Appendix V to Part Ten — Arbitration Hearing Checklist with Administrative Time Frames
Appendix V to Part Ten — Arbitration Hearing Checklist with Administrative Time Frames
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(1) Arbitration of disputes. “Dispute” and “arbitrable matter” refer to those contractual issues and questions, and certain specific non-contractual issues and questions outlined in Standard of Practice 17-4, including entitlement to commissions and compensation in cooperative transactions between REALTORS® and between REALTORS® and their clients and customers. (See Part Ten, Section 43 of this Manual.) (Revised 11/96)
Requests for arbitration must be 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. Boards may provide mediation even if arbitration has not been requested provided the mediation is requested 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.
Suspension of filing deadlines: If the Board’s informal dispute resolution processes (e.g., ombudsmen, mediation, etc.) are invoked or initiated by a complainant (or potential complainant) with respect to an otherwise potentially arbitrable matter that becomes the subject of a subsequent arbitration request, 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. Questions about when informal dispute resolution began or ended will be determined by the Board President or the President’s designee. (Revised 11/00)
(2) Must be consistent with state law. All arbitration hearings must be conducted in a manner consistent with state law.
(3) Three (3) or more arbitrators necessary. No arbitration may proceed without three (3) or more arbitrators not disqualified pursuant to the provisions of paragraphs (a) through (f) of Part Seven, Section 27 of this Manual.
(4) Substitute arbitrator. If an arbitrator is disqualified, the President (or other individual) shall appoint another member qualified to serve as an arbitrator.
(5) Duty and privilege to arbitrate. By becoming and remaining a member, and by signing or having signed the agreement to abide by the bylaws of the Board, every member, where consistent with applicable state law, binds himself or herself and agrees to submit to arbitration (and mediation if required) by the Board all disputes as defined in Part Ten, Section 44 of this Manual. Refer to Section 44 to determine the types of arbitration that are mandatory obligations upon members where not precluded by state law, and those types that should be offered as a service of the Board but are not mandatory obligations upon members. (Revised 11/11)
(6) Conformity to state law. Refer to Part Ten, Section 43 of this Manual for important information concerning the necessity to know the applicable state statutes or case law governing arbitration and to conform the Board’s arbitration procedures to the law. Board or State Association legal counsel may advise the Board in this respect.
(7) Board’s right to decline arbitration. The Board should be aware of its right to decline to arbitrate a dispute between members or between members and nonmembers. If either the Grievance Committee or the arbitration Hearing Panel determines that the matter should not be arbitrated because of the amount involved (too little or too much), or because of the legal complexity of the matter, the arbitration automatically terminates unless either of the parties appeals the decision to the Board of Directors within twenty (20) days of the date of the notice of the Grievance Committee’s or arbitration Hearing Panel’s 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 Hearing Panel can also dismiss the arbitration request if the Hearing Panel concludes the matter is not arbitrable. If the Board declines to arbitrate the matter, any deposits shall be returned to the parties. If the Board of Directors decides that arbitration should proceed, the matter is remanded to the Grievance Committee or arbitration Hearing Panel for further processing. (Amended 5/97)
If an appeal is filed, the President may appoint a panel to hear the appeal composed of at least five (5) Directors or a quorum of the Board of Directors, whichever is less. (Alternatively, the appeal may be heard by the Board’s Executive Committee.) The decision of the appeal panel (or Executive Committee) is final and not subject to further review by the Board of Directors. (Revised 11/91)
If an otherwise arbitrable matter is the subject of civil litigation, arbitration shall not take place unless the litigation is withdrawn or referred to the Board by the court for arbitration in accordance with Article 17. In instances where the arbitration is mandatory (as defined in Part Ten, Section 44 of this Manual) the failure to arbitrate may result in a charge alleging violation of Article 17.
(8) Duty to arbitrate before State Association. As a member of a local Board, the Board Member is obligated to arbitrate a dispute with a member of another Board or a member who is directly a member of the State Association. (State Association bylaws have provisions of professional standards procedures as they relate to ethics and arbitration proceedings.)
