1. Professional Standards 2013 Anne Powell Roberts Brothers, Inc. 251-709-0019 annepowell@robertsbrothers.com 1

2. 2012 Changes to the Code of Ethics New Standard of Practice1-16 Access to property Article 17 Arbitration – Adds mediation and more specific about procedure Standard of Practice 17-2 Mediation is not required but if no mediation, arbitration is still required unless all parties inform the board in writing that they do not wish to arbitrate 2

3. 2013 Changes to the Code of Ethics Standard of Practice 12-10 – “REALTORS®’ obligation to present a true picture in their advertising and representations to the public includes Internet content posted, and the URLs and domain names they use, and prohibits REALTORS® from: engaging in deceptive or unauthorized framing of real estate brokerage websites; manipulating (e.g., presenting content developed by others) listing and other content in any way that produces a deceptive or misleading result; deceptively using metatags, keywords or other devices/methods to direct, drive, or divert Internet traffic; or presenting content developed by others without either attribution or without permission, or to otherwise mislead consumers. 3

4. Ethics Definitions (pp 29-30) and Grievance Committee (pp 37-38) appointed by president confirmed by board of directors balanced representation of membership mature, experienced, knowledgeable person initial review of and screens complaints and requests grand jury 4

5. Grievance Committee does not (p39) conduct hearings determine violation or award mediate or arbitrate business disputes 5

6. Hearing Panel Chair (p 39) When Grievance Committees refer ethics complains and arbitration requests for hearing, hearing panel chairs can determine if questions about Whether ethics complaints and arbitration requests are timely filed Whether arbitral issues exist Whether arbitration requests are too legally complex to be fairly arbitrated Other administrative issues addressed through pre-hearing meetings or at the outset of the hearing. 6

7. Ethics complaints (p 40) Important questions 1.complaint acceptable form 2.necessary parties named 3.timely filed - 180 days 4.respondent a member or MLS participant of board 5.litigation pending – criminal hold, civil may hold 6.impartial hearing panel 7.articles cited 8.if complaint were true, could it violate Code 7

8. Ethics complaints Options for action of committee forward complaint as submitted by complainant for a hearing amend complaint and forward for hearing dismiss complaint Amendments/dismissals dismissal appealable parties do not attend appeal 8

9. Ethics Hearings Reference and pages Checklistpp 57-61 Outline of Procedurepp 77-79 Words to usepp 83-85 Timeframep 62 Formspp 87-120 Before you file a complaint p 73 9

10. Amending a complaint prior to hearing: complainant may file. Hearing panel may disallow during hearing: complainant or hearing panel 10

11. Rights of parties Both Ethics and Arbitration Hearings counsel make an opening statement present evidence witnesses cross-examine witnesses make closing statement 11

12. Witnesses... Both Ethics and Arbitration Hearing present only during testimony the REALTOR® principal may remain throughout hearing 12

13. Hearing panel’s decision Ethics violation in writing findings of fact discipline 13

14. Fact Finding Clear Concise Statement of the facts Leads to the conclusion Sample (pp 260-261) 14

15. Discipline What & How to determine p 65-69 suspension from board membership for not less than 30 days nor more than one year, or a fine of $5,000 in lieu of suspension expulsion from board membership for one to three years suspension or termination of MLS privileges letter of warning letter of reprimand education fine not to exceed $5,000 probation for one year or less 15

16. Ethic Decisions/Board of Directors After 20 days all ethics decisions must be sent to Board of Directors or committee selected by Board of Directors for review. They are not bound to adopt a Hearing Panel’s decision, even absent any appeal. Procedures establish certain bases on which a decision can be modified sent back to the Hearing Panel, or sent to a new Hearing Panel. 16

17. Reasons for Review Where the members rights safeguarded and did the panel act in a legally prudent manner Was there impartiality Directors /committee should have a reasonable concern regarding severity of discipline proposed (anti-trust) All decisions should include a narrative description of the relevant facts as determined by the Panel based on the evidence and testimony presented 17

