Dispute Resolution

The professional standard that sets REALTORS® apart from other real estate practitioners is their acceptance and adherence to the REALTOR® Code of Ethics. Many difficulties between real estate professionals (whether REALTORS® or not) result from misunderstanding, miscommunication, or lack of adequate communication.  As civil litigation becomes increasingly costly, time consuming, and burdensome, many private parties prefer to settle disputes and conflicting claims through alternative means.

Overview

The Outer Banks Association of REALTORS® offers a comprehensive process intent to resolve the dispute as early and easily as possible. Here is a brief overview of possible steps in the process:

In a dispute over ETHICS:

  1. Contact the Association
  2. Dispute Resolution (Ombudsman) (Optional)
  3. Written Ethics Complaint Filed
  4. Grievance Committee Review
  5. Referral for Citation (If appropriate)
  6. Ethics Hearing Held

In a dispute over MONEY:

  1. Contact the Association
  2. Dispute Resolution (Ombudsman) (Optional)
  3. Mediation Request (Optional)
  4. Written Arbitration Request with $500 Deposit
  5. Mediation offered before Grievance Review
  6. Grievance Committee Review
  7. Mediation (Required if not already attempted)
  8. Arbitration Hearing Held

Please note: If the real estate professional (or their broker) you are dealing with is not a REALTOR®, your only recourse may be the North Carolina Real Estate Commission or the courts.  REALTOR® Associations determine whether the Code of Ethics has been violated, not whether the law or real estate regulations have been broken. Those decisions can only be made by the licensing authorities or the courts.

Download a brochure on our Dispute Resolution & Citation Program (pdf)

  1. Contact OBAR

    In order to begin our dispute resolution process, the Professional Standards Administrator will collect the following information along with your permission to share this information with the Ombudsman:

    • Name of Complainant (YOU):
    • Firm (if any):
    • Address:
    • Preferred Phone for contact:
    • Best time to contact you:
    • Role in Transaction: (buyer, seller, agent, broker)
    • Subject property (if any)
    • Name of Respondent (The other party):
    • Firm:
    • Address:
    • Phone:
    • Role in Transaction: (listing agent, selling agent, broker)

    What issue would you like the Ombudsman to resolve?

    Do we have your permission to share this information with the Ombudsman? Yes or No

    You can provide this information over the phone, or you may email your request to dispute@outerbanksrealtors.com. Our Professional Standards Administrators are:

    Christopher Nave, Executive Officer ~ 252.441.4036 ext 11
    Daniel Sutherland, MLS & Operations Director ~ 252.441.4036 ext 12

  2. Dispute Resolution (Ombudsman) Program

    The definition of Ombudsman for REALTORS® – The Ombudsman Program in its simplest definition is informal telephone mediation. In some cases it can address and solve minor complaints from the public. It can also solve inter-REALTOR® conflicts before they become serious problems. Like a mediator, an ombudsman helps parties find solutions.

    Boards and associations of REALTORS® are charged by the National Association of REALTORS® with the responsibility of receiving and resolving ethics complaints. This obligation is carried out by local, regional and state Grievance Committees and Professional Standards Committees.

    Complaints and concerns received by the Outer Banks Association of REALTORS® come in many different forms. (phone, letter, e mail, fax) Some complaints received by the association do not allege violation of specific provisions of the Code of Ethics nor relate specifically to conduct governed by the Code of Ethics. Some concerns or questions relate to transactional, real estate practices, technical or procedural matters that could easily be responded to.

    It seems that many members of the public are reluctant to file a written ethics complaint for several reasons; the process is too cumbersome and the paperwork is too hard to understand. There is also the perception that since the hearing panel is made up of members of the association that the board is trying to protect its own. Many ethics complaints might be averted with enhanced communications and initial problem-solving capacity at the local level. These ombudsman procedures are intended to provide that capacity.

    ROLE OF THE OMBUDSMAN

    The Ombudsman’s role is primarily one of communication and conciliation, not adjudication. Ombudsmen do not determine whether ethics violations have occurred; rather, they anticipate, identify, and resolve misunderstandings and disagreements before matters ripen into disputes and possible charges of unethical conduct.

    The Ombudsman:

    • Listens to the complainant’s concerns
    • Ascertains complainant’s desired outcome (revocation of licenses, sanctions, apology, money, etc.)
    • Can field and respond to a wide variety of inquiries and complaints, including general questions about real estate practice, transaction details, ethical practice, and enforcement issues
    • Explains possible avenues that might resolve the issue or reach the desired outcome
    • Answers general questions and/or procedural questions and explains the formal ethics complaint process

    In cases where an Ombudsman believes that a failure of communication is the basis for a question or complaint, the Ombudsman can arrange a meeting of the parties and assist in facilitating a mutually acceptable resolution.

    • Contacts the potential respondent to explain the complainant’s concerns and desired outcome
    • Tries to bring resolution
    • Reports back to the complainant
    • Explains the complainant’s rights after the completion of the ombudsman process.

    Where a written ethics complaint in the appropriate form is received by OBAR, it can be initially referred to the Ombudsman who will attempt to resolve the matter, except that complaints alleging violations of the public trust (as defined in Article IV, Section 2 of the NAR Bylaws) may not be referred to an Ombudsman.

    If a matter complained of is resolved to the mutual satisfaction of all parties through the efforts of an ombudsman, the formal ethics complaint brought initially (if any) will continue to be processed until withdrawn by the complainant. (revised August 2015)

    In the event the Ombudsman concludes that a potential violation of the public trust* may have occurred, the ombudsman process shall be immediately terminated, and the parties shall be advised of their right to pursue a formal ethics complaint; to pursue a complaint with any appropriate governmental or regulatory body; to pursue litigation; and/or to pursue any other available remedy.

    *For purposes of these policies, a potential violation of the public trust is “demonstrated misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in economic harm.”

    QUALIFICATIONS AND CRITERIA FOR OMBUDSMAN

    • 10 or more years of real estate experience or 5 or more years of real estate experience including additional qualifications such as experience in dispute resolution
    • Ombudsman must be familiar with the NAR Code of Ethics, state real estate regulations, and current real estate practice
    • Ombudsman must serve on the Professional Standards Committee
    • Ombudsman are required to take Ombudsman & Professional Standards Training on an annual basis
    • Ombudsman do not receive compensation for their services as Ombudsman
    • Ombudsman are required to complete an application detailing their experience levels and are selected by the President in conjunction with the association’s Chief Executive Officer
    • The Association will make every effort to incorporate Ombudsman from a variety of real estate specialties

    There shall be a minimum of five Ombudsman for the association
    Ombudsman are appointed for terms of one year however, there is no maximum number of years the member can serve as an Ombudsman
    Ombudsman will meet a minimum of once per calendar year to discuss the program and determine if any policy changes are required. If so, the Ombudsman will forward those changes to the Professional Standards Committee. Upon approval by the Professional Standards Committee, those changes shall be forwarded to the OBAR Association of Directors for ratification.

    CONFIDENTIALITY

    All communications made to the Ombudsman or the Outer Banks Association of REALTORS® whether written or oral, shall be confidential and may not be disclosed (other than communicating information and results between staff and the Ombudsman) to any other person for any reason. The Ombudsman’s opening statement shall confirm the parties understanding of this prior to discussing the issue.

    The allegations, discussions and decisions made in ombudsman proceedings are confidential and shall not be reported or published by the board, any member of a tribunal, or any party under any circumstances except those established in the Code of Ethics and Arbitration Manual of the National Association as from time to time amended. (8/2015)

    Furthermore, it is OBAR’s policy that Ombudsman cannot be called as a witness as part of any future ethics complaint by the complainant or respondent in the matter in which they attempted to resolve in their role as an Ombudsman. This fact shall also be made known to the parties during the Ombudsman’s opening statement.

    RESOLUTION OF COMPLAINTS

    If a matter complained of is resolved to the satisfaction of the complainant through the efforts of an Ombudsman, the formal ethics complaint brought initially (if any) will continue to be processed until the complainant has officially withdrawn the complaint.

    FAILURE TO COMPLY WITH AN AGREED UPON RESOLUTION

    Failure or refusal of a member to comply with the terms of a mutually agreed on resolution shall entitle the complaining party to resubmit the original complaint or, where a formal complaint in the appropriate form had not been filed, to file an ethics complaint. The time the matter was originally brought to OBAR’s attention will be tracked by the board’s professional standards administrator and the 180 day filing deadline shall be suspended from 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. This information shall be provided to the Grievance Committee for purposes of determining whether an ethics complaint is timely filed.

    OPTIONS AFTER AN UNSUCCESSFUL OMBUDSMAN PROCESS

    • The complainant may file a formal ethics complaint
    • The complainant may obtain legal advice
    • The complainant may file a formal complaint with the North Carolina Real Estate Commission
    • The complainant may be offered mediation after a Request and Agreement to Arbitrate is filed.
    • The complainant may seek outside mediation services

    * Please note, if a member serves as an Ombudsman and the issue is not resolved through the Ombudsman process, that member will be precluded from serving in any of the formal processes available through the association (i.e. ethics tribunal, mediation, etc.) with respect to that complaint.

    REFERRALS TO THE GRIEVANCE COMMITTEE OR STATE REGULATORY BODIES

    Ombudsmen cannot refer concerns they have regarding the conduct of any party utilizing their services to the Grievance Committee, to the North Carolina Real Estate Commission or to any other regulatory body. The prohibition is intended to ensure impartiality and avoid the possible appearance of bias. Ombudsmen are, however, authorized to refer concerns that the public trust may have been violated to the Grievance Committee.

  3. Filing a Written Complaint

    Ethics Complaint

    Stipulates the REALTOR® is in violation of one or more of the articles of the Code of Ethics. This method does specify that no monetary compensation may be granted through this process. There is no cost to file an ethics complaint.

    When filing an ethics complaint, here are some general principles to keep in mind:

    Ethics complaints must be filed with the local board or association of REALTORS® within one hundred eighty (180) days from the time a complainant knew (or reasonably should have known) that potentially unethical conduct took place (unless the Board’s informal dispute resolution processes are invoked in which case the filing deadline will momentarily be suspended).

    The REALTORS® Code of Ethics consists of seventeen (17) Articles. The duties imposed by many of the Articles are explained and illustrated through accompanying Standards of Practice or case interpretations.

    Your complaint should include a narrative description of the circumstances that lead you to believe the Code of Ethics may have been violated.
    Your complaint must cite one or more of the Articles of the Code of Ethics which may have been violated. Hearing panels decide whether the Articles expressly cited in complaints were violated—not whether Standards of Practice or case interpretations were violated.

    The local board or association of REALTORS® Grievance Committee may provide technical assistance in preparing a complaint in proper form and with proper content.

    If the dispute involves money:

    Mediation Request – A trained mediator sets a meeting between the parties to suggest possible solutions to avoid further costs and proceedings. Mediation is voluntary and the service is offered free of charge with no deposit required. If voluntary mediation is refused or fails, you may choose to follow it up with a written arbitration request.

    Arbitration Request – In arbitration, a specially trained panel of peers review the issue to determine if monetary compensation should be granted. A $500 deposit is required to initiate an arbitration request, which is refunded if you win the case. All REALTORS® are mandated to participate in confirmed arbitration requests, and refusal to do so can result in their expulsion from membership. Mediation is required before a full arbitration hearing is held.

    You may file both an Ethics Complaint and an Arbitration Request on the same issue, but we will hold off on processing the Ethics Complaint until the Arbitration process is completed.

    Packet for Ethics / Arbitration / Mediation

    Dispute Forms Packet (pdf download) contains:

    • “Before You File an Ethics Complaint” (Appendix X to Part Four of the NAR Code of Ethics & Arbitration Manual)
    • NAR Code of Ethics
    • Ethics Complaint Form (E-1)
    • Request for Mediation Form
    • Request and Agreement to Arbitrate for use by Association Members (A-1)
    • Request and Agreement to Arbitrate for use by Non-Members (A-2)

  4. Grievance Committee Review

    Ethics Complaints

    Your complaint will be reviewed by the association’s Grievance Committee which will take one of three actions:

    Referral to Citation Panel – If the panel feels that the allegations made, if taken as true, might support a violation of the Article(s) cited in the complaint AND the violations match the criteria for our Citation Program, the complaint will be forwarded to a Citation Panel to issue a fine.

