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Professional Standards Newsletter, September 2012

The Code of Ethics is turning 100 in 2013!  Perhaps you already knew that, but did you know the privilege to invoke arbitration existed in the 1913 Code of Ethics and that privilege has remained in the Code for the last century?  The celebration of the centennial will kick off at the National Association’s Annual Conference & Expo November 7-12, 2012, and will continue through 2013.  If you have ideas about how AAR can celebrate the centennial, send us an email at!ACCEPTED OFFERS MUST BE DISCLOSED 
“Don’t confuse the requirement to disclose an accepted offer from the rules on when disclosure of unaccepted offers is required. Disclosure of offers not yet accepted is covered by Standard of Practice 1-15. “REALTORS® in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property.”  Read More at: COMMITTEE REVIEW – NON-REAL ESTATE-RELATED ACTIVITIES 
As you review an ethics complaint to determine if, “taken true on its face,” the conduct of the REALTOR® was potentially unethical, be careful to determine whether or not the issues complained of relate to real estate-related activities.  Article 1, Standard of Practice 1-1 states: “REALTORS®, when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics.”   However, Policy Statement 29 – Applicability of the Code of Ethics to non-real estate-related activities states: “while REALTORS® are encouraged to follow the principles of the Code of Ethics in all of their activities, a REALTOR® shall be subject to disciplinary action under the Code of Ethics only with respect to real estate-related activities and transactions involving the REALTOR®.”HEARING CHAIR CONSIDERATION OF A REMOTE TESTIMONY REQUEST 
In “extreme circumstances” parties and their witnesses may participate by teleconference or videoconference in ethics and arbitration hearings at the discretion of the Hearing Panel Chair. (CEAM, Policy Statement 56). A party requesting to present remote testimony must provide the reason for the request in writing and bear any costs associated with remote testimony.
AAR’s Professional Standards Administrator will advise the Hearing Panel Chair of the request, any response from the adverse party and the local association’s teleconference and videoconference capabilities.  In determining whether to allow the remote testimony, the Hearing Panel Chair should consider whether the circumstances demonstrate that postponement or rescheduling the hearing is not feasible and whether the refusal to permit the remote testimony will deny a party a fair hearing. If the remote testimony is permitted, the Professional Standards Administrator will advise the requesting party and if a witness is appearing remotely, the witness will participate in a hearing just as a witness in  physical attendance would participate:

  • The witness must be available at the beginning of the hearing for the reading of the script
  • The witness will be excused at the appropriate time
  • The witness must remain available and return to present their testimony.

There are times during a hearing when you have a question. Write that question down and after the party finishes their testimony, ask the Hearing Panel Chair for an Executive Session break. Present your question to the Hearing Panel first for discussion. The parties may observe the break positively because it shows that you are paying attention.
Hearing Panel members should avoid being “flip or frivolous or sarcastic in their words and gestures.” They should not attempt to be “casual” in their approach, and they should carefully avoid any reflection of partisanship in their questioning or observations. They should not preach or teach, but should let the findings and recommendations of the hearing panel serve to educate the parties and the membership, as well as vindicate the Code and its purpose. (NAR Professional Standards Training Manual, 1995)

As a mediator, you have certain obligations to the parties, such as:

  • Honor self-determination of the parties to reach their own conclusions:  Assist parties in moving forward if they become stalled, suggest possible options if the parties are not able to articulate any. Empower the parties to reach a conclusion through a discussion of possibilities.
  • Be competent and remain impartial:  Brush up on mediation techniques prior to a meeting, if necessary. Remember both sides are evaluating your language and demeanor.  Do not come across as if you are favoring one party over the other. Be the professional in the room!
  • Abide by confidentiality:  Never, ever, discuss the mediation. Do not discuss the parties involved in a mediation, or outcome of a mediation – NEVER, EVER!
  • Maintain the quality and integrity of the process:  Take control of and keep control of the room. Do not allow a party to take over or “hijack” the meeting.
  • Complete paperwork in a professional manner:  Take a break, allow yourself time to think through the resolution prior to committing it to writing. Connect the dots, follow – who, what, when and where in the resolution. Once written, read it out loud – has the intent of the agreement been captured?  Ask the AAR Risk Management Specialist to review the agreement, if possible, to make sure nothing is unclear or omitted that could jeopardize the agreement.