(9) Interstate arbitration. The procedures described in Part Eleven of this Manual may be used for arbitrating disputes between REALTOR® members of Boards located in different states, subject to the parties’ voluntary agreement in advance to the place, date, and time established by the arbitration Hearing Panel, and agreement to pay all costs of the arbitration as may be directed by the panel, and further subject to the applicable law of the state in which the arbitration is held.
(10) Manner of invoking arbitration. Any Board Member, client, or customer authorized to do so may request arbitration by the Board. The request shall be in writing, indicating the nature of the dispute and the amount in dispute, and must be accompanied by the required arbitration filing fee (deposit). The request may be on a Board form or other form permitted by law. The Professional Standards Administrator (or Executive Officer) shall refer the request to the Grievance Committee for determination within the time specified by the Board’s professional standards procedures as to whether the matter is properly subject to arbitration, and as to whether the circumstances impose a mandatory obligation to arbitrate or arbitration is voluntary (to be conducted only if all parties voluntarily agree to arbitrate and be bound by the decision).
(11) Dismissal of request for arbitration. If the request for arbitration is dismissed by the Grievance Committee or the Hearing Panel, the complainant (requester) shall be informed of the dismissal and the reasons for the dismissal, and may appeal to the Board of Directors within the time specified in the Board’s procedures using Form #A-20, Appeal of Grievance Committee Dismissal or Classification of Arbitration Request. The arbitration request and any attachments to the request may not be revised, modified, or supplemented. The complainant may, however, explain in writing why the complainant disagrees with the Grievance Committee’s conclusion that the request should be dismissed. With the appeal, the Directors shall consider only the same information that was available to the Grievance Committee or Hearing Panel at the time of dismissal of the request for arbitration. The complainant and respondent do not have the right to be present at the Directors’ meeting. (Revised 5/07)
(12) Function of Grievance Committee. The function of the Grievance Committee is to make only such preliminary review as is required to determine proper disposition of the request for arbitration. In reviewing a request for arbitration, the purpose of the review is to determine (1) if the requestor is authorized to invoke arbitration by the professional standards procedures in the Board’s bylaws; (2) if the requested arbitration is mandated by the Board’s bylaws or is voluntary on the part of the parties; (3) if the dispute described is an arbitrable matter; and (4) if the matter, either as to monetary amount (too small or too large) or as to legal complexity, is such that the Board should decline to arbitrate the matter and release the Board Members from their obligation to arbitrate, and thus free the members to seek other recourse to resolve the dispute.
(13) Director on Grievance Committee. A member of the Grievance Committee who is a member of the Board of Directors may not sit as a Director during an appeal to the Board of Directors of the Grievance Committee’s decision to dismiss a request for arbitration, and may not vote on such appeal.
(14) If matter referred for arbitration. If the request for arbitration is referred for hearing, the Chairperson of the Grievance Committee shall refer it to the Professional Standards Administrator (or Executive Officer) with instructions to arrange an arbitration hearing. The Professional Standards Administrator shall notify the other party within the time specified in the Board’s procedures, except that a reasonable delay does not invalidate the procedure. The Professional Standards Administrator shall mail a copy of the complaint to the respondent and provide forms for reply by the respondent, with directions to complete the forms, including the “Arbitration Agreement,” and return them to the Professional Standards Administrator within the time specified in the Board’s procedures.
(15) Obligation to arbitrate. The Board Member is obligated to arbitrate under certain circumstances if mandatory arbitration is permitted by state law. The member, by becoming and remaining a member, has entered into a prior agreement to arbitrate and acknowledges this prior agreement by signing an agreement to arbitrate and abide by the award in each case. If the applicable state law does not permit prior agreements to arbitrate, then arbitration may be voluntarily agreed to by the parties after the dispute arises.
