2011 Professional Standards Workshop

AAR’s annual Professional Standards Workshop was held at the Black Canyon Conference Center, January 19, 2011. Bill Lublin, of the Social Media Marketing Institute and a former chairman for the NATIONAL ASSOCIATION OF REALTORS® (NAR’S) Professional Standards Committee was the keynote speaker in the morning session. Bill, citing examples in application of the NATIONAL ASSOCIATION OF REALTORS® Code of Ethics, spoke with equal parts humor and respect for the articles REALTORS® pledge themselves. The morning session was followed by break-out sessions for the Grievance Committee, Professional Standards Chair training and a general session for current Professional Standards issues. The meeting concluded with Michelle Lind, general counsel for the association, hosting a question and answer session on a variety of topics including procuring cause, short sales and REO issues.

In talking with the attendees, they were all appreciative of the fact that they have the opportunity to participate in a workshop that focuses on hot issues in the industry. Kathy Gimenez from Flagstaff Neighborhood Realty said, “input from the presenters and the attendees was extremely thought provoking and adds to the high level of competence that prevails in the state of Arizona.” The issues addressed throughout the day included procuring cause, 2011 changes to the Code of Ethics, the hearing process, ombudsman process and mediation.

In the current climate of our economy, it is very important to be well informed regarding current trends in the real estate industry. The attendees of the workshop and those who continue to practice real estate within the NATIONAL ASSOCIATION OF REALTORS® Code of Ethics are prime examples of AAR’s Professional Standards motto, “REALTOR®… the best prepared real estate practitioner with the highest standards.”

Raffle winners:

$20 Starbucks gift card — Carole Vaughn, Re/Max HomeStores

$20 QuikTrip gift card — Lori Dee Doerfler, Re/Max Prestige Properties

Free rCRMS class — Ruth Fairbanks, Prudential Arizona Properties

Free rCRMS class — Joan Petty, HomeSmart

Magellan Navigation System — Deems Dickinson, Russ Lyon Sotheby’s International Realty


Court Upholds NAR’s Arbitration Rules

A Massachusetts court recently considered a challenge to an arbitration award stemming from a commission dispute.

George Crawford and Buyer’s Choice Realty (“Challengers”) had a dispute with Paul McNulty and Ann Blackham & Company REALTORS®(“Commission Recipients”) over a commission from the sale of a house. Both parties are members of the Greater Boston REALTOR®Board (“Board”) and so the commission dispute was sent to arbitration, pursuant to the rules adopted by the Board and based on those set forth in the NATIONAL ASSOCIATION OF REALTORS®(“NAR”) Code of Ethics and Arbitration Manual. Notably, the Challengers claimed in the arbitration that they were entitled to the cooperating portion of the commission as procuring cause of the sale based on their relationship with and service to the buyers prior to the time the buyers had contracted with the Commission Recipients, acting as a buyer’s broker. The dispute was arbitrated pursuant to Standard of Practice 17-4(2), which provides for arbitration of disputes under such circumstances despite the absence of a contractual relationship between the parties to the dispute. The Board awarded the commission to the Commission Recipients. The Challengers filed a lawsuit, seeking to overturn the arbitration award. In response, the Commission Recipients filed a counterclaim against the Challengers (on which, the court has yet to rule).

The Commonwealth of Massachusetts Superior Court, Middlesex County, rejected the Challengers’ allegations. The court first considered the Challengers’ allegations that the NAR arbitration rules represent an attempt by the national, state, and local associations to inhibit the ability of buyer’s representatives to collect commissions. The court rejected this argument. Article 17 generally describes the types of disputes REALTOR®members have a duty to arbitrate, and Standard of Practice 17-4(2) specifically describes the types of arbitrable non-contractual disputes, including commission disputes. After reviewing these rules, the court ruled that the parties were required to submit their commission dispute to arbitration by virtue of their membership in the Board.

The Challengers next claimed that Article 17 only required the arbitration of those disputes listed in the Board’s arbitration procedures, and the Board’s procedures only required the arbitration of contractual disputes. The court rejected this argument, stating that the Challengers were misreading Article 17, which describes the substance of what matters are required for arbitration and only leaves to the local associations the procedural mechanism for implementing these rules.

The court also ruled that the Challengers had failed to make any objections to the arbitration procedure at any time prior to the entry of the arbitration award. Under Massachusetts law, one of the requirements for challenging an arbitration award in court is that the challenger must show that there was no agreement to arbitrate and also that the challenging party objected to the arbitration during the proceedings. Even though the Challengers failed to make an objection on the record, the Challengers claimed that they had implicitly objected to the arbitration because they had not signed the Board’s form signifying their agreement to arbitrate. The court rejected this argument, ruling that an actual objection must be made. The court ruled that if the party contends that there is no arbitration agreement, this must be raised immediately, before the parties put all of their efforts into an arbitration proceeding.

