2007 Midyear Legislative Meetings & Trade Expo

2007 Midyear Legislative Meetings & Trade Expo

Minutes

Professional Standards Committee

2007 Midyear Legislative Meetings & Trade Expo

Thursday, May 17, 2007

1:00 p.m. - 5:30 p.m.

Regency Ballroom, Lower Level

Omni Shoreham Hotel

Washington, D.C.

ACTIONS REQUIRING BOARD OF DIRECTORS APPROVAL

  • Standard of Practice related to Article 12 dealing with use and display of designations, certifications and other credentials.
  • Amendments to Sections 42(c) and 45(a) and (d), Code of Ethics and Arbitration Manual

ACTIONS NOT REQUIRING BOARD OF DIRECTORS APPROVAL

  • Amendments to Sections 15, 18, 38 and 41, Code of Ethics and Arbitration Manual
  • Amendments to Sample Forms #A-1 and #E-12
  • Amendments to Section 42 (c), Code of Ethics and Arbitration Manual

FUTURE AGENDA ITEMS

  • Article 12
  • Standards of Conduct for REALTORAssociations and the Unacceptable Business Practices
  • State Association–imposed ethics training requirements

Call to Order

The joint meeting of the Professional Standards Forum and Professional Standards Committee was called to order at 1:00 p.m. by Committee Chair Judie McConville.

Professional Standards Forum

The Professional Standards Form was conducted by Forum Chair David Godden and Vice Chair Wally Folks.

Virginia Association of REALTORS President Melanie Thompson and CEO R. Scott Brunner presented an overview of VAR’s “The Code is Good Business” ethics education program.

A panel composed of Hank Lerner, Director of Member & Legal Services for the Pennsylvania Association of REALTORS; Stacie Davis, Director of Member Services for the Washington Association of REALTORS; Mary Grant, Executive Officer for the Billings Association of REALTORS(MT): and Robert Sadler, Chief Administrator Officer, REALTORAssociation of Greater Miami and the Beaches, discussed their experiences in establishing and operating DRS programs.

Approval of minutes of the 2006 REALTORSConference & Expo meeting

The minutes of the November 11,2006meeting were approved as written.

Professional Standards CommitteeMinutes

May 17, 2007Page 1

REALTORSCommercial Alliance – Commercial Membership Recruitment Work Group update

REALTORJoel Criz updated the Committee on the Work Group’s progress. A summary of his remarks is attached as Appendix A to these minutes.

Old Business

CCIM Institute proposal for a new Standard of Practice prohibiting REALTORSfrom misrepresenting their status as members or designees of NAR’s Institutes, Societies or Councils

It was moved, seconded and carried:

Motion:

That a new Standard of Practice related to Article 12 be adopted reading as follows:

The obligation to present a true picture in advertising, marketing and representations allows REALTORSto use and display only professional designations, certifications and other credentials to which they are legitimately entitled.

(NOTE: This recommendation was subsequently approved at the May 19, 2007 meeting of the Board of Directors.)

Internet-related issues – interim report of the Interpretations and Procedures Subcommittee

Interpretations and Procedures Subcommittee Chair Sharon Steel reported that as part of the Professional Standard Committee’s ongoing consideration of Internet–related issues, the Interpretations and Procedures Subcommittee gave further consideration to the Report and Recommendations of the Joint Work Group of the Interpretations and Procedures Subcommittee and the Multiple Listing Issues and Policies Committee (December 11-12, 2005).

It was consensus of the Subcommittee:

  • That a new case interpretation related to Article 12 illustrating the new Standard of Practice 12-10 prohibiting use of deceptive metatags, key words and other devices to direct/drive Internet traffic to REALTORS’websites should be developed for consideration at the September, 2007 meeting.
  • That the question of whether Professional Standards policy or MLS Policy (or both) prohibiting REALTORS/MLS Participants from creating the mistaken impression in minds of consumers that they have direct, unlimited “MLS access” should be discussed further so that possible action recommendations can be developed for consideration by the Professional Standards Committee.
  • That the Risk Management Committee should be asked to develop sample broker/agent agreements spelling out agent responsibilities for their websites, including key ethical obligations.
  • That NAR staff work with NAR trade show vendors and affinity partners to make them aware of the Code of Ethics and REALTORSobligation to adhere to it.
  • That consideration be given to a new Standard of Practice related to Article 12 holding that ownership of “someone else’s URL” is unethical where actual use by the current owner would be deceptive, and
  • That the Committee and Subcommittee continue to consider how best to use various media (e.g. blogs, NAR’s on-line magazines, REALTOR.org, etc.) to educate REALTORSabout the Code of Ethics.

