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Three-way Agreement
•National Association
Of REALTORS®
•Arkansas REALTORS®
Association
•Local Board of
Realtors®
National Association of
REALTORS®
• 1.3 million members
• Over 30 major policy
suggesting committees
• Board of directors/executive
committee
• Annual member meetings, May
& November Convention
National Association of
REALTORS®
• Chicago: all member services
except political
• Washington, DC: legislative and
political
Arkansas REALTORS® Association
• Membership of approximately 8,400
out of approx. 11,000 active
licensees in AR
•13 committees and task forces
• 38 member Board of Directors
• 8 member Executive Committee
• 9 member staff
Arkansas REALTORS® Association
• Member/Local Board support
• Update NAR with local and state
political and market conditions
• Maintain open dialogue with state and
federal agencies on behalf of the
members
• Toll Free, 888-333-2206 or
501-225-2020
So, what
does all
this mean
to me?
National Association of REALTORS®
•NAR Magazine:
“Today’s REALTOR®”
• Up-to-date with:
REALTOR.Org
•Member discount programs
Arkansas REALTORS® Association
•ARA Newsletter:
“REALTOR® ‘Rightings”
• Up-to-date with:
www.arkansasrealtors.org (some areas are secure for members)
• Knowledgeable, professional staff
Call us!
888-333-2206 or 501-225-2020
National Association of
REALTORS®
• Mid-Year Conference in
Washington D.C.
• Annual Convention with over 300
educational sessions
Arkansas REALTORS® Association
• Graduate, REALTOR® Institute Program (GRI)
• Annual State Convention featuring numerous
industry speakers
• CRS courses sponsored by the AR Chapter CRS
• ABR Courses
• Annual Forms Training to Local Boards
Graduate, REALTOR® Institute
(GRI)
Certified Residential Specialist
(CRS)
Accredited Buyer Representative
(ABR)
e-PRO
Certified Residential Broker
(CRB)
Certified Commercial Investment Member
(CCIM)
Institute of Real Estate Management
(IREM)
National Association of REALTORS®
• Legal Action Program
• Legal Liability Series
ANTI-TRUST:
Arkansas REALTORS® Association
• ARA Legal HOTLINE via e-mail
• Legal FAQ site ON-LINE (secure, requires sign-in)
• Member discount on Real Estate Forms
• Over 2400 man hours annually spent by
REALTOR® volunteers on forms
development
National Association of REALTORS®
• A staff of over 50 in Washington D.C.
serving as “watchdogs” and lobbyists
for YOU and Property Rights!
• REALTOR® Legislative Network
• REALTOR® Political Action Committee
(RPAC)
What can YOU do?
• Understand Private Property issues
• Come to the Mid-Year Conference and get
to know your federal legislators
• Respond to the “Calls to Action” through
Action Center on Realtor.org.
Arkansas REALTORS® Association
• Two Contract Lobbyist at the Capitol daily
• Member-driven decisions
• Members kept up-to-date during the
Legislative Session through ARA website
• ARA is politically active year round
watching out for your rights!
• ARA supports members seeking elected office
REALTORS® Political Action Committee
•Allows members to help candidates who
understand our industry
• Helps open doors and encourages lawmakers to
keep an open mind on our issues
• Positions REALTORS® as legitimate players in
the political arena who command respect
REALTORS® Political Action Committee
What ARPAC is NOT!!!
•Partisan
•A Vote-buying vehicle
REALTORS® Political Action Committee
RPAC’s Recent Successes:
• Private property rights bill
• Housing for Older Persons Act
• Health insurance deduction
• Maintaining mortgage interest
deduction
• Prevented
Banks from entering the Real
Estate Business
Arkansas REALTORS® Political Action
Committee
• In 2006, ARA Lobbyist
voted best in the state.
• In 2006, ARA ranked 1st in
spending, preparing for
and lobbying for the
2006 Session
Arkansas REALTORS® Political Action Committee
WHY CONTRIBUTE?
• Investments in the future of your
business
• Tax credit on State Income Tax , not a
deduction
• Imagine the IMPACT magnified by
over One Million REALTORS®
What If?
• You were responsible for discovering structural
defects…
• You were required to research every listing
neighborhood for registered sex offenders…
• You had to pay sales tax on your earned
fee...
• You were responsible for ANY defects in a home
you sold beyond required disclosure by law…
National Association of
REALTORS®
• E-Commerce
• REALTOR.Org and
REALTOR.COM
• Membership Records (NRDS)
• Technology is best observed at
NAR Convention
Arkansas REALTORS®
Association
• New Task Force named
• Task Force reports on software
and hardware for members
• Real Estate Forms software
• Interactive, full-service website
• Large projects being formed now
PROTECTED CLASSES
The Fair Housing Act Prohibits discrimination on housing
because of:
•Race
•Color
•Sex
•Religion
•National Origin
•Handicap
•Familial Status
National Association of REALTORS®
• Legal
Liability Series
• Fair Housing Partnership
Agreement
• At Home with Diversity
Certification
Arkansas REALTORS® Association
• State Fair Housing Partnership
Agreement with HUD
• Equal Housing Opportunity Posters
provided
• Staff/Officers available to speak at
Local Board Meetings
FAIR
HOUSING
VIDEO
National Association of REALTORS®
• $50,000,000 Public Awareness
Campaign
• 2008 and beyond
year around.
Arkansas REALTORS® Association
• Award for Excellence
• Arkansas Special Olympics.
• ‘House to House’ weekly column to over
320,000 households.
• Over 1,000 articles and news in
newspapers throughout the state
annually.
Arkansas Special
Olympics
•1986 - ARA Becomes a Premiere
Sponsor
Since 1986, ARA has raised over
$1,200,000 on behalf of
Special Olympics
Awards for Excellence Program
• Statewide program to recognize
Top Producers
• Based on listing, leasing and
selling volume
• Available in residential,
commercial, and property
management
REALTOR®-of-the-Year
Arkansas REALTORS® Association
Local Board recipients honored at Gala
during Annual Convention and Trade Show.
One outstanding REALTOR® named
ARA Realtor® of the Year at this
Gala.
CODE OF ETHICS
The REALTOR®
Code of Ethics
New Member Orientation Program
National Association of REALTORS®
History and Background of the
Code of Ethics



