Professional Standards Training Guide

Nothing is more essential than leadership emphasis. If the President, Officers, and Directors count the Code and enforcement important, the members will count it important. The ways by which the President can provide leadership emphasis are by careful selection of Grievance Committee and Professional Standards Committee members, by a lunch or meeting with them, by stated objectives including an annual training program, and by reference in speeches and articles (especially in the first of the year).

The early and careful selection of Grievance Committee and Professional Standards Committee members should be a priority of each new President of the State Association or a local Member Board.

The President should determine the number of appointments to be made to the Grievance Committee and the Professional Standards Committee soon after election and should give careful consideration to available and competent persons for such appointment.

Special care should be given to the naming of a Chairperson and Vice Chairperson of the Grievance and Professional Standards Committees. It is the Chairperson who sets the pace and tone of the committee and the accomplishment of its duties and responsibilities. A competent Chairperson will inevitably ensure a competent and functioning Grievance Committee or Professional Standards Committee, and will provide excellent training for committee members and for future Chairpersons.

Each State Association and each local Member Board should institute an Annual Training Program for Grievance Committee, Professional Standards Committee and Board of Directors members, and if possible, a separate training for mediation and ombudsmen. This may vary at the local Board level in its formality and presentation because of the size of the Board, but an annual “refresher” program for current members and a thorough training seminar or meeting should be provided for new members. Such a training seminar program should be conducted early in each new administration. The Professional Standards Committee of the National Association of REALTORS® has recommended that each local Board establish a Code of Ethics Education Subcommittee of the Board’s Professional Standards Committee, and that the Subcommittee be charged with establishing an ongoing year-round education program for Board Members to train them in awareness of the Code of Ethics, its interpretations, and its enforcement procedures.

The responsibility for establishing an Annual Training Program may be assigned by the President to utilize the talent and facilities available to the President. In larger, more formally organized Boards, the responsibilities may be assigned jointly to the Chairperson of the Grievance Committee, the Professional Standards Committee, and the Education Committee, working with the Professional Standards Administrator of the Board and reporting proposed plans to the President for accomplishing the desired objectives.

In other circumstances, the President may wish to vary from the pattern suggested above but no training program should be implemented without involvement, review and approval of the program by the Chairpersons of the Grievance Committee and the Professional Standards Committee. Where feasible, these Chairpersons or their Committee members may be involved in the presentation of the program, but special consideration should be given to selection of competent and articulate instructors in such a program.

For the local Board, it should be early in the year and at the Board office or other facility.

For the State Association Training Program involving local Board Members, consideration should be given to a one day-long annual program at a central location, or to breaking it into such a program presented in various regions or areas. The time should be early in the year, if feasible, but the training program’s existence on a regular and ongoing basis is more important than the time.

Length and format may vary, but a sample agenda follows:

Training Members of the Grievance Committee, Professional Standards Committee and Board of Directors of a Board of REALTORS®

_________ Association of REALTORS®, Monday, ______, 20__

Ethics In an Era of Litigation (8:30 a.m.)

• Litigation-Prone Era
• Alternatives—Self Control or Government Control;
• Self-Discipline or Discipline of Courts and Agencies
• Organizational Codes of Ethics — Strength and Vulnerabilities
• Code of Ethics of the National Association of REALTRORS®
• Standards of Practice as Interpretations of the Code of Ethics
• Collaborative dispute resolution: mediation and arbitrable disputes, ethics mediation, and ombudsman.

Questions and Answers (9:15 a.m.)

Break (10:00 a.m.)

Code of Ethics and Arbitration Manual: Publications of the National Association (10:15 a.m.)

• Code of Ethics and Arbitration Manual
  • Purpose and Perspective
  • Preface
  • Introduction
• Case Interpretations of the Code of Ethics
  • Purpose and Perspective
  • Preface
• Professionalism in Real Estate Practice Preface
  • Introduction
  • An Assurance of Public Service Protection
  • Aspirational Objectives of the Preamble
  • Citation Policy and Fast Track process for ethics complaints, if applicable

Questions and Answers (11:00 a.m.)

