use, a property managed or listed on terms other than those authorized by the owner or seller	Article 1, supported by Standard of Practice 1-16
Article 3
Failure to communicate a change in compensation for cooperative services prior to the time that REALTOR® submits an offer to purchase/lease the property	Article 3, supported by Standard of Practice 3-2
As a listing broker, attempting to unilaterally modify the offered compensation with respect to a cooperative transaction after a REALTOR® has submitted an offer to purchase or lease that property	Article 3, supported by Standard of Practice 3-2
Failing to disclose existence of dual or variable rate commission arrangements	Article 3, supported by Standard of Practice 3-4
Failure to disclose to cooperating brokers differential that would result in dual or variable rate commission arrangement if sale/lease results through efforts of seller/landlord	Article 3, supported by Standard of Practice 3-4
Failing to disclose existence of accepted offers, including offers with unresolved contingencies, to cooperating brokers	Article 3, supported by Standard of Practice 3-6
Misrepresenting the availability of access to show or inspect a listed property	Article 3, supported by Standard of Practice 3-8
Providing access to listed property on terms other than those established by the owner or the listing broker	Article 3, supported by Standard of Practice 3-9
Article 4
Failing to disclose REALTOR®'s ownership or other interest in writing to the purchaser or their representative	Article 4 (second sentence)
Article 5
Providing professional services without disclosing REALTOR®'s present interest in property	Article 5 (limited to present interest, not contemplated)
Article 6
Accepting any commission, rebate, or profit on expenditures without client's knowledge or consent	Article 6 (first paragraph)
Failure to disclose to a client or customer REALTOR®'s financial benefits or fees received as a direct result of recommending real estate products or services	Article 6 (second paragraph)
Failure to disclose REALTOR®'s direct interest in an organization or business entity when recommending to a client or customer that they use the services of that organization or business entity	Article 6, supported by Standard of Practice 6-1
Article 12
Failing to present a true picture in real estate communications and advertising	Article 12
Failing to disclose status as real estate professional in advertising and other representations	Article 12
Failure to provide all terms governing availability of a "free" product or service in an advertisement or other representation	Article 12, supported by Standard of Practice 12-1
Failure to disclose potential to obtain a benefit from third party when REALTOR® represents their services as "free" or without cost	Article 12, supported by Standard of Practice 12-2
Failure to exercise care and candor when communicating the terms and conditions of premiums, prizes, merchandise discounts or other inducements to list, sell, purchase, or lease	Article 12, supported by Standard of Practice 12-3
Advertising property for sale/lease without authority of owner or listing broker	Article 12, supported by Standard of Practice 12-4
Failing to disclose name of firm in advertisement for listed property	Article 12, supported by Standard of Practice 12-5
Failing to disclose status as both owner/landlord and REALTOR® or licensee when advertising property in which REALTOR® has ownership interest	Article 12, supported by Standard of Practice 12-6
Falsely claiming to have "sold" property	Article 12, supported by Standard of Practice 12-7
Failure to take corrective action when it becomes apparent that information on a REALTOR®'s website is no longer current or accurate	Article 12, supported by second sentence of Standard of Practice 12-8
Failure to disclose firm name and state of licensure on REALTOR® firm website	Article 12, supported by Standard of Practice 12-9
Misleading consumers through deceptive framing, manipulating content, deceptively diverting internet traffic, or presenting other's content without attribution or permission	Article 12, supported by Standard of Practice 12-10
Registering or using of deceptive URL or domain name	Article 12, supported by Standard of Practice 12-12
Representing that the REALTOR® has a designation, certification, or other credential they are not entitled to use	Article 12, supported by Standard of Practice 12-13
Article 14
Failing to cooperate in a professional standards proceeding or investigation in circumstances when cooperation has been demanded by the association and association has advised REALTOR® failure to cooperate could result in an allegation of a violation of Article 14	Article 14
Article 16
Conditioning submission of a buyer's offer on additional compensation from a listing broker	Article 16, supported by Standard of Practice 16-16
Placing for sale/lease sign on property without permission of seller/landlord	Article 16, supported by Standard of Practice 16-19

NOTE: Associations may adopt all or some of the above citations. No additional citations may be added. Fines for each citable offense, as well as any possible training requirements, must be established in advance and should be followed consistently.

Associations, at their discretion, may adopt an escalating fine schedule for repeat citations and also may impose a training requirement in addition to or as an alternative to payment of a fine for any of the citable offenses adopted. If an escalating fine schedule is adopted, it may only be used in circumstances where citations are issued by the same association.

The amount of fine for any citation is at the option of the association, but aggregated fines levied against any member may not exceed $5,000 in any three (3) year period.

Developing an Ombudsman Program

(NOTE: This document includes legislative changes approved by the NAR Board of Directors and Professional Standards Committee that go into effect January 1, 2016; underscoring indicates additions, strikeouts indicate deletions.)

