South-Western Legal Studies in Business

Organization Membership Terms Requiring Arbitration of Disputes Binding on Members
Description

Colorado high court held that members of a professional real estate membership organization were bound to follow the rules of the organization that all fee disputes among members would be governed by arbitration.

Topic

Alternate Dispute Resolution

Key Words

Arbitration; Organization; Membership; Real Estate Agents

C A S E   S U M M A R Y
Facts

Colorado licensed real estate brokers who are members of the Denver Metropolitan Commercial Association of Realtors (DMCAR) agree, as a condition of membership, to submit disputes about transactions to binding arbitration in accord with procedures of the National Association of Realtors. The association has a referral fee agreement that applies to brokers. Some realtors challenged the arbitration agreement, contending it was invalid because the parties did not execute an arbitration agreement with each other and that membership in a voluntary organization, such as DMCAR, does not create a contract among members of the organization. Further, they argued that if one had dropped membership in DMCAR then its rules were no longer binding. The trial court dismissed the suit; plaintiffs appealed.

Decision

Affirmed. Agreements to arbitrate contractual business disputes, where were conditions of membership, became implied conditions of referral fee agreements among licensed agents who were all members of the association. After the dispute arose, some members resigned from DMCAR, but they were still bound by the terms of their membership that applied at the time the dispute arose. The arbitrations provisions and procedures contained in a voluntary membership organization are binding on its members.

Citation

Lane v. Urgitus, 145 P.3d 672 (Sup. Ct., Colo., 2006)

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