Note: These additional FAQs supplement the full Core Standards FAQs available on www.nar.realtor and are incorporated into that document.

1.8.1. Certain of the suggested "Advocacy" and "Consumer Outreach" activities in the Compliance Tool often take place over a period of months, sometimes overlapping compliance cycles. Must they begin and be completed during the same compliance cycle?

As long as the activity was being conducted during the current compliance cycle, the fact it was "initiated" during the prior cycle doesn't make it ineligible. (Added 1.12.16)

2.3.4. We have quite a few financial policies and I'm not able to attach the consolidated document to the Compliance Tool. What can I do?

Some associations experienced difficulty attaching documents to the Compliance Tool. The issue in each case was the size of the file. Files cannot be larger than 10 megabytes. If your document is larger than that, you could reformat it as two (or more) documents, and attach them separately. Downloading the document to Dropbox and adding the link to the Compliance Tool is another way to do it. https://www.dropbox.com/help/topics/sharing_files_and_folders

Also, if you're uploading an image or a pdf, it could be resized and made smaller. (Revised 1.12.16)

2.4. What is the role of the state association in determining whether local associations meet the Core Standards?

Each year local associations will use the online compliance certification system ("Compliance Tool") to submit the required Core Standards information to the state association for review and validation. ByJuly 30th each year, each state association, using the Compliance Tool, provides NAR with the names of their local associations compliant with the Core Standards. (Revised 1.12.16)

2.6. What options/alternatives are available to local associations that have difficulty in meeting the Core Standards?

Given the goals of the Organizational Alignment/Core Standards program, some associations may find the needs of their members will be best served by merging with another association. Local identity, something understandably important to associations of any size, can be retained in large measure through community-specific chapters or councils of local associations. The Association Merger Procedures are available at www.nar.realtor. Additional information on mergers - and establishing chapters can be found at https://www.nar.realtor/ae/manage-your-association/chapter-formation.

Shared services is another option/alternative for associations that anticipate difficulty meeting the Core Standards. State associations might consider conducting a shared services workshop for local associations that might benefit from using shared services. Information on www.nar.realtor includes workshop materials and facilitator resources available at https://www.nar.realtor/ae/manage-your-association/shared-services (Revised 1.12.16)

2.6.1. Question 2.6 (above) refers to "chapters or councils of local associations" as a possibility for associations that merge with another association(s). Are there chapter models or other resources available?

Community-based chapters give associations dissolving either as the result of a merger or otherwise a way to retain a local presence and identity.

Chapters are sub-units of an existing, chartered local association of REALTORS®, with that association of REALTORS® being the entity chartered by NAR. In many cases, chapters are created when two or more associations form a larger "regional" association. In other cases, associations dissolve and surrender their charter with the understanding that another association would request assignment of the first association's former territory. Where an association dissolves without merging with another association, its territory becomes "unassigned", and it's important to keep in mind that the now-unassigned territory may be requested by more than one association.

Chapters give associations that surrender their charters a way to retain their identity and presence in their community. Please note that use of the term REALTOR® in a chapter's name must be in connection with the parent organization, e.g. The _______ Chapter of the _______ Association of REALTORS®.

Chapters' structure, as well as any privileges and responsibilities of chapters, are determined locally, often during merger discussions/negotiations. These and other key questions should be addressed with specificity in the "parent" association's bylaws or other governing documents. Comprehensive information on establishing and operating chapters is available on www.nar.realtor athttp://www.nar.realtor/ae/manage-your-association/chapter-formation. (Revised 1.12.16)

2.11. Can we attach video and audio files to the NAR Online Compliance Tool?

The Compliance Tool does not host video or audio files, but loading the file on your association's website and posting a link to it in the Compliance Tool is one way to make those files available to the state association. Downloading files to Dropbox and adding the link in the Compliance Tool is another way to do it. You can find information about using Dropbox at https://www.dropbox.com/help/topics/sharing_files_and_folders.

Additionally, some associations have downloaded videos to YouTube and linked to them from the Compliance Tool. (Revised 1.12.16)

3.1. What financial and other resources are or will be available from NAR to facilitate mergers?

Grants at a minimum of $15,000 and a maximum of $25,000 will continue to be available to merged associations until June 30, 2016. Grant amount are calculated at $25 times the number of primary REALTOR® members in the newly-merged association but in no case will exceed $25,000. The merger grants are available for two years because in some cases merger discussions may not start until after the associations first attempt to meet the Core Standards on their own; also because merger negotiations can take considerable time to complete.

Special Supplemental Note to FAQ 3.1 - October 29, 2014

In order to provide a greater level of support to the local association community as they consider mergers to better serve members and achieve compliance with the Core Standards, the NAR Finance Committee has expanded eligibility for merger grants as follows:

The initial merger grant process, as outlined above, will continue. Initial mergers will be funded at $25 per member in the resulting merged association, with the minimum grant remaining $15,000 and the maximum grant also remaining $25,000. As initially approved and published, only one grant of not more than $25,000 was available to any merged association; any subsequent additional merger activity involving that association was not eligible for a further merger grant.

Effective immediately, funding for subsequent or "second generation" merger grants are available at the same rate of $25 per member, up to a maximum of $25,000 for an additional merger, but will be computed only on any incremental gain in membership to the final merged organization. The calculation of such grants will not include members who were included in the calculation of another merger grant. These supplemental merger funds will be available through the end of merger grant period, June 30, 2016.

Example: If an association that has 2,000 primary REALTOR® members merges with an association with 500 primary REALTOR® members (the "first merger"), the resulting entity would be eligible for a grant of $25,000. If that newly-merged association is later involved in a subsequent merger under which the previously-merged 2,500 member association now merges with a different 500 member association, an additional grant of $12,500 (500 additional members times $25 = $12,500) will be available. The additional grant (based on the second merger) cannot include the first 2,500 members (the total as a result of the first merger) because they were previously included in an earlier grant calculation. Only the additional incremental primary REALTOR® members added as a result of the second merger can be considered in this next grant calculation.

A comprehensive NAR Merger Kit and the white paper An Alternative to Merging are available on www.nar.realtor. (Revised 1.12.16)

3.1.7. Our small association explored the possibility of merging with a larger nearby association, and our elected leaders decided surrendering our charter and dissolving the corporation is preferable to expending the time, effort and money that considering, negotiating and implementing a merger would involve. We polled our membership, and most of our members felt if that happens, they'd likely become members of the other association. We realize the territory currently assigned to us by NAR would revert to "unassigned" status, and that other associations could request it be added to their existing jurisdiction.

While the costs of dissolving will be less than the costs of merging, there will still be some costs (e.g. terminating our MLS vendor contract, buying out our office lease, severance pay, etc.). Our question, though, is whether an NAR "merger grant" would be available if we dissolve our association rather than merge with the other association?

As noted in the answer to FAQ 3.1.6, situations like you describe were discussed by the NAR Finance Committee, and the Committee determined that applications for funds in circumstances like yours will be considered on a case by case basis until June 30, 2016. The merger grant "minimum" of $15,000 will not apply, and any grant made would be based on the number of primary REALTOR® members in the "dissolving" association (i.e. $25 times the number of primary REALTOR® members). (Revised 1.12.16)

6.5. What "ombudsmen" resources are available from NAR?

Comprehensive tools and resources to help local and state associations implement and administer ombudsman programs are readily available at www.nar.realtor. https://www.nar.realtor/ae/manage-your-association/local-and-state-association-ombudsman-services . FAQs are at https://www.nar.realtor/ae/manage-your-association/local-and-state-association-ombudsman-services/ombudsman-process-faq . (Revised 1.12.16)

10.1.1.c. Our accountant told us we don't have to file tax returns because we are an "exempt" organization. Is that accurate?

If the association obtained tax-exempt status from the IRS it will also have been assigned an Employer Identification Number ("EIN"), and must file annual federal tax returns.

Further, if an association has been classified as "nonprofit" in the state, it must comply with the state's laws regarding nonprofit corporations.

Also, keep in mind that unincorporated businesses are considered sole proprietorships or partnerships, and the "owners" must report their share of the business's income and losses on their personal returns. Another reason to ensure your association is properly incorporated. (Added 1.12.16)

10.2.6.a. For the first compliance cycle we obtained a signed CPA engagement letter committing our association to have the required report performed in 2015 for our 2014 fiscal year. The engagement letter was attached to the Compliance Tool and in June we were certified as compliant with the Core Standards for the first cycle. In August our CPA provided us with an opinion that our financial statements conformed to the Generally Accepted Accounting Standards (GAAS).

We've now obtained a second signed CPA engagement letter for our 2015 fiscal year, and our audit will be performed next August (2016). What information needs to be entered into the Compliance Tool for the second compliance cycle? And will we be able to continue to have our audits performed in the summer when it's less expensive?

The Compliance Tool has been upgraded to accommodate associations like yours that choose to have their audits or other reporting done after the end of the annual compliance cycle. For the current fiscal year, Item 48 in the Compliance Tool asks for the date of the association's last financial audit/review/compilation, who performed it, the applicable year, and the type of opinion. However, if the current fiscal year's report will not be available until after the end of this compliance cycle, Item 48 is where you will attach the new CPA engagement letter.

Since you also obtained a CPA engagement letter for the first compliance cycle, information about the audit/review/compilation conducted last August should be entered at Item 48a.

At this point there is no prohibition on associations continuing to obtain CPA engagement letters and having their audit/review/compilation conducted after the end of the compliance cycle, provided that both Items 48 and 48a in the Compliance Tool are completed each year.

(Added 1.12.16)

Advertisement