The questions and answers in this article explore procuring cause, which is the standard of performance to earn an MLS offer of compensation. Procuring cause may become an issue when a buyer or tenant works with agents from more than one MLS firm. If the brokers are unable to reach a negotiated resolution, the matter may go to arbitration. The broker filing the arbitration would need to show his or her involvement in the uninterrupted series of events that resulted in the sale or lease of the property to the buyer in order to make a successful procuring cause claim.

No predetermination rules of entitlement 

The buyers worked with two different agents on the house they purchased, creating a procuring cause issue. The first cooperating agent showed the buyers the house, but then another cooperating agent from a different MLS company wrote the offer on that house. Is the agent who showed the buyers the house first automatically procuring cause, or is the agent who wrote the offer automatically procuring cause? 

No and no. In an analysis of procuring cause, there are no predetermination rules of entitlement to commission. A predetermination rule would provide, for example, the first broker who shows the property is automatically procuring cause, or the first broker is automatically procuring cause because he or she was the first one to give the buyer the data sheet or to send email through a contact management program. Likewise a predetermination rule might provide the second broker is automatically procuring cause because he or she drafted the offer. Another procuring cause myth is the broker who has buyer agency is automatically procuring cause. The determination of procuring cause requires analysis of the entire course of events. 

Albeit the introduction of the property to the buyers, by any means, is the beginning of the series of events, the broker making the introduction must also show a continuation of the series of events that result in the sale of the property to the buyers. There is no one act that determines procuring cause — it can only be answered by a full, knowledgeable consideration of all the facts of the case. One factor may be whether the first MLS agent who introduced the property did anything to break the series of events by abandonment or estrangement. 

Abandonment

The buyer saw a condo unit last summer with an agent, but the price was too high, so the agent did not follow up with the buyer. Now the buyer is working with an agent from another MLS company. Knowing the buyer is looking for a condo, the new agent found the same unit, which had changed in list price. The agent showed this property to the buyer. Through the new agent, the buyer wrote an offer, which the seller accepted. The first agent now claims that she is procuring cause because she showed the condo to the buyer first. Does showing a property constitute procuring cause?

If the buyer was abandoned due to the first broker’s inaction, the second broker’s actions can create a second series of events resulting in a successful procuring cause claim for the second broker. If the matter could not be resolved between brokers by ombudsman services or mediation, an arbitration hearing panel will look at the continuity or discontinuity of the original agent’s conduct to determine if the first agent abandoned the buyer. The arbitration panel will consider what the first broker did — or didn’t do in the case of an abandonment claim — causing the buyer to chose to work with the second broker. The fact the first agent showed the property to the buyer does not cement procuring cause forever if there was no follow-up and no continuation of the series of events. Procuring cause was the first agent’s to lose; the second broker cannot take procuring cause away from the first broker. If the evidence at a hearing shows that the first broker abandoned the buyer, the abandonment would allow the second broker an opportunity to be procuring cause. 

Estrangement

A prospective buyer approached an agent concerning a property. The buyer acknowledges that an agent from the listing company showed him the property and wrote an offer on the property, which was not accepted. The buyer is unhappy with the agent because the buyer was never told that the agent is the sister of the property owner. The buyer feels misled. 

Although the buyer is frustrated and disillusioned with the other agent, the new broker is concerned about procuring cause. Does any involvement by the second broker have to be with a buyer agency agreement? Should the second broker’s company distance themselves from this transaction as soon as possible?

The second broker has several choices for how to proceed. If the broker elects to move forward with this buyer, the broker could enter into buyer agency, having the buyer pay the broker’s commission and not make any claims for the MLS offer of compensation. Second, the broker could reach out to the broker of the listing firm and negotiate for cooperative commission. A compensation agreement between the brokers may be entered into, acknowledging the participation of the listing agent and documenting commission to avoid a procuring cause claim between companies. Third, the broker could enter into buyer agency and request the MLS offer of compensation; claiming the first broker’s conduct resulted in estrangement. 

Estrangement results if the first broker engaged in conduct that caused the purchaser to terminate the relationship. Examples of actions that could be estrangement include: 

• Refusal to draft an offer.
• Antagonistic behavior toward the buyer.
• Acting without the consent of the buyer.
• Acting in a manner contradictory to the buyer’s direction.
• Other bad faith actions, possibly the failure to properly disclose and obtain consent regarding the immediate family relationship. 

The failure of the negotiations, if due to the first broker’s interference, could be estrangement. If the buyer was estranged due to the first broker’s actions, the second broker’s actions can create a second series of events resulting in procuring cause for the second broker. 

Procuring cause or listing protection?

Firm A was the listing brokerage for a property. During the listing, an agent from Firm B showed the property and wrote an offer to purchase for the buyer. The seller rejected that offer. Several months later after the buyer obtained financing and during the extension of listing period, the buyer with an agent from Firm C wrote an offer. The seller accepted that offer. After closing, the broker from Firm B sent the listing broker a request for commission stating the buyer was automatically protected under the listing and cooperative commission is due to Firm B. How should the brokers move forward with this situation? 

The question needs to be framed in the context of the MLS offer of compensation — not the listing contract context of protected buyers. The broker of Firm B is correct, relating to listing protection. By drafting the first offer, the buyer became a protected buyer for the purposes of the listing agreement between the seller and the listing broker. However, for the broker of Firm B to make a claim for the MLS offer of compensation, the standard of performance is procuring cause. For the first cooperating broker to earn the MLS offer of compensation, the cooperating broker would need to show an uninterrupted series of events that resulted in the sale of the property to the buyer. The drafting of the original offer does not assure procuring cause for the cooperating broker. If the cooperating broker did not maintain the series of events resulting in the sale of the property to the buyer, their procuring cause claim would be unsuccessful.

Resources

Procuring cause resources

• April 2010 Legal Update, “Cooperative Commissions and Procuring Cause” at www.wra.org/LU1004.
• April 2002 Legal Update, “What Is Procuring Cause?” at www.wra.org/LU0204.

WB-36 and buyer agency practice resources

• September 2005 Legal Update, “Buyer Agency Practice,” at www.wra.org/LU0509.
• November 2007 Legal Update, “WB-36 Buyer Agency Agreement — 2008 Revisions,” at www.wra.org/LU0711.

Tracy Rucka is Director of Professional Standards and Practices for the WRA.