Dispute Resolution

The Association has identified and trained members with a thorough knowledge of the Code of Ethics and the Standards of Care in the Sacramento real estate industry, as well as the willingness and patience to help others, to provide ombudsmen services.

When a phone call from a SAR member or client of a member comes into the Association, the caller may be offered the ombudsman service. The ombudsman may advise the complainant on possible avenues of resolution or simply answer questions.

If the matter might be better resolved in a meeting with the respondent, the ombudsman may encourage the complainant to request ethics mediation.

If the complainant wishes to file a complaint, the ombudsman can assist the complainant with the preparation of written statements and an understanding of what the burden of proof for a hearing might entail.

The ombudsman may also be the disputant’s REALTOR^® representative at any ensuing hearing. The complainant is assured of complete confidentiality during this process.

Mediation is the preferred dispute resolution of the National Association of REALTOR^®. The Sacramento Association of REALTOR^® (SAR) has trained some members of the Professional Standards Committee to provide mediation services to association members and their clients.

Mediation is a voluntary process in which disputing parties meet with a neutral third party (the mediator) to create a mutually acceptable resolution of a dispute. Mediators are impartial facilitators of resolution; they do not decide innocence or guilt, give legal advice nor impose a decision on either party.

Mediation is an alternative to adversarial, expensive and time consuming litigation. It is non-adversarial, confidential, informal and inexpensive. Mediation is now widely recognized as a forum of choice for the resolution of conflicts and misunderstandings; it is where the parties control the outcome of a dispute.

If the parties agree upon a resolution of the dispute, the agreement is usually written as a legally binding contract which the parties sign. Parties do not forfeit their legal rights to arbitrate or litigate the dispute if mediation is unsuccessful.

The types of mediation services offered by (SAR) include the following:

Mediation Prior to Arbitration: SAR has adopted the policy of mandatory mediation prior to arbitration. It is in mediation where the parties control the outcome of the decision. The purpose of the discussion with the Mediator is to attempt to resolve the matter and avoid a formal hearing by a Professional Standards Hearing Panel. SAR’S mediators are trained by Pepperdine University instructors from the Straus Institute for Dispute Resolution. A successful mediation cancels the need for an arbitration hearing.

A signed resolution of the dispute ensures that the parties will receive $200 of their $250 arbitration filing fees back upon the final settlement. (In an arbitration hearing, the panel determines whether either of the parties will be refunded their deposit fee, if requested.)

Ethics Mediation: Any party (member of the public, another REALTOR^®, or a licensed real estate agent) may request ethics mediation with SAR members by calling the Association and filling out the appropriate request form. Ethics mediation is a voluntary process giving the parties an opportunity to meet and work out a mutual resolution of the matter before it becomes a written complaint.

Client or REALTOR^®/Client Mediation: SAR also offers buyer/seller mediation to clients of SAR members or between a client and REALTOR^® where specified by a contractual agreement such as the listing agreement. These are provided by paid mediators, who may or may not be members of SAR.

There is a charge of $600 per party. This charge pays for two hours of mediation at $300/hour. If the mediation goes beyond two hours, additional monies will be owed by each party for the mediator’s services. Since the purchase agreement indicates that parties will mediate their disputes, mediation is an excellent avenue for sellers and buyers to try and resolve the dispute if the disputed amount is above the $10,000 allowed by Small Claims Court.

There is also a legal precedent for mediating prior to arbitrating if the parties want to claim attorney’s fees for an arbitration. The very clear advantage of mediation is that the parties are in control of the final decision as opposed to arbitration where someone else will decide who wins and who loses.

Background

The National Association of REALTOR^® adopted its Code of Ethics in 1913, imposing duties above and in addition to those imposed by law and regulation. Not all real estate agents are REALTOR^®; only those agents who belong to their local Association of REALTOR^® may claim this designation. With the REALTOR^® designation comes the obligation to abide by the professional behavior to clients, customers, other members of the public and fellow real estate professionals detailed in the Code of Ethics. It is because of this obligation to the Code of Ethics that you may file a complaint with the Association. To determine whether an agent is a REALTOR^®, please call the Association for verification or check the Association Directory.

Many difficulties between real estate professionals may result from misunderstandings or miscommunications. Therefore, before filing a complaint, it is recommended that you speak with your real estate professional and/or with the principal broker of the firm prior to filing a complaint. Differences may often be resolved by such communication.

