I am a member of Active Rain – a Real Estate Blogging Community, where I share my Code of Ethics posts with other Realtors®, lenders, and the general public. For as much as I study the Code, I do not know everything. Sometimes I come across a question or comment that I do not feel comfortable answering on my own. This recently happened on one of my posts: Understanding the Realtor® Code of Ethics: Article 14- Handling Ethics Violations. After reading through the question several times, I decided to enlist the help of someone who I believe to be a high authority on the Code of Ethics, here in Colorado Springs, Colorado. His name is Doug Barber. He was my instructor for the last “Ethical and Professional Practices of Realtors®” course that I took, and the motivation behind my COE posts. He is also seen by many as the “go to” man for anything in the realm of real estate Ethics. I am pretty sure that he could recite the entire Code in his sleep – but, then again, we all should, shouldn’t we? He is also the President and Owner of the Rawhide Company – A Real Estate Company in Colorado Springs.
Below you will find both the question, and Doug Barber’s response.
“I am a member of the public who purchased property from an owner/realtor whose actions were so egeregious, I had to bring themto the local Board of realtor’s attention. I then found out that I was responsible for making a presentation and proving to the panel that their own member violated their own rules. I have nothing to net from this, why would anyone put in all that work? Is this how it is across the country? With any other regulated industry, you bring an ethical violation to the attention of, say, the lawyer disciplinary council and they do their own investigation. Can you imagine if a client called to complain about their lawyer and the Council/Board said, “prove it”? That would be appaling. Just wondering why the real estate ethics violation system is how it is and how that came to be. Thank you.”
Here is Doug Barber’s REPLY: (Please note: The Bolded parts are my doing. Doug wrote it, but I bolded it.)
” … Let’s start with a philosophical statement from our Code of Ethics and Arbitration Manual:
“No Code of Ethics can long survive its misuse or misapplication. This is why the Realtors® Code of Ethics must be applied with continuing and conscientious concern for procedural due process. Procedural due process is both an explicit and implied requirement of the Code. It is required explicitly by Article , which requires a “proper tribunal” and implicitly by the Preamble’s reliance on the Golden Rule. The due process requirement, after all, requires nothing more than a fair and diligent search for the truth—with an opportunity for all facts to be gathered; all views to be heard; all defenses to be raised and all prejudice or bias to be expunged. But while due process requires nothing more than a fair and diligent search for the truth, so the Code may be properly applied, due process permits “nothing less.” There is no acceptable level of unfairness, no permissible slight of the search.”
I can understand why they complainant in this case feels the way he/she does. The best analogy I can give is that the Board of REALTORS® is required to provide due process to any member who is alleged to have violated its code of ethics, much as a person who is alleged to have committed a crime is required to be given due process by our legal system. In the criminal legal systems, The People have trained prosecutors to investigate the actions of potentially guilty people with an eye to trying to nail them for crime. There are also defense attorneys (sometimes public defenders) trying to do the opposite. Neither of these is neutral in their pursuit of their action, but are zealous advocates of their client’s position. The court, however, cannot advocate for either side, and must be neutral, rendering a decision in the trial on the basis of the evidence and testimony presented in the trial.
The role of the Board of REALTORS® is much like that of the court. The National Association of REALTORS®, which has created the rules by which we must operate our ethics and arbitration cases, has not created the roles of prosecutor and defense personnel because most real estate brokers (from whose ranks these role players would be drawn) do not have a sufficient legal background to handle such roles properly.
Failure to accord due process to a Realtor® accused of a violation of the Code of Ethics can result in the reversal of the Board’s decision by the civil courts and can expose the Board and its officers and members to liability for monetary damages and other penalties. Due process is a legal concept which requires the following: 1) the right of the defendant to know the charges against him/her (which are spelled out in the complaint that the Board receives); 2) the right of both parties to present evidence, testimony, and witnesses to support their positions; 3) the right of both parties to be represented by counsel (in an ethics case, council can be either an attorney or a REALTOR®); and 4) the right to have a full and fair hearing in front of an impartial hearing panel. Due process requirement #4 eliminates the ability for the Board of REALTORS® to be an investigative body, because if they are investigating the defendant, they will not be viewed as being neutral when it comes time for the actual hearing. The standard for determining guilt or innocence of the defendant is whether the complainant establishes the guilt of the defendant in the hearing by clear, strong, and convincing evidence.
If a member is found by the hearing panel to be guilty of a violation, the hearing panel makes a recommendation for an appropriate sanction (which can include a letter of reprimand to remain in the members file, a requirement to take education classes at the member’s expense, a fine up to $5,000, and in severe cases the potential for suspension or termination of MLS privileges and/or membership in the organization.
I often find that members of the public want us to take away the member’s license to practice real estate, but we have no power to do that. Only the licensing entity, which in the case of Colorado is the Division of Real Estate, has the authority to suspend or terminate a brokers real estate license. In order to pursue that, the complainant would have to file a written complaint With the Colorado Division of Real Estate, and their investigation takes a long time (the last one I know of took 10 months). If they determine that license law was violated (they have nothing to do with the Code of Ethics, and we have nothing to do with license law, except if a license law violation also violates our Code), they may try to cut a deal with the accused to stipulate to some plea agreement, but if they do not agree the State must then engage in a trial before an administrative law judge where they act as an investigator and prosecutor, and the accused is entitled to a defense.
Interestingly, as I have shared hearing panels over the years, there have been many cases brought where what appears to be an obvious decision on the basis of the written complaint and response, is not the final decision of the hearing panel after hearing the testimony, witnesses, and evidence presented in the hearing by the parties.
As to why a complainant would bother preparing a case and bringing it before the hearing panel, my best answer is that they believe it is the right thing to do: 1) to place the Board on notice that it has a member that needs education; 2) to try and prevent defendant from repeating the bad behavior with someone else. I suppose a possible third reason is that they are mad enough at the defendant but they want to prove his guilt so that he gets punished by the Board.
I would add, however, that regardless of the outcome of the hearing, it is never a waste of time for the complainant to have gone through the effort and hassle of bringing the complaint and participating in the hearing because the defendant is required to sit quietly without interrupting and listen to the grievances of the complainant (maybe for the first time), and having done so learns in the process how to behave differently in the future to prevent a repeat occurrence. This process of educating the defendant is beneficial to our organization, and to the public. In my many years of professional standards enforcement, I rarely find repeat offenders, as most ethics violations seem to be unintentional and the defendants learned from their mistakes.”