The court also rejected the Challengers’ objections to the qualifications of the arbitration panel and also the fact that part of the Commission Recipients’ legal fees were partially paid by NAR and the Board. Therefore, the court ruled in favor of the Commission Recipients on all of the allegations made by the Challengers.

Crawford v. McNulty, No. 99-0860 (Mass. Super. Ct. Aug. 14, 2000). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]

Editor’s Note: NAR’s Legal Action Committee contributed financial support to the Commission Recipients’ defense of the arbitration proceedings and process.


Advertising & Article 12

What does Articles 12’s “true picture” requirement mean and how do you comply?

How do you explain the terms and conditions for inducements (prizes, premiums, and discounts)?

Who can claim to have “sold” a property?

Read the answers to these questions and more.

NAR Videos

Did you know NAR offers members the CODE OF ETHICS in a Video Series? Fifteen short video Segments cover the Preamble, Articles, and many Standards of Practice.

What’s the best part? It is available, 24/7, FREE at: Realtor.org/Codevideos


A great resource given to the 2011 Workshop attendees by keynote speaker Bill Lublin: www.thecodeisgoodbusiness.com


How well do you know the code?

  1. A request for mandatory arbitration is based on:
    1. A monetary dispute between REALTORS® (principals) in different firms
    2. A legal claim for damages between REALTORS® in different firms
    3. A monetary dispute between salesperson in different firms
    4. A legal claim for damages between a salesperson and his/her broker
  2. The Preamble to the Code
    1. Sets out inspirational ideals that REALTORS® should strive to attain
    2. Can be used as the basis for disciplinary action against a REALTOR®
    3. Requires REALTORS® to meet the standards set forth in the Preamble
    4. Is a summary of all the articles included in the Code
  3. A cooperating broker in a transaction may:
    1. Claim to have “sold” the property involved in the transaction
    2. Post a “sold” sign on the property involved in the transaction after the closing (with the buyer’s permission)
    3. Not claim to have “sold” the property but may state that they have “participated” or “assisted” in the transaction
    4. Both A and B
  4. The concept of procuring cause is used to decide commission disputes in arbitration cases. Which of the following statements is true about the concept of procuring cause?
    1. No predetermined rules of entitlement are allowed to be used by a hearing panel
    2. A hearing panel should not consider the entire course of conduct in the transaction and should decide the case on one factor
    3. Whether an agent abandoned or estranged a buyer is not an important factor in determining which party will receive an award
    4. Generally, a hearing panel should split an award and should not make the award all to one party or the other


1 = A; 2 = A; 3 = D; 4 = A



This year, 2011, the nation commemorates the 43rd year of the passing of The Fair Housing Act, a landmark piece of legislation which was signed into law, April 1968.

It is with pride, REALTORS® acknowledge their organization, THE NATIONAL ASSOCIATION OF REALTORS® (NARs) accomplishment which has taken the lead, ahead of national policy, by amending Code 10 of the NATIONAL ASSOCIATION OF REALTORS® Code of Ethics, to include the term sexual orientation. Enacted in January 2011, Code 10 was amended to read:

REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, or sexual orientation. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, or sexual orientation. (Amended 1/11)

Standard of Practice 10-3 as amended:

REALTORS® shall not print, display or circulate any statement or advertisement with respect to selling or renting of a property that indicates any preference, limitations or discrimination based on race, color, religion, sex, handicap, familial status, national origin, or sexual orientation. (Adopted 1/94, renumbered 1/05 and 1/06, Amended 1/11).

NAR’s addition of sexual orientation to Article 10 of the Code of Ethics is not to be confused with the seven (7) protected classes under the Federal Fair Housing Law consisting of: race, color, religion, sex, handicap, familial status, and national origin.

As described in The NATIONAL ASSOCIATION OF REALTORS® (NAR) Code of Ethics and Arbitration Manual, 2011:

“REALTORS® and REALTOR-ASSOCIATE®s recognize their social responsibility to conform their business conduct to the NATIONAL ASSOCIATION OF REALTORS® (NAR) Code of Ethics… Equal professional service without regard to race, color, religion, sex, handicap, familial status, national original, orsexual orientation is a basic commitment embodied in Article 10 of the Code of Ethics.”

