Procuring Cause for Freezer or Cooler Buildings

Procuring Cause

There from time to time becomes an issue on the rightful entitlement of a real estate commission to be paid on the sale or lease transaction.

A sale or lease transaction is defined as when a Purchase Contract is signed or Lease Agreement is agreed upon.

The entitlement issue on the awarding and payment of the real estate commission is always determined by the procuring cause resulting in the sale or lease transaction.

Procuring cause shall be the primary determining factor in entitlement to compensation. Agency relationships, in and of themselves, do not determine entitlement to compensation. The agency relationship with the client and the entitlement to compensation are separate issues. A relationship with the client, or the lack a one, should only be considered in determining the procuring cause.

Many disputes will be determined by the relationship between the broker and a prospective purchaser or leasee. Consider whether, under the circumstances and in accord with local custom and practice, the broker made reasonable efforts to develop and maintain an ongoing relationship with the purchaser. Where two cooperating brokers have competing claims against a listing broker, whether the first cooperating broker actually maintained ongoing contact with the purchaser or, alternatively, whether the broker's inactivity or perceived inactivity may have caused the purchaser to reasonably conclude that the broker had lost interest or disengaged from the transaction. In other instances a purchaser, despite reasonable efforts by the broker to maintain ongoing contract, may seek assistance from another broker. Consider why the purchaser was estranged from the first broker. There may be no reason that there was an ongoing relationship between the broker and the purchaser. The issue then becomes whether the broker engaged in conduct which caused the purchaser to terminate the relationship. Among other things, by words or actions. Conduct caused a break in a series of events leading to the transaction and whether a successful transaction was actually brought about through the initiation of a separate, subsequent set of events by the second cooperating broker.

In relationship to the exclusive right to sell listings there may be from time to time disputes if a lease or a sales transaction was caused by cooperating broker and it is not clear which broker caused this sequence of events to lead to the transaction. When it is not clear, the listing broker should consult an attorney, notify the real estate commission and place the cooperating portion of the commission paid on the transaction into a non-interest bearing escrow account awaiting absolute clarification of the dispute.

In relationship to a nonexclusive listings or marketing authorization agreements the aforementioned issue with cooperating broker's still does exist and also the issue of procuring cause may also come to exist with the client of those nonexclusive listings or marketing authorization agreements.

Written by Jim Cronin, a refrigerated building real estate broker at Hawk Distribution Services, LLC and at J.Cronin@hawkds.com