18. Arbitration Policy Matters Timing within 180 days after closing within 180 days after facts could have been known with reasonable diligence whichever is later 18

19. Arbitration Policy Matters Fees not to exceed $500 Consistency with state law state law prevails Uniform Arbitration Act consult with board counsel 19

20. Arbitration Policy Matters Consistency with state law Variations from state to state include: advance agreements to arbitrate future disputes agreements to binding arbitration after dispute occurs/arises law does not recognize agreements to arbitrate before or after 20

21. Arbitration Policy Matters Prior Litigation (p 138) pending litigation – hold on arbitration unless court refers to Board to arbitrate matter previously litigated cannot be arbitrated neither party to litigation may charge the other with failure or refusal to arbitrate 21

22. Important questions Arbitration Requests (p 138) acceptable form necessary parties named timely filed parties have standing litigation pending impartial panel arbitrable issue exist – mandatory or voluntary (p 140) amount to small or large too legally complex enough knowledgeable arbitrators 22

23. Arbitration requests Options for action of committee forward for a hearing dismiss request Dismissal by grievance committee may be appealed by either party parties not attend (p 144) 23

24. Submission to arbitration One of three options: signed agreements and deposits before hearing held if no agreement/deposit, proceed if respondent participates in hearing if no agreement/deposit/attendance, proceed if state law allows 24

25. Arbitration Help and Pages in Manual Arbitration Worksheet pp 161-164 Arbitration Checklistpp 167-170 Timeframe p 171 Outline of Procedurepp 188-189 Words to usepp 190- 192 Formspp 203 - 233 25

26. Arbitration hearing The panel three, preferably five, members odd number majority of REALTORS® if REALTOR-ASSOCIATE® or REALTOR® nonprincipal is involved, at least one panel member should be a nonprincipal chair of panel named by chair of professional standards committee challenges for good and sufficient cause additional state law requirements for arbitrators may apply 26

27. Arbitration hearing Rights of parties during hearing counsel (attorney at law) opening statement evidence witnesses cross-examine witnesses make closing statement Note: state law - subpoena power 27

28. Arbitrators’ decision Executive session parties dismissed; panel makes award board counsel may be present to provide procedural guidance and answer legal questions no predetermined rules 28

29. Arbitrators’ decision The award - preponderance of the evidence Form of award only amount no findings of fact or rationale (p 166) not greater than amount requested signed by arbitrators (or majority) no dissenting opinion no discussions with parties in ethics can dissent 29

30. Ethics Complaint Rehearing complainant and respondent have a right to a rehearing newly discovered evidence same hearing panel petitioner given opportunity to present new evidence scope of rehearing limited to new evidence 30

31. Appeal Ethics Hearings deposit maximum $500 in writing clearly state bases for challenge 31

32. Appeal Ethics Hearings respondent’s bases for appeal limited to: misapplication of Articles of Code misinterpretation of Articles of Code procedural deficiency lack of procedural due process nature/extent of discipline imposed alleged procedural deficiency other lack of due process which may have deprived complainant of opportunity for fair hearing 32

33. Appeal Ethics Hearings president or delegate reviews appeal determine if any legitimate basis if not, problem explained to appellant and additional detail requested 33

34. Appeal Ethics Hearings board of directors, or panel of board of directors, or executive committee 34

35. Appeal Ethics Hearings The hearing petitioner limited to bases set forth in written appeal request hearing panel chair summarizes case each party may offer corrections to summary each party may present arguments no new evidence allowed, except as it bears upon claim of deprivation of due process arguments limited to issues raised in written appeal 35

36. Directors’ decision - appeal directors may adopt hearing panel’s decision and recommendation for discipline directors may modify hearing panel’s decision and/or recommendation for discipline directors may dismiss matter if findings of fact not supported if procedural deficiency, directors may refer case back for new hearing before different panel directors may reduce discipline directors cannot increase discipline; can refer back to original hearing panel with their written statement of concerns 36

