Buyers Code of Ethics Contracts Uncategorized

Dear Anne: I’m the procuring cause! – No, I am!

Dear Anne: I spent six months showing 35-plus properties to a very difficult buyer, but after two lengthy showings, she decided 15 Maple Avenue was it. The property was located on a canal, however, and the seawall needed major repairs. The seller adamantly refused to replace it for my buyer but he was willing to consider coming down in price.

Before submitting the offer, my buyer asked me to collect three seawall-repair estimates before deciding on a purchase price offer. With inventory the way it is, I naturally explained that the time to act is now before the property goes to another buyer, but I still managed to get three repair estimates to her within three days, though she suddenly became unresponsive to my phone calls, texts and emails.

In the meantime, I kept checking the MLS to see if the listing remained active, and it eventually closed. Out of curiosity, I checked the tax rolls and discovered my buyer is the new owner! Apparently, the listing agent wrote the offer and didn’t tell me about it.

Where does this leave me? I know I am the procuring cause and I want my commission. I have invested a lot of time and sweat equity into this buyer and deserve to be paid. The listing agent is telling me “tough luck.” What can I do? – Empty Pockets Sales Associate

Dear Empty Pockets: The first thing to do is talk to your broker and find out if they’re willing to pursue the commission because all commission disputes occur between brokers. A sales associate has a financial interest in the outcome, but they’re not considered parties unless they’re also a principal in the firm (sole proprietor, partner, officer, majority shareholder or office manager).

According to the National Association of Realtors® (NAR) 2018 Code of Ethics and Arbitration Manual, “While a number of definitions of procuring cause exist, and a myriad of factors may ultimately enter into any determining procuring cause, for purposes of arbitration by local Boards and Associations of Realtors, procuring cause in broker-to-broker disputes can be readily understood as an uninterrupted series of casual events which result in a transaction. Or in other words what caused the successful transaction to come about.”

A “successful transaction” is a sale the closes or a lease that is executed.

I cannot tell you if you are the procuring cause because I’ve only heard your side of the story. Ultimately, it’s up to your local association arbitration panel to determine if your efforts resulted in bringing the buyer to the closing table. Panels hear from both sides, listen to witness testimony and review evidence before deciding.

Keep in mind, arbitration panels cannot base their decision on a rule of entitlement, which are considerations such as:

  • Who crossed the threshold first?
  • Who wrote the successful contract?
  • Who has an exclusive agency relationship with the buyer?

Instead, the panel’s job is to focus on the “series of events” and analyze the facts to determine if an interruption in the relationship between the agent and buyer occurred. Examples of breaks could include:

  • The agent abandoned the buyer, perhaps by not being available
  • The buyer abandoned the agent (leaves the agent)
  • A third possible cause could be estrangement (alienation)

It’s anybody’s guess as to how much weight the arbitration panel will give to the buyer’s act of leaving you. Generally, arbitration panels award all or nothing, and NAR policy precludes arbitration panels from including a rationale to explain their decision, so the award will only tell you who gets the money.

Only very rarely do panels “split the commission,” so please don’t mislead yourself to believe that the panel will award you something for your time and trouble. And never go into an arbitration believing it’s a “slam dunk.” If you have an “I know I am going to win” mentality, you may come away very disappointed. No one can predict the outcome of an arbitration hearing.

There are arbitration alternatives, one being mediation, which is an informal dispute resolution process that puts the who-gets-paid decision into the hands of the parties rather than a hearing panel. The parties sit down with a mediation officer from the local association to work out their differences without lawyers or witnesses present.

Another alternative is for the brokers in the dispute to sit down and discuss the issue and negotiate the outcome themselves. This avoids any need to go to the local association at all. If the brokers do mutually agree about settlement terms, it’s always best to get the agreement to settle in writing.

For more information about procuring cause and the process to resolve commission disputes, contact Florida Realtors Legal Hotline at 407.438.1409.

Original Source

I am one of the Managing Brokers for United Realty Group, Inc. I have been servicing the residential real estate market since January 2007 and have formed a real passion for the industry. With high standards and a strong moral compass, I am pleased to serve our industry and URG's REALTORS on a daily basis.

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