By: Gary Blau, AIR CRE Member
The benefits of AIR CRE membership offer much more than a marketing platform for your listings and access to a database of commercial real estate contracts. Article 9.1 of the AIR CRE Rules of Professional Conduct provides Dispute Resolution Services, an equitable, efficient and inexpensive process for AIR CRE members to recover brokerage commissions from other AIR CRE members who violate the terms of the Rules of Professional Conduct during a transaction, resulting in a disagreement between the members regarding the payment of the commission. As part of the recent launch of Mediation services, AIR CRE now also provides this service, along with others, to the general commercial real estate community.
As a member who recovered a rightfully earned commission through the AIR CRE Dispute Resolution process, I have written this article to promote this key member benefit. The dispute resolution process is conducted in an utterly fair and objective basis with safeguards in place to ensure that only meritorious disputes are heard.
In my case, I presented a written Request For Proposal (“RFP”) to another AIR CRE member for a property that was unlisted but whom I knew from experience represented the ownership and with whom I had cooperated with on the same property on behalf of a different client 10 years earlier. As a result it was natural for me to submit the RFP to the AIR CRE member directly rather than to the property owner. The other AIR CRE member received the RFP and told me the property was not on the market for lease but that he would notify me if things changed; no other response was ever communicated.
I was initially suspicious since, coincidently, I was marketing the very same property for sublease and knew the property was going to be available because the existing tenant planned to vacate. Sure enough, three months later, I received an email from the client on whose behalf I submitted the RFP, informing me that she was working directly with the other AIR CRE member who I presented the RFP to three months earlier. Several months later, the company in fact leased the subject property.
I repeatedly tried contacting the agent to negotiate a mutually satisfactory resolution but never received a response. Since the amount of the cooperating commission was substantial, I consulted the AIR CRE’s Rules of Professional Conduct and contacted the Dispute Resolution Committee Chair.
The purpose of AIR CRE’s Rules of Professional Conduct are to foster integrity and promote member cooperation for the benefit of our clients. Although it is understood commercial real estate brokerage is a competitive industry, AIR CRE members are expected to operate in an atmosphere of collegiality and respect; and not take unethical advantage of fellow members based on who controls a property.
As mentioned, The Rules of Professional Conduct provide a process for members to recover a commission from a cooperating member who has violated the Rules of Professional Conduct. However, the dispute resolution process is conditioned upon whether or not a serious breach of the standards of “fair play” and professional standards took place and if the monetary amount of the dispute is worth pursuing. If these conditions are met, the Dispute Resolution Chair will meet with both parties in an attempt to mediate a resolution. The procedures are extremely well thought out, and, in many cases, the dispute gets resolved during this mediation process. However, in the event mediation is not successful, an arbitration hearing will be scheduled.
The arbitration hearing itself is structured to uncover the facts, apply the Rules of Professional Conduct to those facts, and reach an equitable resolution. The process works very well. The arbitration panel is made up of three veteran AIR CRE members. Each side is permitted sufficient time to tell their respective version of the facts and each side is permitted to bring witnesses and legal counsel. I should mention that prior to the arbitration, both sides are required to submit their evidence, in writing, to AIR CRE. This information is shared with the panelists so the panelists can review it before the arbitration hearing. During the hearing, the panelists ask questions of each side and each member is permitted to “cross examine” the other. The old cliché that “the truth always comes out” applies and each member’s story gets a thorough vetting.
Before the arbitration hearing is concluded, both sides are asked if they feel they received a fair hearing and if they have anything else they would like the panelists to consider. Once the arbitration is complete, the panelists meet, discuss the facts, and render a decision. This decision is final and binding.
Although commission disputes among AIR CRE members are rare, it is reassuring to know that in the event the Rules of Professional Conduct are violated and this violation creates a disagreement regarding a commission, AIR CRE members have a quick, professional, and inexpensive way to have their grievance heard. Dispute Resolution is just one of the numerous benefits that demonstrate the incredible value AIR CRE membership provides.
Whether you are a member of AIR CRE or not, if you need assistance with Mediation, I encourage you to learn about the AIR CRE Mediation program which was just launched in 2021 and is available to the public.