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What is procuring cause and when do I get my commission?

On Behalf of | Sep 19, 2022 | Real Estate Litigation |

Procuring cause refers to the individual who is chiefly responsible for connecting the buyer with the seller. This individual then receives a commission after the sale of a home.

However, it’s not unusual for two brokers or agents to be involved in a home purchase. Someone who facilitated price negotiations or played a role in a bidding war might also have a claim.

When it’s unclear who gets the commission, it’s known as a procuring cause dispute.

A procuring cause dispute

This legal action is submitted to the local real estate board by the broker or agent who did not get a commission, but believes they have claim to procuring cause. These situations are resolved through arbitration, decided by a panel. If the dispute persists after a panel has made a decision, local courts will enforce the panel’s judgement.

In a dispute, deciding factors include who introduced the buyer to the property (if anyone). If the buyer found the property on their own, say at an open house, then who first engaged the buyer in the sale and did that person maintain contact with the buyer throughout the process?

If the timeline or chronology of events aren’t clear, the panel will delve into topics like the roles each party played, continuity in communication and who did what, or who did more, to move the sale along.

What you can do to prevent a dispute

You can reduce the chances of a procuring cause dispute in a number of ways. When engaging with the buyer, ask if they’ve already talked to another agent and in what capacity. If the buyer says “no,” encourage the buyer to sign an agreement that formalizes your relationship.

When do you get paid?

If there’s no dispute, you get paid after the closing. In a dispute, you will need to wait until the panel makes a ruling.