(16) Content of agreement to arbitrate. The Arbitration Agreement shall acknowledge the membership duty voluntarily accepted when the party sought and received membership in the Board, and shall specify that the party does now, in accordance with the prior agreement to arbitrate, acknowledge and enter into such agreement and agree to abide by the award. The Arbitration Agreement shall be accompanied by a concise statement of the matter in dispute. Each party must sign and file the Agreement with the Professional Standards Administrator (or Executive Officer), along with any required deposit. The deposit may be returned to the recipient of the arbitration award. (Amended 11/95)
(17) Refusal of respondent to appear and/or sign the Arbitration Agreement. The circumstances under which Member Boards may conduct arbitration will vary based on state arbitration statutes and case law. In some states, arbitration may be conducted only if both parties sign the Arbitration Agreements, deposit the required amounts, and appear and take part in the hearing. In other states, arbitration may proceed in the absence of signed Arbitration Agreements and deposits if the parties appear and take part in the hearing. In still other states, arbitration may take place and a valid award may be rendered even if the respondent refuses to sign the Arbitration Agreement and refuses to take part in the hearing. Refer to Part Ten, Section 48(b) of this Manual for important information on the need to determine whether state law permits arbitration to proceed if the respondent refuses to appear at the hearing and/or refuses to sign the Arbitration Agreement.
(18) Reply from respondent. No sooner than fifteen (15) days nor later than twenty-one (21) days after transmitting notice of hearing and a copy of the complaint to the respondent, the Professional Standards Administrator (or Executive Officer) shall transmit a copy of any reply by the respondent to the complainant. A Board may ask for a response to an arbitration request but may not require one. (Revised 11/14)
(19) Opportunity for challenge of possible arbitrators. When the Professional Standards Administrator (or Executive Officer) transmits a copy of the reply, if any, from the respondent, the Professional Standards Administrator shall also transmit to the parties a list of members of the Professional Standards Committee from whom an arbitration Hearing Panel of at least three (3) members will be appointed, and advise of their right to challenge for cause the qualification of any member to serve as an arbitrator if such list has not already been transmitted to the parties with notification of the Grievance Committee’s referral for hearing. Any disqualification must be filed within ten (10) days from the date the list of names was mailed to the parties. Within fifteen (15) days from the date the list of names is transmitted to the parties, the arbitration Hearing Panel members shall be appointed by the Professional Standards Committee Chairperson from the members of the Professional Standards Committee who are not successfully challenged by the complainant or respondent for cause. A majority must be REALTORS®, and if a REALTOR-ASSOCIATE® or REALTOR® other than a principal has invoked the arbitration through the REALTOR® principal, or is affiliated with the respondent, and has a vested interest in the outcome of the proceeding, one (1) of the arbitrators shall be a REALTOR-ASSOCIATE® or REALTOR® other than a principal. The Chairperson shall also select one (1) of the panel members to serve as Chairperson of the Hearing Panel. (Revised 11/14)
If the arbitration involves issues related to areas of the real estate business such as commercial, investment, industrial, etc., and there is not a sufficient number of qualified practitioners on the Board’s Professional Standards Committee to constitute a representative peer panel, the President shall appoint other Board Members qualified in that field to serve on the panel. If other qualified members cannot be identified, that fact is reported by the President to the Board of Directors, and if the Directors concur, the matter is referred to the State Association as outlined in Part Fourteen of this Manual. If the State Association cannot impanel a qualified peer panel, the complainant and respondent are released from their obligation to arbitrate. (Revised 11/98)
(20) Date, time, and place of hearing. The arbitration Hearing Panel will establish the date, time, and place for the arbitration hearing. Notice shall be given at least twenty-one (21) days prior to the date of hearing. Parties' requests for continuances shall only be granted when all parties mutually agree to a subsequent specified date, or when the hearing panel chair determines that denying the continuance would deny the requestor a fair hearing. (However, appearance by a party at an arbitration hearing waives the right to such notice.) The arbitration request 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. (Revised 11/14)
(21) Written statements and proof. In addition to the request for arbitration and the response to the arbitration request, the parties to the arbitration shall, upon notice of the hearing, present to the arbitrators, in writing, such statements and proof as they deem necessary to support their claims. The Hearing Panel may require statements to be verified by affidavit and/or that the accuracy or authenticity of documents or papers be verified by affidavit. In addition to written statements and proof provided to the arbitrators prior to the hearing, the Hearing Panel may, at the hearing, receive any further written statements, documents, or other papers, and shall hear oral testimony as described in Part Ten, Section 51 of this Manual.
