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Dispute Resolution
Mediation is NAR's preferred method of dispute resolution. All local Realtor® Associations must, as a benefit of membership, offer the ability to mediate otherwise arbitrable disputes. RPCRA requires mediation prior to an arbitration hearing.

Mediation

Although no party to an arbitrable matter can be required to submit to mediation (unless Realtors® [principals] are required by their Board to mediate otherwise arbitrable disputes pursuant to Article 17) and mediation is not intended to be a substitute for the arbitration procedures described elsewhere in this Manual, mediation can be a useful tool in resolving the conflicts that arise involving Board Members and their clients and customers. Mediation must be available in instances where arbitration would be provided under Part Ten, Section 44 of this Manual and a Board can require Realtors® (principals) to mediate otherwise arbitrable disputes pursuant to Article 17. Mediation can resolve disputes, promote amicable resolutions, and reduce the number of cases requiring the more formal and complex arbitration procedures of the Board, thus reducing the time and effort required of Board Members serving on the Professional Standards Committee.

Mediation Arbitration and Dispute Resolution Ombudsman Services Pathways to Professionalism

Mediation

Traditionally, real estate industry disputes rely on negotiation for solutions. If negotiation fails, litigation is often initiated. Mediation involves the skillful intervention of a third-party professional to help resolve disputes that arise between two or more parties.

Nonlawyer Mediators and the Unauthorized Practice of Law
Do you have to be a lawyer to serve as a mediator? Learn more.

Top 10 Specious Reasons Why Lawyers Won't Mediate
Mediation is a proven process that is being used by litigators to save time and money and avoid the risk of trial. Yet lawyers offer many reasons to justify not mediating.

On the Forms page of NAR's Code of Ethics and Arbitration Manual, you can download these mediation forms:

  • Agreement to Mediate
  • Mediation Officer Selection Form
  • Mediation Resolution Agreement
  • Notice of Request for Mediation
  • Notice of Selection of Mediation Officer
  • Request for Mediation
  • Sample Letter for Mediation Officer
  • Termination of Mediation Conference
Arbitration and Dispute Resolution

Arbitration, a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside the courts. The parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters," or "arbitral tribunal"), whose decision (the "award") they agree to be bound. It is a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides.

In the event clients of Realtors® wish to mediate or arbitrate contractual disputes arising out of real estate transactions, Realtors® shall mediate or arbitrate those disputes in accordance with the policies of the Board, provided the clients agree to be bound by any resulting agreement or award.

The obligation to participate in mediation and arbitration contemplated by this Article includes the obligation of Realtors® (principals) to cause their firms to mediate and arbitrate and be bound by any resulting agreement or award.” (Amended 1/12)

  • Code of Ethics & Arbitration Manual
  • Professional Standards Policy
  • Case Interpretations
  • Definitions Relating to Arbitration

  • One type of contract frequently entered into by REALTORS® is the listing contract between sellers and listing brokers. Procuring cause disputes between sellers and listing brokers are often decided in court. The reasoning relied on by the courts in resolving such claims is articulated in Black’s Law Dictionary, Fifth Edition, definition of procuring cause:
    The proximate cause; the cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime object. The inducing cause; the direct or proximate cause. Substantially synonymous with “efficient cause.”

    A broker will be regarded as the “procuring cause” of a sale, so as to be entitled to commission, if his efforts are the foundation on which the negotiations resulting in a sale are begun. A cause originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the employment of the broker who is producing a purchaser ready, willing, and able to buy real estate on the owner’s terms. Mohamed v. Robbins, 23 Ariz. App. 195, 531 p.2d 928, 930.

    See also Producing cause; Proximate cause.