37. Directors’ action - no appeal if procedural deficiency, directors may refer back for new hearing before a different hearing panel directors may reduce discipline directors cannot increase discipline if concerned with discipline, directors can refer back to original hearing panel with written concerns in the absence of an appeal or one of the other actions stated previously, the directors must adopt the hearing panel’s decision 37

38. Arbitration hearing no right to appeal award right to limited procedural review based solely on assuring that due process rights were observed process provides “safety valve” so no litigation 38

39. Arbitration Request For Procedural Review Limited right of review based solely on: failure of due process board failed to follow established arbitration procedures Note: If not filed in 20 days from receipt of award, award final 39

40. Request for Procedural Review Request for review board of directors, or a panel of the board of directors, or executive committee Request should clearly set forth all bases for challenge use form A-13 in CEAM (p 221) Should not say, “I appeal.” However, all procedural review requests reviewed 40

41. Request for Procedural Review president or delegate reviews request purpose - to determine if request states legitimate basis, however, no “veto” if not, problem should be explained to party and additional information requested 41

42. Request for Procedural Review Director’s decision is final and binding only issue is whether proper procedures followed for due process if directors find hearing defective, award is invalidated, case sent back for new hearing by different panel Parties can be released from obligation to arbitrate 42

43. Request for Procedural Review arguments limited chair clarifies that award itself is not reviewed no new evidence except as it bears upon claim of deprivation of due process standard rights to challenge hearing panel chair can respond to appellant’s allegation other parties to arbitration can support original decision 43

44. Basis for award (p 154) No predetermined rule to determine entitlement no “contract” rule no “threshold” rule Determination based on all facts and circumstances related to particular transaction 44

45. Basis for award Black’s Law Dictionary, Fifth Edition, defines procuring cause as: A broker will be regarded as the “procuring cause” of a sale... if his efforts are the foundation on which the negotiations resulting in a sale are begun 45

46. Basis for award Black’s Law Dictionary, Fifth Edition, further defines procuring cause as: A cause originating a series of events which, without a break in their continuity, result in accomplishment of prime objective of the employment of the broker who is producing a purchaser ready, willing, and able to buy real estate on the owner’s terms 46

47. Factors to be considered ( pp 155-158) Factor 1: No predetermined rule of entitlement “rules of thumb,” and prior decisions disregarded agency relationships not determinative of entitlement to compensation Factor 2: Arbitrability and appropriate parties questions of arbitrability and appropriate parties named can be considered by panel 47

48. Factors to be considered Factor 3: Relevance and admissibility generally, state law controls any relevant evidence is admissible 48

49. Factors to be considered Factor 3: Relevance and admissibility Possible ethics violations in arbitration hearings can be considered part of evidence cannot be used to withhold an otherwise substantiated award should be considered only as one of the many potentially relevant factors in decision Note: hearing panel shall not make referrals of ethical concerns that arise during a hearing 49

50. Factors to be considered Factor 4: Communication and contact - abandonment and estrangement Abandonment: whether the broker’s inactivity, or perceived activity, may have caused the purchaser to reasonably conclude that the broker had lost interest in or disengaged from the transaction. (CEAM, Appendix II to Part Ten) 50

51. Factors to be considered Factor 4: Communication and contact - abandonment and estrangement Estrangement: whether the broker engaged in conduct or failed to act which caused the purchaser to terminate the relationship. This can be caused, among other things, by words or actions. (CEAM, Appendix II to Part Ten) 51

52. Factors to be considered Factor 5: conformity with state law Factor 6: consideration of the entire course of events -- the list 52

53. Mediation Mandatory or Voluntary (pp 172-182) Mandatory or voluntary as determined by local Board May withdraw from the process at any point prior to reaching an agreement. Testimony and offers of settlement cannot be offered as evidence in arbitration hearing. If settlement is reached Arbitration will no longer be an option. 53