Real Estate Brokers and the Procuring Cause Doctrine

Because real estate brokers typically work on a commission basis, disputes often arise as to whether they are entitled to compensation or not. In Nevada, a broker is only entitled to a commission if the broker was the “procuring cause” of the sale.

Certain guidelines aid in determining whether a broker was the procuring cause. For example, in situations involving non-exclusive listings, merely introducing the eventual buyer is insufficient. However, it does carry considerable weight. Thus, where the broker introduces the ultimate buyer, the burden shifts to the seller to show that the broker subsequently abandoned efforts or that those efforts were merely trifling or helplessly ineffective.

Moreover, when the broker has not abandoned negotiations, he or she must be given the opportunity to consummate the sale, even where the buyer has made a separate, more attractive offer either directly to the seller or through another broker. In fact, the seller must notify the introducing broker of the later offer and give that broker a reasonable time to protect his or her commission; otherwise, the seller must decline the sale.

A broker may be deemed to be the procuring cause, even in cases where the transaction was actually closed by the seller directly and for a different price than the broker's asking price. To be the procuring cause, the broker need not specifically arrange the terms of the sale or be present at the sale. Indeed, the broker need not necessarily even know the closing date, the final purchase price, or other terms of the sale.

Nevertheless, it is not enough that the broker contributes indirectly or incidentally to the sale by imparting information which tends to arouse interest. The broker must set in motion a chain of events which, without break in their continuity, cause the buyer and seller to come to terms as the proximate result of his or her peculiar activities.

Finally, since the terms of the listing agreement often govern the issue, it is important that the agreement clearly set forth both the scope of the services to be provided and the basis for determining whether the broker will be entitled to compensation.