As mandated by the National Association of Realtors, "procuring cause" actions are a bizarre concept. I often wonder who dreamt up this inequitable idea and why do over one million members subscribe to it, including me. I am not aware of any other trade organization where a member can demand another member's paycheck and then get a hearing to see if they can get it.

The obvious answer is that we all want access to the Multiple Listing Service and Pro Cause actions are a part of the NAR package; put into place many years ago. Now it's an antiquated custom that may have been desirable and necessary at the time but I do not believe that it has any merit in this time of client representation for all parties.

The following is a typical scenario that I have observed many times in my 33+ years as a Realtor:

Selling Broker # 1 writes an offer on real estate property negotiating many items, usually with counter offers, gets it accepted, and opens escrow. Then he follows through with a myriad of items, including a professional inspection, dealing with the resulting repairs, guides the buyer through the loan process, the appraisal and comparables and then, perhaps in about 45 days, a closing happens; if all the obstacles are overcome. This would include the "fun" of the final walk through inspection, turning over the keys, the hassle of moving out and moving in and of course other "surprises" like a seller that won't get out.

Selling Broker #1 Broker then gets paid from escrow, but has these responsibilities: must pay errors and omissions insurance, maintain records of the sale for five years and also is the object of any buyer dissatisfaction and resulting lawsuits.

Wow, it was nice to get paid, but wait! After all this, someone else can come to you, via your local Association, and take your paycheck away from you. Without a gun ... .

How does this happen? Well here's the rest of the story:

Selling Broker # 2 who has previously driven the same buyers around looking at homes, bought them lunches, burned a lot of gas and spent long hours at the computer, has lost contact with the buyers and cannot get any return calls. Who knows why, but for some unknown reason, the buyers have chosen to write a contract with Selling Broker # 1 on a home they previously viewed with Selling Broker # 2. They close escrow and the action begins when Selling Broker # 2 puts in a claim for the paycheck earned by Selling Broker # 1.

Selling Broker #1 has no idea what's about to happen -- that a procuring cause claim will be filed, a hearing will be held and Selling Broker #1 could lose her entire paycheck on the transaction.

What makes procuring cause an outdated concept is that some agents deliberately create procuring cause situations by giving buyers a list of addresses with these instructions: Drive by and if you see something you like, call the listing agent to show it to you. But come back to me to write it up because I will work for far less commission than other agents and we can get the property for several thousand dollars less than asking price.

As a broker, this scenario has been reported to me several times but is very hard to prove because the beneficiaries of such savings are not willing to get involved.

Another concern is that brokers often wait until the last week to file claims for arbitration even though they have 180 days to do so. Makes me wonder if they really think they have a claim or as one Broker put it; "Wouldn't you put up $500 to win $10,000? These odds are better than Vegas"! Others have pointed out that arbitration is a good way to get paid while doing no work, pay no E&O insurance, encountering no lawsuits, and avoiding transaction problems after closing.

Whether a selling broker knowingly takes over another broker's buyer isn't the point. The point is that the buyer should be under contract just like the seller. The utilization of Buyer Representation Agreements and collection of retainer fees should substantially reduce procuring cause issues, therefore eliminating the need for the availability of relief in this area.

Agents will whine that it's impossible to get people to sign buyer representation agreements, but they will if it becomes standard practice. Would anyone take a listing on real property, without getting it signed? Do attorneys go to work for anyone, without a retainer? Do you get past the admitting clerk at a hospital and go directly to a room? As a Realtor, are you worth nothing?

I believe if Brokers utilize Buyer Representation Agreements with or without retainer fees, procuring cause actions would never be necessary. And buyers need to know that Brokers services are not cost-free. If the seller pays the fee, then perhaps the buyer won't pay anything. If not, then the buyer must honor their contract with the Broker or perhaps forfeiture of the retainer may satisfy the Broker. In any event, it needs to be negotiated and collected.

The second step is to enter the buyer representation agreement into the MLS computer, as a listing. Then Buyer Representation Agreements will become a way of life for Realtors. .

I call upon NAR and all its subsidiaries to legislate the removal of procuring cause actions from our by-laws. Most Brokers will then insist upon Buyer Representation Agreements with buyer clients, to be entered into the MLS, as insurance of a paycheck for services rendered. Yes, it is now time to abolish procuring cause availability for the good of all Realtors.

Published: August 21, 2007

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