Procuring cause, a legal look
As part of the "Broker skeletons in the closet" series, I asked Rich Rosa to write about procuring cause because he is not only one of the few exclusive buyer’s agents in Massachusetts, he is also an attorney.
There are two kinds of procuring cause disputes. One occurs between listing brokers and sellers. These disputes can end up in court because the seller and their agent have a listing agreement, or contract.The other kind arises between real estate professionals. A procuring cause claim is derived from the offer of the listing broker to pay a commission to a cooperating broker for procuring the sale. The offer of a cooperating commission is primarily facilitated through a multiple listing service (MLS). This postis about these disputes. (It should be noted that listing brokers and cooperating real estate brokers have agreed to be bound by arbitration when such disputes arise.)
Procuring cause disputes between listing brokers and cooperating brokers generally are governed by local multiple listing services. They typically follow the National Association of Realtor's Arbitration Guidelines. The code of ethics and arbitration manual defines procuring cause as
"the uninterrupted series of casual events which results in the successful transaction."Black's Law Dictionary, Sixth Edition, defines procuring cause as
"The proximate cause; the cause originating a series of events, which, without break in their continuity, result in the accomplishment of the prime object. The inducing cause; the direct or proximate cause. Substantially synonymous with 'efficient cause.'"
I, as a lawyer, think the phrase "without break in their continuity" is an important part of the definition.A common misconception among real estate agents is that being the first to show the property or having a buyer's representation agreement with the home buyer automatically demonstrates procuring cause. It does not, and the opposite also is true. Not being the first to show the property and not having a buyer agent agreement does not preclude one from ultimately being the procuring cause.
The important thing for home buyers to remember is that these rules between real estate professionals should not get in the way of them receiving the representation they deserve and buying the home they want. For example, a buyer that wants to work with an exclusive buyer agent or simply wants a buyer agent from a real estate firm not associated with the listing broker should not be held hostage by a potential procuring cause dispute.A common scenario that comes up at my office is a home buyer communicates with and maybe even sees a home with a listing agent or an agent from the listing agent's office. The potential home buyer doesn't get a good vibe working with an agent that must be loyal to the seller or that has divided loyalties, so he or she decides to find their own representation. Clearly that buyer does not want to work with someone in that office. A home buyer that makes his or her wishes clear, preferably in writing, to the listing broker certainly breaks the required "continuity" of events, thus eliminating any argument that the listing broker or someone else is the procuring cause.
Of course, like most legal issues, these procuring cause issues are not black and white. Just like no two homes are exactly alike, no two home sales are exactly alike. These matters are fact specific and require a comprehensive analysis of all the relevant details of the underlying transaction.
Home buyers can steer clear of procuring cause issues by approaching their home search in a professional and methodical manner. Researching and interviewing potential buyer agents and exclusively working with one individual from the start. That will eliminate 99 percent of possible procuring cause problems.
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