Case # 17-1: Obligation to Submit to Arbitration

REALTOR® A and REALTOR® B had been engaged in a cooperative transaction that resulted in a dispute regarding entitlement to compensation. Rather than requesting arbitration before the Association of REALTORS®, REALTOR® A filed suit against REALTOR® B for payment of the compensation he felt REALTOR® B owed him. Upon receiving notification of the lawsuit, REALTOR® B filed a request for arbitration with the Association, which was reviewed by the Grievance Committee and found to be a mandatory arbitration situation. REALTOR® A was advised of the Grievance Committee’s decision, but refused to withdraw the lawsuit. Thereupon, REALTOR® B filed a complaint with the Board charging a violation of Article 17 as supported by Standard of Practice 17-1.

REALTOR® A was directed to be present at a hearing on the complaint before the Board of Directors. Evidence that REALTOR® B had sought REALTOR®R A’s agreement to submit the dispute to arbitration was presented at the hearing. REALTOR® A defended his action in filing the suit and refusing to submit to arbitration by asserting that under laws of the state, the Association of REALTORS® had no authority to bar his access to the courts or to require him to arbitrate his dispute with REALTOR® B.

The Board of Directors concluded that REALTOR® A was correct as to his legal right and as to the Association’s lack of any right to prevent him from filing a suit. It was pointed out to REALTOR® A, however, that the Association of REALTORS® is a voluntary organization, whose members accept certain specified obligations with respect to their relations with other REALTORS®, and that if he wished to continue as a member of the Association, he would be obliged to adhere to the Association’s requirements as to arbitration.

How would you decide on REALTOR® A?

Ethics Violation of Article 1 in the NAR Code of Ethics? or No Violation?

See below for how this hearing panel ruled…if you think a violation, how much discipline would you impose? Fine of $________ and ____ hours of education.

If you were the respondent (aka defendant) REALTOR® in this complaint would you have considered taking an offered citation (small fine and education) in lieu of a full formal ethics hearing or waiving your right to a full formal hearing and accepting the fine and education imposed by the ethics committee who takes into account your admission of unprofessional behavior (aka take a plea deal)?

SCR is receiving numerous reports of unprofessional behavior. Across the country, unprofessional behavior is the number #1 complaint by REALTORS® about their colleagues in the market.

There are several ways of addressing and trying to correct unprofessional behavior. Lead by example. If you see unprofessional behavior, say something. Discuss with the other REALTOR®. Discuss with the REALTOR®’s Broker-in-Charge (BIC). Consider filing ethics complaints at the appropriate association and filing license law complaints at LLR.

Because REALTOR® A would not withdraw the litigation, the Board of Directors concluded that REALTOR® A was in violation of Article 17 for refusing to arbitrate in a mandatory arbitration situation. However, it was noted that if REALTOR® A had filed litigation against REALTOR® B, and had REALTOR® B then requested arbitration with the Grievance Committee determining that an arbitrable issue of a mandatory nature existed, REALTOR® B might have successfully petitioned the court to remand the matter to the Association for arbitration, and there would have been no finding of a violation of Article 17 since the Association’s arbitration process would have been ultimately complied with.

Posted by: Byron King on 11/30/20 (This information is only accurate as of 11/30/20. You must contact SCR for updates and changes to this information after 11/30/20 as laws and regulations may change over time. SCR 803-772-5206 or email info at