Procuring Cause in Colorado as I know it.
I was recently in a class on Procuring Cause and became aware of the misconception of the subject. This is what I got out of it! Several class members seemed to be confused and had this wrong. There are so many items that come about in arbitration to cause a panel to consider procuring cause. To discus what procuring cause is not, one it is not who first showed the property! From what I understand this concept is the threshold rule which was determined in the 70's. Well, no more! Who showed the property is only one of many items the arbitration panel will take into consideration. Of course I personally know some who got away with doing something wrong, knowing it and still got out of it, which should have never happen.
The agency agreement is another misconception of Realtors; some say I had an agency agreement with the buyer so therefore I am the procuring cause. When in arbitration the panel considers who is entitled!! The buyer agency agreement has nothing to do with the co-op compensation. The agreement is between the buyer and their agent. According to the teacher these are two separate compensation agreements.
There are others who think that whom ever wrote the contract gets the commission. The person who writes the contract may be the procuring cause, as in the case of my friend, but not just because they wrote the offer, he himself knew exactly what he was doing.
When ever you become aware of a potential procuring cause dispute the very first thing to do is to communicate with the other broker and try to resolve. It is easier to resolve at this point than it will be half way through the transaction. If you can't resolve then do not let this crash the transaction. Allow the transaction to close even if you are the agent who will not get the commission. You have 180 days after closing to file an arbitration request, and I have seen it happen.
An option that the board offers to Realtors is mediation. We suggest it to clients so why not us. This way maybe a mutual agreement can be obtained by all parties involved. At least here at this stage you have input, not so with arbitration. The panel will make the decision.
Anyway, I thought this was interesting.. hmmm
I have a client now that refuses to sign a buyers agreement, and has two of us working for him, thank goodness she is working with him in other areas of town.
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