Take a look at the new mediation “infomercial” describing the process, expectations and results of mediation at!

In responding to some Ombudsman requests, you may not get to the true issue of the complaint until you have had a conversation with the complainant.  During your conversation you may determine that the issues may fall ‘outside the scope’ of the Ombudsman process, (i.e. possible violation of public trust, legal issues, too complex, specialty fields).  Anytime you feel uncomfortable with the issues being raised, do not hesitate to call and discuss your concerns with the Professional Standards Coordinator, who can  consult with AAR legal counsel if necessary to determine how best to proceed.  There are times when the Ombudsman process should be terminated and the parties advised of their rights to pursue a formal ethics complaint; a complaint with any appropriate governmental or regulatory agency; litigation; or any other available remedy.

The morning session will be lead by Alona M. Gottfried, Esq., of Simmons & Gottfried, PLLC, a mediator, attorney, and conflict resolution trainer. The afternoon session will be broken into two groups: Jan Steward and Carole Ridley will be joining the Mediator afternoon discussions and Kimberly Franzen and Michelle Lind, Legal Counsel for AAR, will be joining the Ombudsmen afternoon discussions. Registration is at 8:30am and the program is scheduled from 9:00am-2:30pm at the Arizona Association of REALTORS®, 1st Floor Meeting Center.  R.S.V.P. by:  October 12, 2012.

Have you been assigned to a review a complaint or sit on a hearing panel regarding an Article of the Code of Ethics? Now you can view the NAR video relative to the Article  either online or downloaded to your PC or other “on the go” equipment, there’s simply no excuse to be without the valuable information provided by NAR on the Code of Ethics. The Code of Ethics video series is available at:

AAR was contacted about how a real estate agent had written a short sale contract for a buyer. The story was described as follows:
A buyer and seller agreed to a purchase price on a short sale property of $150,000. Approval was received from the seller’s creditor for a sales price of $153,500. The buyer’s agent was asked to write a new contract or addendum showing the creditors approved purchase price of $153,500. The agent said he was not changing the sales price, instead he was writing an addendum, stating that the seller was contributing $500 towards the payoff and the buyer would contribute $3,000 toward the payoff at COE.
Representing the sale in this manner raised concerns that there could potentially be valuation fraud.  Read Jan Steward’s article on this scenario at:

The Arizona Real Estate book is available at: at  Want the book on your computer, Kindle or iPad so you can search, cut & paste?  Learn how in this two minute video:


Beginning November 2012, and throughout 2013, look for “Code Talk” a monthly column which will appear in the AZR kicking off AAR’s celebration of 100 years of the Code of Ethics! We are seeking volunteers who would like to tell others about how the Code of Ethics is involved in the everyday practice of real estate. For those who wish to participate please contact Jan Steward at

Did you miss the last update? View the archives.