Lunch (Noon)

The Grievance Committee and the Professional Standards Committee of a Board of REALTORS® (1:00 p.m.)

• Priority Assigned to Selection of Members of Board to Fill Existing Vacancies
• Method and Timing of Selection of Committee Members
• Training at Beginning of Year and on Continuing Basis
• Performance of Chairperson and Committee Members of the Grievance Committee or of the Professional Standards Committee
• Professional Standards Procedures of the Board
• Use of Legal Counsel
• Significance of Actions of the Professional Standards Committee

Questions and Answers (2:00 p.m.)

Break (2:15 p.m.)

Ethics and Arbitration Hearings (2:30 p.m.)

• Separation of Ethics and Arbitration Hearings
• Priority of Arbitration vs. Ethics Hearings
• Use of Counsel in Hearing
• Fidelity to Due Process
• Outline of Procedure With Notice
• Chairperson’s Procedural Guide for Conduct of an Ethics or Arbitration Hearing

Role of the Board of Directors (3:30 p.m.)

• Fiduciary duties
• Appeals of dismissed ethics complaints and arbitration requests
• Appeals of ethics decisions
• Procedural review of arbitration hearing procedures
• Declaratory relief – ethics
• Judicial enforcement – arbitration

Questions and Answers (4:30 p.m.)

Adjournment (5:00 p.m.)

Reference is made in this guide to sources of information which are basic and necessary for instructors who utilize this guide and for Grievance Committee, Professional Standards Committee and Board of Directors members of Member Boards. These sources are listed below along with other products which instructors and/or members may find useful. To order any products listed below, call the Member Support Department of the National Association of REALTORS® at 1-800-874-6500. Sample case materials, videos, and "what ifs" are also available.

(a) Code of Ethics and Standards of Practice: This is the basic document which must be utilized in its current authorized form, and it is presented at the beginning of this Manual. The pamphlet contains the Articles of the Code of Ethics and the Standards of Practice, describing the level of conduct expected of REALTORS® and REALTOR-ASSOCIATE®s.

(b) Code of Ethics and Arbitration Manual: The Code of Ethics and Arbitration Manual is the official guide of the National Association to local Boards and State Associations to the specific procedures to be followed in conducting an ethics hearing or in hearing business disputes submitted to arbitration. It also includes information on mediation, Multi-Board Grievance and Professional Standards Committees, Statements of Professional Standards Policy and the Interpretations of the Code of Ethics. The Case Interpretations are provided in numbered “case study” format and provide guidance in professional standards matters for both Boards and Board Members. Each Case Interpretation contains detailed factual situations and arrives at a conclusion based on all determined facts of the particular case. These interpretations provide valuable guidance for training Grievance Committee and Professional Standards Committees members of Member Boards. The Code of Ethics and Arbitration Manual is recommended to Member Boards of REALTORS® for adoption and incorporation into the bylaws of the Board after review by Board legal counsel to adapt its provisions to conform to applicable state law. It is desirable that the State Association accomplish a legal review of the Code of Ethics and Arbitration Manual and make recommendations to all Member Boards in the state as to the provisions that must be adapted to be consistent with state law. If the Code of Ethics and Arbitration Manual is not adopted and incorporated into the bylaws of the Board, as adapted to conform to state law, any other procedures used by the Board must comply substantively with the provisions of the Code of Ethics and Arbitration Manual, National Association of REALTORS®.

Where this has been accomplished, any training program for Grievance Committee and Professional Standards Committee members should utilize the version of the Code of Ethics and Arbitration Manual of the National Association which incorporates provisions to be consistent with state law. Where it is not accomplished on a statewide level, training programs should utilize the Code of Ethics and Arbitration Manual as available from the National Association, and if training is at the local Board level, the professional standards procedures of the Board as reviewed and certified to the local Board by legal counsel to ensure due process consistent with law.

