How is Procuring Cause Determined, and How can Real Estate Professionals Protect their Claim to It?
“Procuring cause” is one of the most important (and often misunderstood) concepts in real estate and is one of the leading reasons for commission disputes between agents or brokers. Procuring cause refers to the agent or broker whose actions started and maintained an uninterrupted chain of events that resulted in a sale. This issue commonly is litigated when a buyer changes agents or brokers during the process of his/her property search.
Key Elements Considered in Determining Procuring Cause
There is no easy answer to who is considered procuring cause; rather, several critical factors are taken into consideration.
Who introduced the buyer to the property? The initial introduction to a property matters, but it isn’t automatically decisive.
Was there an uninterrupted chain of events? Did the first agent’s efforts naturally lead to the sale, or did the chain break (e.g., buyer took a break, started working with a new agent, etc.)? If the chain of events was broken (e.g. the buyer went dormant for months or changed agents) the first agent’s claim weakens.
Who maintained contact and facilitated negotiations? The agent who guided the buyer through the negotiations, offer, inspection and closing usually has a stronger claim.
Was there any break in continuity? If the buyer’s relationship with the first agent ended or they signed a new agreement with another agent, that can interrupt procuring cause. Reasons for the termination can include abandonment, e.g. the first agent stopped communicating with the buyer; estrangement, e.g. the agent’s behavior caused the buyer to end the relationship; or interruption, e.g. a new agent stepped in with good reason and started a new chain of events.
Did the agent act in good faith? Agents are expected to conduct business in an ethical manner. If either agent lapsed in ethics and/or transparency, it will be considered in favor of the other agent.
Were there written agreements? If the buyer signed a written agreement, its terms often determine commission rights and override any verbal agreements.
How Real Estate Professionals Can Protect Their Claim to Procuring Cause
Legally, procuring cause is not determined by who wrote the contract, who showed the most houses, or who spent the most time with the client. It’s defined by who caused the sale. However, like most areas of the law, there is a lot of room for interpretation. Real estate professionals can take these proactive steps to clarify their status.
Use written buyer representation agreements that clearly define who’s entitled to commission if the buyer purchases a home. Include a clear timeframe (typically one year).
Maintain consistent communication and documentation. Keep records of showings, emails, and discussions.
Ensure there are no overlapping relationships with other real estate agents or brokers prior to entering into a new client agreement.
Understand MLS and brokerage policies. While many MLS systems have specific rules about procuring cause and commission sharing, many mirror NAR’s procuring cause standards.
At Davis & Gelshenen, we handle a myriad of procuring cause cases. With more than 20 years of experience defending real estate professionals, we know the intricacies of the law and are prepared to represent Wisconsin’ real estate professionals in commission and other disputes. If you have a question about procuring cause or another legal issue, please contact us at 866-427-2121 for a free initial consultation.