Professional Standards Newsletter, March 2012

The 2012 NAR Professional Liability Insurance Policy for 2012 limited coverage for the Ombudsmen Program to consultations solely about the association’s ethics hearing, arbitration and NAR Dispute Resolution processes. This is a significant change from years past and severely limits the Program.  Discussions with NAR regarding making insurance coverage available for the Ombudsmen Program as it now exists are on-going and AAR is seeking other insurance coverage.  AAR has suspended the Ombudsmen Program until the insurance issue is resolved.  We are saddened that we must take this action and are hopeful that we will be able to reactivate the Program in the near future.  Last year, AAR’s Ombudsmen handled 104 requests with an 80+% success rate.NEW ETHICS CITATION PROGRAM
Ethics complaints filed at the Arizona Association of REALTORS® (“AAR”) and forwarded by the Grievance Committee (“GVC”), as alleging a possible violation of the Code of Ethics, result in an ethics hearing. An ethics hearing involves the complainant, the respondent REALTOR®, a hearing panel, a court reporter and an AAR Professional Standards Administrator. The respondent’s REALTOR® principal also has the right to be present. During the hearing, both parties have the right to present witnesses, submit evidence pertinent to the case, and to cross-examine witnesses. After the hearing is adjourned, the hearing panel makes a decision by simple majority vote. (Get more information on the ethics hearing process .)
Beginning in April 2012, a new program will be implemented for resolving certain ethics complaints that would have otherwise required this hearing process. The new Ethics Citation Program will allow a REALTOR® member to resolve an ethics complaint without a hearing by paying a citation amount (similar to the administrative fee imposed in an ethics hearing) and attending a class addressing the Code of Ethics article that is the subject of the complaint. The purpose of the program is to streamline the ethics complaint process in the applicable cases while fulfilling the purpose of Code of Ethics enforcement – educating members about their professional obligations and serving as a meaningful deterrent to future violations. The advantages of resolving a complaint without a hearing include being less burdensome on both parties and more cost effective in terms of volunteer time and actual expenses. Further, complaints processed through the program should be resolved more quickly, which benefits everyone involved.

This consumer-focused brochure is designed for use by REALTORS® to inform buyers and sellers of the potential consequences of multiple offer situations. It was approved by the Professional Standards Committee at the 2005 Annual Convention in San Francisco (CA) and is excerpted from the “Presenting and Negotiating Multiple Offers” white paper found in the Code of Ethics and Arbitration Manual.

What does Articles 12’s “true picture” requirement mean? When advertising, how should terms and conditions for inducements (prizes, premiums, and discounts) to list, sell, or lease property be explained? How do Standards of Practice 12-8 through 12-13 relate to websites and the Internet?  Find the answers to these questions and more at:  and read Jan Steward’s article below.

Advertising yourself as #1 in your marketplace?  Be prepared to prove it! 
By Jan Steward, AAR Risk Management Specialist
Complaints are being received by the Professional Standards Department at AAR alleging agent violations of Article 12 fairly frequently.  It is an age old story that travels through different regions of the state and seems to peak periodically.

If you, as a REALTOR®,  are advertising yourself as the:  TOP AGENT, TOP PRODUCER, NUMBER 1 IN LISTINGS OR SALES, you may be asked to “prove it”.

Article 12 of the NATIONAL ASSOCIATION OF REALTORS® (NARs) Code of Ethics states:

“REALTORS® shall be honest and truthful in their real estate communication and shall present a true picture in advertising, marketing, and other representations. “

Statics indicating a “REALTOR’S® sales volume and comparisons with other firms can be impressive, but if inaccurate, untrue, or misleading, their use injures the pubic and violates Article 12. (NAR’s Professionalism in Real Estate Practice 2012)

If you are the Number 1 agent in your local region, and are being challenged, you should be able to provide documentation to substantiate your assertion.   Most local MLS’s provide statistical agent reports for leading sales volume, or listing volume, for areas such as vacant land sales, new home construction sales, condo/townhomes sales, etc.  If you are advertising in this manner, be prepared to defend your title.

In the article “5 Everyday Ethical Dilemmas” by Bruce Aydt this subject is referenced in Dilemma 3 – Ethics in Advertising.  

The scenario: You’re looking for a way to differentiate yourself from the competition and give your marketing materials a kick. You decide on a new tagline: “The No. 1 Real Estate Agent for You.”

The risk: Stretching the truth. If your statements are truthful and accurate, it’s not wrong to tell prospects how you measure up to competitors. But when you make an advertising statement about being the “No. 1” agent, you could be misleading the public.

What to do: Making the claim of being number one is perhaps the most abused or misused term in real estate advertising, Aydt says. If you really want to use that phrase, be careful to explain what you mean by “No. 1.” For example, cite your market share, a date range, and a specific geographic area.

Experts advise focusing on your own merits and what you bring to a prospective client rather than comparing yourself directly to competitors.

For more information on this topic read “5 Everyday Ethical Dilemmas” at


Hearing panel chairs are largely responsible for the conduct of Professional Standards hearings.   As a result, AAR conducts Chair training each year.  During this year’s PS Chair Training information was delivered by Carole Ridley, Professional Standards Administrator and Michelle Lind, AAR’s General Counsel. Included in the presentation were 2012 PS Chair Pat Leach, Ed Hume, 2012 PS Co-Chair, and PS Chair members Ron Roberts and Marge Lindsay. The agenda for the training consisted of: a discussion on hearing procedures, a case study, a survey review, and a quiz. Marge Lindsay’s presentation covered pre-hearing meeting issues, followed by Ron Roberts’ discussion on testimony and evidence issues. Ed Hume wrapped up the discussion segment with executive session issues. In addition to a well attended program, members had an opportunity to learn from other PS chairs, discuss common, and not so common, hearing issues. Attendees left the training with additional skills to help them preside over hearings that serve the members and public fairly.
Of the 105 PS members for 2012, 24 members will serve as chairs, they are:
Jim Amdahl, Martha Appel, Janine Brown, Mary Frances Coleman, Frank Dickens, D. Deems Dickinson, Jane Dutra, Holly Eslinger, Duane Fouts, Mary Lee Greason, Larry Hibler, Ed Hume, Pat Leach, Marge Lindsay, Jim Marian, Carol Pinciaro, Bob Quackenbush, Nancy Rea, Ron Roberts, Dan Santa Maria, Becky Taylor, Mike Warren, Bill Thorne, Bill Whetten.

AAR continues to track statistics on a quarterly basis.  AAR utilizes these statistics to identify trends in the marketplace and issues warranting additional information and education.  To review the statistics for 2011, go to:
Moving into 2012, we have restructured the format for logging statistics to better define the numbers for each local association grouped by region. The new format for the 2012 1st Quarter Statistics will be posted on the AAR website in early April. 

Calculating 180 days with respect to arbitration requests 
The Grievance Committee must determine whether a request for arbitration was filed within one hundred eighty (180) days after the closing of the transaction, if any, or within one hundred eighty (180) days after the facts constituting the arbitrable matter could have been known in the exercise of reasonable diligence, whichever is later.  This calculation can be done consistent with how the Courts calculate time periods and how time periods are calculated pursuant to AAR’s contracts:  i.e., if the close of escrow is on Monday, May 1st   ?   day one would be on Tuesday, May 2nd.

Listen and Take Notes
During the hearing a party or witness may blurt out testimony unrelated to any detail provided by the parties, in writing or as supporting documents that may change the case. If during the hearing a party reveals something in their testimony that might concern an Article not charged, or you hear the actions of a REALTOR® not named as a respondent, and you believe they should be added to the complaint – call for an executive session and discuss your concerns with the entire Hearing Panel.

Thank you for attending the March 20, 2012 Chair Training!
Sharing your thoughts and insight is greatly appreciated!

Considerations when reducing the mediation conference to a Resolution Agreement:

  • Has a party accepted responsibility for an action?
  • What have the parties agreed on regarding the imposition of educational, monetary, or other actions?
  • When is the action to take place?
  • Where is the action to take place or be delivered?
  • Is there an open case file to reference as withdrawn?

Many of AAR’s committees will start to use Dropbox for meeting handouts. Read the following links to get more familiar with what Dropbox is and how to use and install it on your computer/tablet.
How to Install Dropbox:
REALTOR’S® Use of Dropbox:
Dropbox Blog:   

Did you miss the last update? View the archives.