    Referral for Professional Standards Hearing – If the panel feels that the allegations made, if taken as true, might support a violation of the Code of Ethics and the violation does NOT match the criteria for our Citation Program, the complaint will be forwarded to the Professional Standards Committee for a full hearing.

    Dismissal – The Grievance Committee may dismiss your complaint if they determine the allegations, as presented, do not support a violation of the Code of Ethics. You can appeal the dismissal to the Board of Directors.

    Arbitration Requests

    Your complaint will be reviewed by the association’s Grievance Committee to determine if the matter is indeed suitable for arbitration. Arbitration is unavailable when:

    • The dispute is between brokers of the same firm
    • The respondent is not a REALTOR®
    • The matter is deemed too intricate or complex for simple arbitration
    • If accepted, the request is forwarded to the Professional Standards Committee for an Arbitration Hearing. Mediation will be required if it has not already been attempted.
    • If dismissed, you may appeal the dismissal to the Board of Directors.
    Mediation Requests

    Requests for Mediation are processed by the Professional Standards Administrators and referred to a trained Mediator who will initiate the process.

  5. Citation Program

    HOW IT WORKS:

    If the Ombudsman process is unsuccessful or refused, a REALTOR® or member of the public would file a written complaint for submission to the Grievance Committee.

    If the Grievance Committee decides that the Articles cited in the complaint make the case eligible for the Citation Program, the respondent will be notified and given 20 days to participate in the Citation Program OR request a full ethics hearing.

    If the respondent agrees to the Citation Program, he/she would pay a standard, pre-set fine associated with that Article.

    WHY USE THE CITATION PROGRAM?

    For Respondents, electing the Citation Program avoids an uncomfortable and often time-consuming hearing process while still respecting their due process rights as they may elect NOT to pay the citation and proceed with a full hearing. The Citation Program is as confidential as the hearing process.

    For Complainants, there may be less time involved, yet justice will still be served, thereby protecting the industry from unethical behavior. However, if the Respondent elects to have a hearing, the Complainant would need to be prepared to attend.

    Which violations are covered by the Citation Policy?

    For full details, please see the Citation Policy section of OBAR Policy B.

    Article 1 Fine
    Failure to fully disclose and obtain consent from both parties when representing both the seller/landlord and buyer/tenant in the same transaction (SoP 1-5) 2

    Failure to submit offers and counter-offers objectively and as quickly as possible (SoP 1-6) 1

    Accessing or using, or allowing others to access or use, a property managed or listed on terms other than those authorized by the owner or seller (SoP 1-16) 3

    Article 3
    Failure to communicate a change in compensation for cooperative services prior to the time that REALTOR® submits an offer to purchase/lease the property (SoP 3-2) 1

    As a listing broker, attempting to unilaterally modify the offered compensation with respect to a cooperative transaction after a REALTOR® has submitted an offer to purchase or lease that property (SoP 3-2) 3

    Failing to disclose existence of dual or variable rate commission arrangements (SoP 3-4) 2

    Failure to disclose to cooperating brokers differential that would result in dual or variable rate commission arrangement if sale/lease results through efforts of seller/landlord (SoP 3-4) 2

    Failing to disclose existence of accepted offers, including offers with unresolved contingencies, to cooperating brokers (SoP 3-6) 3

    Misrepresenting the availability of access to show or inspect a listed property (SoP 3-8) 1

    Article 4
    Failing to disclose REALTOR®’s ownership or other interest in writing to the purchaser or their representative (second sentence) 1

    Article 5
    Providing professional services without disclosing REALTOR®’s present interest in property (Article 5, limited to present interest, not contemplated) 2