    Disputes concerning the contracts between listing brokers and cooperating brokers, however, are addressed by the National Association’s Arbitration Guidelines promulgated pursuant to Article 17 of the Code of Ethics. While guidance can be taken from judicial determinations of disputes between sellers and listing brokers, procuring cause disputes between listing and cooperating brokers, or between two cooperating brokers, can be resolved based on similar though not identical principles. While a number of definitions of procuring cause exist, and a myriad of factors may ultimately enter into any determination of procuring cause, for purposes of arbitration conducted by Boards and Associations of REALTORS®, procuring cause in broker to broker disputes can be readily understood as the uninterrupted series of causal events which results in the successful transaction. Or, in other words, what “caused” the successful transaction to come about. “Successful transaction,” as used in these Arbitration Guidelines, is defined as “a sale that closes or a lease that is executed.” Many REALTORS®, Executive Officers, lawyers, and others have tried, albeit unsuccessfully, to develop a single, comprehensive template that could be used in all procuring cause disputes to determine entitlement to the sought-after award without the need for a comprehensive analysis of all relevant details of the underlying transaction. Such efforts, while well-intentioned, were doomed to failure in view of the fact that there is no “typical” real estate transaction any more than there is “typical” real estate or a “typical” REALTOR®. In light of the unique nature of real property and real estate transactions, and acknowledging that fair and equitable decisions could be reached only with a comprehensive understanding of the events that led to the transaction, the National Association’s Board of Directors, in 1973, adopted Official Interpretation 31 of Article I, Section 2 of the Bylaws. Subsequently amended in 1977, Interpretation 31 establishes that:

    A Board rule or a rule of a Multiple Listing Service owned by, operated by, or affiliated with a Board, which establishes, limits or restricts the REALTOR® in his relations with a potential purchaser, affecting recognition periods or purporting to predetermine entitlement to any award in arbitration, is an inequitable limitation on its membership.

    The explanation of Interpretation 31 goes on to provide, in part:

    . . . [T]he Board or its MLS may not establish a rule or regulation which purports to predetermine entitlement to any awards in a real estate transaction. If controversy arises as to entitlement to any awards, it shall be determined by a hearing in arbitration on the merits of all ascertainable facts in the context of the specific case of controversy.

    It is not uncommon for procuring cause disputes to arise out of offers by listing brokers to compensate cooperating brokers made through a multiple listing service. A multiple listing service is defined as a facility for the orderly correlation and dissemination of listing information among Participants so that they may better serve their clients and customers and the public; is a means by which authorized Participants make blanket unilateral offers of compensation to other Participants (acting as subagents, buyer agents, or in other agency or nonagency capacities defined by law); is a means by which information is accumulated and disseminated to enable authorized Participants to prepare appraisals and other valuations of real property; and is a means by which Participants engaging in real estate appraisal contribute to common databases. Entitlement to compensation is determined by the cooperating broker’s performance as procuring cause of the sale (or lease). While offers of compensation made by listing brokers to cooperating brokers through MLS are unconditional,*

    [*Compensation is unconditional except where local MLS rules permit listing brokers to reserve the right to reduce compensation offers to cooperating brokers in the event that the commission established in a listing contract is reduced by court action or by actions of a lender. Refer to Part One, G. Commission/Cooperative Compensation Offers, Section 1, Information Specifying the Compensation on Each Listing Filed with a Multiple Listing Service of a Board of REALTORS®, Handbook on Multiple Listing Policy. (Adopted 11/98)]

    The definition of MLS and the offers of compensation made through the MLS provide that a listing broker’s obligation to compensate a cooperating broker who was the procuring cause of sale (or lease) may be excused if it is determined through arbitration that, through no fault of the listing broker and in the exercise of good faith and reasonable care, it was impossible or financially unfeasible for the listing broker to collect a commission pursuant to the listing agreement. In such instances, entitlement to cooperative compensation offered through MLS would be a question to be determined by an arbitration Hearing Panel based on all relevant facts and circumstances including, but not limited to, why it was impossible or financially unfeasible for the listing broker to collect some or all of the commission established in the listing agreement; at what point in the transaction did the listing broker know (or should have known) that some or all of the commission established in the listing agreement might not be paid; and how promptly had the listing broker communicated to cooperating brokers that the commission established in the listing agreement might not be paid. (Revised 11/98)

Ombudsman Services

An ombudsman is an individual appointed to receive and resolve disputes through constructive communication and advocating for consensus and understanding. Ombudsman procedures are intended to provide enhanced communications and initial problem-solving capacity at the local level. All associations must provide ombudsman services to their members and members’ clients and customers consistent with Professional Standards Policy Statement #59, Associations to Provide Ombudsmen Services, Code of Ethics and Arbitration Manual.

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

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.

Professional Standards Policy Statement #59, Associations to Provide Ombudsman Services, in the current NAR Code of Ethics and Arbitration Manual, provides as follows:
Every local and state association of Realtors® is required to offer, either directly or as part of a cooperative enforcement agreement (consistent with Professional Standards Statement #40, Cooperative Enforcement Agreements), ombudsman services to members, clients, and consumers on or before January 1, 2016

Boards and associations of Realtors® are charged 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.

Many “complaints” received by boards and associations do not expressly allege violations of specific Articles of the Code of Ethics, and many do not detail conduct related to the Code. Some “complaints” are actually transactional, technical, or procedural questions readily responded to. It is the belief of the National Association’s Professional Standards Committee that 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.

View video demonstrations of the Ombudsman process from recent NAR Professional Standards Education Seminars. View frequently asked questions about the Ombudsman process and procedures.

The ombudsman’s role is primarily one of communication and conciliation, not adjudication. Ombudsmen do not determine whether ethics violations have occurred or who is entitled to what amount of money, rather they anticipate, identify, and resolve misunderstandings and disagreements before matters ripen into disputes and possible charges of unethical conduct.

Boards and associations have considerable latitude in developing criteria for service as ombudsmen.

At a minimum, ombudsmen should be thoroughly familiar with the Code of Ethics, state real estate regulations, and current real estate practice. Ombudsmen may be Realtors®, staff members, or others acting on behalf of the local board/association.

Ombudsman are covered through the NAR insurance program, as long as they are acting within the coverage limits described in the policy.

As provided in the FAQ about the National Association of Realotrs® Professional Liability Insurance Program for Associations of Realtors®, the policy defines an "ombudsman" (or "ombudsperson") as an individual designated by an association to be available for consultation about the association's ethics hearing, arbitration, and/or DRS processes. Only association staff or members may serve as an ombudsman. The policy excludes from coverage any claim that alleges or arises out of any action committed by ombudsman that does not involve an association's ethics hearing, arbitration or the DRS processes.

The following are examples of some situations in which an ombudsman would be covered and other situations when the ombudsman would not be covered:

A seller contacts the association because they feel their listing broker, who is a Realtor®, is not responding to phone calls, and may have received offers that they haven’t presented to the seller yet. If an ombudsman were appointed to assist the parties, the ombudsman’s actions would be covered by the NAR insurance program.

A buyer contacts the association for help with a short sale transaction. If an ombudsman assisted the buyer, the ombudsman’s actions would not be covered by the NAR insurance program.

Realtor® A contacts the association because she has reason to believe Realtor® B has been criticizing her business on Facebook after a difficult transaction. If an ombudsman were appointed to assist the parties, the ombudsman’s actions would be covered under the NAR insurance program.

For more information about insurance coverage, visit the Professional Liability Insurance Program page.

Boards and associations have considerable latitude in determining how and when ombudsmen will be utilized. For example, ombudsmen can field and respond to a wide variety of inquires and complaints, including general questions about real estate practice, transaction details, ethical practice, and enforcement issues. Ombudsmen can also receive and respond to questions and complaints about members; can contact members to inform them that a client or customer has raised a question or issue; and can contact members to obtain information necessary to provide an informed response.

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 to facilitate a mutually acceptable resolution.

Where a written ethics complaint in the appropriate form is received, 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. “Public trust” refers to misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm.

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; or to pursue any other available remedy.

Persons filing complaints, or inquiring about the process for filing ethics complaints, will be advised that ombudsman services are available to attempt to informally resolve their complaint. Such persons will also be advised that they may decline ombudsman services and can have their complaint referred to ethics mediation (if available), or considered at a formal ethics hearing.

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.

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 the board or association’s attention will be considered the filing date for purposes of determining whether an ethics complaint is timely filed.