In considering the new Standards of Practice related to Article 12 that were adopted in 2006, Chairman Steele noted that the question was asked whether Article 12, as currently worded, is broad enough to address all forms of REALTORS’ communications (including all communications made electronically), or whether the existing phrase “advertising and representations to the public” is understood by REALTORSas applying only to their advertising and marketing activities? It was the consensus of the Subcommittee that Article 12, as currently worded, may be viewed as relating primarily to advertising and marketing activities, and that broader, more encompassing ethical direction guiding all forms of REALTORS’communication may be desirable. The Subcommittee focused on concepts it felt should be articulated in the Code, whether in Article 12, or possibly in a new Article. It was felt the fundamental message to be communicated to both REALTORSand to the public should be “REALTORSshall be honest and truthful in all real estate communications. To the extent practical, their status as real estate professionals shall be readily apparent in such communications.”

The Subcommittee initially concluded this principle might most effectively be communicated in a separate new Article. With that as a starting premise, the discussion turned to the wording of the proposed new Article; to possible amendments to Article 12; to which existing Standards of Practice related to Article 12 should continue to be “tied” to Article 12, and how those Standards of Practice might be clarified; and which concepts established in the existing Standards of Practice related to Article 12 might be recast (and possibly amended) as Standards of Practice related to the proposed new Article.

After reviewing their initial proposed actions the Subcommittee subsequently determined that REALTORS, the public, and the Code of Ethics might be better served by clarifying and expanding the scope of existing Article 12, rather than creating a separate, new Article. It was then moved, seconded and carried that action on the following proposed amendments to Article 12 be delayed until the September, 2007 meeting so that the substance of these discussions could be shared with the Professional Standards Committee at the 2007 Midyear meeting, and so that the Committee’s input can be incorporated into the Subcommittee’s final recommendations (underscoring indicates additions, strikeouts indicate deletions):

REALTORS shall be careful at all times to present a true picture in their advertising and representations to the public. REALTORS shall also ensure that their professional status (e.g., broker, appraiser, property manager, etc.) or status as REALTORS is clearly identifiable in any such advertising. (Amended 1/93)

REALTORSshall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing and other representations. To the extent practical, their status as real estate professionals shall be readily apparent in their communications and clearly identifiable in their advertising.

The Chair concluded her report by noting that the following issues were also discussed, but not acted on by the Subcommittee, and may be addressed in later recommendations from the Subcommittee. These were presented so members of the Professional Standards Committee could provide input and guidance to the Subcommittee:

  • A definition of “communications”
  • REALTORSmaking anonymous comments on other REALTORS’ blogs
  • REALTORS’ responsibility for monitoring/editing their own blogs
  • REALTORSresponsibility for blogs run by licensees affiliated with them
  • Disclosure of time lag (hours or days) in posting comments to blogs. Must the fact that a blog is not run in “live time” be disclosed?
  • Posting unfavorable/unflattering (but truthful) comments to blogs

Any input Committee members would like to provide can be shared via the staff.

Grievance Committee meetings

It was moved, seconded and carried:

Motion:

That Sections 15, 18, 38 and 41 of the Code of Ethics and Arbitration Manual be amended as follows (underscoring indicates additions):

Section 15. Selection and Appointment of the Grievance Committee

There will be a standing committee, known as the Grievance Committee, of at least ______Board Members, in good standing, of whom at least a majority shall be REALTORS. The members of the committee shall be appointed by the President, subject to confirmation by the Board of Directors, for staggered three (3) year terms. The committee shall annually select its own Chairperson and Vice Chairperson (or, alternatively, the President shall annually designate the Chairperson and Vice Chairperson of the committee). The Grievance Committee will hold regularly-scheduled meetings or, alternatively, will meet often enough to ensure timely review of ethics complaints and arbitration requests.