Professional Standards Policy Statement #59, Associations to Provide Ombudsman Services, in the current NAR Code of Ethics and Arbitration Manual, provides as follows:

Every local and state association of REALTORS® is required to offer, either directly or as part of a cooperative enforcement agreement (consistent with Professional Standards Statement #40, Cooperative Enforcement Agreements), ombudsman services to members, clients, and consumers on or before January 1, 2016.

An ombudsman is an individual appointed to receive and resolve disputes through constructive communication and advocating for consensus and understanding.

Ombudsman procedures~~, which may be adopted and utilized at the discretion of boards and associations,~~ are intended to provide enhanced communications and initial problem-solving capacity at the local level. All associations must provide ombudsman services to their members and members' clients and customers consistent with Professional Standards Policy Statement #59, Associations to Provide Ombudsmen Services, Code of Ethics and Arbitration Manual.

Introduction

Boards and associations of REALTORS® are charged with the responsibility of receiving and resolving ethics complaints. This obligation is carried out by local, regional and state grievance committees and professional standards committees.

Many "complaints" received by boards and associations do not expressly allege violations of specific Articles of the Code of Ethics, and many do not detail conduct related to the Code. Some "complaints" are actually transactional, technical, or procedural questions readily responded to.

It is the belief of the National Association's Professional Standards Committee that many ethics complaints might be averted with enhanced communications and initial problem-solving capacity at the local level. These ombudsman procedures~~, which may be adopted and utilized at the discretion of boards and associations,~~ are intended to provide that capacity.

Role of ombudsmen

The ombudsman's role is primarily one of communication and conciliation, not adjudication. Ombudsmen do not determine whether ethics violations have occurred or who is entitled to what amount of money, rather they anticipate, identify, and resolve misunderstandings and disagreements before matters ripen into disputes and possible charges of unethical conduct.

Qualification and criteria for ombudsmen

Boards and associations have considerable latitude in developing criteria for service as ombudsmen.

At a minimum, ombudsmen should be thoroughly familiar with the Code of Ethics, state real estate regulations, and current real estate practice. Ombudsmen may be REALTORS®, staff members, or others acting on behalf of the local board/association.

Insurance Coverage

Ombudsman are covered through the NAR insurance program, as long as they are acting within the coverage limits described in the policy.

As provided in the "Answers to Questions Most Frequently asked about the National Association of REALTORS® Professional Liability Insurance Program for Associations of REALTORS®", the policy defines an "ombudsman" (or "ombudsperson") as an individual designated by an association to be available for consultation about the association's ethics hearing, arbitration, and/or DRS processes. Only association staff or members may serve as an ombudsman. ~~; an attorney serving in this role will not be eligible for coverage.~~ The policy excludes from coverage any claim that alleges or arises out of any action committed by ombudsman that does not involve an association's ethics hearing, arbitration or the DRS processes.

The following are examples of some situations in which an ombudsman would be covered and other situations when the ombudsman would not be covered:

A seller contacts the association because they feel their listing broker, who is a REALTOR®, is not responding to phone calls, and may have received offers that they haven't presented to the seller yet. If an ombudsman were appointed to assist the parties, the ombudsman's actions would be covered by the NAR insurance program.

A buyer contacts the association for help with a short sale transaction. If an ombudsman assisted the buyer, the ombudsman's actions would not be covered by the NAR insurance program.

REALTOR® A contacts the association because she has reason to believe REALTOR® B has been criticizing her business on Facebook after a difficult transaction. If an ombudsman were appointed to assist the parties, the ombudsman's actions would be covered under the NAR insurance program.

For more information about insurance coverage, visit the Professional Liability Insurance Program page.

Involving the ombudsman

Boards and associations have considerable latitude in determining how and when ombudsmen will be utilized. For example, ombudsmen can field and respond to a wide variety of inquiries and complaints, including general questions about real estate practice, transaction details, ethical practice, and enforcement issues. Ombudsmen can also receive and respond to questions and complaints about members; can contact members to inform them that a client or customer has raised a question or issue; and can contact members to obtain information necessary to provide an informed response.

In cases where an ombudsman believes that a failure of communication is the basis for a question or complaint, the ombudsman can arrange a meeting of the parties and to facilitate a mutually acceptable resolution.

Where a written ethics complaint in the appropriate form is received, it can be initially referred to the ombudsman who will attempt to resolve the matter, except that complaints alleging violations of the public trust (as defined in Article IV, Section 2 of the NAR Bylaws) may not be referred to an ombudsman. "Public trust" refers to misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm.

In the event the ombudsman concludes that a potential violation of the public trust may have occurred, the ombudsman process shall be immediately terminated, and the parties shall be advised of their right to pursue a formal ethics complaint; to pursue a complaint with any appropriate governmental or regulatory body; to pursue litigation; or to pursue any other available remedy.

Right to decline ombudsman services

Persons filing complaints, or inquiring about the process for filing ethics complaints, will be advised that ombudsman services are available to attempt to informally resolve their complaint. Such persons will also be advised that they may decline ombudsman services and can have their complaint referred to ethics mediation (if available), or considered at a formal ethics hearing.

