Procuring Cause
From the perspective of a real estate agent, procuring cause is a critical concept that determines which agent is entitled to receive the commission for a specific real estate transaction. It recognizes the effort and actions taken by an agent that ultimately lead to a successful sale. Establishing procuring cause is essential to ensure fair compensation for the agent who played a significant role in facilitating the transaction.
As agents, we often request clients to sign buyer-broker agreements to establish the parameters of our representation and determine if we have an exclusive right to represent the buyer. Exclusive Right to Represent Agreements prevent buyers from working with multiple agents simultaneously, ensuring that the agent who secures the sale is entitled to the commission. On the other hand, Nonexclusive/Not for Compensation agreements allow buyers to engage multiple agents without any obligation to compensate them.
The duration of a buyer-broker agreement can vary, ranging from a short period to several months. Once an exclusive agreement expires, the buyer is free to work with another agent.
Buyer-broker agreements are crucial in determining procuring cause. In most cases, the agent who first introduces the buyer to a property and shows them the house is considered the procuring cause. However, if the buyer decides to work with a different agent and ultimately purchases the property with their assistance, procuring cause may also be attributed to the agent who writes up the offer and negotiates on behalf of the buyer.
Disputes over procuring cause can be complex and may result in legal action. Agents can face consequences if they assist a buyer in purchasing a property while the buyer is still under contract with another agent. The burden of proof lies with the first agent, who must demonstrate that the second agent was aware of the existing contract at the time of the purchase.
To resolve commission disputes, agents involved in the transaction may choose to arbitrate through the local real estate board. In some cases, the buyer may be asked to provide their perspective as a witness.
To prevent such disputes, transparency and upfront communication with clients are essential. If a buyer decides to switch agents, it is crucial for them to clearly communicate which properties they have already viewed with the previous agent. This allows for a smooth transition and helps avoid conflicts.
Example: Suppose a buyer, Jane, initially signs an Exclusive Right to Represent Agreement with Agent A but becomes dissatisfied with their services and decides to work with Agent B. During the contract period with Agent A, Jane visits a house but does not submit an offer. Later, she visits the same house with Agent B and decides to purchase it. In this scenario, both Agent A and Agent B could potentially claim procuring cause. Agent A may argue that they introduced Jane to the property initially, while Agent B can assert that they wrote up the offer and negotiated the purchase. The resolution of this situation would depend on the specific circumstances and any legal agreements in place.
To avoid disputes, it is crucial for clients like Jane to have open and honest conversations with both agents. Informing Agent B about previous interactions, including properties viewed with Agent A, allows for informed decision-making and potential resolution regarding commission entitlement. Additionally, clients should review the terms of their buyer-broker agreement carefully to understand any obligations or limitations when working with multiple agents.
As real estate agents, understanding procuring cause is vital in ensuring fair compensation for our efforts in facilitating successful property sales. Buyer-broker agreements play a crucial role in establishing procuring cause and clarifying the terms of our representation. By maintaining transparent and open communication with our clients and fellow agents, we can minimize the potential for disputes and foster positive working relationships. Ultimately, by abiding by ethical standards and diligently serving our clients’ best interests, we can navigate the complexities of procuring cause and contribute to a thriving real estate industry.
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