Overview Interpretation and Application of the Code of Ethics Function of the Grievance Committee 2015 NAR Changes The Hearing Process Due Process Authoring an Ethics Decision Procuring Cause
Articles Standards of Practice Broad statements of ethical principles Divided into Three Sections Support, interpret, and amplify the Articles under which they are stated Case Interpretations Specific fact situations to which the Articles and/or Standards of Practice are applied Duties to Clients & Customers Articles 1-9 Duties to the Public Articles 10-14 Duties to REALTORS Articles 15-17
The Code includes objective enforceable standards, but does not address the voluntary, professional courtesies and etiquette guidelines. Good for business practices! May be supplemented by local customs and practices Golden Rule Concept
“I would never work with a buyer who has been working with another Realtor; it’s not something I would do.” Fred “Hey, it’s business, no one owns the buyer. Besides, he doesn’t want to work with you anymore. I don’t know what you did, but he’s my buyer now.” Sally
Jane, a buyer’s agent, who is not a Realtor and neither is her broker, called Listing Agent Jim to arrange for a showing. Jim said, the property is not available for showing at this time, call back in a week. Jane makes a second attempt at scheduling an appointment and was told the property is still not ready. Frustrated, the buyer calls Jim and is shown the property that very same day.
We, the members of the Hearing Panel, find the Respondent, Realtor Jim, in Violation of Article 3 (citing Standard of Practice 3-10) for not making the property available on 15 Maple Ave to the complainant when in fact the property was actually available for showing on the very same day the complainant requested a showing. Article 3 states that Realtor’s shall cooperate with other brokers and based on the definition of brokers in the NAR Code of Ethics and Arbitration Manual, the term “broker” refers to any real estate licensee acting as an agent or in a legally non-agency capacity.
1. As part of her morning routine, Realtor Sally spends an hour or more checking expired listings or listings that are temporarily off the market or withdrawn. 2. The minute she sees a status change, she calls the seller to solicit the listing and promote her services. 3. Realtor Bob is ticked when Sally contacts his seller after he enters one of his listings as a “Temporarily Off the Market” in the MLS.
We, the members of the Hearing Panel, find the Respondent, Realtor Sally in Violation of Article 16 as cited in Standard of Practice 16-9 whereby Realtor Sally did not make reasonable efforts to determine whether or not the prospect was subject to a current, valid exclusive agreement to provide the same type of service.
1. Realtor Rob works with the buyer on a transaction and finds listing agent/broker unresponsive when he tries to contact them. 2. The seller experiences the same thing and starts calling Rob asking for help. Rob tells the seller he needs to talk to his agent/broker. 3. The property is about to go into foreclosure, the seller is desperate, pleads with Rob to take over the transaction before he loses his house. Rob agrees….
We, the members of the Hearing Panel, find the Respondent, Realtor Rob, not in violation of Article 16. It was the complainant’s seller not the respondent who initiated contact with the respondent. The respondent performed substantive services as directed by the seller which is in compliance with Standard of Practice 16-13.
1. Realtor Kathy cooperated in her very first sale. 2. Before the property closed, she mailed out postcards promoting the fact she sold 15 Maple Avenue and she can “Sell yours, too.” The postcard did not include a disclaimer that telling sellers to disregard if they are currently listed. 3. When the transaction fell through, Kathy immediately stopped sending out the postcards.
We, the members of the Hearing Panel, find the Respondent, Realtor Kathy, not in violation of Article 12 of the Code of Ethics based on Standard of Practice 12-7 and Case Interpretation 12-5. Based on the fact that a bona fide offer that was signed by both the buyer and the seller that brought about the sale of 15 Maple Avenue, the respondent could advertise she sold the property. Once it was clear the sale had fallen through, the respondent immediately ceased advertising she sold the property thereby maintaining a true picture in her advertising.
Realtor Bob, a member of the Sunny Beach Association, receives a call from Realtor Sally who is a member of the Barefoot Association which located 3 hours away. Sally’s buyer wants to see one of Bob’s listings. Sally’s Association does not participate in MLS Advantage nor does her broker belong to the Sunny Beach MLS. Sally requests access. Realtor Bob says, “no lockbox access, no entry. PERIOD.”
We, the members of the Hearing Panel, find the Respondent, Realtor Bob, in violation of Article 3 (citing Standard of Practice 3-10) for not making the property accessible to the complainant and her customer even though the complainant did not have lockbox access.
Realtor Jane’s buyers are on top of the world after they see the property at 120 Maple Avenue. Realtor Jane submits verbal offer to the listing agent, Realtor Millie, and is told the seller accepts the verbal offer. In the meantime Realtor Lucy shows the same property to her buyers. Millie’s seller gives her the authority to share with Lucy the terms of Jane’s buyers verbal offer. As a result, Lucy’s buyers’ increase their offer. The seller is satisfied with the terms of Lucy’s offer and has no desire for Millie to contact Jane to ask for a competitive offer. He signs Lucy’s offer. Realtor Jane submits her written offer within an hour after Lucy’s is accepted. She is furious…Talk about Shock and AWE!
We, the members of the Hearing Panel, find the Respondent, Realtor Millie, not violation of Article 1 of the Code of Ethics. The respondent had seller’s authority to disclose the existence of verbal offer including the terms of the offer which is supported by Standard of Practice 1-15 and Standard of Practice 1-13(5).
Realtor Judy’s listed her sister’s property. Judy enters the listing into the MLS immediately. Judy has no ownership interest in the property nor does she stand to inherit from the proceeds of the sale Buyer Fred, who is working with Realtor Ethel, puts in an offer on the property. At closing, Fred and Ethel discover Judy’s sister is also the seller this fact was never disclosed prior to signing the contract. Both feel this is a violation of the Code of Ethics and file an ethics complaint against Judy.
We, the members of the Hearing Panel, find the Respondent, Realtor Judy, not violation of Article 4 of the Code of Ethics because the respondent had no ownership interest in the property nor did she stand to gain an inheritance from the proceeds of the sale. Let’s change the facts, what if it had been a lease?
Realtor Marcia’s listing is next door to a property where underground utilities for new construction are underway. Realtor Joel’s buyer asked him to find out from Marcia what is being built next door because it could be a deal breaker. Marcia tells Joel, it’s the new boutique shopping center she has been reading about. It is supposed to go up in this area. Joel’s buyer’ purchases the property and goes ballistic when he finds out the construction next door is for a sewage treatment plan. He wants to sell but once word gets out, he’s stuck!
We, the members of the Hearing Panel, find the Respondent, Realtor Marcia, in violation of Article 2 of the Code of Ethics. The buyer relied on the respondent’s statement that a proposed boutique shopping venue was being built on the adjacent property. The buyer would not have purchased the property if he had known the construction project was a sewage treatment plant.
Article 1 Protect, Promote, Honesty Presentation of offersConfidentiality of the terms of the offer Article 3 Cooperation Access to the Property Changes in compensation must be communicated before the offer is submitted. Shall not provide access to listed property on terms other than those established by the owner and listing broker. Make access available to non-electronic lock box users Article 12 True Picture Advertising another agent’s listingsAdvertising MLS Stats Article 15 Comments about other Agents Dinging another real estate professionals reputation by knowingly making false, reckless or misleading statements about other professionals, their businesses or their business practices. Article 16 Respect for Client Relationships All dealings must be through the client’s agent Inducing clients to change listing firms when REALTOR changes firms Using the offer to modify compensation
The Unsung Heroes of the Professional Standards Process
Ethics Complaint or Arbitration Request Is filed with the Association Ethics Complaint or Arbitration Request Is filed with the Association Professional Standards Committee Ethics and Arbitration Hearings Professional Standards Committee Ethics and Arbitration Hearings Grievance Committee Grand Jury Grievance Committee Grand Jury Board of Directors Appellant Body Decision is Final Board of Directors Appellant Body Decision is Final Appeal Decision of Grievance Committee Refer to/or refer back a Hearing Panel
Professional Standards Judicial System Complainant Respondent Grievance Committee Professional Standards Board of Directors Professional Standards Administrator Plaintiff Defendant Grand Jury Hearings Appellate Body Clerk of the Court
Pre-hearing meetings – 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. - The current policy affords both sides parties the right to be present during the Pre-hearing meeting – in 2015, it will be at the Chair’s discretion if they will be present. Probation means that a form of discipline recommended by the Hearing Panel is held in abeyance…The fact that one or more forms of discipline is held in abeyance during the probationary period does not bar the imposition of other forms of discipline that will not be held in abeyance.