    Article 6
    Any violation of Article 6 2

    Article 12

    • Failing to present a true picture in real estate communications and advertising 1
    • Failing to disclose status as real estate professional in advertising and other representations 1
    • Failure to provide all terms governing availability of a “free” product or service in an advertisement or other representation (SoP 12-1) 1
    • Failure to disclose potential to obtain a benefit from third party when REALTOR® represents their services as “free” or without cost (SoP 12-2) 2
    • Falsely claiming to have “sold” property (SoP 12-7) 1
    • Failure to take corrective action when it becomes apparent that information on a REALTOR®’s website is no longer current or accurate (SoP 12-8) 1
    • Misleading consumers through deceptive framing, manipulating content, deceptively diverting internet traffic, or presenting other’s content without attribution or permission (SoP 12-10) 3
    • Registering or using of deceptive URL or domain name (SoP 12-12) 3
    Escalating Fine Schedule

    Level 1st Offense, 2nd Offense, 3rd Offense

    1. $100 OR Ethics Training* $200 $400
    2. $250 $500 $1,000
    3. $500 AND Ethics Training* $1,000 $2,000

    *Ethics Training includes completion of the NAR Online Ethics Course or other course as defined by OBAR. In the case of Level 1 1st Offense, the respondent may choose between the $100 fine or Ethics Training.

    For full details, please see the Citation Policy section of OBAR Policy B.

  6. The Ethics Hearing

    Preparing for the Hearing

    Familiarize yourself with the hearing procedures that will be followed. In particular you will want to know about challenging potential panel members, your right to counsel, calling witnesses, and the burdens and standards of proof that apply.

    Complainants have the ultimate responsibility (“burden”) of proving that the Code of Ethics has been violated. The standard of proof that must be met is “clear, strong and convincing,” defined as, “. . . that measure or degree of proof which will produce a firm belief or conviction as to the allegations sought to be established.” Consistent with American jurisprudence, respondents are considered innocent unless proven to have violated the Code of Ethics.
    Be sure that your witnesses and counsel will be available on the day of the hearing. Continuances are a privilege—not a right.

    Be sure you have all the documents and other evidence you need to present your case.

    Organize your presentation in advance. Know what you are going to say and be prepared to demonstrate what happened and how you believe the Code of Ethics was violated.

    At the Hearing

    Appreciate that panel members are unpaid volunteers giving their time as an act of public service. Their objective is to be fair, unbiased, and impartial; to determine, based on the evidence and testimony presented to them, what actually occurred; and then to determine whether the facts as they find them support a finding that the Article(s) charged have been violated.

    Hearing panels cannot conclude that an Article of the Code has been violated unless that Article(s) is specifically cited in the complaint.

    Keep your presentation concise, factual, and to the point. Your task is to demonstrate what happened (or what should have happened but didn’t), and how the facts support a violation of the Article(s) charged in the complaint.
    Hearing panels base their decisions on the evidence and testimony presented during the hearing. If you have information relevant to the issue(s) under consideration, be sure to bring it up during your presentation.

    Recognize that different people can witness the same event and have differing recollections about what they saw. The fact that a respondent or their witness recalls things differently doesn’t mean they aren’t telling the truth as they recall events. It is up to the hearing panel, in the findings of fact that will be part of their decision, to determine what actually happened.

    The hearing panel will pay careful attention to what you say and how you say it. An implausible account doesn’t become more believable through repetition or, through volume.

    You are involved in an adversarial process that is, to some degree, unavoidably confrontational. Many violations of the Code of Ethics result from misunderstanding or lack of awareness of ethical duties by otherwise well-meaning, responsible real estate professionals. An ethics complaint has potential to be viewed as an attack on a respondent’s integrity and professionalism. For the enforcement process to function properly, it is imperative for all parties, witnesses, and panel members to maintain appropriate decorum.

    After the Hearing

    When you receive the hearing panel’s decision, review it carefully.

    Findings of fact are the conclusions of impartial panel members based on their reasoned assessment of all of the evidence and testimony presented during the hearing. Findings of fact are not appealable.

    If you believe the hearing process was seriously flawed to the extent you were denied a full and fair hearing, there are appellate procedures that can be involved. The fact that a hearing panel found no violation is not appealable.

