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Ethic's Complaints:
Tough Times Mean More Complaints - Are You Prepared?
February 2008
By Stephen J. Nash
Nash & Lodge, PLLP
When the real estate economy is struggling, the focus is on finding clients. But you must make sure that is not your
only focus. When times are tough, there are more disputes. Disputes lead to ethics complaints. It is extremely important
you avoid common mistakes that real estate agents/brokers make that make you an easy target. Even how you respond to an ethic's
complaint can help your situation or make it substantially worse.
An ethic’s complaint can come from a client, from the buyer or seller that you did not represent or from another real
estate agent/broker. More and more the complaints are being originated from an agent/broker probably as result of the competitive
pressures on everyone in the industry.
When a Complaint is Made Against You
When an ethic complaint is made, you will receive a notice that sets forth the complaint against you and sets out the ethical
cannons that you allegedly broke. In my experience, the responses made are often poorly thought out and poorly written.
You must make the time and effort to properly respond. The following are some tips to help you effectively respond to an
ethic’s complaint:
1. Type your response – it is hard to be persuasive if the person reading your
response can’t read it.
2. Focus on the allegations that relate to ethic violations. In many situations the ethic’s
complaint will ramble on about things that have nothing to do with an actual ethical violation.
Resist the urge to answer every allegation made and make sure that you respond to each allegation
made that relates to the alleged ethical violation. If you try to do both, you have to be careful
that your response to the ethical claims is not buried among other verbiage.
3. If you refer to documents, attach copies to your response.
4. Organize your response to make it easy to read and to follow.
5. Read the ethical cannons that you are alleged to have violated. Identify the facts you
need to establish in order to show that a violation did not occur.
6. If you did violate an ethical cannon don’t try to make a fight that you cannot win.
In many cases,you are better off owning up to the violation and, instead, focusing on showing
that it was an innocent violation and/or did not cause any harm.
I have seen many cases where the response actually set out facts that gave grounds for additional ethic violations. Obviously,
the agent/broker did not realize that the response would result in additional violations being added but once you provide
the facts that show a possible violation, MAR will normally point out to the complainant the possible additional violations
and will allow them to amend their complaint to include the additional violations. What are the odds that the complainant
won’t add the additional violations? If you provided the facts that show the violation it makes it almost impossible
to later argue that there was no violation.
Common Violations to Avoid
One of the most common violations is a failure to have all agreements in writing. When an ethic’s complaint is made,
your file becomes an open book. The panel is not restricted to looking at just what the complainant is focusing on. If there
was an agreement that comes up that was not in writing, it is an easy violation to tag you with. In almost every real estate
file I have gone through, I have found oral agreements. At the time they may seem minor or common but if they end up in front
of an ethic’s panel you will lose. Common examples include extending the closing date, MLS changes or any agreement
made with the opposing agent (often seeking information or documents).
A second common violation is the failure to provide a copy of the purchase agreement and addendum's to your client in a timely
manner.
A third common violation is a failure to respond to your client. It is a natural reaction to want to avoid the client who
is upset or if you only have bad news to deliver. But avoiding a client is a sure way to have an ethic’s violation
filed against you.
Some Suggestions to Help You Avoid an Ethic Complaint
There are many things that can be done to help avoid having to face an ethic complaint or will help provide you with a better
defense. The following are some of those suggestions:
1. Make sure copies of every important document is given to your client. Have a system in
place that is followed in every case. When in doubt, give them a copy.
2. Do not rely on oral agreements. It takes a little extra time but every oral agreement leaves
you vulnerable. If you could tell which one would come back to haunt you it would be easy to
pick and chose which agreements need to be in writing. Unfortunately, by the time you know
there is a problem, it is too late. The only real protection is to never rely on an oral agreement.
3. Take notes. It takes extra time and effort but it is well worth it. Many ethics’
complaints come down to “he said, she said” disputes. If you have notes to back
up your recollection of meetings, phone calls and what was said your credibility will be much
higher and you are more likely to prevail. You don’t have to be great at taking notes,
anything you can do is better than nothing. Taking notes is a habit that you can learn, will
make you look more professional and will discourage claims against you because they believe
you to be detail oriented. The client does not know whether you take good notes or not but
they certainly are aware that you have taken notes.
4. Don’t throw documents away. It is difficult to defend against a claim when you don’t
have key documents.
5. Regularly communicate with your clients. When you are hired by a client take about how
and how often you will communicate with your client even if you have no new news. E-mails are
great in that you have a record of your communications (save the e-mails received and sent).
Summary
Nobody wants to receive an ethic complaint and while you cannot totally guard against a complaint, you can take a number of
steps to reduce or avoid such a complaint. If you receive an ethic’s complaint it is extremely important that you carefully
prepare a response or have someone prepare it for you.
Next month we will address what happens at the Ethic Hearing and provide you with some helpful suggestions as to what you
should do and what you should avoid. If you want a more comprehensive look at the ethic complaint process, common ethical
issues and ways to avoid a complaint or help in your defense, sign-up for one of our upcoming Ethic Seminars to be held in
Andover on February 28th and in Bloomington on March 12th. Contact Lisa Hansen at 763.862.6100 or l.hansen@nashandlodge.com.
NOTICE
The foregoing is not intended to constitute legal advice for any specific circumstance, but is intended to reflect broadly
applicable principles, under Minnesota law, relevant to a typical situation. Each set of facts and each contract is, or can
be unique; the unique facts and specific language of the contract may require a different legal analysis and may result in
a different outcome. Before proceeding in reliance upon this or any other general description of law, consult with an attorney
competent in the field of practice relevant to your situation.
2008 Copyright Nash & Lodge, PLLP
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