The term "procuring cause" in real estate is crucial for understanding who deserves a commission. It's a legal concept that determines which real estate agent is entitled to payment after a successful transaction. This isn't always as straightforward as it seems, and disputes over procuring cause can arise frequently. This guide will break down the definition, explore common scenarios, and clarify the complexities of this critical aspect of real estate law.
What is the Definition of Procuring Cause in Real Estate?
Simply put, the procuring cause is the agent who is directly responsible for bringing about the sale. It's not just about who first showed the property or made initial contact. Instead, it focuses on the agent whose actions were the primary and effective cause of the final transaction. This means the agent's efforts directly led to the buyer and seller entering into a binding agreement.
This definition hinges on establishing a direct causal link between the agent's actions and the successful sale. It considers factors beyond just initial contact; it analyzes the entire process, identifying the key events and actions that ultimately resulted in the closing of the deal.
Who is Considered the Procuring Cause? Common Scenarios
Let's look at some typical scenarios to understand how procuring cause is determined:
Scenario 1: The "First Showing" Agent
Agent A shows a property to a buyer, but the buyer doesn't make an offer. Weeks later, Agent B shows the same property to the same buyer, who then makes an offer and the property sells. In this case, Agent B is likely the procuring cause because their actions directly led to the sale. While Agent A made initial contact, their efforts didn't result in a successful transaction.
Scenario 2: Multiple Agents Involved
Agent A introduces the buyer to the property and answers questions. Agent B negotiates the deal and handles the paperwork. Agent C handles the closing. Determining the procuring cause in this situation involves carefully examining each agent's contribution. It's often Agent B who gets the credit as the negotiator, as negotiations are generally seen as the most crucial step in getting the deal done.
Scenario 3: Buyer Finds Property Independently
A buyer finds a property online and contacts the listing agent. The buyer never worked with any other agent. In this case, the listing agent is the procuring cause since they facilitated the transaction.
Scenario 4: Expired Listing
Agent A had the listing, but it expired. Agent B then lists the property and sells it to a buyer introduced by Agent A before the listing expired. This situation is complex and will depend on the specifics of the agreement between the agents. The original agreement between Agent A and the seller may hold relevance here.
What Factors Determine Procuring Cause?
Courts consider several factors when determining procuring cause:
- Initiating Contact: Who first introduced the buyer to the property or brought them into the process?
- Negotiations: Who handled the most critical negotiations leading to the final agreement?
- Continuous Effort: Did one agent consistently work with the buyer, nurturing their interest and addressing their concerns?
- Terms of the Agreement: What were the initial agreements between the agents and clients regarding commission?
- State Laws: Procuring cause laws vary by state. State laws should always be consulted.
How is Procuring Cause Disputed?
Disputes over procuring cause can arise, leading to litigation. Strong documentation is vital to support claims of procuring cause. This includes:
- Detailed Records: Keep accurate records of all client interactions, property showings, negotiations, emails, and contracts.
- Clear Communication: Maintain clear, written communication with both the buyer and the seller, outlining your role and contributions.
- Agency Agreements: Ensure your agency agreement clearly outlines the terms of your representation and commission structure.
Conclusion
Understanding procuring cause is fundamental for both real estate agents and clients. It's not just about who first shows a property but about who effectively brings about the sale. Thorough documentation, clear communication, and an understanding of relevant state laws are essential in avoiding disputes and ensuring fair compensation. If you have questions regarding specific situations or state laws, consult with a real estate attorney.