Professional Standards Newsletter, December 2011

The NAR Board of Directors approved amendments to Article 17 of the Code of Ethics to give  associations discretionary authority to obligate members to mediate otherwise arbitrable disputes.In the event of contractual disputes or specific non-contractual disputes as defined in
Standard of Practice 17-4 between REALTORS® (principals) associated with different
firms, arising out of their relationship as REALTORS®, the REALTORS® shall mediate
the dispute if the Board requires its members to mediate. If the dispute is not resolved
through mediation, or if mediation is not required, REALTORS® shall submit the dispute
to arbitration in accordance with the regulations policies of their the Board or Boards
rather than litigate the matter.

In the event clients of REALTORS® wish to mediate or arbitrate contractual disputes
arising out of real estate transactions, REALTORS® shall mediate or arbitrate those
disputes in accordance with the regulations policies of their the Board, provided the
clients agree to be bound by any resulting agreement or award the decision.

The obligation to participate in mediation and arbitration contemplated by this Article
includes the obligation of REALTORS® (principals) to cause their firms to mediate and
arbitrate and be bound by any resulting agreement or award.
AAR made this mandatory mediation recommendation to NAR in 2008 and will consider implementing the option in 2012.

  • The board also adopted a new Standard of Practice to prohibit REALTORS® from accessing or using, or permitting or enabling others to access or use, listed or managed property on terms or conditions other than those authorized by the owner or seller. The new Standard of Practice, which is based on the existing Standard of Practice 3.9, goes into effect January 1.
  • In the Delegate Body meeting, delegates changed the word “competitors” to “other real estate professionals” in a provision in Article 15 of the Code that prohibits the making of false or misleading statements about others.

To read all the key decisions from the November 2011 NAR Board of Directors Meeting go to:

The AAR Executive Committee will consider a recommendation to adopt an Ethics Citation Program at its meeting in January.  In short, when the Grievance Committee receives a complaint alleging violations of Articles 3, 4, 5, 6, 12, 14, or 16 and determines there isa potential violation of the Code of Ethics, it will have the option toissue a citation to the respondent.  The citation will be sent to the respondent, as well as to the REALTOR® principal of the respondent’s office.  The respondent will have fifteen days to decide to accept the citation and pay the fine, or request a full hearing on the ethics complaint. The fine for the first violation will be $250, plus education commensurate with the Article violated.
A Citation Program can streamline the complaint process in the applicable cases while fulfilling the purpose of Code of Ethics enforcement – educating members about their professional obligations and serving as a meaningful deterrent to future violations.  Complaints processed through the Program (if ultimately adopted) should be resolved more quickly, which benefits the parties.  The advantages of resolving a complaint without a hearing include being less burdensome on the complainant and more cost effective in terms of volunteer time and actual expenses.  Several other associations have adopted a Citation Program, such as Texas, California, Pennsylvania and Fredericksburg, Virginia.
Between January 1, 2009 and December 31, 2012, every member of the National Association of REALTORS® is required to complete 2½ hours of Code of Ethics training. For your convenience, you may take the Code of Ethics course free at:
There are fifteen short video segments covering the Preamble, Articles, and Standards of Practice. Included are support material and questions to stimulate discussion. Each segment is five to seven minutes long, available 24/7, and free of charge.
Join us at our 2012 workshop where we’ll put professional standards success within reach! Discussions at this year’s workshop will cover changes to the NAR Code of Ethics, issues around procuring cause and more.
When: Wednesday, January 18, 2012 | 9:00am – 3:00pm
Where: Black Canyon Conference Center
C/E: 3 hours
This program is free for AAR Grievance Committee and Professional Standards Committee members, who will be required to take an online exam on the Code of Ethics. And in thanks for their service, AAR had decided to “comp” all AAR ombudsmen and mediators so they too can attend for free. Members at large may attend for $75.00.
Register Online:


  • Be sensitive to conflicts of interest and circumstances where you should disqualify yourself from a review, hearing, mediation, or ombudsman effort.