    Refer to the procedures used by the local board or association of REALTORS® for detailed information on the bases and time limits for appealing decisions or requesting a rehearing. Rehearings are generally granted only when newly discovered evidence comes to light (a) which could not reasonably have been discovered and produced at the original hearing and (b) which might have had a bearing on the hearing panel’s decision. Appeals brought by ethics respondents must be based on (a) a perceived misapplication or misinterpretation of one or more Articles of the Code of Ethics, (b) a procedural deficiency or failure of due process, or (c) the nature or gravity of the discipline proposed by the hearing panel. Appeals brought by ethics complainants are limited to procedural deficiencies or failures of due process that may have prevented a full and fair hearing.

    Outcome

    REALTOR® Associations can discipline REALTORS® for violating the Code of Ethics. Typical forms of discipline include attendance at courses and seminars designed to increase a REALTOR’S® understanding of the ethical duties or other responsibilities of real estate professionals. REALTORS® may also be reprimanded, fined, or their membership can be suspended or terminated for serious or repeated violations. REALTOR® Associations cannot require REALTORS® to pay money to parties filing ethics complaints; cannot award “punitive damages” for violations of the Code of Ethics; and cannot suspend or revoke a real estate professional’s license.

    The primary emphasis of discipline for ethical lapses is educational, to create a heightened awareness of and appreciation for the duties the Code imposes. At the same time, more severe forms of discipline, including fines and suspension and termination of membership may be imposed for serious or repeated violations.

  7. Mediation & Arbitration

    Mediation

    Mediation is a free, voluntary service provided to help settle disputes involving money. We’ve found that mediation oftentimes allows members to settle an issue and avoid a full hearing. Mediation is required, however, when a written complaint has been filed and deemed arbitrable by the Grievance Committee.

    Informal meeting (ideally it is between the broker/manager) of the two firms and one mediation officer.

    Discussion between the parties wherein:

    • All parties agree to the decision
    • Relationship has opportunity to stay intact
    • If an agreement can NOT be reached between the parties the issue will be sent to a hearing, however, no discussion at the mediation will be admissible at the formal hearing.
    • Leave knowing the results.
    Arbitration

    In this method, a specially trained panel of peers will arbitrate the issue and determine if monetary compensation should be granted. We require a $500 deposit to initiate an arbitration request, which would be returned to you IF you win the case. If you lose, we keep the deposit. All REALTORS® are mandated to participate in confirmed arbitration requests, and refusal to do so can result in their expulsion from membership.

    • Formal hearing with witnesses, attorneys, three to five panel members, formal statements.
    • Formal swearing in, testimony
    • Gives away the decision to the members of the panel
    • The panel decides who gets the money and there is no appeal-you get only one chance.
    • Must wait for the results to be mailed as certified mail.

  8. Frequently Asked Questions

    Where do the rules for the Arbitration, Mediation, and Ethics complaint process come from? All Professional Standards rules and procedures are set forth in the National Association of REALTORS® Code of Ethics and Arbitration Manual (CEAM).

    In order for me to arbitrate does the transaction have to be closed? Yes. For a matter to be arbitrable the transaction must have closed.

    Do I have to be the managing broker in order to file an Arbitration Request or a request for Mediation? For a matter to be considered a mandatory arbitration request, the managing broker must be the requesting party.

    Does an ethics complaint allow for damages? There are no provisions for damages for an ethics complaint.

    If I arbitrate with another broker regarding a monetary dispute as it relates to co op commissions is the Arbitration Award binding? Yes, pursuant to the CEAM (Section 56) the mediation agreement as well as the arbitration award can be judicially enforced in the event the non prevailing party fails to comply.

    If I have a dispute with a managing broker of a brokerage who is a member of another board can I still arbitrate or mediate? Yes, pursuant to the Multiboard Agreement you may file the request for arbitration or mediation at your primary board.

    If have a complaint about a REALTOR® from another board can I file an ethics complaint? If so, where do I file? Yes, pursuant to the Multiboard Agreement in accordance with the CEAM you may file an ethics complaint at your primary board.