Question:
A firm had a property listed. An agent from the listing firm showed the property to a buyer. The buyer subsequently signed a buyer agency agreement with a different firm. The buyer used the offer to purchase to ask the seller to pay the buyer`s firm`s fee, which the seller accepted. The agent with the listing firm who showed the property now claims procuring cause. There was no firm-to-firm compensation agreement. Is procuring cause even relevant anymore?
Answer:
If there was a firm-to-firm compensation agreement and the firm`s indicated procuring cause was the standard of performance, then the firms could arbitrate which firm was procuring cause, like when there used to be an MLS offer of compensation. Without a firm-to-firm compensation agreement dictating procuring cause as the standard of performance, arbitrating procuring cause is only relevant in a few limited situations with specific facts. As applicable to the facts indicated here, for the listing firm to be able to file arbitration and claim procuring cause, they would have to fit the scenario identified in Standard of Practice 17-4(5).Standard of Practice 17-4(5) identifies a scenario where a buyer`s firm is compensated by the seller and the listing firm reduces the commission owed by the seller but the listing firm claims to be procuring cause. In this instance, the arbitration shall be between the listing firm and the buyer`s firm and the amount in dispute shall be the amount of reduction the listing firm agreed to with the seller.
The various scenarios where procuring cause is still applicable are found in the Standards of Practice for Article 17, which can be found on page 14 of NAR’S Code of Ethics & Arbitration Manual.
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- - Volume: 25 - WEEK: 24 Date: 6/10/2025 8:17:42 AM -