  • Do not engage in conjecture and to look closely at the facts as it is presented.
  • A member of the Grievance Committee can be assigned to assist a complainant in presenting their complaint and will be excused from review of that case.
  • Look at case interpretations to assist in your review of an ethics complaint.


  • Attorney’s fees, punitive damages, and interests are not generally part of any arbitration award unless it is expressly provided for in the agreement giving rise to the dispute.
  • Present your questions to the Hearing Panel at the pre-hearing meeting to help determine if the question may be leading.



  • Even if the facts are clear, strong, and convincing, play the devil’s advocate and engage the panel into discussion so that the non-prevailing party’s issues are discussed and considered.
  • Do not voice your opinion during the Executive Session unless your vote breaks a tie or until after the Hearing Panel has reached their decision.


  • Mediation is a blend of counseling skills and knowledge – each party in a mediation has an emotional need to be met: a) the desire to be heard; b) the need to have their underlying concerns and feelings acknowledged;  c) to have those concerns and feelings validated.
  • The mediator needs to employ active listening skills such as focusing eye contact (no distractions), to paraphrase, summarize, reflect, parrot and/or reframe questions for clarity.
  • Ask open ended questions – What is this about for you?  What was the impact of this on you?  How do you feel about what happened?  In a perfect world, what outcome would you like? What is important to you?


Professional Standards and Grievance Committee Members
Thank you for dedicating your time, your knowledge, and your energy to participate with Grievance Committee Meetings and Hearing Panels! We proudly tout to the parties, and to whoever gives us the floor, that you are passionate volunteers willing to watch over your profession and the word REALTOR® and its reputation to provide the real estate industry with high standards and professional conduct.

2011 Grievance Committee
John Barile, David Brashear, Debra Coste, Sharon Ellsworth, Sue Flucke, Eileen Greene, Leslie Hammond, Jo Hannifan, Bob Kaczmarek, Carol Lewis, Marion McGuire, Michael Mulvena, Michael Tiers, Chris K. Warren, Dori Wittrig, Sandy Young.

2011 Professional Standards Committee
James Amdahl, Charlene Anderson, Gary Ando, Martha Appel, Kristin Armbruster, Viva Ashcroft, Jennifer Aubrey, William Barnes, Carla Bowen, Janine Brown, Tom Clancy, Janet Clark, Mary Frances Coleman, Karen Cyga, Flo Day, Alice DeShane, Frank Dickens, Larry Dignan, Chad Dixon, Lori Doerfler, Sandra Durazo, Jane Dutra, Tomyal Emptage, Holly Eslinger, Ruth Fairbanks, Gary Fenton, Kyle Fouts, Duane Fouts, Robert Gaudette, Kathleen Gimenez, Judith Grammond, Mary Lee Greason, Jon Hammond, Kerry Hannifan, Michelle Hartley, Barrie Herr, Larry Hibler, Ed Hume, Pat Jessup, Bill Johnson, Karen Jones, Clark Jones, Rosemary Keely, Dee Kepp, Jon Kichen, Jill Knox, Dick Krause, Fred LaBell, Kathleen Landis, Pat Leach, Leah Lichter-Roedig, Marge Lindsay, Holly Mabery, James Marian, Tim Massingale, Kathy Mayus, Todd Menard, Karen Miller, Trudy Moore, Paul Olson, Carol Pinciaro, Janet Quackenbush, Robert Quackenbush, Peggy Rauch, Nancy Rea, Jill Remington, Bridget Reynolds, Tina Robbins, Ronald Roberts, Catherine J. Rose, Sharon Rundle, Ken Ryan, Rick Sack, Dan Santa Maria, Richard Schneiter, Nancy Smith, David Stephens, Michael Steward, Lisa Suarez, Yvonne Taylor, Becky Taylor, Gillean Terry, Steven Urie, Carole Vaughn, Denise Venturelli, Mike Waling, Carol Anne Warren, Michael Warren, George Watrous, William Whetten, Suzanne White.

