Arbitration Between REALTORS® Affiliated With Same Firm

Q: I recently left the firm where I was working and I had several deals pending at the time we parted ways. The broker-in-charge of my former firm won’t pay me any commission for my deals that weren’t closed when I left, because she says she’s got to assign someone else in the firm to handle them. I think I am entitled to those commissions or at least a good part of them, so I want to take my former BIC to arbitration over it, but our local Board said REALTORS® that were affiliated with the same firm aren’t required to arbitrate with one another. I thought REALTORS® were required to arbitrate all disputes between them. Who’s right?

A: The local Board is right. There are circumstances under which REALTORS® must submit to arbitration versus circumstances under which arbitration is contingent upon the REALTORS®’ voluntary participation. REALTORS® (principals) associated with different firms have a duty under Article 17 of NAR’s Code of Ethics to arbitrate contractual and specific non-contractual disputes between them arising out of their relationship as REALTORS® rather than litigate the matter. That’s the “must submit” part. It’s different for REALTORS® who are or were affiliated with the same firm at the time the dispute arose- they may invoke the arbitration facilities of the local Board, irrespective of the time the actual request for arbitration is made, provided they both agree to arbitration in writing. That’s the “voluntary” part. So, even though you might request arbitration at a time when you and your former BIC are associated with different firms, since the dispute is over entitlement to a commission when you and your former BIC were affiliated with the same firm, arbitration to settle the dispute is voluntary. That is, you can each ask the other to arbitrate through the local Board, but neither of you has an ethical duty to agree to it.