In selecting members of the Grievance Committee, the President should consider the following recommended criteria:

  • number of years as a REALTOR
  • number of years in the real estate business
  • primary and secondary fields of real estate endeavor/ expertise
  • participation in post-licensing real estate education
  • training in the Code of Ethics position in firm (principal, nonprincipal)
  • size of firm
  • common sense
  • open-mindedness
  • familiarity with state(s) law and regulations
  • receptiveness to instruction/training
  • other relevant professional or procedural training

The committee should have balanced representation of REALTORS, REALTOR-ASSOCIATEs, men, and women, and should include representatives of various racial and ethnic groups. Committee members should be mature, experienced, knowledgeable persons of a judicial temperament. It is suggested that, to the extent practical, members of the Grievance Committee not serve simultaneously on the Professional Standards Committee or on the Board of Directors to avoid conflict with the prohibition on serving on more than one (1) tribunal in the same matter. (Revised 11/96)

Section 18. Function

The function of the Grievance Committee is clearly distinguishable from the function of the Professional Standards Committee. The Professional Standards Committee is similar to a court. The court adjudicates matters that come before it. The Professional Standards Committee makes decisions on matters involving ethics or arbitration.

If the function of the Professional Standards Committee is understood as similar to a court, the function of the Grievance Committee can then be understood as similar to that of the grand jury. A grand jury evaluates potentially criminal conduct to determine whether the evidence and testimony presented warrants indictment and trial.

In a similar manner, the Grievance Committee receives ethics complaints and arbitration requests to determine if, taken as true on their face, a hearing is to be warranted. The Grievance Committee makes only such preliminary evaluation as is necessary to make these decisions. While the Grievance Committee has meetings, it does not hold hearings, and it does not decide whether members have violated the Code of Ethics. The Grievance Committee does not mediate or arbitrate business disputes. Grievance Committees are encouraged to hold regularly-scheduled meetings. Meetings should be called often enough to ensure timely review of ethics complaints and arbitration requests.

In evaluating ethics complaints, the Grievance Committee may require a written response from the respondent(s). In such instances the respondent(s) should be provided with a copy of the ethics complaint and advised that failure to respond may be the basis for a charge of having violated Article 14 of the Code of Ethics. (See Form #E-4, Grievance Committee Request for Information [Ethics Complaint] and Form #E-5, Response to Grievance Committee Request for Information, Part Six of this Manual). In evaluating arbitration requests, the Grievance Committee may request a written response to the arbitration request from the respondent(s). (See Form #A-5, Grievance Committee Request for Information [Arbitration Request] and Form #A-6, Response to Grievance Committee Request for Information, Part Thirteen of this Manual.) If no response is filed within the time allotted, the Grievance Committee shall make its determination as to whether an arbitration hearing should be scheduled based upon the information set forth in the arbitration request.

Section 38. Selection and Appointment of the Grievance Committee

There will be a standing committee, known as the Grievance Committee, of at least ____ Board Members, in good standing, of whom at least a majority shall be REALTORS. The members of the committee shall be appointed by the President, subject to confirmation by the Board of Directors, for staggered three (3) year terms. The committee shall annually select its own Chairperson and Vice Chairperson (or, alternatively, the President shall annually designate the Chairperson and Vice Chairperson of the committee). The Grievance Committee will hold regularly-scheduled meetings or, alternatively, will meet often enough to ensure timely review of ethics complaints and arbitration requests.

In selecting members of the Grievance Committee, the President should consider the following recommended criteria:

  • number of years as a REALTOR
  • number of years in the real estate business
  • primary and secondary fields of real estate endeavor/ expertise
  • participation in post-licensing real estate education
  • training in the Code of Ethics
  • position in firm (principal, nonprincipal)
  • size of firm
  • common sense
  • open-mindedness
  • familiarity with state(s) laws and regulations
  • receptiveness to instruction/training
  • other relevant professional or procedural training

The committee should have balanced representation of REALTORS, REALTOR-ASSOCIATEs, men, and women, and should include representatives of various racial and ethnic groups. Committee members should be mature, experienced, knowledgeable persons of a judicial temperament. It is suggested that, to the extent practical, members of the Grievance Committee not serve simultaneously on the Professional Standards Committee or on the Board of Directors to avoid conflict with the prohibition on serving on more than one (1) tribunal in the same matter. (Revised 11/96)

Section 41. Function

The function of the Grievance Committee is clearly distinguishable from the function of the Professional Standards Committee. The Professional Standards Committee is similar to a court. The court adjudicates matters that come before it. The Professional Standards Committee makes decisions on matters involving ethics or arbitration.

If the function of the Professional Standards Committee is understood as similar to a court, the function of the Grievance Committee can then be understood as similar to that of the grand jury. A grand jury evaluates potentially criminal conduct to determine whether the evidence and testimony presented warrants indictment and trial.

In a similar manner, the Grievance Committee receives ethics complaints and arbitration requests to determine if, taken as true on their face, a hearing is to be warranted. The Grievance Committee makes only such preliminary evaluation as is necessary to make these decisions. While the Grievance Committee has meetings, it does not hold hearings, and it does not decide whether members have violated the Code of Ethics. The Grievance Committee does not mediate or arbitrate business disputes. Grievance Committees are encouraged to hold regularly-scheduled meetings. Meetings should be called often enough to ensure timely review of ethics complaints and arbitration requests.

In evaluating ethics complaints, the Grievance Committee may require a written response from the respondent(s). In such instances the respondent(s) should be provided with a copy of the ethics complaint and advised that failure to respond may be the basis for a charge of having violated Article 14 of the Code of Ethics. (See Form #E-4, Grievance Committee Request for Information [Ethics Complaint] and Form #E-5, Response to Grievance Committee Request for Information, Part Six of this Manual). In evaluating arbitration requests, the Grievance Committee may request a written response to the arbitration request from the respondent(s). (See Form #A-5, Grievance Committee Request for Information [Arbitration Request] and Form #A-6, Response to Grievance Committee Request for Information, Part Thirteen of this Manual.) If no responseis filed within the time allotted, the Grievance Committee shall make its determination as to whether an arbitration hearing should be scheduled based upon the information set forth in the arbitration request.

Sample Form #A-1, Request and Agreement to Arbitrate

It was moved, seconded and carried:

Motion:

That the proposed amendments to Sample Form #A-1 be approved as shown in Appendix B.

Sample Form #E-12 – Action of the Board of Directors (Ethics Hearing)

It was moved, seconded and carried:

Motion:

That the proposed amendments to Sample Form #E-12 be approved as shown in Appendix C.

Appealing dismissed arbitration requests , Section 42 (c), Code of Ethics and Arbitration Manual

It was moved, seconded and carried:

Motion:

That Section 42 (c), Grievance Committee’s Review and Analysis of a Request for Arbitration and Section 45 (a) and (d), Board’s Right to Decline Arbitration be amended as follows (underscoring indicates additions, strikeouts indicate deletions):

Section 42. Grievance Committee’s Review and Analysis of a Request for Arbitration

C.Appeals from the decision of the Grievance Committee related to a request for arbitration

If the Grievance Committee determines that a matter should not be arbitrated by the Board (because of the amount involved or the legal complexity, or for any other valid reason specified in the Grievance Committee decision and written report), either of the partiesthe reason(s) for dismissing the request will be stated in the notice of dismissal. Any party may appeal the decision to the Board of Directors within twenty (20) days of the date of notice of the committee decision using Form #A-20, Appeal of Grievance Committee Dismissal or Classification of Arbitration Request.; however, no additional information may be added or attached to the form.The request for arbitration and any attachments cannot be revised, modified or supplemented. The party appealing the dismissal may, however, explain in writing why they disagree with the Grievance Committee’s conclusion that the request for arbitration should be dismissed. The Hearing Panel can also dismiss the arbitration request if the Hearing Panel concludes the matter is not arbitrable. (Amended 5/97)