Real Estate Commissions Based on Procuring Cause

By Matthew Vitart

Real Estate Commissions Based on Procuring Cause

In general, there are two potential basis that may support a real estate broker’s claim for a commission on a transaction: 1) pursuant to a contract (such as a listing agreement), or 2) acting as the “procuring cause” of the transaction. These grounds are not mutually exclusive; they may overlap or be intertwined in a particular case. This post discusses the second basis – procuring cause.

Procuring Cause may sound like a simple concept, and in some ways it is. The basic question is whether the real estate agent did anything that significantly contributed and led to the successful closing of the transaction. In most deals, it is rather clear which brokers were the procuring cause of the sale. But, in some cases it can be a very complicated analysis and contentious issue, especially when there are multiple causes of a transaction. For example, the timing of the offer and acceptance of a purchase contract (or multiple counter-offers or multiple offers from multiple parties), the involvement of multiple brokers, a party switching brokers, or independent conduct and negotiations by the seller or prospective buyers may make it difficult to determine whether or not a broker was the procuring case of the sale.

The Mississippi courts have explained:

  • In general terms, precedent established by case law in this state entitles a real estate agent to recover a commission on a sale if the agent was the procuring cause of the sale of the subject property. Whether a broker may be considered the procuring cause of a sale depends upon the particular facts and circumstances of each case. . .

Sudeen v. Castleberry, 794 So. 2d 237, 245 (Miss. 2001).

  • Before a broker is entitled to a commission, he must call the purchaser’s attention to the property and begin negotiations that lead to a sale. Absent contract to the contrary, the rule is settled that the broker’s efforts need not be the sole cause of the sale, merely a predominant one. Pursuant to an implied brokerage agreement, the broker must with diligence and fidelity provide substantial services to his principal – be he seller or buyer – which services become a substantial causal predicate to a consummated sale.

Leary v. Stockman, 937 So. 2d 964, 971 (Miss. Ct. App. 2006).

There is no single factor that determines procuring cause. Rather, it is evaluated by the totality of the circumstances in a given case. The Central Mississippi Realtor’s Association has issued a quick-reference that provides hypotheticals illustrating common procuring cause issues. The paper can be accessed by clicking here.

Matt Vitart
Attorney
RANDALL | SEGREST

0

About Matt Vitart

Matt Vitart practices in the areas of real property and business transactions. H

    You May Also Like