(c) Professionalism in Real Estate Practice: This brochure provides a comprehensive, ready reference to the Articles of the Code of Ethics, the Standards of Practice, and Case Interpretations. It contains a narrative explanation of each Article of the Code, plus a brief synthesis of the Standards of Practice and Case Interpretations. It also contains a tear-out certification form that may be used by REALTORS® and REALTOR-ASSOCIATE®s to confirm their commitment to Code of Ethics awareness in their firms.

(d) Advanced Administrative Concepts Self-study Course: Self-study course designed to increase awareness and understanding of advanced professional standards issues. Lessons include: The Code of Ethics, key players, ethics and arbitration cases, the appeal process and the National Association’s Dispute Resolution System.

(e) Professional Standards Procedures Outlines: Available online at nar.realtor are eleven (11) single subject outlines, ready for duplicating, on various topics relating to enforcement of the Code ranging from the role of the Grievance Committee to appeals and procedural reviews heard before the Board of Directors. Allows Association Executives and selected members of Boards and Associations to consistently and correctly relay professional standards enforcement information to Board Members, specifically those serving on the Grievance and Professional Standards Committees and the Board of Directors.

(f) The Code of Ethics—REALTORS®’ Pledge of Performance and Service, Mediation—The Winning Solution, and Code of Ethics Enforcement—An Association Service Brochures: All brochures are four-panel self-mailers designed to be personalized with your Board’s or Association’s name, address, and telephone number. See below for details. To order your Association’s/Board’s customized, concise, and easy-to-understand brochures, call 1-800-874-6500.

• The Code of Ethics—REALTORS®’ Pledge of Performance and Service: This brochure details the 17 Articles of the REALTORS®’ Code of Ethics within the categories “Duties to Clients and Customers,” “Duties to the Public,” and “Duties to REALTORS®.” Excellent for listing presentations or as a handout for new member orientation.
   
• Code of Ethics Enforcement—An Association Service: Problems with a REALTOR® and not sure where to turn? Ready to take matters into your own hands, but afraid of being buried under paperwork? Let your local Board’s/ Association’s Code of Ethics enforcement program point you in the right direction. Included in this brochure are the history of the NAR Code of Ethics, answers to some commonly asked questions about ethics and arbitration, and an ethics complaint/arbitration request checklist.
   
• Mediation—The Winning Solution: Even REALTORS® who are committed to a higher standard of conduct occasionally have honest business disputes with other professionals, clients, or customers. Arbitration is valuable in resolving these disputes, but mediation is simpler and the parties involved agree on their own resolution. This brochure highlights the benefits of mediation, and explains the mediation process.

Mr./Ms. President
ABC Board of REALTORS®
123 Somewhere Street
Any Town or City, This State 00000

RE: Annual Training Program for Grievance Committee and Professional Standards Committee Members

Dear _______ ,

This is to inform you and the Officers and Directors of your Board of the date, time, and location of the training program for Grievance Committee, Professional Standards Committee and Board of Directors Members presented annually by the ________ Association of REALTORS® (details on program outline enclosed) and to make a strong personal request for your support of this program.

I am confident you agree that adherence to the Code of Ethics of the National Association of REALTORS® by REALTORS® and REALTOR-ASSOCIATE®s, and proper enforcement of the Code by the Board of REALTORS® is the basis of professionalism in practice and self-discipline we must embrace or be disciplined by legislation and litigation. Accordingly, I have established a high priority to promotion of a continuing awareness of the Code and its importance and to its responsible enforcement during my term of office.

Therefore, I am both inviting and urgently requesting that your Board be represented at this annual training program by, at a minimum, yourself as President, the Professional Standards Administrator of your Board, and the Chairpersons of the Grievance Committee and Professional Standards Committee. It is also desirable that your Board legal counsel attend, as well as any other persons, such as Grievance and Professional Standards Committee members.

Our objective is to have 100 percent representation from Member Boards of our state. I solicit and confidently anticipate your personal interest and support of this effort. Please discuss it now with your key people mentioned earlier and make your Board plans to be with us.