…”When adoption of the Code for Equal Opportunity was integrated with Article 10 of the Code of Ethics, to which all REALTORS® and REALTOR®-ASSOCIATE®s must subscribe as members of the NATIONAL ASSOCIATION OF REALTORS®, the result is a positive public position on civil rights and on fair and equal housing opportunities.”

A REALTOR® pledges to conduct business in keeping with the spirit and letter of the Code of Ethics. Article 10 imposes obligation upon REALTORS® and REALTOR®-ASSOCIATE®s and is also a firm statement of support for equal opportunity in housing.

The NATIONAL ASSOCIATION OF REALTORS® has developed a Fair Housing Program to provide resources and guidance to REALTORS® in ensuring equal professional services for all people.

Fair Housing Quiz:

  1. Under federal fair housing laws, it is legal to prohibit which of the following in a housing unit?
    1. Smoking
    2. A live-in caregiver for a resident with a disablility
    3. Drinking alcohol
    4. Both a and c
  2. The fair housing laws prohibit all of the following, except:
    1. Refusal to show, sell, or rent a property because of disability
    2. Expressing a preference for young adults in a listing comments
    3. Evicting a current user of illegal drugs
    4. Marketing your listings exclusively in a religious publication
  3. Based on federal fair housing law, which of the following people would be protected:
    1. A divorced female, single parent
    2. A 35-year old single, Jewish man
    3. A 50-year old white man
    4. All of the above
  4. When a prospect inquires about the racial makeup of neighborhoods or schools, you should respond by saying:
    1. “I believe the neighborhood has a few Hispanic families, I can check and get back to you.”
    2. “The Fair Housing Act prohibits me from providing that kind of information, I recommend you contact the school district, municipal government, or the local library.”
    3. “I wouldn’t worry about that, the neighborhood is safe and the schools are good.”
    4. “Residents in this neighborhood value diversity, you’ll fit right in.”
  5. If a seller using a real estate agent refuses an offer because of the buyer’s national origin, who may file a federal lawsuit against the seller?
    1. The prospective buyer
    2. The real estate practitioner
    3. The federal government
    4. All of the above


1 = D; 2 = C; 3 = D; 4 = B; 5 = D

Helpful Links:

Diversity and Fair Housing Program:

Fair Housing Initiatives Program:

Fair Housing Field Guide:

REALTOR® Magazine Online: 8 Tips for Fair Housing Compliance:

Fair Housing and Diversity:


Chair Tips

What to do when additional evidence is submitted at the hearing:

  1. Ask the party submitting the additional evidence if they have anything else they want to submit at this time to avoid multiple breaks.
  2. Call an executive session recess to allow the Hearing Panel and the opposing party time to review the new evidence.
  3. Notify the opposing party that when they return to the room, they can:
    1. Accept the new evidence and continue with the hearing.
    2. Request a postponement not less than 15-days or more than 30-days from hearing.

What to do when there are multiple respondents:

  1. It works to have the Respondent cross-examine the Complainant one after the other.
  2. Each Respondent should then present their case and undergo cross-examination, one after the other.
  3. It is permissible to allow cross-examination from one Respondent to another (NAR letter dated 9/13/96).

Panel Tips

Procuring Cause Reminders:

  1. Consider a party’s actions up to the point in time when the buyer has made a decision to begin negotiations to purchase the property.
    1. A party’s actions after the contract is signed is not a consideration.

NAR Question Tips:

  1. Wait to be recognized by the chair, and ideally, save questions until after the parties have had an opportunity to question each other.
  2. Be careful with your tone of voice.
  3. Avoid asking leading questions.
  4. Ask questions in a positive and generally open ended matter.
  5. Ask questions to clarify a point not understood, not to assist either party.
  6. Stay away from judgment words and phrases such as “do you mean to tell me.”

Mediator Tips

Breaking down the “what” or substance of a mediation. An initial outline can be formulated by determining the following questions at the beginning of a mediation session:

What is the conflict about?

What are the actions that occurred, or did not occur?

What are the positions?

What are the real interests?

Excerpts from “Secret to Successful Mediation” presented to Arizona Association of REALTORS®, October 29, 2010 by Amy Lieberman, Insight Employment Mediation.

“What NOT to Wear” to a hearing

Flip Flops! Always dress in professional business attire.

Don’t make
THIS facial expression
during a hearing

Did you miss the last update? View the archives.

About the Author

Michelle Lind

K. Michelle Lind, CEO of Arizona REALTORS®, is also an attorney, State Bar of Arizona board certified real estate specialist, and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice. Please note that this article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel.