Understanding Procuring Cause in Real Estate Transactions
What is Procuring Cause?
Procuring cause is a legal term used to describe the actions that lead to the successful completion of a transaction. In the context of real estate, this term is often invoked to determine whether a broker is entitled to receive a commission for facilitating the sale or purchase of a property.
In simpler terms, if a broker’s efforts are directly responsible for bringing buyers and sellers together to finalize a transaction, the broker can claim to be the procuring cause and, thus, is entitled to a commission.
Real Estate and Procuring Cause
The application of procuring cause is particularly significant in real estate transactions. Whether you are a buyer, seller, or a broker, understanding this concept is critical to ensuring fair and equitable financial dealings.
An Illustrative Example
Consider Jane, a seasoned real estate broker who introduces the Smith family to a potential home they are looking to purchase. After several viewings and negotiations managed by Jane, the Smith family decides to buy the property. Jane claims that her efforts directly led to the successful sale of the home and therefore, she is entitled to a commission. To validate this claim, Jane would need to prove in court that her efforts were indeed the procuring cause of the transaction.
Determining Procuring Cause
To determine whether a broker’s actions constitute the procuring cause, multiple factors are considered:
- Continuity of Effort: Did the broker maintain ongoing efforts to bring the deal to fruition?
- Interruption in Negotiations: Were there any significant interruptions in negotiations or services directly caused by the broker?
- Activities Conducted: Did the broker engage in significant actions that contributed to the completion of the transaction?
- Client Relation: Was there a consistent relationship maintained between the broker and the client leading to the transaction?
Importance in Real Estate Brokerage
Understanding procuring cause is fundamental for both brokers and clients. For brokers, it enables them to claim their rightful earnings. For clients, it clarifies who played the pivotal role in securing the deal and deserves compensation.
Frequently Asked Questions (FAQs)
What is the procuring cause in Real Estate?
In real estate, procuring cause refers to the actions taken by a broker or agent that directly result in a successful transaction between a buyer and a seller.
How does a broker prove procuring cause?
A broker may prove procuring cause through documentation of their communications, efforts, and continuous engagement with the parties involved, leading up to the transaction.
Can there be multiple procuring causes in a single transaction?
While it is uncommon, there may be disputes where multiple brokers claim to be the procuring cause. These situations are typically resolved through arbitration or legal proceedings, considering various factors related to each broker’s involvement.
Is procuring cause relevant only in real estate?
While prominently used in real estate, the concept of procuring cause can apply to other industries where intermediary roles and commission-based earnings are common.
Related Terms: Broker, Commission, Transaction, Legal Process.
