ShareA New York court considers whether REALTORS® must arbitrate their commission disputes, even if they are members of two different associations.
Norma Reynolds Realty, Inc. ("Reynolds") is a member of the Long Island Board of REALTORS® ("LIBOR"). Brown Harris Stevens Westhampton, LLC ("Brown Harris") is a member of the Hamptons & North Fork REALTORS® Association, Inc. ("HNFA"). The two associations had entered into a "Cooperative Enforcement Agreement", which specified the procedural requirements the associations would use if a dispute arose between members of the two associations.
The two brokerage firms had a dispute over whom was entitled to a commission from a transaction involving property owned by Adam and Peggy Young ("Owners"). Brown Harris submitted a request to arbitrate the commission dispute with LIBOR. Reynolds rejected this request, and instead filed a lawsuit against Brown Harris and the Owners. The Owners were holding the commission in escrow, pending the resolution of the commission dispute. Both parties filed motions with the trial court, Brown Harris seeking to compel arbitration and Reynolds seeking an order to stay the arbitration pending resolution of the lawsuit.
The Supreme Court, State of New York, Suffolk County, entered an order compelling arbitration and staying the lawsuit. Reynolds argued that it never agreed to arbitrate disputes with Brown Harris. However, the court determined that Reynolds had agreed to arbitrate contractual disputes with other REALTORS®, pursuant to Article 17 of NAR's Code of Ethics, regardless of what association or board to which the other REALTOR® belongs. Thus, the court entered an order compelling arbitration of this dispute and stayed the lawsuit.
Norma Reynolds Realty, Inc., v. Young, No. 04-26308 (N.Y. Sup. Ct. July 7, 2005). [Note: When an official reporter citation becomes available for this case, the citation will be updated to reflect this information].
Editor's Note: Special thanks to Howard Goldson of Goldson, Nolan, Connolly, P.C., for alerting NAR Legal Affairs to this decision. Mr. Goldson has informed NAR that Reynolds has appealed the court's decision.