Conflict Avoidance, Management & Dispute Resolution Procedures Flashcards
What is a conflict?
Where impartiality comes into question
What are the procedures for identifying a COI?
I used CBRE’s internal conflict check database. Checked:
- Property full address
- Client’s name
- Borrower’s name
What do you do if a conflict is identified?
Conflict Avoidance: Contact the Fee earner of the conflicting instruction; see if there is a resolution. (e.g. Information Barrier). If no resolution to manage, decline instruction.
Written disclosure: I would disclose any previous or current involvement with the parties or the property to be valued to the client:
• Within the past 12 months for financial reporting purposes
• Within the past 24 months for other purposes (incl. secured lending under the Red Book)
Printed the results page, Job Director signed, dated and held on the Job File.
Conflict Management: Included a statement in both the Terms of Engagement and Valuation Report.
What practical examples of identifying a conflict do you have?
Horlicks Factory – information barrier.
What do you include in TOE on conflicts?
A statement. Either that no conflicts of interest have been identified OR that a conflict has been identified and the procedures taken to either resolve or manage it.
RICS Conflicts of Interest 2017
Global: Conflicts of interest, 1st edition, March 2017 (became effective 1st Jan 2018) Professional Statement
3 parts:
- Part 1: Mandatory rules for COI and definitions
- Part 2: Principles as to how to apply the PS
- Part 3: Guidance on how to meet the obligations set out in Part 1
3 types of conflict:
- Party conflict: work on same instruction for 2 parties
- Own interest: personal interest
- Confidential information
General Principles (Part 1):
- Member/Firm must not advise or represent a client a Conflict of Interest or a significant risk of a Conflict of Interest;
- Unless those affected have provided their Informed Consent
- Must identify and manage Conflicts of Interest
- Must keep records of the decisions made in relation to whether to accept COIs, Informed Consent, preventing COIs arising (to show compliance)
RICS Conflicts of Interest – UK Commercial Property Market Agency 2017, 1st Ed
UK only Professional Statement. Mandatory.
Firms and members acting on the open market sale or acquisition of a commercial investment real estate.
Dual Agency: where an agent (firm/member) has a contractual agency relationship with both seller and buyer at the same time. MUST NOT be undertaken in UK. Also applies to Related Firms to the agent (must be separate legal entities, no fee sharing, no common directors and no common internal data/access to).
Multiple Introductions: agent has competing contractual relationships to acquire similar opportunities. Must inform new client, MUST be agreed in written TOE happy to proceed on this basis, and MUST say exclusive/non-exclusive basis. If exclusive, advise other parties intro’d same property to that no longer able to act for them. If non-exclusive, obtain Informed Consent w/ info barriers.
Incremental Advice: e.g. you act for seller but buyer approaches you for planning/valuation advice (not to act for them in agency capacity). Can with Informed Consent/Info Barriers.
CBRE CHP
General: Required under Rule 7 of Rules of Conduct for Firms. A firm’s CHP must be approved by RICS. PII insurers must be notified as soon as a complaint made. CHP should be given to client at same time as TOB. RICS: Complaints Handling 2016, residential surveyors. STAGE 1 (inhouse): Complaint must be made in writing. CHP issued when complaint made. Details of the Complaints Handling Officer must be stated on CHP. Employee report complaint to CHO. Acknowledge complaint within 7 days. Investigate within 28 days. STAGE 2 (ADR): if the complainant not happy with investigation result, revert to redress scheme. OTHER: RICS will get involved if firm doesn’t respond to a complaint. Sole practitioners should have CHO at another firm.
Alternative Dispute Resolution methods
If CHP fails. These are to resolve disputes outside scope of courts. Advantages: speed, cost, confidentiality, informality and greater opportunity for negotiation.
First step: NEGOTIATION. Between the two parties only.
Second step (3rd party helps parties to a decision): Mediation: 3rd party mediates as a neutral person to find a solution. The mediator has no decision-making authority. Not binding. Confidential and informal.
Third step (3rd party determines the decision): Arbitration: Quasi-judicial process under Arbitration Act 1996. Can have a hearing or each party submit written representations. ADVANTAGES: arbitrator has specialist knowledge in the subject area, confidential, binding result (can only challenge on a point of law only, CANNOT sue for negligence), arbitrator can award costs. DISADVANTAGES: arbitrator looks only at evidence submitted.
Used for: rent reviews, service charges.
Independent Expert: Independent Expert appointment by the two parties. Has expert knowledge. ADVANTAGES: binding result, confidential, IE can use information provided AND own opinion/experience. Fast and cost effective. DISADVANTAGES: limited powers to allocate costs. CAN be sued for negligence.
Independent Expert vs. Arbitrator
Arbitrator Can only use information submitted Slower More expensive Cannot be sued for negligence Can award costs
Independent Expert Can use own knowledge as well Flexible Fast Cheaper Can be sued for negligence Limited cost awarding powers
What is PACT?
Professional Arbitration on Court Terms (PACT), administered by RICS and the Law Society. For lease renewal disputes. Quick, efficient and flexible. Decision is legally binding.
What are Calderbank letters?
For rent reviews. An offer in writing setting out the terms to settle the dispute without taking arbitration further. Dual purpose; settle rent review, gain protect on costs. If recipient doesn’t accept, open themselves up to risk of covering other parties costs.
Who do you refer complaints to if they cannot be resolved by your Compliance Director?
Property Redress Scheme (PRS)
Centre for Effective Dispute Resolution (CEDR)
