MULTIPLE LISTING SERVICE HILTON HEAD ISLAND

MULTIPLE LISTING SERVICE HILTON HEAD ISLAND COMPLIANCE GUIDELINES EFFECTIVE: SEPTEMBER 2, 2010 M102-0910

Multiple Listing Service Of Hilton Head Island Compliance Guidelines Table of Contents SECTION 1 THE VIOLATION PROCESS... 1 Initiators of Alleged Violations... 1 How to Report Alleged Violations... 1 SECTION2 MINOR VIOLATIONS... 2 Minor Violations Processing and Correction Fees... 3 Minor Violations -Non-Response Or Non-Compliance Fees... 3 SECTION 3 AUTOMATIC VIOLATIONS AND FEES... 3 SECTION 4 PROHIBITED ACTIVITIES... 6 Prohibited Activities Processing and Correction Fees... 7 SECTION 5 INTERNET DATA (IDX) EXCHANGE VIOLATIONS... 7 SECTION 6 VIRTUAL OFFICES AND VIRTUAL OFFICE WEBSITES (VOWs)... 7 SECTION 7 REPEAT OFFENSE POLICY... 8 SECTION 8 LOCKBOX VIOLATIONS, PROCESSING AND CORRECTION FEES... 9 SECTION 9 FAILURE TO PAY PROCESSING AND CORRECTION FEES... 10 SECTION 10 LIQUIDATED DAMAGES... 10 SECTION 11 APPEAL FROM AUTOMATIC AND INTERNET PROCESSING AND CORRECTION FEES.10 M102-0910 i

Multiple Listing Service of Hilton Head Island, Inc. COMPLIANCE GUIDELINES Effective Date: September 2, 2010 The Multiple Listing Service of Hilton Head Island, Inc. ( HHIMLS ) is responsible for the enforcement of HHIMLS Rules and Regulations. All violations of the HHIMLS Rules and Regulations including written complaints will be considered by HHIMLS in accordance with these Compliance Guidelines. All complaints of unethical conduct or requests for arbitration between Realtors shall be referred to the Hilton Head Area Association of Realtors. Any financial disputes regarding HHIMLS fees or processing or correction fees or ethical complaints between a non-realtor and a Realtor, Appraisers, non-realtors, and between Associate Members or Full Members of different Real Estate Brokerages, will be determined by HHIMLS. SECTION 1 THE VIOLATION PROCESS Initiators of Alleged Violations Alleged violations of the HHIMLS Rules and Regulations will be determined in one of the two following ways: a. By HHIMLS. b. By HHIMLS Full Member, BIC or Head Appraiser, as defined in the HHIMLS Rules and Regulations, in writing to HHIMLS, as set forth below, setting forth the details of the alleged violation, name, address and contact information of the allegedly violating Full Member and any supporting evidence of such alleged violation. How Alleged Violations Are Reported a. Via email to violations@hiltonheadmls.com b. Via US Mail to HHIMLS P.O. Box 5134 Hilton Head Island, SC 29938 c. By any efax using the proper cover sheet, i.e. Document Manager d. Through the Members Only portion of MLS System. On any listing the sidebar has a functionality where you can click on Report a Violation and complete the form. e. Automated Data Checker in the HHIMLS System. If through the automated Data Checker system, the system scans listing information and notifies the person designated by the Full Member BIC to receive such notice (the Courtesy Notice Recipient or CNR ). The Courtesy Notice is sent by email, daily, and will advise what listing corrections need to be made in the HHIMLS Compilation, as that term is defined in the HHIMLS Rules and Regulations. 1

If through other means, either a Courtesy Notice will be sent by email or Federal Express or US Mail, requiring signature confirmation, to the BIC and Associate Member. SECTION 2 MINOR VIOLATIONS When a Minor Violation is confirmed to have occurred, HHIMLS Data Checker System or Staff will send an HHIMLS Courtesy Notice as set forth above. This person designated by the Full Member BIC is responsible for having the errors corrected within forty-eight (48) hours. Minor violations include, but are not limited to: a. Failure to enter a listing in the correct AREA as identified in the HHIMLS Database. b. Failure to report the correct sale price on a closed listing. c. Failure to report the correct selling office and selling agent on a closed listing. d. Failure to correctly report all required fields on the Listing Input Screen. e. Entries into the compensation to cooperating broker fields other than a specific dollar amount, percentage or combination thereof. f. Failure to obtain seller s written consent prior to entering a status change relating to an amendment to the Member s listing agreement. g. Failure to provide HHIMLS with any documentation required by HHIMLS within forty-eight (48) hours of the HHIMLS. h. Failure to report a correct listing expiration date. i. Failure to make any required change of listing within the specified time frame. j. Input of personal property, unless being sold as a part of real property. k. Input of more than one listing for the same property in ACTIVE status at any time. l. Failure to input listing within forty-eight (48) hours of receipt of valid listing agreement. m. Failure to submit, within forty-eight (48) hours, a copy of the Office Exclusive Listing agreement which shows the seller refused to permit the inclusion of the listing in the HHIMLS Compilation. n. Failure to amend the status of a listing in the HHIMLS Database within fortyeight (48) hours of the change of status. o. Failure to use the original listing date and listing price when a property is withdrawn from the HHIMLS Compilation, prior to its expiration date, and then reentered by the same Member without the execution of a new signed valid Listing Agreement. p. Failure to properly notify HHIMLS when part of a listed property was sold. q. Failure to withdraw a listing within forty-eight (48) hours after written request of the owner/seller. 2

Minor Violations Processing and Correction Fees If an HHIMLS Courtesy Notice has been sent to the CNR of the Full Member, the correction must be made within forty-eight (48) hours from the date of the notice. If the violations are not corrected the following may occur: If violation is not corrected by Full Member, the correction may be made by HHIMLS. If the correction cannot be made by HHIMLS, the processing and correction fees will escalate as described below. If a Full Member desires to explain any extenuating circumstances for failure to comply, a letter must be sent to HHIMLS before its HHIMLS bill is due. Minor Violations -Non-Response Or Non-Compliance Fees Non-response or non-compliance to a HHIMLS Courtesy Notice within the designated grace period may result in the following: 1 st Time Courtesy Notice, $10 Fee Waived. 2 nd Time Warning Notice, Associate Member or Assistant may attend a Rules & Regulations learning session to have fee waived. (May only be applied once annually). 3 rd Time Full Member billed processing and correction fee of Ten Dollars ($10.00) per violation. If the violation is not corrected during the grace period, the Full Member will be billed a processing and correction fee of Fifty Dollars ($50.00) per seven (7) day period following the initial Courtesy Notice. HHIMLS only corrects violations that can be corrected and are also classified as Automatic Violations (Section 3) or Prohibited Activities (Section 4). If the correction cannot be made by HHIMLS, the processing and correction fees will escalate as set forth in Section 7. These fees are per offense and will be billed to the Full Member. Repeat Offense Fine Policy can be found in Section 7. SECTION 3 AUTOMATIC VIOLATIONS AND FEES When any of the violations listed below are reported or discovered, HHIMLS will send notice to the BIC and/or Agent causing the infraction by email. HHIMLS will make the correction, where applicable and if possible, and the following processing and correction fees will be assessed. Violations that are correctable and which are not corrected by the Full Member within forty-eight (48) hours after notification and which cannot be corrected by HHIMLS, will be charged the processing and correction fees listed below, plus $100.00 per calendar day thereafter until the correction is made. If a Full Member desires to explain any extenuating circumstances for violation or failure to comply with 3

the HHMLS Rules and Regulations or Compliance Guidelines, the explanation with supporting documentation, if any, must be received at the HHIMLS office within fortyeight (48) hours from receipt of the notice of violation. a. Self-promotion or company promotion included in the public remarks section or superimposed onto any photo. $100.00 per occurrence b. Entering a property into the HHIMLS Compilation without a valid signed listing agreement. $1,000.00 per occurrence c. Unauthorized dissemination of personal seller information including, but not limited to alarm codes, children at home, elderly at home, gate codes. The personal information may be removed by the HHIMLS staff. $1,000.00 per occurrence d. Unauthorized physical access to listed property, including, but not limited to, failure to follow showing instructions. $1,000.00 fee e. Unauthorized use or disclosure of HHIMLS login information, Compilation, listing information, ranking statistics or other statistical or comparable reports to a third party. $15,000.00 fee per occurrence f. Input of derogatory statements or statements found to discriminate against any of the 7 classes protected in the Fair Housing Act. $100.00 fee per term(s) and the term(s) is (are) immediately removed by HHIMLS. This is also an Internet Data Exchange ( IDX ) Violation see Section 5. g. Advertising on market listings from the HHIMLS Compilation without written authorization from the listing Member prior to posting or printing. $100.00 per listing per occurrence up to a maximum of $5,000.00 per occurrence h. Lockbox Violations. See Section 8 i. Failure to input a new listing into the HHIMLS Compilation within forty-eight (48) hours of execution by the BIC or failure to submit, when requested from HHIMLS, a copy of the Listing Agreement showing the seller refused to permit the dissemination of the listing. $1,000.00 per infraction j. If an individual has been granted an exemption from HHIMLS fees because they are a Referral Agent in a Referral Company or a agent is a Non-Participating 4

Brokerage or Sister Company, and it is discovered that the Referral Agent or Non-Participating Brokerage or Sister Company agent has used the HHIMLS Database, Compilation or system in any way to list, sell, show or appraise property, such exemption shall automatically be revoked and the following processing and correction fees apply. The Referral Company or Non-Participating Brokerage or Sister Company shall pay a sum equal to the actual fees that would have been incurred for HHIMLS fees, not to exceed twelve (12) months plus a $300.00 penalty fee k. If a Full Member fails to answer, provides incomplete information or delays in response to a Referral Company audit, Non-Participating Brokerage Sister Company audit, or annual Full Member audit. $50.00 plus $50.00 per month for each licensee who has not been listed on the Disclosure and Disclaimer Statement and is listed as a licensee by the state of South Carolina with the Referral Company or the Non- Participating Brokerage or Sister Company as defined in the HHIMLS Rules and Regulations commencing thirty (30) days from the Member s failure to respond, until the Member responds. l. If it is discovered that a Referral Company, Non-Participating Brokerage or Sister Company of a Full Member with a direct or indirect ownership interest has used, accessed or displayed the HHIMLS Database, Compilation, system or Service or any portion thereof, in any way, the offending Full Member shall be assessed : $15,000.00 per occurrence m. If it is discovered by HHIMLS that a secretary/assistant, or any person with authorized access to the HHIMLS Database, Compilation, system or Service working for or with a Full Member, uses their login to assist any individual in a Non-Participating Brokerage or Sister Company or a Referral Agent or any person not authorized to have access to the HHIMLS Database, Compilation, system or Service in a Referral Company, the Full Member with a direct or indirect ownership interest in the Non-Participating Brokerage Sister Company or Referral Company will be fined: $15,000 per occurrence n. If an application is made and paperwork is submitted for access to the HHIMLS Database and Compilation for Non-Licensed Sales Assistants, as defined in the Rules, a violation occurs when such personal assistants are not directly employed or under contract to the Full Member and/or when Full Member fails to submit paperwork verifying the employment or independent contractor status of a Non- Licensed Sales Assistant when requested by HHIMLS. $1,000.00 per occurrence o. Misrepresentation of the availability of access to show or inspect a listed property. $1,000.00 per occurrence 5

p. Failure to withdraw a listing that becomes unavailable for showing for seven (7) days or longer by the REB. $1,000.00 per occurrence q. Failure to return, incomplete information or delay in response to a Full Member audit. $50.00 plus $50.00 per month for each licensee who has not executed an Associate Member Agreement and is listed as an affiliated licensee of a Full Member r. Failure of a Full Member to obtain a one time waiver from attendance at one (1) of the four (4) General Assembly meetings. $50.00 SECTION 4 PROHIBITED ACTIVITIES When one of the prohibited activities listed below is found, HHIMLS will send a notice by email to the BIC and the BIC must correct what can be corrected within forty-eight (48) hours. The prohibited activities will incur a processing and correction fee to the Full Member by HHIMLS for the following prohibited activities: a. Sharing a listing filed with HHIMLS with any broker or firm that is not a Full Member. b. A Full Member other than the listing Member places a For Sale sign on a property. c. A Full Member other than the listing Member places a Sold sign on a property prior to closing without the listing Member s authorization. d. A Full Member submits a photograph of a listing property promoting its company or the listing Member in the remarks section or superimposed onto any photo or depicts any marketing or promotional messages made on behalf of the listing Member or Full Member. e. A Full Member solicits a listing on property filed with HHIMLS, unless such solicitation is consistent with the Rules adopted by HHIMLS. f. A Full Member other than the listing Member advertises a listing without the listing Member s consent. g. Failure to include an offer of compensation expressed as a flat dollar amount or a percent of sales price, whose sum of the compensation fields is greater than zero (0). h. Input of a co-exclusive listing with a non-member. i. Failure to change listing status from active to pending within forty-eight (48) hours after acceptance of the contract. j. Input of derogatory statement into the HHIMLS Compilation. 6

Prohibited Activities Processing and Correction Fees The prohibited activities listed above will be charged $250.00 plus $50.00 per calendar day after notice has been provided until the prohibited activities cease and are corrected at the direction of HHIMLS. If Full Member desires to explain any extenuating circumstances for failure to comply, a letter must be sent to HHIMLS before the end of the forty-eight (48) hour grace period. SECTION 5 INTERNET DATA EXCHANGE (IDX) VIOLATIONS When a violation of the HHIMLS Rules for IDX (Section 13.2) has been found or reported, a Courtesy Notice will be sent to the Member causing the infraction. Failure to abide by Section 13.2 of the HHIMLS Rules and Regulations and the HHIMLS Rules for Internet Data Exchange (IDX), as amended from time to time, will result in the following processing and correction fees. If a HHIMLS Courtesy Notice has been sent to the Full Member s designated person, the correction of the violation must be made within forty-eight (48) hours. The HHIMLS Courtesy Notice will be posted on the Members Only HHIMLS Site for review by Associate Members. Violations not corrected within five (5) days of Courtesy Notice, will be charged as follows: $1,000.00 plus $100.00 per seven (7) day period thereafter until the correction is made. A repeat offense may cause termination of the IDX feed. The Member may reapply for the IDX feed after sixty (60) days of suspension with the understanding that a future offense will be the maximum fine allowable of $15,000 per occurrence. If a Full Member desires to explain any extenuating circumstances for failure to comply, a letter must be sent to HHIMLS within forty-eight (48) hours from the date of the initial Courtesy Notice. SECTION 6 VIRTUAL OFFICES AND VIRTUAL OFFICE WEBSITES ( VOWS ) VIOLATIONS Failure to abide by Section 13.3 and 13.4 of the HHIMLS Rules and Regulations, as may be amended from time to time, with regard to a VOW will result in the following fines: 7

a. Failure to abide by the Virtual Office Website (VOW) Rules and Regulations regarding the operation of the VOW: $1,000.00 per infraction plus $25.00 per calendar day thereafter until the correction is made b. Failure to abide by the Virtual Office Website (VOW) Rules and Regulations regarding a display violation correction and compliance must be made within seventy-two (72) hours. $1,000.00 per infraction plus $25.00 per calendar day thereafter until the correction is made At the end of the seventy-two (72) hours after notice to Members, the VOW Content feed may be suspended until Member s VOW is corrected and compliant as noticed on the notice of violation. Suspension of the VOW Content feed may occur for one or more of the items listed below but not limited to: (1) Display of Content that should not be displayed as set forth in the notice of violation. (2) No registration process for consumers. (3) Transfer of HHIMLS Content to any third party without HHIMLS authorization. (4) Refusal to allow HHIMLS or any HHIMLS Member access to Member s VOW for evaluation and compliance. A Member may avoid the additional daily fine by taking their VOW website offline within seventy-two (72) hours of notice of violation until correction or compliance is accomplished. If a Member desires to explain any extenuating circumstances for a violation or failure to comply, refer to Section 11 of these Compliance Guidelines. Refer to Section 7 for the Repeat Offense Fine Policy. SECTION 7 REPEAT OFFENSE POLICY Minor Violations 2 nd Thru 6 th offense within one (1) year: double the last base fee 7 th or greater offense within one (1) year: maximum fee allowed for violation (excessive violations, may be assessed double the thirty (30) day fee) This fee schedule is per Full Member/Associate Member/Appraiser and/or Secretary/Assistant, per offense and is billed to the Full Member. Note that a one-year term is defined as the calendar year. 8

