Many factors can affect a determination of Procuring Cause; however, no one factor will ever, by itself, be determinative. Read on to learn how to determine Procuring Cause.
What is the Procuring Cause doctrine?
Procuring Cause refers to the legal cause of action real estate brokers have to recover their commissions. The Procuring Cause doctrine applies in both residential and commercial real estate contexts, and even applies to brokered sales outside of the real estate market, such as yacht and aircraft sales.
Although difficult to determine with total precision, whether a real estate broker is the Procuring Cause of is commonly determined by proving that the real estate broker introduced the parties and his or her efforts led to the closing of the sale by way of continuous involvement in the negotiations.
How can real estate brokers sue sellers for their commissions?
For Florida real estate brokers to effectively establish a prima facie case against sellers for recovery of their commissions, they must show:
- An employment contract with the seller of the property;
- Possession of a valid Florida real estate license;
- Proper performance of the terms of the contract; and
- The seller’s breach of the contract by refusing to pay the agreed commissions.
What factors do courts commonly consider in broker commission lawsuits?
When it comes to broker commission lawsuits, Florida courts will commonly consider the following factors in order to determine Procuring Cause:
- The terms of the listing agreement;
- The nature and status of the real estate transaction;
- The relationship and roles of the parties;
- The initial contact with the buyer;
- The behavior of the real estate broker throughout the transaction;
- The behavior of the buyer throughout the transaction; and
- The behavior of the seller throughout the transaction.
Determining Procuring Cause
When the purchase price is different from what was originally agreed to – For a real estate broker to be the Procuring Cause of a sale, the final purchase price of the property does not need to be the same as the one specified in the listing agreement. Courts will always recognize that buyers and sellers typically negotiate the price verbally during a transaction, and usually sellers agree to sell for a lower price than they had originally asked for, which does not negate a real estate broker’s efforts.
When the property sells under different terms – If the parties in a real estate transaction cannot reach an agreement on the terms of the sale, then the real estate broker will more than likely not be considered the Procuring Cause of the sale.
When the real estate broker makes the initial contract with the buyer – When it comes to the Procuring Cause doctrine, there is no automatic entitlement to a real estate commission based upon obtaining the initial contract with the buyer. However, how and when the initial contract is made can be an important factor in determining whether a real estate broker is the Procuring Cause of a sale.
Work with a Real Estate Lawyer
As the amount of Florida real estate transactions reaches new records, Florida real estate brokers and sellers are finding themselves in more and more disagreements and disputes regarding commissions. When it comes to handling this type of disputes, working with a lawyer is key.
Our Miami law firm, Jurado & Farshchian, P.L., represents real estate brokers all across Florida who are seeking to recover their commissions, as well as sellers that have been sued for damages under the Procuring Cause doctrine.
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