Understanding Procuring Cause: The Key to Seamless Real Estate Transactions
Introduction
The concept of procuring cause plays a pivotal role in real estate transactions. It refers to the individual who initiated an unbroken series of events that lead to a successful deal. This person is often integral in connecting the buyer with the seller or a tenant with a landlord.
Examples and Key Insights
In real estate, procuring cause usually identifies the real estate agent responsible for driving the buyer to buy a property. Generally, this is the buyer’s broker. However, consider the following scenario:
John meets Kelly through an open house. Kelly, an agent, shows him a remarkable property. Weeks later, without informing Kelly, John finalizes the deal with another agent, Sandra, who is officially John’s broker. In this case, Kelly might be entitled to the commission instead of Sandra as Kelly initiated the series of events leading to the purchase.
Complexity and Legal Considerations
Understanding who the procuring cause is can be complex and is governed by state law. Conflicts over which agent should receive the commission can lead to lawsuits, potentially disrupting sales. To mitigate this, adhere to the guidance provided by your buyer’s broker or legal professionals.
Best Practices for Buyers
When working with a buyer’s broker, it’s vital to follow their instructions when interacting with other agents. This helps in avoiding conflicts and ensures smooth transactions.
Being aware of the procuring cause principle can help both buyers and brokers navigate the intricate dynamics of real estate transactions more effectively and can prevent legal disputes down the line.
Related Terms: real estate agent, commission disputes, real estate law, brokerage.
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### What does the term 'procuring cause' refer to in real estate transactions?
- [x] Someone who set into motion an unbroken series of events leading to a completed transaction
- [ ] A legal term meaning the rightful owner of a property
- [ ] A financial term referring to the amount of commission earned
- [ ] Someone who files a complaint about property transactions
> **Explanation:** A procuring cause in real estate refers to the individual who initiated a continuous chain of events that led to a completed transaction. This often pertains to real estate agents who introduce a buyer to a property, essentially setting the transaction in motion.
### In most cases, who is typically considered the procuring cause in a real estate transaction?
- [x] The buyer's broker
- [ ] The seller's broker
- [ ] The mortgage lender
- [ ] The buyer themselves
> **Explanation:** Typically, the procuring cause is considered to be the buyer's broker, as they are the ones who generally introduce the buyer to the property and facilitate the transaction.
### What can happen if there is a dispute about which agent was the procuring cause?
- [x] It can lead to lawsuits and may foul up the sale of a property.
- [ ] The property will be taken off the market indefinitely.
- [ ] The buyer must pay an additional fee to settle the dispute.
- [ ] The transaction proceeds with an internal review process.
> **Explanation:** Disputes over the procuring cause can lead to lawsuits and may complicate or even halt the sale of the property. These disputes often require legal intervention to resolve, which can delay or disrupt the transaction.
### According to the concept of procuring cause, which agent might be entitled to the commission if another agent showed the buyer a property?
- [x] The agent who showed the property
- [ ] The listing agent
- [ ] The mortgage lender
- [ ] The buyer's family member
> **Explanation:** If another agent, different from the buyer's primary broker, showed the buyer a property, that agent may be eligible for the commission instead of the buyer's broker, since they played a crucial role in bringing the transaction to fruition.
### What should be done when working with a buyer's broker to avoid procuring cause disputes?
- [x] Follow their instructions on how to handle other agents
- [ ] Contact other agents for multiple opinions
- [ ] Always work directly with the property owner
- [ ] Negotiate commission rates personally
> **Explanation:** To avoid disputes related to procuring cause, it's essential to follow the buyer's broker's instructions on how to engage with other agents. This helps ensure that all involved parties understand who is the recognized procuring cause.