Members may also be required to cease or refrain from continued conduct deemed to be in violation of the Code, or take affirmative steps to ensure compliance with the Code, within a period of time to be determined by the hearing panel. Where discipline is imposed pursuant to this subsection, the decision should also include additional discipline (e.g. suspension or termination of membership) that will be imposed for failure to comply by the date specified, and to continue to comply for a specified period not to exceed three years from the date of require compliance.
REALTOR take outs a billboard that doesn’t include his company name and the hearing panel finds him in violation of the Article 12 of the Code, as interpreted by SOP 12-5. The discipline could include a statement like: “The respondent is to take affirmative steps to ensure compliance with the Code, as interpreted by SOP 12-5, within thirty (30) days from receipt of final action by the Board of Directors. If affirmative steps are not taken to ensure compliance with the Code, the respondent will be suspended from board membership until such steps are taken.
What is the appropriate role and use of Alternate panel members? o Answer: Associations may, but are not required to include one or more alternate members. o If alternates are included, alternates must be Seated apart from the Hearing Panel Not Participate in any way unless called on to replace a panel member Are bound by same duties applicable to panel members.
Parties’ requests for continuances shall only be granted when all parties mutually agree to a subsequent specified date, or when the hearing panel chair determines that denying the request for continuance would deny the requestor a fair hearing.
The intended purpose of rehearing's is generally misunderstood and are generally granted inappropriate circumstances and such requests occur so rarely that the Professional Standards Committee voted to eliminate this procedures entirely.
Verbiage “that except “extreme circumstances” or rescheduling to when participation is not feasible has been deleted. Parties and their witnesses may request to participate via teleconference or videoconference at the discretion of the Hearing Panel Chair. Only “parties” eligible to attend the entire hearing would be entitled to participate remotely. Witnesses can only be present during their own testimony. Hearing panels, staff, or counsel should employ steps to verify the identity of remote participants to preclude unauthorized individuals from being present to safeguard the confidentiality of the proceedings.
Ombudsman Services to members, clients and consumers on or before January 1, 2016. Rationale: Establishes responsibility of associations to offer, either directly or as part of cooperative enforcement agreement Ombudsman services to members, clients and consumers.
Question: Do parties to ethics and arbitration hearings have the right to question parties who choose not to testify? Answer: In 2014 Section 5 and 30 of COEAM was amended to clarify that o All witnesses, except those who are also parties, will be excused after their testimony and cross-examination unless otherwise provided for in the COEAM. o All parties appearing at the hearing may be called as witnesses without advance notice
You Can’t Find Fair in the Code – But Being Fair is What Due Process is All About
Clothe the process with dignity that commands respect Ensures fairness for all Mandates that hearings are held in a uniform manner Definition from the CEAM: The due process requirement, after all, requires nothing more than a fair and diligent search for the truth – with an opportunity for all facts to be gathered; all views to be heard; all defenses to be raised and all prejudice of bias to be expunged The due process requirement, after all, requires nothing more than a fair and diligent search for the truth – with an opportunity for all facts to be gathered; all views to be heard; all defenses to be raised and all prejudice of bias to be expunged.
Ethics Complaint or Arbitration Request Is filed with the Association Ethics Complaint or Arbitration Request Is filed with the Association Professional Standards Committee Conducts Hearings Professional Standards Committee Conducts Hearings Grievance Committee Grand Jury Grievance Committee Grand Jury Board of Directors Appellant Body Decision is Final Board of Directors Appellant Body Decision is Final Appeal Decision of Grievance Committee Refer to/or refer back a Hearing Panel
Before the Hearing During the Hearing Postponements Interpreters Remote Testimony Audio Testimony Subpoena Power – Arbitration only – call Florida Realtors Legal Hotline for more information Evidence/Testimony Surprise Witnesses Panel Conduct Attorneys Safety Issues Parties, Witnesses and Attorneys who are AWOL Adding articles
The respondent submits evidence she did not include in her response. This is the first time the complainant and the panel has seen it? The complainant shows up with a surprise witness (the buyer). The respondent’s attorney objects because the complainant did not give proper notice. The complainant insists the buyer’s testimony is critical to his case. The attorney for the respondent says her schedule prevents her from attending the hearing and has requested to be allowed to video conference in? The attorney for the complainant is demanding the respondent produce a copy the listing agreement. The respondent refuses to comply. Here is where your Chairman’s Toolkit comes in handy.