Resolution of complaints

If a matter complained of is resolved to the mutual satisfaction of all parties through the efforts of an ombudsman, the formal ethics complaint brought initially (if any) will ~~be dismissed~~ continue to be processed until withdrawn by the complainant.

Failure to comply with agreed upon resolution

Failure or refusal of a member to comply with the terms of a mutually agreed on resolution shall entitle the complaining party to resubmit the original complaint or, where a formal complaint in the appropriate form had not been filed, to file an ethics complaint. The time the matter was originally brought to the board or association's attention will be considered the filing date for purposes of determining whether an ethics complaint is timely filed.

Referrals to the Grievance Committee or to state regulatory bodies

Ombudsmen cannot refer concerns they have regarding the conduct of any party utilizing their services to the Grievance Committee, to the state real estate licensing authority, or to any other regulatory body. The prohibition is intended to ensure impartiality and avoid the possible appearance of bias. Ombudsmen are, however, authorized to refer concerns that the public trust may have been violated to the Grievance Committee.

Confidentiality of ombudsman process

The allegations, discussions and decisions made in ombudsman proceedings are confidential and shall not be reported or published by the board, any member of a tribunal, or any party under any circumstances except those established in the Code of Ethics and Arbitration Manual of the National Association as from time to time amended.

2016 Summary of Key Professional Standards Changes

Change to the Code of Ethics and Standards of Practice

Standard of Practice 12-5

Changes to the Code of Ethics and Arbitration Manual (Manual)

Policy Statement #44, Effective Dates of the Code of Ethics and Standards of Practice and the Code of Ethics and Arbitration Manual, was amended as follows:

Policy Statement #33, Use of Panels in Place of Committees and the Board of Directors, was amended as follows:

Policy Statement #50, Separate Subcommittees for Ethics, Arbitration, and Mediation, was amended follows:

New Policy Statement #61, Arbitration Procedures Governing Nonmembers, was adopted as follows:

Section 1 (s), Definitions Relating to Ethics, was added and (u) was deleted as follows:

Sections 18 and 41, Function, were revised as follows:

Section 19, Grievance Committee's Review of an Ethics Complaint, was revised as follows:

Section 42, Grievance Committee's Review and Analysis of a Request for Arbitration, was revised as follows:

Section 20, Initiating an Ethics Hearing, was revised as follows:

Section 47 (b), Manner of Invoking Arbitration, was revised as follows:

Sections 20 (c), Initiating an Ethics Hearing, was amended as follows:

Sections 21 (f) (1) and (2), Ethics Hearing, were amended as follows:

Sections 23 (f), Action of the Board of Directors, was amended as follows:

Appendix X to Part Four, Before You File an Ethics Complaint, was amended in the following four paragraphs:

The following two paragraphs were added to each of the following forms:

Sections 45 (a) and (d), Board's Right to Decline Arbitration, were amended as follows:

Sections 47 (c), Manner of Invoking Arbitration, was amended as follows:

Section 51 (a), Arbitration Hearing, was amended as follows.

Section 53, The Award, was amended as follows:

Section 55, Request for Procedural Review by Directors, was amended as follows:

Appendix III to Part Ten, Rationale of Declaratory Relief and of Judicial Enforcement in Matters of Arbitration, was amended as follows:

Appendix XI to Part Four, Ethics Mediation, was amended as follows:

Adoption of ethics mediation procedures

Appointment of mediators

Complaints that may be mediated

Participation in ethics mediation is voluntary

Referral of complaints to the mediator

Nature of the mediated resolution

Referrals to the Grievance Committee or to state regulatory bodies

Refusal to comply with agreed upon discipline

Confidentiality of mediation process

The Chairperson's Procedural Guide: Conduct of an Arbitration Hearing and Chairperson's Procedural Guide: Conduct of an Interboard Arbitration Hearing, Part 12, Conduct of an Arbitration Hearing, were revised, in pertinent part, to add the following:

There were numerous ethics and arbitration forms amended to incorporate the changes to policy contained in this summary. Please see the shaded language in the Manual for details for the following forms:

Additional Points of In​terest

NAR Model Citation Policy

Initial Review by Grievance Committee and Citation Panel

Issuance of Citations

Limitations

Model Citation Schedule​ of Fines

Developing an Ombudsman Program

Profes​sional Standards Policy Statement #59, Associations to Provide Ombudsman Services, in the current NAR Code of Ethics and Arbitration Manual, provides as follows:

Introduction

Role of ombudsmen

Qualification and criteria for ombudsmen

Insurance Coverage

Involving the ombudsman

Right to decline ombudsman services

Resolution of complaints

Failure to comply with agreed upon resolution

Referrals to the Grievance Committee or to state regulatory bodies

Confidentiality of ombudsman process

Additional Points of Interest

Model Citation Schedule of Fines

Professional Standards Policy Statement #59, Associations to Provide Ombudsman Services, in the current NAR Code of Ethics and Arbitration Manual, provides as follows: