Legal Ease
TransFORMed
Major Changes to the 2012 Georgia REALTORS Contract Forms
EVERY YEAR FOR THE LAST 20 YEARS, THE GAR FORMS COMMITTEE HAS REVISED THE GAR FORMS (“FORMS”) TO TRY TO ENSURE THAT THEY REMAIN THE BEST REAL ESTATE FORMS AVAILABLE FOR USE BY REALTORS IN THE STATE OF GEORGIA. THE GAR FORMS COMMITTEE IS COMPOSED OF REALTORS FROM ALL OVER THE STATE OF GEORGIA. AS A RESULT, GAR RECEIVES EXTENSIVE INPUT ON THE ISSUES REALTORS ARE SEEING IN THEIR DAY TO DAY PRACTICES THAT NEED TO BE ADDRESSED IN OUR FORMS AND THE PROVISIONS IN OUR GAR FORMS THAT MAY NEED TO BE REVISED TO MAKE OUR FORMS CLEARER AND EASIER TO USE. OUR GAR FORMS ARE UNIQUE IN THAT THEY REFLECT THE THINKING OF REALTORS HIGHEST QUALITY.
In considering revisions to the GAR Forms, the GAR Forms Committee also evaluates potential changes against five major goals expressed as questions below.
1) Does the proposed change help protect REALTORS against potential legal claims?
2) Does the proposed change help protect the commission rights of REALTORS?
3) Does the proposed change provide a clear, reasonable solution to an issue routinely arising in real estate transactions?
4) Does the proposed change fairly balance the rights of buyers and sellers in real estate transactions? or
5) Is the proposed change necessary to comply with a change in the law?
Normally, changes will not be approved unless one or more of the above questions can be answered yes. With that background, let’s look at the major changes to the GAR Forms for 2012.
1. NEW ARBITRATION PROVISI ON IN ALL BROKERAGE ENGAGEMENT AGREEMENTS
A new arbitration provision is being added to all brokerage engagement agreements requiring that most disputes between REALTORS and their clients be arbitrated rather than litigated. In addition, the new arbitration provision limits the ability of clients to assert claims against REALTORS on a class action basis. As many REALTORS are aware, a dispute in Alabama over an administrative fee of less than $200 recently ended up as a multi-million dollar class action lawsuit against the brokerage firm. Unfortunately, real estate brokerage firms are increasingly the target of such claims, which, if lost, can literally put a brokerage firm out of business. Therefore, limiting such “bet the company” claims will be a huge benefit for REALTORS.
Second, while the arbitration provision will not decrease the number of disputes that clients have with their REALTORS, it will shift the venue for the resolution of such disputes away from our courts. In most cases, REALTORS would prefer to resolve disputes with clients in the more private setting of arbitration than in our public and visible judicial system.
Third, arbitration is generally faster and less expensive than traditional litigation as a means of resolving disputes. This should be good for both REALTORS and their clients. Under the arbitration provision, the parties jointly select the arbitrator and the arbitration is held in accordance with the rules set forth in the Federal Arbitration Act. The federal rules were selected because earlier this year, the U.S. Supreme Court upheld the rights of parties to limit class action claims in arbitration actions brought under that law.
14 I GEORGIA REALTOR JANUARY I FEBRUARY 2012
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