Please ensure the early return of the registration form enclosed in the return envelope provided.

With best regards,

___________ President,
___________ Association of REALTORS®

Enclosures

cc: ________, Professional Standards Administrator
     ________ Board of REALTORS®
     ________, Chairperson, Professional Standards Committee     
     ________, Chairperson, Grievance Committee
     ________, Board Counsel
     ________, State District Director
     ________ Association of REALTORS®
     ________, Executive Vice President
     ________ State Association of REALTORS®

*A similar letter may be prepared from the President of a local Board to the chairpersons and members of the Grievance Committee and Professional Standards Committee inviting them to attend a local Board training program on Code of Ethics education and Code enforcement procedures.

The success of any training program is directly related to competent and stimulating instructors. The persons charged by the President should give most thoughtful attention to selection of an instructor or instructors knowledgeable and articulate in the subject area. It is imperative that such person or persons have actual experience in serving on a Grievance or Professional Standards Committee or in working closely with such a committee, and be aware and knowledgeable as to the various liabilities that can accrue to the Board of REALTORS® from Board actions in professional standards matters. An instructor may be an outstanding Chairperson of a Grievance or Professional Standards Committee or it may be a wise and articulate member of such a committee who has the ability to teach. It may be a person whose personal dedication to the Code is well known and who is greatly respected as such. It may be a Professional Standards Administrator whose experience and general knowledge of all professional standards procedures of the Board makes him or her an ideal instructor. Knowledgeable and experienced legal counsel for the State Association or a local Member Board may also be utilized wisely as a competent instructor, especially with respect to more detailed instruction in the requirements of due process. A wise choice of instructors will determine continued success or weakness of the program.

Following are suggested criteria for Boards and State Associations to employ when considering instructors for professional standards training programs:

• number of years as a REALTOR®
• number of years in real estate business
• participation in post-licensing real estate education
• attendance at either an NAR or state-sponsored procedures training course
• taught by a certified professional standards instructor
• minimum of three years service on a local or state Grievance Committee or Professional Standards Committee
• attendance at the National Association’s Professional Standards Committee meetings
• prior experience/training as an instructor
• other relevant professional or procedural training

The objectives of the National Association of REALTORS® and its constituent Member Boards are to:

(1) provide facilities for education, to raise the standards of real estate practice, and preserve the right of property ownership in the interest of the public welfare

(2) promote and maintain high standards of conduct in the transaction of real estate business

(3) formulate and promulgate a Code of Ethics for members of the National Association

(4) license the right to display and use the emblem seal of the National Association of REALTORS® and the right to use the terms REALTOR®, REALTORS®, and REALTOR-ASSOCIATE®

(5) inform the public of the advantages of transacting business with REALTORS®, and to encourage use by members of the term REALTOR® and the emblem seal

The State Association and local Member Boards are the important basic entities through which the foregoing objectives are accomplished. For a Code of Ethics to be meaningful, it must be enforced. To be enforced, there must be a responsibility for its enforcement, and facilities, and procedures must be provided for such enforcement. The responsibility for enforcement of the Code of Ethics is set forth in Article IV, Code of Ethics and Member Board Business Practices, of the Bylaws of the National Association as follows:

Section 1: Each Member Board shall adopt the Code of Ethics of the National Association as a part of its governing regulations for violation of which disciplinary action may be taken.

Adoption of the Code of Ethics includes responsibility for providing applicant/new member Code of Ethics orientation and ongoing member ethics training that satisfies the learning objectives and minimum criteria established by the National Association from time to time.

Section 2: Any Member Board which shall neglect or refuse to maintain and enforce the Code of Ethics with respect to the business activities of its members may, after due notice and opportunity for hearing, be expelled by the Board of Directors from membership in the National Association.

Enforcement of the Code of Ethics also requires Member Boards to share with the state real estate licensing authority final ethics decisions holding REALTORS® in violation of the Code of Ethics in instances where there is reason to believe the public trust may have been violated. The “public trust,” as used in this context, refers to demonstrated misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm. Enforcement of the Code of Ethics also requires Member Boards to provide mediation and arbitration services to members and their clients so that the dispute resolution requirements of Article 17 of the Code of Ethics can be met. (Amended 01/02)

Enforcement of the Code of Ethics also includes responsibility for ensuring that persons primarily responsible for administration of enforcement procedures have successfully completed training that meets the learning objectives and minimum criteria established by the National Association from time to time.

Enforcement of the Code of Ethics also prohibits Member Boards from knowingly granting REALTOR® or REALTOR-ASSOCIATE® membership to any applicant who has an unfulfilled sanction pending which was imposed by another Board or Association of REALTORS® for violation of the Code of Ethics.

There is the most urgent need for business people and professionals to discipline themselves to gain and hold the respect and trust of those they serve and to avoid being harassed, burdened, and restricted severely in their business or profession by agencies, by legislation, and by litigation.
The National Association and Member Boards have a proud history of obligatory Code enforcement since 1924.

However, codes of ethics are sometimes viewed by individuals, by government agencies, and by judges as being designed to perpetuate customs or practices because they are beneficial to the business or profession, rather than because they are beneficial to the public.

The strength of a code of ethics lies in the demonstrable benefits derived by the public from it. A code is vulnerable and subject to challenge if it does not primarily serve the public interest.

In an era when many persons are prone to litigate, the enforcement of the Code of Ethics, especially if it involves suspension or expulsion of a member from the Board, may involve the Board in litigation. Fortunately, this is the exception rather than the norm. However, a Professional Standards Committee and the Board of Directors of a Board of REALTORS® must remain aware of the possibility of litigation accruing to the Board from a disciplinary sanction imposed as a result of a professional standards proceeding. It behooves them, therefore, to ensure that all professional standards matters are handled carefully, judiciously, exactly as set forth in the regulations of the Board, and with scrupulous regard for due process. Board counsel should be used as a participant in the professional standards hearings or as a review authority before actions become final or effective. If there is a reason to anticipate that a disciplined member will sue, the Board should consider filing a petition for declaratory relief with a court of competent jurisdiction to confirm the legal propriety of the Board’s action in the disciplinary proceeding.

A Member Board of REALTORS® adopts the REALTORS®’ Code of Ethics of the National Association as a part of its application and its agreement to be a Member Board. By reason of such adoption, it is obligated to enforce the Code. To this end, the Board has an obligation to promulgate the Code and ensure that its Board Members know their obligations under it. In its enforcement of the Code, the Board must ensure that it (1) accepts and processes ethics complaints and arbitration requests promptly and fairly, (2) follows exactly the authorized procedures, and (3) affords due process to all parties to complaints and arbitration requests.

Any person, including Board Members, may charge a member with violating an Article or Articles of the Code of Ethics, and if the charge is properly drawn, is entitled to have the charge heard by a Hearing Panel of the Professional Standards Committee. If the charge is dismissed by the Grievance Committee, the complainant has a right to appeal to the Board of Directors of the Board requesting that the charge be heard. If charged, a respondent has the right to proper notice and adequate time to prepare an answer. 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 continuance would deny the requestor a fair hearing. When a reply is received from a respondent, the complainant has a right to know the details of the reply. The complainant and respondent are each entitled to have such witnesses testify as they deem necessary. Each party is entitled to legal counsel and is entitled to know if any other party to the complaint intends to use legal counsel. Parties are entitled to have a recording or transcript made at their expense of any hearing, providing they present a transcript to the Directors. They have the right to cross-examine witnesses testifying against them at a hearing. They have a right to have only qualified persons sit on any Hearing Panel for a hearing to which they are a party. (Revised 11/14)

The concept of due process is not a difficult concept, but it is an essential one. Due process means nothing more nor less than the right to a full and fair hearing before an impartial tribunal with a full and complete knowledge of the charges made and with adequate opportunity to prepare a defense.

A party to an ethics or an arbitration hearing has a right to due notice as to complaint and/or arbitration request and answer, time to prepare, right to legal counsel, right to continuances, right to challenge members of Hearing Panel, right to testify, right to cross-examine, right to know decision rendered, and right to appeal, if any.

The decision of a real estate practitioner to become a Board Member is entirely voluntary. Board membership should be available to all qualified persons on a reasonable and non-discriminatory basis. The Board must have no membership qualification more rigorous or demanding than the Membership Qualification Criteria of the National Association of REALTORS® for members who are Sole Proprietors, Partners, Corporate Officers, or Branch Office Managers in a Real Estate Firm, or the Membership Qualification Criteria of the National Association for Applicants for REALTOR® and REALTOR-ASSOCIATE® Membership Other than Sole Proprietors, Partners, Corporate Officers, or Branch Office Managers in a Real Estate Firm. When accepted as a Board Member, the member has all the rights, privileges, and obligations of such membership set forth in the Board’s bylaws but only so long as the professional remains a member in good standing. Board membership has been recognized by the courts as a valuable property right. Any action by a Board limiting or denying the rights and privileges of a member must be justified, not only substantively, but procedurally. Therefore, any contemplated action to diminish the rights and privileges of a member by disciplinary action should be taken only with consultation and advice of Board legal counsel.

The Professional Standards Administrator will normally receive the written complaints alleging Code violation or requesting arbitration. The Professional Standards Administrator will refer the ethics complaint and/or arbitration request to the Grievance Committee for preliminary review to determine whether an ethics hearing and/or an arbitration hearing should be held or, conversely, whether the ethics complaint should be dismissed as insufficient on its face or the arbitration request is inappropriately filed. If there is uncertainty whether the complaint is an ethics complaint or an arbitration request, the Grievance Committee must seek clarification from the complainant. If the complaint is from a member of the public and is vague, overly general, or does not allege violations of specific Articles of the Code, the Chairperson may assign a member of the Grievance Committee to help the complainant draft the complaint in proper form. The assigned member is not and will not act as the complainant’s advocate or representative. (Revised 11/14)

The Grievance Committee may, upon its own motion, and must, upon instruction of the Directors, review the actions of a member when there is reason to believe the member’s conduct may be subject to disciplinary action. If their review indicates a hearing should be held, the Grievance Committee acts as the complainant in the matter.

Upon the determination of the Grievance Committee, the Grievance Committee Chairperson advises the Professional Standards Administrator as to the disposition to be made of the ethics complaint or the arbitration request and the Professional Standards Administrator takes the necessary actions. If a hearing(s) is to be held, appropriate arrangements are made and appropriate notices sent on behalf of the Professional Standards Committee, from which a Hearing Panel(s) will be appointed. The Professional Standards Administrator is the administrative officer through whom the Grievance Committee and the Professional Standards Committee correspond and document their activities, and the Professional Standards Administrator should send and receive all correspondence, or at minimum, receive copies of all correspondence concerning any professional standards matters. Professional Standards Administrator, the Grievance Committee, and the Professional Standards Committee work as a team.

As indicated in the proceeding paragraphs, the Professional Standards Administrator is the administrative channel through whom the Grievance Committee, the Professional Standards Committee and the Board of Directors correspond and carry out their respective functions. The Professional Standards Administrator does not make decisions or determinations concerning professional standards matters and must be careful to avoid making such determinations. Rather, the Professional Standards Administrator advises as to the procedures that are appropriate and required, and coordinates all professional standards and arbitration matters from receipt to final determination by order of the Board of Directors. This coordination involves contacts and correspondence with the complainant, the respondent, the Grievance Committee, the President, the Chairperson of the Professional Standards Committee or the Chairperson of the appointed Hearing Panel, witnesses, and the Board of Directors. Hearing arrangements and records are the Professional Standards Administrator's responsibility on all related matters. The Professional Standards Administrator has an exacting and detailed responsibility for each professional standards matter.