By virtue of becoming and remaining a member of an Association and having signed an agreement to abide by Association bylaws, every member agrees to bind themselves and the company for whom they act to submit disputes "arising out of a real estate transaction" to arbitration as defined in Article 17 of the National Association of REALTORS® Code of Ethics. Furthermore, membership termination from the Association will not absolve the member of arbitration duty for disputes arising when the person was a member of the Association.
Disputes subject to arbitration include disputes with other REALTOR® members arising out of real estate business and their relationship as REALTORS® (usually over the distribution of a commission) and in specified contractual disputes with a member's client arising out of an agency relationship between the member and client (provided the client agrees to submit the dispute to binding arbitration with the association and be bound by the arbitration award).
REALTOR® and REALTOR-ASSOCIATE® members filing for arbitration of a dispute involving the responsible broker at the time of the dispute (but not between the member and responsible broker) must have the responsible broker join in the dispute and filing of a complaint.
Members and the Association are not bound to arbitrate disputes between members of the same firm unless each party agrees in writing to the arbitration of such disputes under the Association's facilities or a copy of the Independent Contractor's Agreement specifying that the matter be considered at the Association is presented. Similarly, if members enter into separate agreements to arbitrate disputes outside of the Association (e.g. the American Arbitration Association); this separate agreement would supersede the obligation to arbitrate the dispute at the Association.
This would not include an attempt to bypass the arbitration process by filing a civil lawsuit against another member. In this case the respondent member can request the court to compel arbitration at the local association in accordance with the arbitration agreement; however, failure by the respondent to make this request of the court would waive the right of the parties to arbitrate at the local association.
Associations may also refuse arbitrations that clearly did not arise out of the real estate business, are clearly beyond the time frame for submission of an arbitration complaint, are legally too complex, or the amount involved in the dispute is considered too large or too small. If an arbitratable matter is involved in litigation at the time a complaint is filed, the arbitration will not be heard at the Association unless litigation is withdrawn or the courts refer the matter back to the Association.
If a member holds membership in several different associations, another member can file a complaint at any association where the other member holds membership or where both members have common membership.
If both an ethics complaint and a request for arbitration are received concerning the same event, the Association will wait until the arbitration has been concluded before proceeding with the ethics complaint. Also, if more than one arbitration complaint is received concerning the same event, the requests will be combined and considered in one arbitration hearing. And under no circumstances are punitive damages awarded or will an award exceed more than the amount specified in the dispute.