(22) Arbitrators to regulate hearing. The Hearing Panel determines (1) date, time, and place of hearing; (2) what appearances are to be made by the parties; (3) what evidence it will receive and consider, including the evidence of accountants and other experts; and (4) interpretations of Board bylaw provisions. Each party is responsible for the expenses of his/her expert witnesses and legal counsel. Arbitration hearings should be conducted in accordance with the Chairperson’s Procedural Guide, Part Ten, Section 51 and Part Twelve of this Manual.
(23) Witnesses sworn or affirmed. Prior to testifying, all parties and witnesses shall be sworn or affirmed by the Chairperson as described in the Chairperson’s Procedural Guide in Part Twelve of this Manual.
(24) Witnesses present only as necessary to hearing. Witnesses shall be present during the arbitration hearing only as necessary to receive instructions, to be sworn or affirmed, to give testimony, and to respond to cross-examination. Witnesses should be excused during other parts of the hearing.
(25) Opening statement by parties or attorneys. Each party or the party’s attorney-at-law shall be given an opportunity for an opening statement which shall briefly outline the basic premise of the party’s position in respect of the matter to be arbitrated.
(26) Testimony of character or general business reputation of party. No testimony may be admitted related to the character or general business reputation of any party unless such testimony has a direct bearing on the matter being heard.
(27) Testimony. The complainant may give testimony and present evidence as deemed appropriate to the arbitration by the Hearing Panel. Following presentation by the complainant, the respondent shall testify. The parties shall present to the arbitrators their oral testimony and such written statements and proof as the arbitrators may require. Proof may be by affidavit or other form acceptable to the arbitrators.
(28) Right to cross-examine. At the conclusion of testimony by each party, or by a witness, the opposing party and/or his/her counsel may cross-examine the party or witness.
(29) Arbitrators’ examination of parties or witnesses. Upon completion of testimony and cross-examination of any party or witness, the arbitrators may examine the party or witness.
(30) Summary of each party. Upon completion of all testimony, each party or party’s attorney may summarize the proceedings for the Hearing Panel. The complainant’s summary shall be presented first, and the respondent’s summary follows.
(31) Parties excused for executive session and decision by arbitrators. After the summary by each party, the parties shall be excused from the hearing room, and the arbitrators shall, in executive session, render their decision. The arbitrators shall be guided in the evaluation of all the evidence by the Arbitration Guidelines in Part Ten, Appendix II of this Manual.
(32) Parties’ settlement of the issue at any time. The parties to the arbitration may settle the issue between them at any time. If they settle, they shall advise the Professional Standards Administrator (or Executive Officer), and the arbitration shall be terminated and so recorded in the file.
(33) The award. The award shall be made as soon as possible after the evidence is presented. The award shall be in writing and signed by the arbitrators or a majority of them, and shall state only the amount of the award, and when transmitted to each of the parties shall not be subject to review or appeal. Notwithstanding the foregoing, a party may appeal to the Board of Directors only on the basis of alleged irregularity(ies) of the proceeding as may have deprived the party of fundamental due process. The Directors shall not receive or review evidence offered as to the merits of the award, except as such evidence may bear upon a claim of deprivation of due process. After the award has been transmitted to each of the parties, they have twenty (20) days to request procedural review of the arbitration hearing by the Board of Directors. If no such review is requested, the award becomes final and binding following the twenty (20) day period. However, if procedural review is requested, the award is not considered final and binding until after the Board of Directors has concluded that the hearing had been conducted in a manner consistent with the Board’s procedures and the parties had been afforded due process. (See Part Ten, Sections 53 and 55 of this Manual.) (Revised 11/14)
(34) Escrowing of arbitration awards. Boards must adopt procedures that require the nonprevailing party to either pay the award or deposit the amount with the Board within ten (10) days of transmittal of the award. Please refer to Part Ten, Section 53 of this Manual. (Revised 05/15)
