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What is a procuring clause?

On Behalf of | Apr 6, 2022 | Real Estate Transactions |

A procuring clause creates you right to obtain a commission after the sale of a property. A real estate agent needs to use this kind of clause to be sure that they will receive the commission at a certain point in time, such as during the closing of the home’s sale.

Sometimes, more than one agent show the same property to a client. Other times, a buyer might choose to use more than one agent. In those cases, what happens? Will you face a dispute from another agent over wanting a portion of the commission? Will you be entitled to the commission?

Using a procuring clause helps to protect you

A procuring clause can be helpful in some ways, because it makes sure that some commission will be awarded upon closing. Who obtains that commission will depend on the specific contract.

There are a couple of people who could be entitled to a commission after a home is sold, such as:

  • The person who represented the buyer
  • The person who showed the property

For this reason, it’s important for you to know who the buyer is working with before you agree to show a property. If they are already working with another real estate agent, you can talk to them about how important it is to work with a single agent. If they want to know why, you can explain that it could make it harder to know who should receive a commission under the procuring clause.

What happens if you have a procuring clause but don’t receive payment?

If another agent steps in and collects the commission despite you being the person who did the work, you may be able to challenge that and file a legal suit. Similarly, if you have a buyer’s agent agreement with clients and they use another agent without terminating your contract, you could hold them liable for your share of the commission once a property is purchased or sold.

To avoid issues with a procuring clause, you may want to look into setting up a contract with an exclusive right to sell (when representing sellers).

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