NATIONAL ASSOCIATION of REALTORS s4

NAR Professional Standards Procedures

Ethics Hearing Procedures

Process

 The Code of Ethics contains both Articles and Standards of Practice that support each Article. However, an ethics hearing may not be held if only Standards of Practice are alleged to have been violated; discipline may be imposed only if a violation of an Article(s) is alleged and determined.

 While REALTORS® are encouraged to follow the ideals of the Code in all of their activities, disciplinary action may be taken only for real estate-related activities and transactions involving a REALTOR® [Professional Standards Policy Statement #29].

 A violation of the Code of Ethics is an offense against both the Board and membership.

 The purposes for holding an ethics hearing are:

 to vindicate the Code  to educate the member

 Because an ethics hearing may result in the imposition of discipline or the denial of particular membership rights and/or privileges, it is necessary for procedural due process to be provided at every step [Professional Standards Training Guide, Code of Ethics and Arbitration Manual].

 A hearing panel of the Professional Standards Committee is not a court of law. It is not charged with the responsibility of enforcing state or federal law, and cannot determine violations or enforcement of the law [Professional Standards Training Guide, Code of Ethics and Arbitration Manual].

 Ethics complaints must be filed within one hundred eighty (180) days after the facts constituting the matter complained of could have been known in the exercise of reasonable diligence.

If the Board’s informal dispute resolution processes (e.g., ombudsman, mediation, etc.) are invoked or initiated by a complainant (or potential complainant) with respect to conduct that becomes the subject of a subsequent ethics complaint, the one hundred eighty (180) day filing deadline shall be suspended beginning with the date of the complainant’s (or potential complainant’s) request for informal dispute resolution service or assistance and shall resume when the informal dispute resolution procedures are concluded or terminated.

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Ethics Hearing Procedure

 When determining if an ethics hearing should proceed, ask the following questions.

 Is there pending criminal litigation related to the same facts?  Is there pending civil litigation related to the same facts?  Is there a hearing pending before a state or federal regulatory or administrative agency that is related to the same facts?

 If there is pending criminal litigation related to the same facts, the ethics hearing should not proceed until after the litigation has been concluded [Section 13(e), Code of Ethics and Arbitration Manual].

 If pending civil litigation or a hearing pending before a regulatory or administrative agency related to the same facts giving rise to an ethics hearing exist, the complaint may, at the discretion of the Grievance Committee or on appeal and at the direction of the Board of Directors, proceed to a hearing before an Ethics Hearing Panel.

 Board legal counsel should be consulted and five factors should be considered before a decision to proceed with an ethics hearing is made. These factors are:

 degree of similarity between pending litigation and ethics complaint  degree to which resolution of litigation or other proceeding may affect the necessity to process ethics complaints  length of time that keeping the ethics hearing "on hold" would delay the final disposition of complaint  nature of alleged violation and the extent that it would affect cooperation with other Board Members  assurance that consideration of the ethics complaint at this time would not deprive the respondent of right to due process

Rights of Parties

 There must be an impartial, unbiased Hearing Panel comprised of at least three (preferably five) members. Any Hearing Panel should have an odd number of members [Section 21(c), Code of Ethics and Arbitration Manual].

 Members are automatically disqualified from serving on a Hearing Panel (or Board of Directors on appeal) for the following reasons:

 only one person connected with any firm, partnership, or corporation may serve on a Hearing Panel  a member is related by blood or marriage to the complainant, respondent, or REALTOR® acting as counsel for either party

 a member is an employer, partner, or employee of the complainant, the respondent, or a REALTOR® acting as counsel for either party  a member is party to the hearing  a member is party to or a witness for any other pending case involving the complainant or respondent

 Any individual who served on the Grievance Committee that originally reviewed a complaint may not serve on any subsequent Ethics Hearing Panel or participate in an appeal to the Board of Directors [Section 1(s), Code of Ethics and Arbitration Manual].

 Both the complainant and the respondent have the right to challenge the qualifications of Hearing Panel Members for cause -- that is, the parties may state any factor that, in their minds, would prevent a panel member from rendering an impartial, unbiased, and knowledgeable decision. Challenges for cause are ruled on by the Professional Standards Committee Chair. If the Committee Chair is challenged, the Vice Chair rules. If both are challenged, the Board President rules [Section 21(f), Code of Ethics and Arbitration Manual].

 If the complainant or the respondent in an ethics complaint is a REALTOR® (non- principal) or a REALTOR-ASSOCIATE®, then at least one member of the Hearing Panel must be a REALTOR® (non-principal) or a REALTOR-ASSOCIATE® [Section 21(c), Code of Ethics and Arbitration Manual].

