South Florida Real Estate News

Procuring Cause

April 17th, 2018 5:35 PM by Linda Barratt PA and Justin Cervantes, PA

A great article was generated by Anne Cockayne and released on FloridaRealtors.org surrounding the infamous Procuring Cause issue. This is always a subject of contention and we decided to share this great article in our blog for future reference.

"The first thing to do is talk to your broker and find out if they're willing to pursue the commission because all commission disputes occur between brokers. A sales associate has a financial interest in the outcome, but they're not considered parties unless they're also a principal in the firm (sole proprietor, partner, officer, majority shareholder or office manager).

According to the National Association of Realtors® (NAR) 2018 Code of Ethics and Arbitration Manual, "While a number of definitions of procuring cause exist, and a myriad of factors may ultimately enter into any determining procuring cause, for purposes of arbitration by local Boards and Associations of Realtors, procuring cause in broker-to-broker disputes can be readily understood as an uninterrupted series of casual events which result in a transaction. Or in other words what caused the successful transaction to come about."

A "successful transaction" is a sale the closes or a lease that is executed.

I cannot tell you if you are the procuring cause because I've only heard your side of the story. Ultimately, it's up to your local association arbitration panel to determine if your efforts resulted in bringing the buyer to the closing table. Panels hear from both sides, listen to witness testimony and review evidence before deciding.

Keep in mind, arbitration panels cannot base their decision on a rule of entitlement, which are considerations such as:

  • Who crossed the threshold first?
  • Who wrote the successful contract?
  • Who has an exclusive agency relationship with the buyer?

Instead, the panel's job is to focus on the "series of events" and analyze the facts to determine if an interruption in the relationship between the agent and buyer occurred. Examples of breaks could include:

  • The agent abandoned the buyer, perhaps by not being available
  • The buyer abandoned the agent (leaves the agent)
  • A third possible cause could be estrangement (alienation)

It's anybody's guess as to how much weight the arbitration panel will give to the buyer's act of leaving you. Generally, arbitration panels award all or nothing, and NAR policy precludes arbitration panels from including a rationale to explain their decision, so the award will only tell you who gets the money.

Only very rarely do panels "split the commission," so please don't mislead yourself to believe that the panel will award you something for your time and trouble. And never go into an arbitration believing it's a "slam dunk." If you have an "I know I am going to win" mentality, you may come away very disappointed. No one can predict the outcome of an arbitration hearing.

There are arbitration alternatives, one being mediation, which is an informal dispute resolution process that puts the who-gets-paid decision into the hands of the parties rather than a hearing panel. The parties sit down with a mediation officer from the local association to work out their differences without lawyers or witnesses present.

Another alternative is for the brokers in the dispute to sit down and discuss the issue and negotiate the outcome themselves. This avoids any need to go to the local association at all. If the brokers do mutually agree about settlement terms, it's always best to get the agreement to settle in writing.

For more information about procuring cause and the process to resolve commission disputes, contact Florida Realtors Legal Hotline at 407.438.1409."

Always remember that the deal is not done until you receive your commission and even then, it's always best to make sure you closed all open issues in every facet of the transaction. In today's litigious atmosphere, you can sue anyone over almost anything.

Just my 2 cents...

Posted by Linda Barratt PA and Justin Cervantes, PA on April 17th, 2018 5:35 PM

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