In the event a party fails to, within ten (10) days of the date the award is transmitted, either pay the award to the party(ies) named in the award or deposit the funds with the Professional Standards Administrator of the Board administering the arbitration consistent with Section 53, The Award, Code of Ethics and Arbitration Manual, that failure shall be brought before the Directors. The Directors, consistent with Section 53, may, at their discretion, impose discipline, including but not limited to termination of Board membership and/or MLS access/use, or may give the party an additional period to make the required deposit. The directors may also stipulate appropriate discipline to be automatically imposed if the party fails to make the deposit within the time established by the Directors. (Adopted 05/15)
(35) Request for procedural review. The appeal may be heard by a panel of Directors appointed by the President or heard by the Board’s Executive Committee. The request for procedural review shall be reviewed by the Board President or the President’s designee only for the purpose of determining whether the request states any legitimate basis for consideration by the Board of Directors. Any appeal panel must be comprised of five (5) Directors or a quorum of the Board of Directors, whichever is less. The decision of the appeal panel (or Executive Committee) is final and binding and is not subject to further review by the Board of Directors. All requests for procedural review received by the Board must be considered by the Board of Directors and only the bases raised in the written request for procedural review may be raised during the review before the Directors. (Amended 11/94)
(36) If a REALTOR® refuses to arbitrate. If a REALTOR® is charged in an ethics complaint of improperly refusing to submit a dispute to arbitration (or mediation if required by a Board) as specified in Part Ten, Section 49 of this Manual, the complaint shall not be referred to the Grievance Committee or a Hearing Panel, but shall be brought before the Board of Directors at the next regularly scheduled meeting or at a special meeting called by the President for that purpose. The procedures for notice, time of notice, and hearing prescribed for matters before a Hearing Panel shall apply. The sole question of fact for the Directors to decide will be whether the respondent failed to submit an arbitrable matter (as defined in Part Ten, Sections 43 and 44 of this Manual) to arbitration or mediation in violation of Article 17. Upon determination that the member has refused to arbitrate or mediate a properly arbitrable matter, the Directors may direct the imposition of appropriate sanction and should, if they have reason to believe that the imposition of sanction will become the basis for litigation and a claim for damages consequent to such sanction, delay the effective date of implementing the sanction to a date following receipt by the Board of a judicial decision in a petition for declaratory relief filed by the Board to confirm the propriety of its action. (Amended 11/11)
(37) Enforcement of award. If a party refuses to abide by an award in arbitration or the terms of a mediated settlement agreement, such refusal should not be referred to the Grievance Committee as a violation of the Code of Ethics unless it reflects an established pattern or practice of noncompliance with the commitment to arbitrate/mediate. The award recipient, or the beneficiary of a settlement agreement reached by the parties in mediation, should be advised by the Board to seek judicial enforcement of the award/agreement by a local court of competent jurisdiction and to request reimbursement of legal fees incurred in seeking enforcement. (Refer to Part Ten, Section 56 of this Manual.) If the court does not award reimbursement of legal fees, the Board of Directors may, at its discretion, reimburse the award recipient/beneficiary for legal fees incurred in seeking enforcement. (See Part Ten, Appendix III of this Manual for the rationale of judicial enforcement of awards in arbitration.)
|Request filed||180 days . . .|
|Response required/# of days to submit||Optional/15 days from transmitting request to respondent if response solicited|
|Appeal dismissal to Directors||20 days from transmitting dismissal notice|
|Appeal of mandatory vs. voluntary classification||20 days from transmittal of decision|
|Notification to respondent of request||5 days from transmittal of Grievance Committee’s instruction|
|Response required||15 days from transmitting request to respondent|
|Challenge forms||10 days to challenge from date forms transmitted|
|Panel named||15 days from transmitting challenge forms|
|Hearing notice*||21 days before hearing|
|Arbitration case to panel||Board option|
|Notice of witnesses and attorney||15 days before hearing to Board and other party|
|Request filed||20 days from transmitting award|
|Preliminary review||Optional number of days|
|Amendment received||Within 10 days of notice|
|Review held by Directors||Next/special meeting giving not less than 10 days notice|
* Notice of hearing should be transmitted to the parties with the Outline of Procedures (Form #A-10 or Form #A-10a, as appropriate) and the Arbitration Guidelines (including the Worksheet contained in Appendix II to Part Ten.)