Unlike the Ombudsmen Program or mediation, arbitration is a formal process that is binding. The parties to a dispute refer it to one or more persons or arbitrators on whose decision they agree to be legally bound (for both sides). A request for Arbitration must be filed: 1) after the real estate transaction giving rise to the dispute has been completed; 2) within six months (180 days) after the facts constituting the Arbitration matter could have been known in the exercise of reasonable diligence; and 3) only by the broker of the real estate agency.
Arbitration is available in limited circumstances to REALTORS® and clients of REALTORS® but is typically used for contractual disputes or certain non-contractual disputes, like procuring cause, between REALTORS®. Circumstances dictate whether participation in arbitration is mandatory or voluntary for a REALTOR®. Clients of REALTORS® may invoke arbitration through the REALTOR® Association for business disputes with his or REALTOR®, as long as the client agrees to abide by the award.
Section 53 of the Code of Ethics and Arbitration Manual limits the award in an arbitration proceeding to the amount in dispute. An arbitration award will not include punitive damages, attorney’s fees, or interest, unless the parties agree to these charges.
Filing an Arbitration Request
If you are considering filing an arbitration request, contact your local association or Board of REALTORS® or the local association/board of which the REALTOR® with which you are in a dispute is a member.
At times, local boards or associations will refer arbitration requests to the state association for administration. You can read more about the Alabama REALTORS® arbitration process below.
Contact the local REALTOR® Association or Board of which the person with which you wish to arbitrate is a member. Some of these steps may differ depending on the policies of the specific board or association. The steps listed here are for arbitration administered by the state association.
2. Arbitration Request
REALTOR® completes the applicable arbitration request and agreement to arbitrate.
The Request and Agreement to Arbitrate must be signed by the Designated REALTOR® (principal) of the firm or their designated representative. The designated representative must be a principal, partner, corporate officer or trustee of such firm or the individual responsible for the operation of the firm’s real estate activity within the office involved in the particular dispute in order to act on behalf of such Designated REALTOR®. However, clients of a REALTOR® invoking arbitration need not complete the designation.
The Request form (and statement) must be signed and dated affirming that the information is true to the best of their knowledge, that the matter complained of is not the subject of civil or criminal litigation and must include a factual statement detailing the basis of the complaint.
Generally, the Request must be typewritten and the Request and Agreement to Arbitrate and Response and Agreement to Arbitrate Forms must be signed and dated by the Complainant (party filing the Request) or Respondent (party being filed against).
3. Send Forms to State Association
The original Request (or Response) Form and typed detailed description of the events, plus any documentation that is relevant to your request and the filing fee should be sent to the state association at Alabama Realtors®, Attn: Professional Standards Administrator, 522 Washington Ave., Montgomery, AL 36104. Once received you will be notified via email.
Filing Fee - For arbitration at the Alabama REALTOS®, both the Complainant and Respondent must each pay a $250 filing fee for a total of $500. If the parties attempt mediation and resolve their dispute the filing fees will be refunded to the parties. If mediation is not attempted or unsuccessful, the entire fee will be retained by the Association to offset the cost of processing the Arbitration.
Evidence to Consider Submitting - It is common for Grievance Committee and Hearing Panel members to request specific information as part of a complaint and response. Complainants and Respondents are encouraged to include copies of the following documents, if available:
- Agency Disclosure forms
- Offers to Purchase
- Purchase and Sales Agreements
- Deposit Checks
- Show Slips
- MLS Sheet
- Phone Logs
- Open House Logs
PLEASE DO NOT SUBMIT ORIGINAL DOCUMENTS to the Association as part of your Request or Response. Although parties are encouraged to bring original documents to a hearing for examination by the Hearing Panel, the Association will not accept liability for the safekeeping of original document(s).
4. Respondent's Reply
Once the state association receives the Notice of Request for Arbitration, the state association will send to the Respondent a copy of the request. The Respondent will have 15 (fifteen) days after receipt of a copy of the request to submit a reply and pay the $250 filing fee, as mentioned above. Once a reply is received, a copy will be sent to the Complainant.
