Buying and selling a home is a thorough process of negotiations, paperwork, and legal intricacies involving real estate agents and brokers. With those processes and individuals involved, an important question emerges: Who deserves the commission at the end of that process? That’s where procuring cause comes in and plays a vital role. A legal principle untangles that critical question by determining which real estate agent or broker, if any, set in motion the unbroken chain of events that led to a successful real estate transaction.
What is Procuring Cause, and how does it help?
In real estate, the procuring cause is the agent or party deemed to be the primary reason for a successful property transaction. It is a crucial concept in determining commission entitlement and involves evaluating the actions and contributions of various involved parties.
Imagine finding your dream home thanks to an agent who tirelessly showed you countless properties, patiently answered your endless questions, and skillfully navigated your way through the hectic world of negotiations. As you finalize the closing, another agent steps forward, claiming they brought you and the seller together. Such conflict is where the concept of procuring cause helps. In essence, the legal principle helps allocate the commission, pinpointing the agent who initiated and sustained the “unbroken chain of events” that ultimately culminated in the successful sale.
The Unbroken Chain
But what is this unbroken chain? It starts with the first interaction between the agent and the buyer or seller, whether it’s a chance encounter at an open house, a phone call sparked by a captivating listing, or an email brimming with excitement about a potential property. From that starting point, the chain weaves its way through every critical touchpoint of the sales process: the informative property tours, the strategic offer crafting, the meticulous paperwork, and negotiations. Any significant break in this chain, like the buyer contacting the seller directly without the agent’s knowledge, breaks the chain and brings forth the question of procuring cause.
Procuring Cause for Buyer and Seller
For buyers, procuring cause signifies the efforts that ignited their interest in the property, the tireless guide who patiently led them through the market maze, and the fierce advocate who helped their customers throughout the negotiation process. For sellers, it’s about being the architect of a captivating marketing campaign that attracts qualified buyers, the skilled negotiator who bridges the gap between expectations, and the trusted advisor who ensures a smooth and profitable transaction.
Factors involving Procuring Cause for Buyers and Seller Roles
Determining who holds the procuring cause in a transaction can be a nuanced affair, far from a black-and-white equation. Courts, when called upon to untangle the threads, meticulously scrutinize the chain of events that led to the final sale, weighing various factors:
The initial connection: Who established the initial connection between buyer and seller? Was it a phone call initiated by the agent, a chance encounter at an open house or an email exchange?
Substantial Assistance: Did the agent’s efforts go beyond simply initiating contact? Did they offer expert market insights, strategic negotiation skills, or unwavering support that materially contributed to the sale?
Negotiation Impact: Did the agent play a decisive role in bridging the gap between buyer and seller demands, effectively communicating needs, and crafting mutually agreeable terms?
Chain Continuity: Were there any significant gaps or lapses in communication or involvement throughout the sales process that might disrupt the narrative of the unbroken chain?
Procuring Cause Disputes
Unfortunately, disagreements regarding procuring causes can sometimes arise. Such disagreements could involve multiple agents claiming their due, a sale without an agent’s direct involvement, or simply a misunderstanding about the sequence of events that led to the closing. However, proactive measures can go a long way in fostering harmony and preventing such discord.
How do you prevent disputes and resolve them?
Building Foundations of Trust:
Maintaining clear and consistent communication with buyers and sellers is crucial, meticulously documenting all interactions and establishing a clear involvement timeline. Formal agreements outlining your role and commission expectations are valuable safeguards while adhering to professional, ethical standards to foster trust and transparency.
Mediation:
Resolving the procuring cause questions in a dispute may require professional mediation or, in rare cases, legal proceedings. This underscores the importance of preventive measures and highlights the collaborative approach that benefits both agents and clients.
Legal Proceedings
Disputes over procuring cause can escalate to legal proceedings, often resulting in arbitration or litigation. When conflicting claims arise among real estate agents or brokers disputing for commission, legal intervention becomes necessary to resolve the dispute. There are two common ways involved:
1. Arbitration Process:
Arbitration is a standard method to settle procuring cause disputes outside the courtroom. The parties present their cases to a neutral third-party arbitrator or panel, who then evaluates the evidence, testimonies, and relevant documentation. The arbitrator’s decision holds legal weight and determines the rightful recipient of the commission.
2. Litigation in Courts:
The dispute may proceed to court litigation in more complex or contentious situations. Such disputes involve presenting the case before a judge, who will assess the evidence and make a legally binding decision. Legal proceedings can be time-consuming and costly; it is essential to emphasize the importance of clarity and documentation in real estate transactions to prevent procuring cause disputes from reaching this stage.
Conclusion
In conclusion, navigating the intricacies of procuring cause is essential to a successful real estate career. By understanding its principles, implementing preventive measures, and upholding professional standards, agents can ensure they receive fair compensation for their efforts while fostering a transparent and collaborative environment for every client they serve. It is essential to be mindful of procuring cause whenever you are exposed to any transaction and do your diligence to have substantial claims.