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

Confidentiality of Ombudsman Process
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.
Last revised 12.30.15

Five-part video demonstration of the Ombudsman process that occurred during the 2013 NAR Professional Standards Education Seminar.
Part 1 — The complainant calls association about a member’s conduct
Part 2 — Association staff alerts ombudsman to matter
Part 3 — Ombudsman calls complainant
Part 4 — Ombudsman calls REALTOR®/Respondent
Part 5 — Ombudsman closes matter with call to complainant

Seven-part video demonstration of the Ombudsman process that occurred during the 2014 NAR Professional Standards Education Seminar.
Part 1 — Complainant calls association about a member's conduct
Part 2 — Association staff alerts ombudsman to matter
Part 3 — Ombudsman calls complainant
Part 4 — Ombudsman calls Realtor®/Respondent
Part 5 — Ombudsman calls complainant to set up settlement call with respondent
Part 6 — Ombudsman calls respondent and suggests that the two talk to one another
Part 7 — Respondent calls complainant to settle issues and close out the matter

  1. What is the difference between the ombudsman process and mediation?
    The ombudsman process usually involves parties who have not filed an ethics complaint or arbitration request, but have experienced a breakdown in communication requiring informal resolution (although an ombudsman may also be used where a complaint has been filed). Often the ombudsman functions as an intermediary who communicates the concerns of one party to the other over the phone, so a positive relationship can be restored.

    Mediation, on the other hand, normally involves monetary disputes (unless the association also offers ethics mediation) where an arbitration request may have been filed. Parties generally meet face-to-face at a prearranged time with their mediator, who encourages both parties to come to a mutually satisfactory resolution of their dispute.

    Ombudsmen and mediators often have the same skill set: impartiality, the ability to listen carefully, and the desire to identify and resolve misunderstandings.
  2. Is the ombudsman process just for consumers?
    No. Boards and associations have considerable latitude in determining how and when ombudsmen will be utilized. If the complaint is the type of case the association’s ombudsman process handles, ombudsman services must be offered to members, clients, and consumers consistent with Professional Standards Policy Statement # 59, Associations to Provide Ombudsman Services, Code of Ethics and Arbitration Manual.

    The ombudsman process can be beneficial for both consumers and Realtor® members who need an immediate, informal resolution to common misunderstandings. For example, ombudsmen 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. Ombudsmen can also receive and respond to questions and complaints about members, can contact members to inform them that a client or customer has raised a question or issue, and can contact members to obtain information necessary to provide an informed response.

  3. Does the ombudsman decide who is right or wrong?
    No. Ombudsmen do not determine whether ethics violations have occurred, rather they anticipate, identify, and resolve misunderstandings and disagreements.

  4. How long does the ombudsman process take?
    Disputes can often be resolved through the ombudsman process in as little as a few hours or days, depending on the availability of the ombudsman and the parties.

  5. Do parties have to participate in the ombudsman process?
    Not at all. Parties should be notified that ombudsman services are available to them, and may decline those services and opt to file a formal complaint instead.

  6. What sort of documents or evidence do parties exchange during the ombudsman process?
    Exchanging documents or evidence during the ombudsman process is  typically unnecessary. Rather, the ombudsman will work to resolve the dispute through a series of phone calls or an informal meeting with the parties.

  7. If the parties do not resolve their dispute through the ombudsman process, how long does the individual have to file an ethics complaint or arbitration request?
    The filing date for purposes of determining whether an ethics complaint or arbitration request is timely filed will be the time the matter was originally brought to the board or association’s attention. When the parties invoke informal dispute resolution processes such as ombudsman, ethics mediation, or mediation of arbitrable disputes, filing deadlines are suspended.

  8. What if the ombudsman thinks the dispute may involve a potential violation of the public trust?
    In the event the ombudsman concludes at any time that a potential violation of the public trust may have occurred, the ombudsman process shall be immediately terminated, and the parties should be advised of their right to file a formal ethics complaint, to file a complaint with any appropriate governmental or regulatory body, to pursue litigation, or to pursue any other available remedy. “Public trust” refers to misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm.

    Written ethics 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.

  9. Can an ombudsman file an ethics complaint based on what he or she has learned from the parties through the ombudsman process?
    Ombudsmen cannot refer concerns they have regarding the conduct of any party utilizing their services to the Grievance Committee, to the state real estate licensing authority, 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.

  10. Is the ombudsman process confidential?
    Yes, the allegations, discussions, and decisions made in ombudsman proceedings are confidential and may not be reported or published by the board, any member of a tribunal (including the ombudsman), or any party under any circumstances except those established in the Code of Ethics and Arbitration Manual.

  11. Are ombudsman covered by NAR Insurance Program?
    Ombudsman are covered through the NAR insurance program, as long as they are acting within the coverage limits described in the policy. Please refer to the ombudsman policy on nar.realtor for more information.

