LEGAL HOTLINE ARCHIVE
Procuring Cause

Q. If Broker A stops by a place of business and leaves his business card and tells the clerk about a piece of property and requests that the clerk conveys the information to the owner and asks that the owner call him. The owner instead calls Broker B to write an offer on the property. Can broker B collect a full co-op fee from Broker A if the deal closes? Also perhaps I should mention that Broker B did call Broker A to clarify what property it was without telling Broker A who the prospect was. Thank you for your help.

A. The facts indicate, or at least we assume, that Broker A was the listing agent, who went to a place of business to tell the owner of that business about a certain piece of property. When the business owner was not there, Broker A left his business card and left a message for the owner to call him.

The owner of the business apparently called Broker B. Broker B then called Broker A to clarify what property it was, without discussing who the prospect might have been. Broker B then wrote the offer.

The question of whether Broker B can collect a commission-split from the listing broker depends on whether Broker B was the procuring cause. Procuring cause is that cause originating or setting in motion a series of events which, without break in continuity, result in the accomplishment of the prime objective of the employment of the broker, i.e., a sale or exchange of property.

Procuring cause requires an intense inquiry into all the facts and circumstances surrounding the matter, including the prior course of conduct of all parties vis-a-vis their relations to one another with respect to the property at issue. We do not have the benefit of such facts and therefore cannot provide our best educated guess regarding whether Broker B would be considered the procuring cause.

However, from the fact that Broker A "left his business card", one could infer that Broker A had no prior dealings with this business owner. This inference might be bolstered by the fact that the prospect chose to call Broker B. At any rate, these "inferences" do not substitute for a factual analysis and, as noted, we cannot opine in the absence of the knowledge of such facts.

Q. Realtor "A" showed property listed by Realtor "B". On October 26, 1994, Realtor "A" presented an offer to listing Realtor "B" contingent upon buyer's husband's approval when he returned to the country. This approval or disapproval was to be given by November 21, 1994. When the husband returned to the country, he did not approve of the contract.

On January 17, 1995, the buyer contacted Realtor "B". The buyer was instructed to contact Realtor "A". The buyer refused and stated he was dissatisfied with services of Realtor "A" and would like to talk with Realtor "B" concerning the property he had previously not given his approval on. The buyer made another offer on January 17, 1995, for a lower price and their offer was accepted by the seller.

Would Realtor "A" still have a claim on the prospect and the commission?

A. Realtor "A" would have a claim to a commission if he were the procuring cause of the sale. "Procuring Cause" is judicially defined as a cause originating or setting in motion a series of events which, without a break in continuity, result in the accomplishment of the prime objective of the employment of the broker, i.e., a sale or exchange of property, an ultimate agreement between the principal and a prospective contracting party, or the procurement of a purchaser who is ready, willing and able to buy on the principal's terms.

The question of procuring cause is almost always problematical. It is intensely factual, always requiring a detailed analysis of all the underlying facts and circumstances surrounding the matter, including the prior course of conduct of all parties vis-a-vis their relations to one another with respect to the property at issue. There are many hundreds of cases on the subject, no two exactly alike. No doubt cases could be found both for and against the argument that Realtor "A" is the procuring cause in this instance.

The prior factual history is certainly a factor -- one of many which need to be analyzed -- in support of Realtor "A's" claim. However, beyond that comment, the Hotline is ill-suited to further opine.

Q. I have a simple scenario that has gotten very complicated. My agent (A) sold a listing by another broker (B). The property was initially showed to A's client by a showing agent (SA) with CB firm. The SA was not the listing agent. A later wrote the offer with buyer. The offer was accepted and now the CB, on behalf of SA, is stating that SA was the procuring cause and demanded the selling agent's commission, our company's entire commission. CB later called and said they would compromise for ½. We refused. I don't feel they are owed a penny but want to know your opinion on this matter.

A. Generally, a Realtor has a claim to a commission if he or she was the procuring cause of a sale. "Procuring cause" is judicially defined as a cause originating or setting in motion a series of events which, without a break in continuity, results in the accomplishment of the objective of the employment of the broker (i.e., sale of property) and ultimate agreement between the principal and prospective contracting party, or the procurement of a purchaser who is ready, willing and able to buy on the principal's terms.

The question of procuring cause is almost always problematic. It is intensely factual, always requiring a detailed analysis of all Underlying facts and circumstances surrounding the matter, including the prior course of contact of all parties vis-à-vis their relations to one another with respect to the property at issue. Some of the questions which should be considered in determining if the initial broker is entitled to a commission include the following:

1. Who first introduced the purchaser 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 which caused the purchaser to utilize the services of another broker?
5. Did the cooperating broker initiate a separate series of events, unrelated to and not dependent on any other broker's efforts which led to the successful transaction - that is, did the broker perform services which assisted the buyer in making his decision to purchase?
6. How did the efforts of one broker compare to the efforts of another?
7. What was the length of time between the initial broker's efforts and the final sales agreement?
8. Did the broker who made the initial introduction to the property maintain contact with the purchaser?
9. Did the seller act in bad faith to deprive the initial broker of his commission?

There are hundreds of cases on procuring cause. No two are exactly alike. No doubt cases can be found both for and against the argument that SA was the procuring cause for the sale in this instance. We can not, in this HOTLINE, opine as to the likelihood of success on the merits of a case as to whether "SA" was the procuring cause for the sale. The HOTLINE can provide general legal principles on question affecting the industry as a whole, but cannot render personal legal advice regarding specific questions about specific situations or provide legal advice when actual litigation is involved. Therefore, the HOTLINE cannot provide specific legal advice as to your situation.

It should also be noted that SA may request arbitration of this issue with his/her local Board of Realtors. Such a request must be filed within 180 days of the transaction.

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