Release Date: 09/14/2017
QUESTION: I recently showed an MLS listing to a buyer. I went over the Working With Real Estate Agents brochure with her beforehand. She wanted me to be her buyer agent but was reluctant to sign a buyer agency agreement. I said I could show her the property without a written agreement but that she would need to sign a written buyer agency agreement before I could help her make an offer on the property as her agent. She said she understood.
The buyer was very excited about the property. We had several phone conversations and I emailed her additional information about the property. Then she went dark on me. Long story short, I found out that she got another agent to write an offer on the property for her. When I called that agent to tell him I thought I might be the procuring cause, he told me that it would be against the law for me to be paid a commission since I didn’t have a written buyer agency agreement, and that if I tried to do so he’d report me to the Real Estate Commission. My question is, would it be wrong for my firm to try to recover the compensation offered in MLS if the deal closes and we can’t work something out?
ANSWER: No, it would not be wrong for your firm to do that. It’s true that the Real Estate Commission’s rules require brokerage agreements between a broker and a buyer to be in writing no later than the time an offer is made. And it’s true there is a state law prohibiting a broker from recovering a commission from a client under an agreement for brokerage services unless the agreement is in writing. However, the agreement you would be seeking to enforce would not be an agreement with the buyer, but rather an agreement with the firm that listed the property in MLS. Neither the law nor the Real Estate Commission’s rules require an agreement between brokers for the payment of a commission to be in writing. In the case of an MLS listing, the agreement between the brokers is formed by an MLS participant accepting the listing firm’s offer of compensation by demonstrating that they are the procuring cause of a successful transaction.
We are not saying you would necessarily be successful if you file a “procuring cause” claim (called a “request for arbitration”) with your local association. A hearing panel called on to decide a commission dispute between members is required to consider all the relevant facts and circumstances, and must disregard “predetermined rules of entitlement” (meaning that the winner isn’t determined simply by figuring out who showed the property first or who had the buyer agency agreement with the buyer). Also, we are not saying that a violation of the law or a Real Estate Commission Rule might not be a factor in a hearing panel’s decision in a procuring cause dispute. What we are saying is that based on the facts of your particular situation, we do not think the absence of a written buyer agency agreement should be a bar to your firm’s pursuit of a procuring cause claim if the matter can’t otherwise be worked out.
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