So, You Received an Ethics Complaint. Now What?

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Imagine that, as a broker, you’re just about to wind up a long, busy day at the office. (Not very hard to picture!) You open the mail that’s been sitting on your desk, and you find a certified letter from your local REALTOR® association. Your stomach sinks. You open it to find a form alerting you that one of your agents has had an ethics complaint filed against them. You have 15 days from the date of the notice to respond.

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“Don’t panic,” said real estate speaker and trainer Leigh York at a Friday session titled “In Your Defense: Navigating a Code of Ethics Complaint” during the REALTORS® Conference & Expo in San Diego. You can get through this. Take a deep breath and proceed systematically through these key steps.

  1. Call the agent named in the complaint and set a time to meet. The agent also will have received a copy of the letter and is probably even more stressed about it than you. “Let them know you’re in this together,” York said. “Agents, make sure your broker is in the loop.” Also, make sure to keep everything confidential per the rules of the process.
  2. Call your errors & omissions insurance carrier. It might seem counterintuitive because the insurer doesn’t cover association-related issues, but the carrier likely has tools to help you deal with the complaint, York said. “Plus, it gives the insurer a heads up in case it turns into a lawsuit.”
  3. Gather your files and your thoughts. When you and the agent meet, you’ll need all documentation, including texts, emails, and files, organized chronologically to prepare for the ethics hearing on the complaint.
  4. Create an accurate timeline. “The timeline becomes the cover sheet for your formal response so the panel can easily see what happened in what order,” York said.
  5. Prepare a typewritten response. Remember: The panelists are probably busy. Make the response crystal clear. “If the panel can’t understand what they’re reading, you’re not helping yourself.”

You’ll receive a list of possible hearing panelists from the association. You can strike someone from the initial list whom you feel may not be impartial to you—but you must justify why, York explained. Those folks won’t know you marked them off the list. Only the staff and chair of the professional standards committee will likely know. Panelists will then be selected from your short list.

Arbitration and Mediation

York said if you receive an arbitration request, “you‘ll be offered mediation. Do it.” During mediation, “you can hear the other side of the story and learn something you didn’t know previously about the transaction. [It’s an opportunity to] negotiate and communicate.”

Besides having the facts of the case straight, prepare for the hearing by brushing up on your knowledge of the REALTORS® Code of Ethics. “The Code of Ethics manual is your number one resource,” York noted. “It’s online, free, and searchable.”

You can hire legal counsel if you choose, or you can have REALTOR® counsel. “If someone you know is knowledgeable about the Code and you trust them, you can ask them to be your REALTOR® counsel,” she said. You can call witnesses to provide specific information on the transaction, but they are not character witnesses, York said. Always keep the facts of the case top of mind, she added. That’s what the arbitration is solely concerned with.

If you decided to appeal, you can do so within 20 days of the association’s decision. Keep in mind, she said, that an “appeal is not about appealing the decision but about a procedural deficiency: ‘I didn’t get my notice in time.’ Or, ‘I marked someone off the panel list, but they were on it.’”

Most importantly, “learn something from the experience whether you win or lose,” York advised. “What could you have done differently?”