National Association of
REALTORS formed in
1908.
No license laws at the
time.
Real estate industry had a
history of speculation,
exploitation, and disorder.
2
History and Background of the
Code of Ethics


Code was adopted in 1913 to establish a
professional standard of conduct.
Code of Ethics formed the basis for
license laws.
2
History and Background of the
Code of Ethics

2
From its inception, the
Code of Ethics
required arbitration of
monetary disputes
between
REALTORS.
Under all is the land …
The Preamble

The Golden Rule

Widely allocated ownership” and
“widest distribution of land ownership”

Maintain and improve the standards
of their calling.
3
The Preamble
Share with fellow REALTORS a
common responsibility for the integrity
and honor of the real estate profession.
 Strive to become and remain informed
on issues affecting real estate.
 Willingly share the fruit of your
experience and study with others.

3
The Preamble

Identify and take steps to eliminate practices
which may damage the public or which might
discredit or bring dishonor to the real estate
profession.
 Urge exclusive representation of clients.
 Do not attempt to gain any unfair advantage
over competitors.
 Refrain from making unsolicited comments
about other practitioners.
3
The Preamble

If an opinion is sought about a competitor (or
the REALTOR believes comment is
necessary), the opinion should be offered in
an objective, professional manner.
 The term REALTOR stands for competency,
fairness, high integrity, moral conduct in
business relations.
 No inducement of profit and no instruction
from clients can justify departure from these
ideals.
3-4
The Three Major Sections
Duties to Clients and
Customers
 Duties to the Public
 Duties to REALTORS®

4
The Structure of the Code of Ethics

Articles
– Broad statements of ethical principles.

Standards of Practice
– Support, interpret, and amplify the Articles
under which they are stated.
4
The Structure of the Code of Ethics

Case Interpretations
– Specific fact situations to which the
Articles and/or Standards of Practice are
applied.

Only Articles of the Code can be
violated, though Standards of
Practice can be cited in support of an
alleged violation.
4
Ethics or Arbitration

Ethics: Basic Issue
– Is there a possible violation of the Code
of Ethics?

Arbitration: Basic Issue
– Is there an arbitrable issue, that is, a
money dispute?
– Typically a dispute over which
REALTOR is entitled to the
cooperative commission in a
transaction.
5
The Ethics Enforcement Process
 Who
can file a
complaint?
5
The Grievance Committee

A screening committee comprised of
members of the Association appointed to
the committee.
 Key question for the Grievance Committee:
If the allegations in the complaint were
taken as true on their face, is it possible
that a violation of the Code of Ethics
occurred?
5
Professional Standards Hearing
Panel


Function is to conduct a full “due process”
hearing with sworn testimony, witnesses
and evidence.
Hearing Panel is comprised of members
of the Professional Standards Committee.
5
Professional Standards Hearing
Panel


After conducting a hearing, the Hearing
Panel decides whether there was a
violation of the Code of Ethics, proven by
clear, strong and convincing proof.
If the Hearing Panel finds a violation of
the Code of Ethics, the Panel then
determines the discipline to be imposed
on the violator (respondent).
5
Authorized Discipline
(and administrative processing fees)

Letter of Warning
 Letter of Reprimand
 Education
 Fine not to exceed $5,000
 Probation for one year or less
 Suspension for not less than 30 days nor more than
one year
 Expulsion from membership for period of one to three
years
 Suspension or termination of MLS privileges
 Administrative processing fee (if found in violation) not
to exceed $500 (“Court Costs”)
6
The Arbitration Process
Request filed.
 Arbitration is conducted under
Article 17 of the Code of Ethics and
the state arbitration statute (if any).

