Procuring Cause

Procuring Cause

Procuring cause refers to the legal cause of action a broker has to recover their commission. The procuring cause doctrine applies in commercial and residential real estate contexts, and even to brokered sales outside of real estate such as aircraft and yacht sales. Although difficult to determine with absolute precision, the most commonly accepted definition of “procuring cause” is that the broker introduced the parties and his or her efforts led to the consummation of the sale by way of continuous negotiations or involvement.

The Elements

For a real-estate broker to establish a prima facie case against the seller for recovery of their real estate commission, the broker must show:

  1. Possession of a valid real-estate license;
  2. An employment contract with the seller (verbal or written);
  3. Performance of the terms of the contract; and
  4. The seller's breach by refusing to pay the agreed commission.

The element most frequently determinative of whether a real estate broker is entitled to recovery of a commission is the broker's performance under the contract; in particular, whether the broker produced a ready, willing, and able buyer, or was the procuring cause of the sale of property.

Common Factors Which Are Considered in Broker Commission Lawsuits
  • The nature and status of the transaction;
  • The nature, status and terms of the listing agreement or offer to compensate;
  • The roles and relationships of the parties;
  • The initial contact with the purchaser;
  • The conduct of the broker or agent;
  • Continuity and breaks in continuity;
  • The conduct of the buyer; and
  • The conduct of the seller.
Common Defenses

A seller may assert various defenses in response to the broker's action for recovery of a commission, including that the broker breached a fiduciary or contractual duty owed to the seller or that the broker did not have a real-estate license at the time of the transaction. Other defenses that may be asserted are fraud in the inducement, the statute of frauds, and abandonment i.e. the broker has abandoned his or her obligations to sell the property.

Proof

The proof required of the broker to establish a cause of action for recovery of a real-estate sales commission and the proof required of the seller to refute the broker's claim are dependent on the specific basis of the broker's claim. Whether or not a broker is the procuring cause is a question of fact for the jury to decide, not the judge.

Remedies

The damages available to a broker in a breach of contract action against the seller for recovery of a commission under the procuring cause doctrine may include the amount of the agreed to, or a computed commission, interest, and punitive damages. In some cases, depending on the contract at issue, attorneys’ fees and costs can also be awarded to the successful party in a procuring cause lawsuit.

The above factors are simply intended to provide the reader with a general outline of procuring cause. Each case is unique and whether you are entitled to recover money damages should be determined on a case-by-case basis with an experienced real estate lawyer. Our law firm represents brokers seeking to recover their commissions and sellers that have been sued for money damages under the procuring cause doctrine. If you have questions, please contact us to schedule a free consultation to discuss your particular situation.