Procuring Cause

What procuring cause actually means

Procuring cause is the reason a broker gets paid. It is the effort, or chain of efforts, that produced the customer and brought about the completed transaction, whether or not it was the broker who finally signed the closing papers. In plain terms, the law asks one question: whose work brought the buyer to the deal?

An open listing depends entirely on this idea. If several brokers may show the same property, only the broker who was the procuring cause is entitled to a commission. That is why an open listing gives a broker no guarantee of anything.

The two-part test

Most exam questions reduce procuring cause to two ingredients. The first is finding the customer, and the second is inducing that customer to complete the transaction. A broker who merely introduces a customer has done part of the job. A broker who introduces the customer and then carries the negotiation to an accepted offer has done all of it.

When two brokers are involved, the exam often gives the customer to a broker who came later but did the real work. That later broker is usually the one who earned the commission, because effort that produces the sale outweighs a brief first contact.

Ready, willing, and able

A commission is due when the broker produces a customer who is ready, willing, and able to buy on the seller's terms. Ready and willing means the customer accepts the terms of the transaction. Able means the customer is financially capable of paying the price and legally capable of completing it. A customer who cannot close, or who makes an offer that the seller rejects, does not satisfy this standard.

A concrete example

Imagine an open listing on a small house. Agent Peter shows the property to a few people but no one buys. Weeks later, Agent Perry's customer sees the same house, makes an acceptable offer, and closes. Even though Peter held the listing and Paul, Peter's broker, supervised the effort, Perry is the procuring cause. Perry found the customer and induced the purchase, so Perry is the one entitled to be paid. A separate commission agreement held by another person does not change whose efforts actually produced the sale.

Procuring cause across listing types

Procuring cause matters most under an open listing, where brokers compete for the same seller. Under an exclusive agency listing the broker still needs to be the procuring cause to collect, except that the seller may produce the buyer alone and owe nothing. Under an exclusive right to sell listing, the listing broker is paid no matter who produces the buyer, so the fight shifts to the split among brokers rather than to whether a commission is owed at all. Net listings follow their own logic, because the broker's pay is whatever remains above the seller's net figure.

How this appears on the exam

Listing and agency scenarios on the national exam almost always come down to a payday question. Read every scenario looking for two facts: which agreement was signed, and whose effort actually produced the customer and the completed transaction. Identify the procuring cause first, then check whether the listing type changes who owes the money. Doing those two steps in order answers most procuring cause questions cleanly.