Ethics Q&A

Determining procuring cause for a sale goes beyond simple guidelines.

Read the full Code of Ethics updated for 2003.

Q I’m a relatively new agent. Recently, our broker had to fight with another broker over a commission. The commission was for a transaction that was handled by an agent at our firm who has been in the business for a long time. The arbitration panel ruled in favor of the other broker, and our firm and agent received nothing. She put in a lot of work on this transaction–she should have gotten something.

This whole episode has me worried that the same thing will happen to me. What can I do to make sure it never does?

A Procuring cause is a complex issue. NAR discourages split awards and instructs that only when the transaction would have resulted only through the combined efforts of both parties should the award be split.

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. For example, a signed buyer’s representation agreement by itself does not establish procuring cause. 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.

NAR defines procuring cause as "the uninterrupted series of causal events which results in the successful transaction." Though many factors can come into play, most cases will turn on the following dynamics:

• Who first introduced the buyer to the property, and how was the introduction made?
• Was the series of events starting with the original introduction of the buyer to the property and ending with the sale hindered or interrupted in any way?
• If there was an interruption or break in the original series of events, how was it caused and by whom?
• Did the action or inaction of the original broker cause the buyer to seek the services of the second broker?
• Did the second broker unnecessarily intervene or intrude into an existing relationship between the buyer and the original broker?

The reason for the entry of the second broker into the transaction should be examined closely. For example, if the original broker did not call the buyer for three weeks after a showing, the hearing panel might decide that he abandoned the buyer and paved the way for the entry of the second broker.

If, on the other hand, the buyer looked at a home with the original broker and the next day wrote an offer through his cousin (the second broker), then the second broker may be deemed to have been unnecessarily intervening in the transaction.

Other kinds of details that may affect the outcome of a hearing are issues such as what type of agreements were in effect and when; whether brokers were aware of other cooperating brokers; whether the buyer or seller acted in bad faith to deprive the broker of a commission; and many others.

Nothing you do will guarantee that you never face arbitration of a commission. However, you can limit the chances of such an occurrence by knowing and following the code of ethics and state laws, and by always communicating clearly with all parties.

Send questions about ethics to texasrealtor@texasrealtors.com. Not all questions received can be answered.

home   current issue    top 10    resources 

discussions   contact us   search

Buyers & sellers, visit www.texasrealestate.com.
REALTORS®, visit www.texasrealtors.com.