All Other Violations A repeat offense of any automatic violation, lockbox violation, IDX violation and VOW violation will be double the last processing and correction fee levied as set forth in the respective Section above, until reaching a maximum of $15,000.00. (For Instance: $100.00 second offense, $200.00 third offense, $400.00 fourth offense). SECTION 8 LOCKBOX VIOLATIONS, PROCESSING AND CORRECTION FEES Lockbox violations are as follows and incur the following processing and correction fees: a. Full Member BICs are responsible to obtain the key access code and lockbox from Associate Members when an Associate Member leaves the Full Member $500.00 or the appropriate fee as set by the Board of Trustees b. Removal of a lockbox by HHIMLS $35.00 plus mileage at.48 per mile round-trip from the HHIMLS office. c. No Member key access code shall be used nor shall any key access code be loaned to any person for purposes of entering a property on a lockbox or any other key or lockbox function other than the authorized Lease key holder $5,000.00 for first violation Second and Future violations see Section 7 for Repeat Offense Policy and Fines d. No Member may physically enter any property without notification to, and express approval of, the listing Member unless the published HHIMLS Database indicates otherwise up to $1,000.00 for the first violation Second and Future violations see Section 7 for Repeat Offense Policy and Fines e. No Member may attach, mark or in any way disclose the PIN number on any lockbox key, PDA or shackle code on the lockbox. up to $300.00 for the first violation Second and Future violations see Section 7 for Repeat Offense Policy and Fines 9

SECTION 9 FAILURE TO PAY PROCESSING AND CORRECTION FEES Invoices for violations are due upon receipt. Failure to pay a processing or correction fee assessed for a violation(s) within thirty (30) days of invoice date will result in a late fee or interest charge. In the event any fees, including any late fees, remain unpaid for more than thirty (30) days, all access to HHIMLS Services are subject to suspension until the account is paid in full. After thirty (30) days any unpaid balances due from an Associate Member may be transferred to the Full Member s account for collection. SECTION 10 LIQUIDATED DAMAGES Damages suffered by HHIMLS from access to, commercial exploitation of and unauthorized use of Services and Compilation by an unauthorized third party as a result of disclosure of Full Member s access identification number would be speculative and difficult to quantify. In the event that any disclosure of Full Member s access identification number results in access to commercial exploitation of or unauthorized use of HHIMLS Services and Compilation by an unauthorized third party, regardless of whether such disclosure is intentional, negligent or inadvertent, Full Member shall be liable to HHIMLS at HHIMLS option, for liquidated damages in an amount not to exceed Five Hundred thousand Dollars ($500,000.00). SECTION 11 APPEAL FROM AUTOMATIC AND INTERNET PROCESSING AND CORRECTION FEES Minor Infractions (Fees under $5,000.00) Any Full Member, having reason to believe that the processing or corrections fees of less than $5,000.00 imposed on that Full Member by HHIMLS is without merit, may file an HHIMLS Appeal Hearing Request with the Appeals Committee, within ten (10) business days of notification of the imposition of the processing and correction fees (See Section 11.10.3.5 of the Rules and Regulations.) The hearing will be conducted in accordance with provisions of the HHIMLS By-Laws and the Rules and Regulations. An Appeals Committee comprised of HHIMLS Staff meets at the end of each month to review any request for dispensation from a Rules violation. All those who have submitted petitions explaining extenuating circumstances will receive written notification of the Committee s decision by the US Mail within ten (10) days of submission of the petition. 10

Major Infractions (Fees $5,000.00 or Greater) Any Full Member, having reason to believe that the processing or corrections fees of more than $5,000.00 imposed on that Full Member by HHIMLS is without merit, may file an HHIMLS Appeal Hearing Request with the Appeals Committee appointed by the Board of Trustees, within ten (10) business days of notification of the imposition of the processing and correction fees (See Section 11.10.3.5 of the Rules and Regulations.) The hearing will be conducted in accordance with provisions of the HHIMLS By-Laws and the Rules and Regulations. The appeal hearing will be scheduled with the Appeals Committee and the Full Member will be notified of the hearing date by HHIMLS. A hearing will be held as noticed before the Appeals Committee and the Full Member will have the opportunity to present evidence of non-violation to the Appeals Committee. Full Member will be notified of the Appeals Committee s decision to confirm, dismiss or lower the processing or correction fee or sanction being assessed by HHIMLS within five (5) business days of the appeal hearing. If in the opinion of the Appeals Committee the Full Member is unable to show compliance with the HHIMLS Rules and Regulations, the processing and correction fee must be paid. If, in the opinion of the Appeals Committee, the Full Member is able to show compliance with the HHIMLS Rules and Regulations, the processing and correction fee will be adjusted or waived. (See Sections 11.10.3.6, 11.10.3.7 and 11.10.3.8 of the Rules and Regulations) 11