May 3, 2012

Professional Standards Committee

The following has NOT been approved by the Professional Standards Committee, Executive Committee or the Board of Directors.

Any change in policy for membership criteria must be approved by the Membership Committee, and if approved, the motion must be taken to the Directors by the Membership Committee.  The purpose of this Issues Briefing Paper is for the members of the Professional Standards Committee to determine if this Committee wishes to encourage the Membership Committee to approve any of the proposed changes to membership criteria.

Background

C.A.R. publishes model bylaws for use by California Local Associations of REALTORS®.  These have been reviewed for compliance with NAR policy as well as for compliance with California law.  Local California AORs are not required to adopt the C.A.R. model rules but may do so at their option or modify those provisions to suit local preferences.  All changes are subject to a separate N.A.R. policy review.

The need for a possible change to the C.A.R. Model Bylaws came to light, because a Final Judgment was entered by a California Superior Court Judge, in August 2009, against a REALTOR® who was a member of a California local association of REALTORS®.  The REALTOR® was fined by the Superior Court and ordered to pay restitution to victims, as a result of his admitting to acts of real estate fraud.  In December 2009, that same REALTOR® was expelled from the local Association of REALTORS®, for a period of three (3) years, the maximum length of expulsion allowed by NAR policy.  Recently, the former REALTOR® advised the association of his intent to re-apply for membership, when his expulsion expires in December 2012.  Under current NAR Model Bylaws for local associations, the former REALTOR® will be eligible for a new membership, in December 2012, because more than three (3) years will have lapsed since his official sanction by the court.  Questions have arisen about whether a local association should be allowed to look back further than three (3) years, when making their decision regarding an application for membership.  This issues briefing paper addresses qualifications for REALTOR® membership and does not address the issues of MLS admission and lockbox access.

California Model Bylaws Membership Qualification

The current California Model Bylaws include qualifications of membership in Article V Section 2 as further modified by Section 8.  In relevant part, these sections allow for membership committees to consider:

(1)        all final  findings of N.A.R. Code of Ethics violations and violations of other membership duties in any other Association within the past three (3) years;

            (2)        pending ethics complaints or hearings;

            (3)        unsatisfied discipline pending;

            (4)        pending arbitration requests or hearings;

            (5)        unpaid arbitration awards or unpaid financial obligations to any other Association or Association Multiple Listing Service ("MLS").

Violations of membership duties include court rulings on a violation of civil rights laws, real estate laws and certain crimes.  The provisions also allow the AOR to require an applicant to certify:

(1)        that they have no record of official sanctions rendered by the courts or other lawful authorities for (i) violations of  civil rights laws or real estate license laws within the past three years or (ii) criminal convictions ...; and

(2)        that they have not been suspended or expelled from an Association the past three years for violations of the N.A.R. Code of Ethics.

N.A.R. Policy

The National Association does not allow local Associations to adopt membership criteria more strict than NAR membership requirements.  NAR Model Bylaws for local associations allow an association of REALTORS® to require that the applicant have no record of official sanctions for “unprofessional conduct,” which is defined as:

A.             judgments against the applicant within the past three (3) years of violations of (1) civil rights laws, (2) real estate license laws, and (3) or other laws prohibiting unprofessional conduct against the applicant rendered by the courts or other lawful authorities ….

Questions for consideration by the Committee :

In order to expand the C.A.R. Model Bylaws to include sanctions for “laws prohibiting unprofessional conduct,” no approval from NAR is necessary, since NAR already allows that criteria.  The change would only need to be approved by the Membership Committee and C.A.R. Directors.

1.     Unprofessional Conduct.   Should C.A.R. amend its model local bylaws to clarify that in order to qualify for membership, applicants for membership must have no record within the past three (3) years of a final judgment rendered by the courts or other lawful authorities against the applicant for violations of (a) civil rights laws; (b) real estate laws; and (c) other laws prohibiting unprofessional conduct?  This amendment is within current NAR policy and clarifies that the prohibition is not only for violation of civil rights or real estate laws but also includes “laws prohibiting unprofessional conduct,” which may include a broader range of misconduct, than just civil rights and real estate laws.  

The following proposal for a time frame longer than three (3) years is not currently within N.A.R. policy and would require a policy change at the national level in order to implement it.  The time frame at issue here deals with civil violations only, since NAR policy already allows an association to look back ten (10) years for certain crimes.

2.     Longer Time Frame.   Subject to a policy change by N.A.R., should C.A.R. amend its model local AOR bylaws to make the time frame longer than three (3) years, such as ten (10) years, from the date the final judgment is rendered against the applicant for violations of (a) civil rights laws; (b) real estate laws; and (c) other laws prohibiting unprofessional conduct?