Procuring cause

Key Takeaways

• Procuring cause asks which broker set in motion the unbroken chain of events that led to the completed sale, and it decides which broker has earned the disputed commission.
• Procuring cause is industry and arbitration doctrine drawn from case law, not a section of any licensing statute.
• A procuring cause claim settles money between competing brokers. The doctrine does not decide who represented the buyer or the seller.
• In Washington, a firm's right to be paid by its own client comes from a written services agreement under RCW 18.86.080(7), not from a procuring cause argument.

What It Means

Procuring cause is the test used to decide which broker earned the commission when more than one broker had a hand in a sale. The broker who set in motion the unbroken chain of events leading to the completed transaction is treated as the procuring cause. National Association of Realtors arbitration guidelines describe that broker as the one whose efforts are the foundation on which the negotiations resulting in a sale are begun.

Two limits matter. First, procuring cause is doctrine rather than statute. The test grew out of case law and association arbitration practice, which is why these disputes normally go to an arbitration panel rather than to a state licensing regulator. Second, the doctrine settles money between brokers, not representation. Winning a procuring cause claim does not make a broker anyone's agent, and it does not rewrite the terms of a signed Written Services Agreement.

Because compensation is now negotiated in written agreements rather than advertised through the MLS, procuring cause comes up less often than it once did, but it still decides contested cooperative commissions.

How It Works in Washington

Procuring cause is not written into a licensing statute, so no state code section defines it. What state law does control is where a firm's right to compensation comes from in the first place. In Washington, RCW 18.86.080(7) provides that to receive compensation for rendering real estate brokerage services from any party or firm, a real estate firm must have a services agreement setting out the amount the principal agrees to pay, the principal's consent to sharing compensation with another firm, and the principal's consent to compensation by more than one party. That written agreement, not a procuring cause argument, is what entitles a Washington firm to be paid by its own client.

Procuring cause still does work at the edges, between cooperating firms arguing over a share of an agreed fee. Washington also keeps payment separate from representation: RCW 18.86.080(2) provides that an agreement to pay or payment of compensation does not establish an agency relationship between the party who paid and the broker. The broker who shows a property first and the broker who writes the winning offer can be different people, and an Offer Of Compensation now sits in the written agreements rather than on the MLS.

Example

Broker Alan of Cedar Realty shows Jenna a house on June 2 and follows up with her twice. Jenna then signs a buyer services agreement with broker Nina of Rainier Group on June 20, and Nina writes the offer that is accepted. The home closes at $540,000, and the listing firm had agreed to share 2.5 percent with the buyer's firm, or $13,500.

Alan claims he was the procuring cause because he introduced Jenna to the property. An arbitration panel weighs the whole chain: who first showed the home, whether Alan abandoned the contact, whether Jenna broke the chain by seeking out a new broker, and what each broker did to bring the parties to agreement. If the panel finds Alan's efforts were the foundation of the negotiations, the $13,500 goes to Cedar Realty. If it finds the chain was broken, Rainier Group keeps it. Either way, what Jenna herself owes is governed by her written agreement with Rainier Group, which since the Nar Settlement is negotiated directly rather than assumed from an MLS posting.

Common Mistakes and Exam Traps

• Procuring cause decides who gets paid among brokers. It does not decide who represented the buyer or the seller.
• Procuring cause comes from case law and association arbitration guidelines, not from a licensing statute. Answer choices citing a code section as the source of the doctrine are wrong.
• Being the first broker to show a property does not by itself make that broker the procuring cause. The chain of events has to run unbroken through to the sale.
• Procuring cause arises between cooperating brokers, normally in association arbitration. It is not the theory a broker uses to enforce a fee against their own client.