Illinois Receiver and Assignee Arthur van der Vant has published several articles about issues with the NAR arbitration process. Here, he offers additional supporting reasoning behind his outspoken criticism of the Association’s policy.
The Code of Ethics and Arbitration Manual of NAR Part 08, Section 39, says Arthur van der Vant, outlines the process for selection/appointment of arbitrators. Before an individual goes to REALTOR arbitration, he or she would be provided with a list of arbitrators to choose from, and/or to challenge. Arbitrators are REALTORS who happened to serve on the Professional Standards Committee at any given time, explains Arthur van der Vant.
1. Issue number one in selecting arbitrators is that the party in arbitration would only be given the individual REALTOR’s name and the name of the brokerage company he/she works for. No other information as to their qualifications would be provided. According to Arthur van der Vant, the NAR’s arbitration guidelines allow a party in arbitration to challenge any arbitrator on the list, based on qualifications but, asks Arthur van der Vant, how is it possible to determine their qualifications to begin with, if you do not know anything about them?
2. One of the qualifications based on which arbitrators are chosen is the familiarity with state(s) laws and regulations. Here, Arthur van der Vant outlines Part 08, Section 39 of the Code of Ethics and Arbitration Manual of the National Association of Realtors (NAR):
Section 39. Selection and Appointment of the Professional Standards Committee
There shall be a Professional Standards Committee of at least ______ Board Members, in good standing, of whom at least a majority shall be REALTORS®, appointed by the President, subject to confirmation by the Board of Directors. Members of the Professional Standards Committee shall be selected to serve on Hearing Panels as required to hear matters of alleged unethical conduct by Board Members or to provide arbitration as requested. The committee shall annually select its own Chairperson and Vice Chairperson (or, alternatively, the President shall annually designate the Chairperson and Vice Chairperson of the committee).
In selecting members of the Professional Standards Committee, the President should consider the following recommended criteria:
• number of years as a REALTOR®
• number of years in the real estate business
• primary and secondary fields of real estate endeavor/expertise
• participation in post-licensing real estate education
• training in the Code of Ethics
• position in firm (principal, nonprincipal)
• size of firm
• common sense
• familiarity with state(s) laws and regulations
• receptiveness to instruction/training
• other relevant professional or procedural training
3. Some may argue that the REALTOR arbitration is an insult, says Arthur van der Vant, partially for the reason that judgments are passed and awards are entered by unqualified individuals who have no knowledge of the state laws and regulations. Their decisions are often misguided by favoritism and the only recourse to the arbitration verdict is an appeal to the Board of Directors of the REALTOR Association which must be filed within 10 days of issuing the Arbitration Award Notice.
4. It must be also noted, insists Arthur van der Vant, that to calculate the 10 days for a timely filing of an appeal request the REALTOR Association does not go by the date of party’s receipt of the Arbitration Award Notice, but by their date of mailing it. If the Arbitration Award Notice by any chance would be lost in mail, you would lose your opportunity to appeal. According to Arthur van der Vant, Realtor Boards typically mail Arbitration Award Notice via US Certified Mail with the Return Receipt Requested, but that is a slow process and you may receive the Arbitration Award Notice 5-8 days after it was mailed to you, leaving you only few days to respond, at best.
5. In the event you would have enough time to file an appeal, points out Arthur van der Vant, the Procedural Review would only be available and granted to you if the original arbitration panel made procedural error, not because they issued a wrong verdict that was not in compliance with the state law or regulation.
6. The Procedural Review Panel would be made of members of the Board of Directors of the REALTOR Association. Says Arthur van der Vant, Realtors who are elected Association’s Directors are elected from its REALTOR members and often for “political reasons” and not for their qualifications or knowledge of the state laws and regulations.
7. It must be noted, says Arthur van der Vant, that in the event your request for a Procedural Review is granted you would again receive a list of arbitrators to choose from. However, you would only be given a REALTOR’s (board member) name and the name of the brokerage company she/he works for. No other information as to their qualifications would be available. As Arthur van der Vant has already, stated NAR’s arbitration guidelines allow you to challenge any arbitrator on the list, but he points out that this might do little good, if there was no specific information to go by.
8. If you make to the Procedural Review, says Arthur van der Vant, you must know that those reviews are conducted covertly in full secrecy. NAR does NOT allow Court Reporters or any other type of recording during the Procedural Review, he claims. So if you later intended to bring a lawsuit in the court of law, you would have no proof of what has transpired during the Procedural Review proceedings. Such secrecy allows REALTOR Associations to protect the status quo, and to escape the scrutiny of the law, cites Arthur van der Vant.
All arbitration proceedings are ruled by federal laws and state laws, notes Arthur van der Vant. In Illinois, this is the 710 ILCS Illinois Uniform Arbitration Act. Arthur van der Vant states that Illinois regulates arbitration through the variety of laws that govern issues pertaining to arbitration: (a) The law governing the arbitration agreement; (b) The law governing the arbitral tribunal and its proceedings (lex arbitri – procedural law); (c) The law governing the substance of the dispute; and (d) The law governing recognition and enforcement of the award. The Illinois Courts exercise jurisdiction over the seat of arbitration and have a supervisory role over the conduct of the arbitration. All arbitrations must be conducted in strict conformity with the Illinois Law (710 ILCS Illinois Uniform Arbitration Act).
(710 ILCS 5/3) (from Ch. 10, par. 103)
Sec. 3. Appointment of arbitrators.
If the arbitration agreement provides a method of appointment of arbitrators, this method shall be followed, reports Arthur van der Vant. In the absence thereof, any method of appointment of arbitrators agreed upon by the parties to the contract shall be followed. An arbitrator so appointed has all the powers of one specifically named in the agreement. When an arbitrator appointed fails or is unable to act, notes Arthur van der Vant, his successor shall be appointed in the same manner as the original appointment. If the method of appointment of arbitrators is not specified in the agreement and cannot be agreed upon by the parties, the entire arbitration agreement shall terminate.
1. Without an Arbitration Agreement you would NOT be able to bring action into arbitration, but you could in the court of law.
2. On the other hand, if you willingly participate in an arbitration – even if it is improperly conducted and the arbitration award is not issued in conformity with the law, you might have waived your legal rights because you voluntarily submitted yourself to NAR’s jurisdiction.
3. Arthur van der Vant says that another alternative may be having an arbitration agreement by and between parties to a transaction, which designates other arbitration venue, for example American Arbitration Association (AAA). With AAA you would have a transparent system where retired Judges and/or other highly qualified attorneys are making decisions. They have spent their lives on the law and its application and they are familiar with state(s) laws and regulations.
Arthur van der Vant is a Receiver and Assignee located in Cook County, Illinois. He is an expert in commercial real estate and corporate turnaround management with over 10,000 projects to his credit. As a member of several professional organizations, including the Turnaround Management Association and the National Association of Bankruptcy Trustees, Arthur van der Vant is up to date on every aspect of his profession. He is one of only a handful of Certified Commercial Investment Members (CCIM), and has trained at the World Bank Headquarters in Washington DC. Currently, Arthur van der Vant serves Illinois State and Federal Courts as a Receiver, and as an Assignee in Assignments for Benefit of Creditors (ABC).
For more information or to contact Arthur van der Vant, please call 800-496-9107.
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