 |
|
| NATIONAL ASSOCIATION OF REALTORS® | Videos | Store | Library | Directories | Need Help? |
| Search REALTOR.org | Register | Login | My Account | NRDS | |
 |
REALTOR® ASSOCIATION EXECUTIVE
| |
| Legal Update Help Leaders Remain Knowledgeable About Association Policies and Operations As an association executive and a leader of your REALTOR® association, your role is very diverse. You must be a visionary and lead your association into the 21st century and be a politician and take into consideration the interests and needs of various constituencies. You also need to be knowledgeable about association policies and operations to avoid or eliminate undue risk. Each year, you have new elected leaders who will turn to you for advice when carrying out their roles, so it's imperative that you remain knowledgeable about policy and legal issues and educate them concerning conflicts, conformance with NATIONAL ASSOCIATION OF REALTORS® policy, and the areas of greatest legal exposure for REALTOR® associations. Avoid Conflicts of Interest Elected leaders will be responsible for recommending or deciding on association policy. This imposes a fiduciary duty on them to act in the best interests of the association and avoid any real or perceived conflicts of interest. To act in the best interests of the association means that leaders have a duty of loyalty and care to the association and could be liable for any damages to the association if that duty is breached. It also imposes on them a duty to protect confidential information obtained while serving the association. The duty of care requires that one act reasonably and without negligence or fraud. Negligence may arise when a member inadvertently discloses confidential information. If the disclosure adversely impacts an individual, that person could file a claim alleging defamation. This area of legal risk often arises in the employment context or as an aftermath of a professional standards hearing. There is also a duty to avoid conflicts of interest. Conflicts arise when individuals participate in the deliberation or resolution of issues whose outcome could result in personal gain for them. Robert's Rules of Order states that "no member shall vote on a question in which he has a direct personal or pecuniary interest not common to other members of the organization." For example, if a motion proposes that the association enter into a contract with a company in which some members are officers and from which they'll derive personal profit, the members should disclose their interest, recuse themselves from the deliberations, and abstain from voting on the motion. Protect Association From Liability One of your primary responsibilities as an association executive is to protect the association from legal liability and be sure it has adequate insurance coverage as well as reserves for uninsured expenses, settlements, or judgments. Insurance coverage under the NAR Professional Liability Insurance Policy is contingent on an association's governing documents being in compliance with NAR policy. This means that changes to NAR policy must be adopted in a timely manner (at the earliest time practicable based on the meeting schedule of the appropriate association committee and the board of directors). Failure to make changes in a timely manner can lead to denial of insurance coverage. If questions arise involving changes to policy, you should contact NAR's Member Policy department for clarification and guidance. Other insurance needs also should be investigated. Most associations will need, at a minimum, property, general liability, bonding, and workers’ compensation policies and may also need other types of policies, depending on the association's operations. Finally, reserves should be established to cover exposures that are uninsurable or underinsured or to meet unanticipated operating expenses. Be Sensitive to Legal Exposure Areas of significant legal exposure to which you should sensitize your elected leaders include antitrust, employment practices, and professional standards matters. The greatest number of lawsuits against REALTOR® associations includes allegations of negligence in these three areas, so new leaders should receive an overview of and training in these areas of legal exposure. Antitrust--It’s important to remind elected leaders that the anti-trust laws apply to the association's operations as well as their brokerage operations. Therefore, discussions of pricing or boycotts at association meetings could result in antitrust liability to the association. If a discussion among competitors at an association meeting turns to pricing, it should immediately be discontinued. Employment practices--Litigation in the employment practices area has been trending upward for several years. It's likely that you regularly review your employees and provide them with written evaluations. The content of performance evaluations should remain confidential. The specific details should be shared only with those who have a need to know, which may, from time to time, include your leadership team. If leaders have access to any of this information, remind them that it's confidential. If disciplinary action is warranted for any employee, the Employer-Employee Guidelines promulgated by NAR should be followed in order to invoke errors and omissions insurance coverage should a claim be filed at a later date. Sharing this information with your leaders is important, since many of them view employment practices in the context of the independent contractor relationship and don't understand employee protections provided under federal and state laws. It's also important to have a sexual harassment policy in place, as sexual harassment cases are increasing. The Equal Employment Opportunity Commission's guidelines call for employers to have a policy that is communicated to all employees and provides for a complaint process for aggrieved employees. When complaints are filed and investigated, remind those involved that the information must be handled with the highest degree of confidentiality. And remind your elected leaders that a claim can arise if a member harasses a staff person (third-party harassment). In those instances, certain members of your leadership team may become involved in the investigatory process, so providing them with proper advice and the assistance of counsel is critical. Professional standards--In the professional standards area, due process is the key to avoiding liability. The procedures for handling arbitration and ethics complaints should be followed explicitly so that there's no question about whether an aggrieved party received a fair hearing. When it's evident the aggrieved party was provided with due process, courts have consistently refused to second-guess the decision of a board of directors. This article was written by NAR's Legal Affairs department. |
  |
 Copyright NATIONAL ASSOCIATION OF REALTORS® Headquarters: 430 North Michigan Avenue, Chicago, IL. 60611-4087 DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 1-800-874-6500 Terms of Use | Privacy Policy | REALTOR.com | Contact NAR | Site Map |