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Legally speaking: I’m entitled to compensation…right?

By Peg Ritenour, OAR Vice President of Legal Services/Administration

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. This one involves procuring cause…

Q: I represent a buyer with whom I have a written buyer agency agreement. Unfortunately, my buyer went to another brokerage’s open house and ended up writing a purchase contract through the listing agent. When I found out, I immediately contacted the listing agent and informed her that I had an exclusive written agency agreement with the purchaser and that I expected to be paid the commission that was offered in the MLS. Her broker has indicated that since I didn’t show the property to the buyer or write the offer he isn’t paying me; instead he said his agent is the procuring cause. Doesn’t the fact that I have a written buyer agency agreement require the listing broker to pay me the compensation offered in the MLS?

A: No. Agency relationships and compensation are two different issues in this situation. Under the NAR guidelines, entitlement to compensation offered in the MLS is determined by whether a broker can show he was the procuring cause of the sale. The fact that you are acting as a buyer’s broker or have a written contract with the buyer will not, by itself, automatically entitle you to the compensation offered to buyer brokers in the MLS. Instead, if you are not paid by the listing brokerage and you file for arbitration at your local Board of REALTORS you will have to show you were the procuring cause of the sale, which will be based upon the entire course of events that led up to the procurement of a ready, willing and able buyer.

Of course depending on the terms of your exclusive buyer agency agreement with the purchaser, the purchaser may owe you a commission.

Click here for an OAR Daily Buzz video that offers a detailed explanation of procuring cause.

Tags: legal, Legally Speaking