This used to be referred to as the doctrine of “To and Through”. In other words whoever showed the Buyer the property was entitled to the Selling commission. Today however, that has been updated with the “Procuring Cause” argument. Which simply stated says: “Procuring cause is the unbroken chain of events that leads to the sale of the property”. Agents should do their best in protecting themselves before showing properties listed for sale to a Buyer. Agents should have Buyers sign a “Buyer Broker Agreement”. This is our UAR form 6. There is legal and binding language in this agreement. For instance section 4 states the following:
4. BUYER REPRESENTATIONS/DISCLOSURES. The Buyer warrants that the Buyer has not entered into any other Exclusive Buyer-Broker Agreement with any other brokerage that is still in force and effect. The Buyer will: (a) In all communications with other real estate agents, notify the agents in advance that the Buyer has entered into this Exclusive Buyer Broker Agreement with the Company; (b) Furnish the Buyer’s Agent with relevant personal and financial information to facilitate the Buyer’s ability to acquire a property; (c) Exercise care and diligence in evaluating the physical and legal condition of the property selected by the Buyer; (d) Hold harmless the Company and the Buyer’s Agent against any claims as the result of any injuries incurred while inspecting any property; (e) Upon signing of this Exclusive Buyer-Broker Agreement, personally review and sign the Buyer Due Diligence Checklist form and Wire Fraud Alert Disclosure; and (f) Disclose to the Buyer’s Agent all properties in which the Buyer, as of the date of this Exclusive Buyer-Broker Agreement, is either negotiating to acquire or has a present interest in acquiring.
As Realtors, we also subscribe to the NAR Code of Ethics. Specifically Article VII Section 1 – 3
Section 1. The responsibility of the Board and of Board members relating to the enforcement of the Code of Ethics, the disciplining of Members, and the arbitration of disputes, and the organization and procedures incident thereto, shall be governed by the Code of Ethics and Arbitration Manual of the NATIONAL ASSOCIATION OF REALTORS®, as amended from time to time, which is by reference incorporated into these Bylaws, provided, however, that any provision deemed inconsistent with state law shall be deleted or amended to comply with state law.
Section 2. It shall be the duty and responsibility of every REALTOR® Member of this Board to abide by the Constitution and Bylaws and the Rules and Regulations of the Board, the Constitution and Bylaws of the State Association, the Constitution and Bylaws of the NATIONAL ASSOCIATION OF REALTORS®, and to abide by the Code of Ethics of the NATIONAL ASSOCIATION OF REALTORS®, including the duty to arbitrate controversies arising out of real estate transactions as specified by Article 17 of the Code of Ethics, and as further defined and in accordance with the procedures set forth in the Code of Ethics and Arbitration Manual of this Board as from time to time amended.
Section 3. The responsibility of the Board and Board members relating to enforcement of the Code of Ethics, the disciplining of members, the arbitration of disputes, and the organization and procedures incident thereto, shall be consistent with the cooperative professional standards enforcement agreement entered into by the Board, which by this reference is made a part of these Bylaws.
Unfortunately, there are occasions that a Buyer may not disclose to an Agent that they have previously signed a Buyer Broker agreement with another Agent, or a Buyer may not know what they have signed. This is usually the precursor of the Procuring cause argument. If an argument arises as to who should receive the commission, there is a process Agents should follow to amicably solve the situation if a simple agreement cannot be reached. Please refer to your Boards Governing Documents for more information regarding the procedure to follow regarding a Procuring Cause argument.
See links below: