As a realtor, you expect you will receive a commission for each successful real estate transaction. Seems simple enough, right? However, what is simple in theory is rarely so in the real world. Disputes can arise between brokers over who should receive a commission for the sale of a property. To resolve these disputes, it’s necessary to determine who is the “procuring cause” of a sale.
Procuring cause defined
A real estate broker is considered the procuring cause of a sale if their actions led to the sale of a property. Because a broker effectively procured the sale, they should be entitled to the commission. This is relatively straightforward. Issues can arise when there appears to be a break or interruption at some point during the transaction.
For example, one realtor may show a prospective buyer a property. The buyer then finalizes the sale with a different realtor. Who was the procuring cause? The realtor who first showed the property or the one who actually made the sale?
Answering difficult questions
Arbitration is the preferred method for resolving most procuring cause disputes. This form of dispute resolution takes place outside of the court system. Through arbitration, an impartial panel will enter a decision regarding who should receive the commission. The National Association of Realtors has put together a list of questions to help guide arbitration panels in reaching a decision. It’s important to consider these questions if you are thinking about moving forward with a procuring cause complaint.
Although arbitration doesn’t follow the traditional litigation process, a panel’s decision still carries the force of law. You shouldn’t attempt to navigate arbitration on your own. An experienced real estate law professional can help protect your interests as you work toward a successful resolution to commission disputes.