Procuring Cause

Notes from the Attorneys of the Massachusetts Association of REALTORS Legal Hotline

Q. I was working with a buyer for several months. I thought I had the buyer’s loyalty, though we didn’t have an exclusive buyer agency agreement. While we were in the process of executing an offer, the buyer suddenly stopped returning my calls and I haven’t heard from him since. According to public records, the buyer purchased the property a month later, and a different brokerage company was listed in MLS as the selling company. Am I the procuring cause of this sale and entitled to a commission?

A. You will need to file a request for arbitration with your local board to determine if you are entitled to a commission. Procuring cause is a complex issue. NAR’s Code of Ethics and Arbitration Manual provides an extensive list of factors an arbitration panel should consider when hearing a case. You cannot rely on any single factor to determine who was the procuring cause of a sale. An arbitration panel will base its decision on the full set of circumstances surrounding a specific case and must weigh each factor against the others.

The Law and Policy section of has the Arbitration Guidelines in the Code of Ethics and Arbitration Manual (Appendix II to Part 10), which include analyses of 12 situations. Your situation may be similar to one of these situations and might help you determine if you want to file an arbitration request.

Q. I have an agreement with a buyer as their exclusive buyer agent. Without my knowledge, my client attended an open house and executed an offer with the listing agent. The listing agent is saying he will not compensate me, however, because I’m the buyer’s representative, I’m the procuring cause of sale, right?

A. Not necessarily. Agency and entitlement to compensation are addressed in Factor No. 1, “No predetermined rule of entitlement,” Appendix II, Arbitration Guidelines, Code of Ethics and Arbitration Manual:

“Agency relationships, in and of themselves, do not determine entitlement to compensation. The agency relationship with the client and entitlement to compensation are separate issues. A relationship with the client, or lack of one, should only be considered in accordance with the guidelines established to assist panel members in determining procuring cause.”

Although you have an exclusive buyer agency contract with the buyer, an arbitration panel could conclude that the listing broker has led the buyer through an uninterrupted series of events that resulted in the successful transaction and is therefore the procuring cause of the sale. It’s possible, of course, that the buyer’s representative could be entitled to compensation from the buyer as a result of the terms of their contract.