Sacramento Association of REALTORS^® offers Ethics Mediation as another option to resolve a dispute before a written complaint is filed. Mediation is a voluntary process of giving the parties an opportunity to meet and work out a mutual resolution with a neutral third party Mediator.

Associations of REALTORS^® only determine whether the Code of Ethics or association membership duties have been violated, not whether the law or real estate regulations have been broken. When broken laws or regulations are suspected or when the real estate professional is not a REALTOR^®, you may need to contact the California Bureau of Real Estate at (877) 373–4542 or the courts. And if litigation is being pursued by the complainant, the Association will usually not proceed with the ethics complaint until the litigation has concluded.

For violations of the Code of Ethics, the association may discipline its REALTOR^® members. Such discipline may involve letters of warning or reprimand, require appropriate education relevant to the violation, impose fines and/or suspend or terminate association membership for serious or repeated violations. The Association may not require REALTOR^® to pay the complainant(s) monetary or punitive damages and cannot revoke a real estate license.

Filing an Ethics Complaint

To file a complaint you must:

• Complete, sign and date the ethics complaint form. (Ethics complaints must be filed with the Association within 180 days of the time the complainant knew – or reasonably should have known—that potentially unethical conduct took place).
• Check the Article(s) of the Code of Ethics believed violated. The articles are illustrated through Standards of Practice, but the Standard of Practice may only be used as support for the Article(s) being charged. The Article number(s) must be cited.
• Include a narrative description of the circumstances and facts surrounding the complaint, being as specific as possible.
• Attach copies of all relevant documents such as listing and sales contracts, letters etc. labeling these as Exhibit 1, etc.
• Make 8 copies of the complaint package and forward it to the Professional Standards Coordinator of the Association which has jurisdiction over the complainant.

Background

In an ongoing effort to increase professionalism in the marketplace for our Membership, streamline the ethics hearing process and protect the interests of the general public, SAR adopted the C.A.R. Citation System for Code of Ethics violations.

SAR’s Professional Standards and Grievance Committees are charged with upholding the highest principles of the Association and ensuring that Members adhere to the REALTOR^® Code of Ethics. Over the years, Members have sought ways to avoid time consuming ethics complaint filings and hearings. In response to a similar complaint by Associations throughout the state, C.A.R. introduced a new citation system. SAR and its regional partners, the El Dorado, Placer and Yolo County Associations of REALTOR^®, all adopted this Citation System effective January 1, 2009.

How the Citation System Works

Business conduct violating some articles in the REALTOR^® Code of Ethics could be subject to a citation or fine. The Association’s Grievance Committee or a subcommittee of the Grievance Committee will decide whether the conduct in any ethics complaint received by the Association is subject to a citation/fine. If the Grievance Committee decides the conduct is a citable offense, the following will occur:

• The violator will be notified (as will the violator’s broker) and he/she will have 10 days to pay the cited fine or request an ethics hearing.
• If no response is received after ten (10) days, a warning letter will be issued. If there is no response to the warning letter within another ten (10) days, the matter will be forwarded for a full ethics hearing, with possible amendments by the Grievance Committee
• Only three (3) citations may be issued to a violator within a three (3) year period; subsequent potential violations would be sent directly to an ethics hearing.
• The fee structure is: $250 for the first citation, $500 for the second citation and $1,000 for the third citation. On the first citation only, the violator may attend live Code of Ethics training to be completed within 90 days, after which the violator would receive a refund of $200 of the $250 fine paid.

Articles and Behavior Which are Citable

Article 3:

• Attempt to change offer of compensation after being made aware of signed offer to purchase
• Failure to disclose existence of dual or variable rate commission
• Failure to disclose existence of accepted offers to cooperating brokers

Article 6:

• Accepting any commission, rebate or profit on expenditures without client’s knowledge or consent

Article 12:

• Failure to present a true picture in real estate communications and advertising
• Failure to disclose professional status in advertising and other representations
• Failure to disclose compensation from 3^rd party for services provided free to a client
• Failure to make reasonable efforts to ensure that information on websites is current and correct
• Failure to display name of firm and state of licensure in a reasonable and apparent manner
• Failure to present a true picture in advertising and representations to the public, including misleading images, internet content, URLs and domain names
• Failure to disclose intent to share or sell consumer information gathered via Internet
• Using or registering domain name or URL that presents less than a true picture
• Using a professional designation, certification or other credential to which they are not legitimately entitled
• Failure to disclose status as both owner/landlord and REALTOR^® or licensee when advertising property in which REALTOR^® has ownership interest
• Falsely claiming to have “sold” property
• Registration or use of deceptive URL or domain name