Mediators and Ombudsmen
Whether the conflict stems from the public or between members, your contribution to AAR’s Mediation and Ombudsman programs are making an impressive difference in complaints being filed, hearing reduction, and satisfaction in the dispute outcome:

2011 Mediators
Gary Best, Frank Dickens, Thomas Fannin, William Farretta, Charles Fraas, Lucille Fraas, Evan Fuchs, Mary Lee Greason, Dick Krause, Marge Lindsay, Carol Pinciaro, Tina Robbins, Ron Roberts,  Carol Anne Warren, George Watrous, Thomas Weddingfeld.

2011 Ombudsmen
Alice DeShane, Chad Dixon, Bob Herd, Kirsten Hill, Clark Jones, Dick Krause, Kathleen Landis, Marge Lindsay, James Marian, Kathy Mayus, Beth Morton, Carol Pinciaro, Tina Robbins, Nancy Smith, April Starr, David Stephens, Lisa Suarez, Tom Tischer, Mike Waling, Duane Washkowiak, Jacqueline Weems.

Association Executives and Staff
Your assistance, courtesy, and general helpfulness throughout the year makes it possible to schedule and hold hearings or meetings at the member’s local facility.

Here’s wishing you all a Healthy, Happy, and Prosperous 2012!!!
Michelle Lind, Carole Ridley, Jan Steward, Kimberly Franzen and Christina Smalls.


Did you miss the last update? View the archives.

Professional Standards Newsletter, March 2011

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:


A great resource given to the 2011 Workshop attendees by keynote speaker Bill Lublin:


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.

Professional Standards, Correction to December Update

Tuesday, January 4, 2010

Please note that there was a publication error on NAR’s website when the article “New IRS 1099 Requirements for Landlords” was originally extracted for distribution to AAR members. Thereafter, NAR corrected the article without notification to the members. The legal affairs department at NAR has confirmed the error and asked that any members who previously received the article should note the correction.

The corrected article clarifies that, “All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.” The corrected article in its entirety is below.

We apologize for any confusion.


Starting in 2011, there is a new tax requirement for landlords. All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.

The new requirement applies to owners of both residential and commercial property. Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. Landlords will need to gather federal tax ID numbers from service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS. In 2012, these requirements will expand to cover providers of good to landlords.

NAR actively opposed this change in the law and is working with others to have this requirement repealed or otherwise modified. Congress took this action in order to assure that income paid to contractors can be verified through a section 1099. To read more about the history of the law as well as the actions NAR has taken to oppose this change in the law, click here.


Starting in 2011, there are new tax requirements for landlords. All landlords who receive rental income of more than $600 a year from a tenant must file a Form1099 information return for all rental income received and send a copy of the 1099 to the tenant. Landlords must also send a 1099 to all service providers who received payments of $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.

The new requirement applies to owners of both residential and commercial property. The only exception to the new requirements occurs when an owner temporarily rents out his/her primary residence, so long as the owner’s income does not exceed a “minimal” amount to be determined by the IRS. Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. Landlords will need to gather federal tax ID numbers from both their tenants and service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS.

NAR actively opposed this change in the law and is working with others to have this requirement repealed or otherwise modified. Congress took this action in order to assure that income paid to contractors can be verified through a 1099. To read more about the history of the law as well as the actions NAR has taken to oppose this change in the law, click here.

ADDITIONAL RESOURCE: You can listen to a related podcast from NAR.

This content originally appeared in the NATIONAL ASSOCIATION OF REALTORS® December 2010 “Did You Know?”segment.

Did you miss the last update? View the archives.