The respondent in an ethics case skips the hearing but sends his attorney to present the case without him. The complainant who is a sales associate does not want his broker to sit in the hearing. The broker insists he has a right to be there. During the hearing it appears the respondent may have violated articles that were not named in the complaint. Do you let it go? You have a panelist who keeps nodding and bobbing her head in agreement with one of the parties. It is also obvious by the tone of her questioning she doesn’t like the complainant. Despite your efforts to rein her in (and two recesses to caution her), she continues to be exhibit behavior befitting a poster child for a procedural review. Oh my momma said there’ll be days like this …
Chair reads opening statement and basis for hearing Swearing/Affirmation of Witnesses Complainant’s Opening Statement & Presentation of Evidence and Witnesses Cross Examination by the Complainant and Questions from the Hearing Panel Respondent’s Opening Statement & Presentation of Evidence and Witnesses Cross Examination by the Respondent and Questions from the Hearing Panel Closing Statement by Complainant Closing Statement by Respondent Closing Statement by Chair – Did parties receive a fair hearing? Hearing is Adjourned
Burden of proof: Is on the complainant not the hearing panel. Standard of Proof: Based on clear, strong and convincing. – That measure or degree of proof which will produce a firm belief or conviction as to the allegations sought to be established – in other words, did the complainant prove that a violation did occur.
QuestionsYes Which Article? No Are the actions charged supported by the evidence? If the alleged conduct is true, does it violate the Code of Ethics? Did the complainant prove a violation(s) occurred?
Review Executive Session Checklist No monetary damages allowed in Ethics Everyone will have an opportunity to discuss the evidence and testimony Each case is considered separately No subjective opinions based on personal experiences Decision based on facts not assumptions Chair speaks last
The Standard of Proof in Board/Association arbitration is a preponderance of the evidence – burden of proof rests primarily with the party that asked for the arbitration Evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the facts ought to be proved are more probable than not.
A Board or its MLS cannot make a rule regarding entitlement to the commission in a real estate transaction Interpretation 31, NAR Bylaws Look at all of the relevant facts and circumstances No rules of thumb Prior decisions by other panels, “threshold”, “contract in hand” and agency relationships by themselves do NOT determine entitlement The agency relationship with the client or lack of one does not determine procuring cause
Reasoning relied on by the courts between sellers and listing brokers… NAR’s CEAM Definition: The proximate cause; the cause originating a series of events which, without a break in their continuity, result in the accomplishment of the prime object. The inducing cause; the direct or proximate cause Substantially synonymous with “efficient cause”. From Black’s Law Dictionary, Fifth Edition Procuring cause in broker to broker disputes can be readily understood as the uninterrupted series of events which results in the successful transaction. Or in other words, what “caused” the successful transaction to come about.
Create a timeline of events o Check for breaks in time between the agent and the buyer Separate the Complainant’s series of events from the respondents – Compare the two bucket lists. It’s all about the Based on the evidence and testimony presented, what was relationship between the buyer the agent? o Abandonment of the buyer o Perceived abandonment of the agent o Estrangement – did the buyer fire the agent or was it the other way around?
Evidence Possible Ethics Violations Can be considered as part of the evidence Can’t be used to withhold in otherwise substantiated award Should be considered as only one of many potentially relevant factors Do not make referrals of ethical concerns The general rule is that anything the Hearing Panel believes may assist it in reaching a fair, equitable and knowledgeable decision is admissible.
Non-judicial proceeding Legally binding In Florida, witnesses can be subpoenaed Parties can settle at anytime Arbitration cannot be held in the absence of the complainant May proceed without respondent if state law permits The panel may decline to arbitrate: – Because of the amount in dispute – Too legally complex
Simply majority vote – Decision is valid and binding No rationale – only states amount of award o Not based on personal conduct but on series of events related to a transaction o Not subject to review by the BOD or appeal by either party o No punitive damages o No Attorneys fees unless provided in an agreement Winner and Loser – splitting the award is not recommended; but permitted in rare circumstances