Article 14:

• Failure to cooperate in any professional standards proceeding or investigation

Article 16:

• Use of terms of an offer to modify listing broker’s offer of compensation
• Placement of for sale/lease sign on property without permission of seller/landlord

Background

By virtue of becoming and remaining a member of an Association and having signed an agreement to abide by Association bylaws, every member agrees to bind themselves and the company for whom they act to submit disputes “arising out of a real estate transaction” to arbitration as defined in Article 17 of the National Association of REALTOR^® Code of Ethics.

Furthermore, membership termination from the Association will not absolve the member of arbitration duty for disputes arising when the person was a member of the Association.

Disputes subject to arbitration include disputes with other REALTOR^® members arising out of real estate business and their relationship as REALTOR^® (usually over the distribution of a commission) and in specified contractual disputes with a member’s client arising out of an agency relationship between the member and client (provided the client agrees to submit the dispute to binding arbitration with the association and be bound by the arbitration award).

REALTOR^® and REALTOR^®–ASSOCIATE members filing for arbitration of a dispute involving the responsible broker at the time of the dispute (but not between the member and responsible broker) must have the responsible broker join in the dispute and filing of a complaint.

Members and the Association are not bound to arbitrate disputes between members of the same firm unless each party agrees in writing to the arbitration of such disputes under the Association’s facilities or a copy of the Independent Contractor’s Agreement specifying that the matter be considered at the Association is presented. Similarly, if members enter into separate agreements to arbitrate disputes outside of the Association (e.g. the American Arbitration Association); this separate agreement would supersede the obligation to arbitrate the dispute at the Association.

This would not include an attempt to bypass the arbitration process by filing a civil lawsuit against another member. In this case the respondent member can request the court to compel arbitration at the local association in accordance with the arbitration agreement; however, failure by the respondent to make this request of the court would waive the right of the parties to arbitrate at the local association.

Associations may also refuse arbitrations that clearly did not arise out of the real estate business, are clearly beyond the time frame for submission of an arbitration complaint, are legally too complex, or the amount involved in the dispute is considered too large or too small. If an arbitratable matter is involved in litigation at the time a complaint is filed, the arbitration will not be heard at the Association unless litigation is withdrawn or the courts refer the matter back to the Association.

If a member holds membership in several different associations, another member can file a complaint at any association where the other member holds membership or where both members have common membership.

If both an ethics complaint and a request for arbitration are received concerning the same event, the Association will wait until the arbitration has been concluded before proceeding with the ethics complaint. Also, if more than one arbitration complaint is received concerning the same event, the requests will be combined and considered in one arbitration hearing. And under no circumstances are punitive damages awarded or will an award exceed more than the amount specified in the dispute.

SAR has adopted the policy of mandatory mediation prior to any arbitration hearing. The purpose of the discussion with the Mediator is to attempt to resolve the matter and to avoid a formal hearing by a Professional Standards Hearing Panel. It is in mediation where the parties control the outcome of the decision. If the matter is successfully resolved within the three hour mediation session, each party will receive $200 of the deposit fee back.

If the parties are unable to resolve the dispute in mediation, a formal hearing will be scheduled with a Professional Standards Panel.

Filing an Arbitration

To file an arbitration complaint you must:

• Complete, sign and date the Arbitration Request Form. Arbitration request forms should be typed or printed and indicate the amount in dispute and should be submitted with a legible narrative explaining why you feel you are entitled to an award, with any pertinent exhibits and attachments clearly marked. Eight (8) legible copies of all documents must accompany the arbitration request.
• The complaint must be filed within one hundred and eighty days (180) from the date the transaction closes or from the time the facts giving rise to the dispute occurred.
• Include an arbitration filing fee of $250 made payable to the Sacramento Association of REALTORS^®.
• Obtain the complaining broker’s signature on all requests to arbitrate. Arbitration may not proceed with the salesperson as the sole complainant.
• Be sure to determine the necessary and appropriate respondent depending on the circumstances of the dispute – usually the responsible broker in a commission dispute.