Procuring Cause

 Questions of procuring cause in real estate brokerage transactions will always be hotly debated because they are ultimately questions about money.  Who will get it and who will not. 

Definition of Procuring CauseThe National Association of REALTORS® Code of Ethics and Arbitration Manual cites an Arizona case for the definition “procuring cause”.  In that case, the court ruled that “a broker will be regarded as the procuring cause of a sale, so as to be entitled to a commission, if his efforts are the foundation on which the negotiations resulting in a sale are begun.”  The court went on to state that procuring cause was a “cause originating a series of events which, without a break in their continuity, result in the accomplishment of the prime objective of the employment of the broker who is producing a purchaser ready, willing and able to buy real estate on the owner’s terms.”  The Georgia courts have tended to express the definition of procuring cause in terms of whether the broker initiated the key uninterrupted series of events which resulted in the sale of the property.
The problem with these types of legalistic definitions is that they provide little practical guidance in determining who is the procuring cause of the sale in the myriad of real-world transactions in which brokers find themselves.  This is particularly the case when two or more brokers are involved in a transaction and decisions have to be made regarding their respective roles in procuring the sale.
REALTORS® serving on arbitration panels and struggling with procuring cause questions regularly ask whether there is a minimum standard that should be met before a broker can rightfully claim all or part of a commission, and how to divide commissions when the relative contributions of the two brokers are unequal.  The National Association of REALTORS® tries to give guidance to arbitration panels by including in its Code of Ethics and Arbitration Manual a list of factors to consider and questions to ask in evaluating issues of procuring cause.  Examples of such questions include the following:

1. Who first introduced the buyer to the property?
   
2. When was the first introduction made?
   
3. How was the first introduction made?
   
4. Did the broker who made the initial introduction to the property engage in conduct (or fail to take some action) that caused the buyer to utilize the services of another broker?
   
5. How do the efforts of one broker compare to the efforts of another?
   
6. If more than one cooperating broker was involved, how and when did the second cooperating broker enter into the transaction?
   
7. What was the length of time, between the broker’s efforts and the final sales agreement?
   
8. Did the broker who made the initial introduction to the property maintain contact with the buyer?
   
9. Did the buyer make the decision to buy independent of the broker’s efforts/information?
   
10. Did the buyer seek to freeze out the broker?
    

Important to note:

Buyers are entitled to be represented by a broker whenever they would like representation and can hire a real estate broker to represent their interests any time they desire. A listing broker only has to share its commission when the buyer’s broker is the procuring cause of the sale. 
A signed buyer brokerage agreement means that the buyer has entered into a written agency contract with a broker. It does NOT mean the buyer’s broker is the procuring cause of the sale or is automatically entitled to be paid a commission by a seller.  If a Seller refuses to pay a broker that has a valid Buyer Brokerage Agreement because that broker is not the procuring cause, then the Buyer may be liable under the Buyer Brokerage Agreement for a separate commission to the non-procuring cause broker for agency services.
Buyers are entitled to be represented by a broker whenever they would like representation and can hire a real estate broker to represent their interests any time they desire. A listing broker only has to share its commission when the buyer’s broker is the procuring cause of the sale.

​