If you have never been involved in a commission dispute with another agent where Procuring Cause was used to determine who should rightfully be paid, it's only a matter of time before you are.
Unfortunately, commission disputes are common.
I was playing around with ChatGPT yesterday and I wanted to see how A.I. would handle the “procuring cause” subject.
Check out this prompt and response:
▶️ ▶️ MY PROMPT: You have full access to the National Association of Realtors document library including realtor policies, procedures, code of ethics, legal filings, complaint filings, broker/agent disputes, arbitration and mediation records. You are recognized as an expert in the legal field with a specific focus on real estate broker and agent conduct and compensation. You have passed the BAR in all 50 states. Based on your knowledge, write a 250 word summary of Procuring Cause and how it plays a role in commission disputes. Include an illustrative example. Write your summary as if you are writing to a 25 year old law student studying for the BAR exam in the state of California.
🚩 🚩 ChatGPT: Procuring cause refers to the broker's or agent's actions and efforts that result in the sale of a property. It's a fundamental concept in real estate law, particularly when commission disputes arise between brokers or agents. Understanding it is essential for any law student aiming to specialize in real estate law or simply to pass the BAR.
Typically, the selling broker or agent earns the sales commission, but issues arise when multiple brokers or agents are involved. Here's where procuring cause comes into play. It is not simply who first introduced the buyer to the property or who was involved at the time of sale, but rather it's about the continuous, unbroken chain of events that leads to the transaction.
Take this illustrative example: Broker A shows a house to a prospective buyer but does not follow up after the initial meeting. Later, Broker B steps in, provides additional information, arranges another viewing, and finally seals the deal. If a dispute arises over the commission, the concept of procuring cause would consider whether Broker A's involvement was merely incidental, or if it established the groundwork for the eventual sale. If Broker B's actions were more directly responsible for the final transaction, they may be deemed the procuring cause.
Remember, procuring cause is fact-specific and requires an examination of the entire course of events, including the nature, quality, and quantity of the broker's or agent's actions. It is often subject to the rules and policies of the local real estate board and can become a key issue in arbitration proceedings.
▶️ ▶️ MY PROMPT: Write this again, but this time write your summary as if you are writing to a 5 year old. Use an illustrative example and write up to 300 words.
🚩 🚩 ChatGPT: Imagine you're playing a game with your toys. You've got a very cool dragon toy named Sparky. You really want Sparky to find a hidden treasure chest in your room. You ask your friend, Teddy, to help you. Teddy is very smart and good at treasure hunts. He spends a lot of time with you and Sparky, looking under your bed, behind the curtains, and even inside your toy box. Teddy does a lot of work to find the treasure chest.
But at the very last moment, just when Teddy is about to find the treasure chest hidden behind the pillows, your little sister rushes in. She sees the treasure chest and shouts, "I found the treasure!" Now, who should get the reward for finding the treasure? Teddy, who did all the searching and almost found the treasure? Or your little sister, who saw it at the very end and claimed it?
In the grown-up world of selling houses, there's a similar rule. This rule is called "Procuring Cause". It helps decide who gets the reward (or the commission) for selling a house. If a real estate agent, let's call him Agent Teddy, shows a house to a buyer and does a lot of work to help the buyer decide, but then another agent, let's call her Agent Sister, steps in at the end and finishes the sale, who should get the reward?
Just like in your game, the grown-ups look at who did the most important work. If Agent Teddy's work was really important in helping the buyer decide to buy the house, then Agent Teddy might still get the reward, even if Agent Sister was the one who finished the sale. This is because Agent Teddy was the "Procuring Cause", the one who really got the job done. And that's why it's a fair rule, just like in your game!