At that time, if mediation has not yet been attempted and both parties agree to mediate, the complaint and reply will be sent to a mediation officer who will contact both parties and set a date for mediation. If the mediation is successful, the case will be closed. If it is not successful, a hearing panel will be appointed and both parties will be officially notified 21 (twenty-one) days in advance of the time and place of such hearing.
Failure to Reply - If no reply is received from the Respondent within 15 (fifteen) days from the date that the complaint is served, the hearing panel may set a date, time and place of the hearing and the charges may be taken as true, by default.
5. Notice of Hearing and Striking of Panel Members
An Official Notice of Hearing will be sent to the parties 21 days in advance of the time and place of the hearing and will contain the names of the members of the Tribunal who will hear the case and will be accompanied by an Outline of Procedure. Not less than 10 (ten) days prior to the date of the hearing, either party may file a written request for disqualification of any member for any of the following reasons:
- Is related by blood or marriage (to the fourth degree) to either Complainant or Respondent;
- Is an employer, partner, employee or in any way associated in business with either Complainant or Respondent;
- Is a party to the dispute; or
- Knows of any reason acceptable to the Hearing Panel which may prevent him/her from rendering an impartial decision.
Parties’ Legal Counsel - All parties to the action may be represented by legal counsel, IF written notice of their intention to be represented by counsel is received no less than 15 (fifteen) days prior to the hearing. Such notice will include the name, address and telephone number of the attorney. Failure to provide this notice may result in a continuance of the hearing, if the Hearing Panel determines that the rights of the other party/parties require representation.
Witnesses - It is the responsibility of each party to arrange for witnesses to be present at the time and place designated for the hearing. Each party must provide a list of the names of witnesses he/she intends to call at the hearing and to all other parties not less than 15 (fifteen) days prior to the hearing date. Each party shall arrange for their witnesses to be present at the time and place designated for the hearing. Witnesses may ONLY attend the hearing for the purpose of testifying and cross examination. Following their testimony and cross examination, witnesses are excused from the hearing.
6. During the Hearing and Award
The Complainant and Respondent will be given the opportunity to give opening and closing statements, testify, present evidence and witnesses and cross-examine witnesses. At the conclusion of the Hearing, the Panel will go into Executive Session and will award the amount in the dispute to one party only (the award may not be divided between or among parties). If the Panel fails to make an award on the day of the hearing, the Panel may reach a determination within 48 hours of the conclusion of the hearing.
The Award will be reduced to writing, signed by a majority of the Panel and transmitted to the parties within 5 days after the award is reduced to writing.
7. After the Hearing and Procedural Review Appeal
Within 30 (thirty) days of receipt of the award, the non-prevailing party either must pay the amount in dispute to the prevailing party or deposit the amount with the Association (to be held during an application for procedural review). If filed, a Request for Procedural Review must be filed by either party within 20 days of receipt of the Award of Arbitrators. The procedural review must allege procedural deficiencies or other irregularities that constitute deprivation of due process such as fraud, coercion, bias, prejudice, evident partiality, etc. No other ground for appeal of an award will be heard. The Association may request additional information, and the response with the additional information must be received by within 10 days of receiving the request.
Parties will receive a minimum of 10-days’ notice of the Procedural Review hearing, to be administered by a separate panel of the Professional Standards Committee. The meeting shall be held within 30 days of the receipt of the procedural review request or receipt of additional details.
If the Procedural Review Panel confirms the award, the non-prevailing party has 15 days from transmittal of the Review Panel’s decision to initiate an appropriate legal challenge to the award. If no notice of a challenge is received during the 15-day period, the award funds will be released to the prevailing party
If neither a Procedural Review Request nor a legal challenge to the award is filed within 20 days of receipt of the award notice, the Association will release the award to the prevailing party.
8. Failure to Pay the Award
Failure to make the required deposits for arbitration will be referred to the Executive Committee. The party failing to make the deposit will receive notice of the meeting and have the opportunity to explain the reason for his or her failure to deposit the funds. The Executive Committee may impose discipline or give the party additional time to make the deposit.