  12. Are associations of Realtors® required to offer ombudsman services?
    Yes, starting January 1, 2016. Professional Standards Policy Statement #59, Associations to Provide Ombudsman Services, in the current NAR Code of Ethics and Arbitration Manual, provides as follows:

    Every local and state association of Realtors® is required to offer, either directly or as part of a cooperative enforcement agreement (consistent with Professional Standards Statement #40, Cooperative Enforcement Agreements), ombudsman services to members, clients, and consumers on or before January 1, 2016.

  13. Will the National Association offer ombudsman training?
    NAR has numerous resources available to association and potential ombudsmen wanting to know more about the process, including a series of instructional videos and information and sample materials from other associations. NAR also periodically offers sessions on ombudsman programs at the Realtors® Conference and Expo and the Realtors® Legislative Meetings and Trade Expo.

    While not specifically focused on the ombudsman process, NAR’s Mediator/Mediation Training offers invaluable dispute resolution skills and training that can greatly assist ombudsman in identifying and resolving disputes and misunderstandings. 

Pathways to Professionalism

These Professional courtesies are intended to be used by REALTORS® on a voluntary basis, and cannot form the basis for a professional standards complaint.

  • Follow the "Golden Rule”: Do unto other as you would have them do unto you.
  • Respond promptly to inquiries and requests for information.
  • Schedule appointments and showings as far in advance as possible.
  • Call if you are delayed or must cancel an appointment or showing.
  • If a prospective buyer decides not to view an occupied home, promptly explain the situation to the listing broker or the occupant.
  • Communicate with all parties in a timely fashion.
  • When entering a property ensure that unexpected situations, such as pets, are handled appropriately.
  • Leave your business card if not prohibited by local rules.
  • Never criticize property in the presence of the occupant.
  • Inform occupants that you are leaving after showings.
  • When showing an occupied home, always ring the doorbell or knock—and announce yourself loudly before entering.
  • Knock and announce yourself loudly before entering any closed room.
  • Present a professional appearance at all times; dress appropriately and drive a clean car.
  • If occupants are home during showings, ask their permission before using the telephone or bathroom.
  • Encourage the clients of other brokers to direct questions to their agent or representative.
  • Communicate clearly; don’t use jargon or slang that may not be readily understood.
  • Be aware of and respect cultural differences.
  • Show courtesy and respect to everyone.
  • Be aware of—and meet—all deadlines.
  • Promise only what you can deliver—and keep your promises.
  • Identify your REALTOR® and your professional status in contacts with the public.
  • Do not tell people what you think—tell them what you know.
  • Be responsible for everyone you allow to enter listed property.
  • Never allow buyers to enter listed property unaccompanied.
  • When showing property, keep all members of the group together.
  • Never allow unaccompanied access to property without permission.
  • Enter property only with permission even if you have a lockbox key or combination.
  • When the occupant is absent, leave the property as you found it (lights, heating, cooling, drapes, etc.) If you think something is amiss (e.g. vandalism), contact the listing broker immediately.
  • Be considerate of the seller's property. Do not allow anyone to eat, drink, smoke, dispose of trash, use bathing or sleeping facilities, or bring pets. Leave the house as you found it unless instructed otherwise.
  • Use sidewalks; if weather is bad, take off shoes and boots inside property.
    Respect sellers’ instructions about photographing or videographing their properties’ interiors or exteriors.
  • Identify your REALTOR® and professional status in all contacts with other REALTORS®.
  • Respond to other agents' calls, faxes, and e-mails promptly and courteously.
  • Be aware that large electronic files with attachments or lengthy faxes may be a burden on recipients.
  • Notify the listing broker if there appears to be inaccurate information on the listing.
  • Share important information about a property, including the presence of pets, security systems, and whether sellers will be present during the showing.
  • Show courtesy, trust, and respect to other real estate professionals.
  • Avoid the inappropriate use of endearments or other denigrating language.
  • Do not prospect at other REALTORS®' open houses or similar events.
  • Return keys promptly.
  • Carefully replace keys in the lockbox after showings.
  • To be successful in the business, mutual respect is essential.
  • Real estate is a reputation business. What you do today may affect your reputation—and business—for years to come.