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REAL ETHICS by Steve Stazel | Feb
2006 | Index of all Real Ethics columns
Procuring Cause... What It Is NOT
There are so many things an arbitration panel may consider when determining procuring cause that it may be beneficial to discuss what procuring cause is NOT.
It is not who first showed the property to the buyer. This concept is known as the “threshold” rule. Back in the 1970s, the threshold rule was what determined procuring cause in Colorado. NOT ANY MORE. Who first showed the property is only one of many things arbitration panels take into consideration when arriving at their decisions.
Some people think that whoever writes the contract gets the commission. NOT SO! The person who writes the contract MAY be the procuring cause, but not just because they wrote the offer.
The other misconception about procuring cause is, “I had an agency agreement with the buyer; therefore I am the procuring cause.” NO, NO & NO. An arbitration panel is concerned with who is entitled to the offered CO-OP compensation. The buyer agency agreement has nothing to do with the co-op agreement. The agency agreement is between the buyer and their agent. These are two SEPARATE compensation agreements.
Whenever 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 the problem there. It is far easier to resolve a dispute early in the transaction than halfway through.
If you and the other broker cannot resolve your differences, do not let the transaction crash because the two of you are arguing over who should get the commission. Allow the transaction to close, even if you will not receive the commission you feel you deserve. You have 180 days after closing to file an arbitration request. If the deal dies because you and the other broker were arguing over the commission, do you know what the two of you may become known as? Joint tenants!
An option that the Association offers to REALTORS® in an arbitration dispute is mediation. This is an excellent way for both brokers to meet with a trained mediator in an attempt to reach an outcome that is acceptable to both parties.
The advantage of mediation is that both brokers, with the mediator’s help, attempt to reach a mutually agreeable solution. If the brokers cannot reach a solution that is acceptable to both, the dispute then goes to arbitration. In arbitration, neither party gets to make the final decision…the arbitration panel make the decision.
Each month, the Aurora Association of REALTORSŪ Web site features Real Ethics,
a column by Steve Stazel devoted to explaining Code of
Ethics issues for members. A REALTORŪ since 1974, Stazel is a Professional Standards
instructor and senior Ethics
instructor for the Colorado Association of REALTORSŪ.
If you have an ethical concern or an issue you would like
to see addressed, please call Stazel at (303) 773-3333 or e-mail him at
stazels@msn.com. The comments of this article reflect the understanding and
opinions of the author and do not represent an official expression of policy by the National Association
of REALTORSŪ.
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