 All parties have the right to be notified about the time and place of the hearing in advance (in accordance with the Board's procedures) [Part Six, Code of Ethics and Arbitration Manual].

 Each party has a right to be present and to present relevant evidence and testimony. (The Hearing Panel Chair rules on the admissibility of evidence and testimony.)

 Each party has a right to cross-examine witnesses called by the other side.

 Each party has a right to make an opening and a closing statement.

 After an ethics complaint reaches a Hearing Panel (after the Grievance Committee has determined that a hearing should be held), it may be withdrawn by the complainant, but only with the Hearing Panel's approval. If a complaint is withdrawn after it has reached the Hearing Panel, then no determination has been reached on the merits of the complaint.

 The complaint and response, if any, shall be provided to Hearing Panel members prior to the hearing. Such time period shall be (as determined by the Board of Directors) and shall be adhered to for all hearings [Section 21(c), Code of Ethics and Arbitration Manual].

Amended Complaints

 Prior to a hearing, the complainant may file an amended complaint. The respondent has the right to be notified, to receive a copy of the amended complaint, and to file an amended response [Section 21(f), Code of Ethics and Arbitration Manual].

 A Hearing Panel may, at its discretion, disallow an amended complaint.

 During a hearing, a complaint may be amended by the complainant or the Hearing Panel to add previously uncited Articles and/or additional respondents. Amendments to include Articles previously dismissed by the Grievance Committee may be made only upon motion of the Hearing Panel. If the respondent agrees, the hearing may continue with the record reflecting that the respondent has waived the right to an adjournment. If the respondent requests a continuance, the hearing is continued to a date not less than 15 nor more than 30 days later.

 If a hearing is adjourned to a later date, the amended complaint must be in writing and signed by either the complainant (if the complainant made the amendment ) or by the Chair of the Hearing Panel (if the complaint was amended by the Hearing Panel). In either event, the amended complaint is served upon the respondent, who then has an opportunity to prepare an amended response.

 To prevent the appearance of bias, at no time during or after an ethics hearing may the Hearing Panel or any appellate body refer concerns regarding potentially unethical conduct to the Grievance Committee.

Failure of Complainant (Member of Public) to Appear

 If a complaint scheduled for a hearing is from a member of the public who refuses or is unable to attend the hearing, the complaint is referred back to the Grievance Committee. If the Grievance Committee determines that there is sufficient information for a Hearing Panel to consider (i.e., there is clear, strong, and convincing evidence), the complaint is amended to name the Grievance Committee as complainant, and the hearing is continued to a new date. In such cases, the respondent is provided with a copy of the amended complaint [Section 21(f), Code of Ethics and Arbitration Manual].

 If a Grievance Committee determines that there is insufficient information for a Hearing Panel to consider, the complaint is dismissed.

Failure of Complainant (Member) to Appear

 In the event that a complaint scheduled for hearing is from a REALTOR® or REALTOR-ASSOCIATE® of a Board who refuses or is unable to attend the hearing, the complainant shall be advised that the refusal to participate I the hearing without a satisfactory reason may result in a charge that the complainant has violated Article 14’s obligation to place all pertinent facts before an appropriate tribunal of the Board.

 REALTOR® or REALTOR-ASSOCIATE® complainant continues to refuse a duly noticed request to appear, or if the complainant is excused from appearing for reasons deemed valid by the Hearing Panel, the hearing shall not take place. Rather, the complaint shall be referred back to the Grievance Committee. If the Grievance Committee determines that there is sufficient information for a Hearing Panel to consider (i.e., there is clear, strong, and convincing evidence), the complaint shall be amended to name the Grievance Committee as complainant, and the hearing shall be continued to a new date. In such a case, the respondent shall be provided with a copy of the amended complaint [Section 21(f), Code of Ethics and Arbitration Manual].

Respondent's Failure to Appear at the Hearing

If a respondent fails to appear at a hearing without obtaining a continuance, the Hearing Panel may proceed in the respondent's absence and make its decision based upon all available evidence. However, the Hearing Panel Chair should make every reasonable effort to determine the whereabouts of the respondent [Section 21(g), Code of Ethics and Arbitration Manual].

 If it appears that a respondent has been unavoidably delayed or detained, serious consideration should be given to rescheduling the hearing to a future date that is convenient for all parties.

 An ethics hearing may be postponed based on extenuating circumstances. Generally, requests for postponement are made in writing and are granted at the discretion of the Chair [Part Five, Code of Ethics and Arbitration Manual].

Recording the Hearing

 The Board must and any party may, at its own expense, have a court reporter present or arrange to tape record the proceeding. If the Board tape records the proceeding, it may preclude parties from recording the hearing. If the Board uses a court reporter in lieu of recording the proceeding, the parties may not be prohibited from making their own tape recordings. The Board's recording is considered the official record of the proceeding. If a party has the tape transcribed, then that party must provide a transcript to the Board, at no cost [Section 6, Code of Ethics and Arbitration Manual].

Witnesses

 All parties have the right to call witnesses. Any party wishing to call witnesses must provide the Board and the other party with a list of names at least 15 days prior to the hearing. Failure to provide this information constitutes a waiver of the right to call those witnesses at the hearing, unless the other party agrees to allow their testimony. If all the names of witnesses have not been provided, as required, and if the Hearing Panel believes the testimony is essential, testimony may be permitted provided the other party has the right to a continuance.

 The testimony of all parties and their witnesses should be sworn or affirmed. Witnesses do not have the right to be present, except when giving testimony or being cross-examined [Section 5, Code of Ethics and Arbitration Manual; exception, Section 13, Code of Ethics and Arbitration Manual].

 Panel members may question parties and their witnesses at any time during the proceedings. However, the Hearing Panel Chair may rule that certain questions are irrelevant or argumentative.

Right to Use Legal Counsel

 All parties have the right to have legal counsel present at any hearing. However, if a party does not give notice of the intent to have counsel present (in accordance with the Board's procedures), and if the Hearing Panel determines that the rights of any other party require representation by legal counsel, the hearing may be rescheduled [Section 4, Code of Ethics and Arbitration Manual].

 Parties may also be "represented" by a REALTOR® who is not an attorney at law. That REALTOR® acting as counsel should be careful not to engage in the unauthorized practice of law. [Section 4, Code of Ethics and Arbitration Manual].

 No party may refuse to directly respond to a request for information or to questions from panel members, except on the grounds of self-incrimination. The Hearing Panel is not obligated to accept the statements of a party's attorney as being the statements of the actual party [Part Five, Code of Ethics and Arbitration Manual].

 All parties are personally accountable for the conduct of their attorney. The respective parties and their attorneys determine how active a role the attorneys play.

 If an attorney attempts to harass, intimidate, coerce, or confuse panel members or any of the other parties, the Hearing Panel Chair may order that attorney to leave.

 If an attorney is dismissed from the hearing for any reason, the hearing should be postponed to a specific date not less than 15 or more than 30 days later so that the party may obtain substitute counsel if so desired.

 Every party is responsible for the expenses of their legal counsel and any expert witnesses called.

Executive Session

 After each party makes a closing statement, the Hearing Panel goes into executive session to render a decision. If Board legal counsel and/or staff was present at the hearing, it is at the discretion of the Hearing Panel whether counsel and/or staff will remain for the executive session.

 The standard of proof that must be met in an ethics hearing is: "Clear, strong, and convincing." In other words, for the respondent to be found in violation, the evidence presented must clearly, strongly, and convincingly demonstrate that the conduct alleged in the complaint did take place and breaches one or more Articles of the Code of Ethics.

 The Hearing Panel's decision must be in writing, must have findings of fact, must have conclusions regarding unethical conduct, and should contain the Hearing Panel's recommendation for discipline, if any [Section 22(a), Code of Ethics and Arbitration Manual] Note: A sample "Findings of Fact and Conclusions" form is included in the Professional Standards Training Guide, Code of Ethics and Arbitration Manual.

 The decision of the Ethics Hearing Panel must be signed by all Hearing Panel members or by a majority of them.

 Any member of the Hearing Panel not concurring with the decision may write a dissenting opinion.

Discipline

 If a respondent is found in violation, the Hearing Panel may, at its discretion, review the member's record of previous violations and discipline imposed when determining what to recommend for discipline.

 Any discipline recommended by the Hearing Panel must be authorized in the Board's professional standards procedures and may not exceed the forms of discipline provided for in Section 14, Nature of Discipline, Code of Ethics and Arbitration Manual, NATIONAL ASSOCIATION OF REALTORS®.

 Discipline has two purposes: to educate and to punish.

 Discipline cannot be used as a "lever" to coerce some other action. For example, a Board cannot say, "You're suspended until you replace the hot water heater."

 Any discipline imposed must be reasonable. The punishment should fit the offense. Mitigating circumstances and past violations (if any) should be considered.

 Final ethics decisions holding REALTORS® in violation of the Code of Ethics must be forwarded to the state real estate licensing authority in instances where there is reason to believe that 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.