6
The Arbitration Process

Article 17 provides that arbitration occurs
under the following circumstances:
– Contractual disputes or specific noncontractual disputes
(see Standard of Practice 17-4);
– Between REALTORS (principals)
associated with different firms;
– Arising out of their relationship as
REALTORS
6
Grievance Committee

Committee performs a screening function
similar to review of ethics complaints.
 Key question for the Grievance Committee:
If the allegations 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?
6
Mediation

A voluntary process in which
disputing parties meet with a mediator
appointed by the Association to
create a mutually acceptable
resolution of the dispute, rather than
having a decision imposed by an
arbitration hearing panel.
7
Mediation

Mediation can occur before or after the
Grievance Committee reviews requests for
arbitration, depending on local Association
policy.
 If a dispute is resolved in mediation, the
parties sign an agreement spelling out the
terms of the settlement, and no arbitration
hearing is held.
7
Professional Standards Hearing
Panel


Function is to conduct a full “due process”
hearing with sworn testimony, witnesses
and evidence.
Hearing Panel is comprised of members
of the Professional Standards Committee.
7
Professional Standards Hearing
Panel

After the hearing, the Hearing Panel
decides which REALTOR is entitled
to the award (typically a disputed
commission in a transaction), proven
by a preponderance of the evidence.
Materials Page #7
Payment of the Award
Generally, the award of the Panel in
an arbitration case can be judicially
enforced if not paid by the nonprevailing party.
 Some associations have procedures
requiring that awards by deposited
with the association pending review of
the hearing process or during legal
challenge.

7
NAR’s Arbitration Guidelines

Found in the Code of Ethics and Arbitration
Manual.
 Guidance to Hearing Panels as to how to
determine procuring cause in arbitration
hearings.
 Also referred to as “Suggested Factors for
Consideration by a Hearing Panel in
Arbitration.”
 Guidelines focus on “procuring cause” as
the basis for resolving most commission
disputes between brokers.
8
Key Factors in a
Procuring Cause Dispute

No predetermined rule of entitlement may
be established by an association.
 Hearing Panels should consider the entire
course of events.
 Matters such as the first showing of the
property, the writing of the successful offer
or the existence of an agency relationship
with the buyer are not, in themselves,
exclusive determiners of procuring
cause/entitlement.
8
Key Factors in a
Procuring Cause Dispute

The key concepts of procuring cause
are referenced in this definition from
Black’s Law Dictionary, Fifth Edition:
“The proximate cause; the cause
originating a series of events which,
without break in their continuity,
result in the accomplishment of the
prime object.”
8
Article 1
Protect and promote the interests of
the client;
 This obligation to the client is primary;
 But must treat all parties honestly,
regardless of agency or non-agency
relationship.
 Standard of Practice 1-2 defines
terms such as “client,” “customer,”
“agent,” and “broker.”

9
Article 2
11
Article 2
Avoid exaggeration,
misrepresentation and concealment
of pertinent facts about the property or
the transaction;
 But there is no obligation to discover
latent defects, matters outside scope of
license, or matters confidential under
agency or non-agency relationships.

11
Article 9
 Get
13
it in writing!!!
Article 9

Agreements shall be in writing whenever
possible;
 In clear and understandable language;
 Expressing the specific terms, conditions,
obligations and commitments of the
parties.
 A copy of each agreement shall be
furnished to each party upon their signing
or initialing.
13
Article 9

Standard of Practice 9-1 requires that
reasonable care be used to keep
documents current by use of written
extensions and amendments.
13
Article 12
 Truth
14
in advertising!!
Article 12

Present a “true picture” in your
advertising and representations to the
public.

Ensure that the professional status of
REALTORS is clearly identifiable in
any advertising.
14
Article 16

Do not engage in any practice or take
any action inconsistent with the
agency or other exclusive relationship
that other REALTORS® have with
clients.
15
Article 16

Examples of issues covered by Article 16
and its Standards of Practice
– Innovative or aggressive business practices
– Advertising/solicitations which may be received
by other REALTORS clients
– Solicitation of listings and agency relationships
of clients of other brokers
– Dealing with other brokers’ clients
– Obligations when entering into exclusive
relationships
– Agency and/or brokerage relationship
disclosure
15
The REALTOR Code of Ethics …
protects the buying and selling public.
 promotes a competitive real estate
marketplace.
 enhances the integrity of the industry.
 is your promise of performance.
 is your promise of professionalism.

16
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Collection, 1895 Francisco Blvd. East, San Rafael, CA
94901-5506, USA
Local MLS Rules
and Regulations