Discipline That May be Imposed (Singly or Combined)

 Discipline that may be imposed for a violation of an Article of the Code of Ethics, includes [Section 14, Code of Ethics and Arbitration Manual ]:

 letter of warning [Section 23(j), Code of Ethics and Arbitration Manual ]  letter of reprimand  requirement to attend the ethics portion of the Board's indoctrination course or another appropriate course or seminar specified by the Hearing Panel that respondent could reasonably attend taking into consideration cost, location, and duration  fine not to exceed $2,500 (regardless of number of Articles violated)  probation for one year or less

 suspension from Board membership for not less than 30 days, or more than one year (decision should be written clearly articulating all intended consequences, including denial of MLS participatory or access privileges). Additionally, the Board of Directors has the option to allow the respondent to pay a fine (not in excess of $2,500) in lieu of suspension. However, this option may be exercised only once during any given three-year period with respect to a particular member, and may not be offered as an option if the conduct giving rise to the suspension is failure to arbitrate.  expulsion from Board membership for a period of one to three years (decision should be written clearly articulating all intended consequences, including denial of MLS participatory or access privileges).  suspension or termination of MLS rights and privileges may also be utilized. Suspension of MLS services may be no less than thirty (30) days nor more than one (1) year; termination of MLS services shall be for a stated period of one (1) to three (3) years.

 Finally, REALTORS® who participate in the MLS or otherwise access MLS information through a Board or Association in which they do not hold membership are subject to the Code of Ethics in that Board or Association on the same terms and conditions as the Board members. Discipline may be the same as but shall not exceed the discipline that may be imposed on members. Boards entering into regional or reciprocal MLS agreements are encouraged to include provisions requiring signatory Boards to respect, to the extent feasible, decisions rendered by other Boards involving suspension or expulsion from membership or from MLS.

 The Hearing Panel's decision and recommendation for discipline (if any) is provided to the parties and the parties are advised of their rights to request a rehearing and/or appeal. The Hearing Panel's decision is not provided to the Board of Directors until the time specified in the Board's procedures to request a rehearing and an appeal have lapsed [Specimen Form #E-11, Code of Ethics and Arbitration Manual].

Note: An administrative processing fee not to exceed $500 may be assessed against respondents found in violation of the Code of Ethics or other membership duties which may be in addition to, and not part of, any sanction that may be imposed. Boards and Associations are encouraged to determine in advance when, and under what circumstances, administrative processing fees will be imposed so that imposition is a matter of administrative routine.

As an administrative routine, boards may also follow optional procedures to permit publication of the names of Code of Ethics violators after a second violation occurs within a three (3) year period. [Section 23(n), Code of Ethics and Arbitration Manual]

Joinder of REALTOR® Principal

 A local Board may not require the automatic joinder of the REALTOR® principal in all ethics complaints against a non-principal REALTOR® or REALTOR- ASSOCIATE®.

 However, the REALTOR® principal may still be named in such complaints by action of the complainant, the Grievance Committee, or the Hearing Panel prior to the hearing. If the complaint is amended during the hearing, the provisions for amending a complaint apply Policy Statement II and the REALTOR® principal has the right to have the hearing reheard by the same Panel, or may waive this right.

 If the REALTOR® principal is not named as a co-respondent in a complaint against another broker or sales associate in the firm, the REALTOR® principal still:

 has the right to be present at the hearing or may be required by the Hearing Panel to attend the hearing  may consult with or testify on behalf of the respondent in the hearing, if requested by the respondent  receives copies of the complaint and response, notice of the hearing, and may be called on by the parties or the Hearing Panel as a witness  receives copies of the Hearing Panel's findings of fact, conclusions, and any recommendation for discipline  receives copies of requests for rehearing or appeal and notices of such proceedings, has the right to be present at the hearing, and receives a copy of the final action by the Directors

These rights accrue to both the former REALTOR® principal and the current REALTOR® principal, if the respondent non-principal REALTOR® or REALTOR- ASSOCIATE® changes firm affiliation either before or after a complaint is filed, but before the Hearing Panel reaches a decision.

Resignation or Termination of Membership While Ethics Complaint Is Pending

 If the respondent in an ethics complaint resigns or otherwise causes membership to terminate after a complaint is filed, but before final action is taken by the Board of Directors, the hearing process suspends and the Board secretary (or executive officer) forwards the complaint to any other Board in which the respondent holds membership.

 If the respondent does not currently hold membership in another Board, or if the secretary (or executive officer) is unable to determine if such membership is held,

the complaint is held in abeyance until such time as the respondent rejoins the Board, or it can be determined that the respondent holds membership in another Board.

 In any instance when a complaint is transferred to another Board, the complainant is notified [Section 20(e), Code of Ethics and Arbitration Manual].

Note: There are expedited ethics administrative procedures which may be adopted by local Boards [Section 20, (f) - (q), Code 0of Ethics and Arbitration Manual].

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