Procuring Cause-What is It? Who determines It?

Procuring Cause-What is It? Who determines It?

A recent event just reminded me why I had shied away from doing real estate in Mexico all this time. After being in the real estate business for 20+ years, since starting back in Chicago in 1987, after many years of being in the music business and a Business Management College Education, the most obvious thing for me would have been to enter the real estate industry in Mexico. However, hearing so many horror stories with regards to how realtors, more often than not, get wrapped up in commission disputes in the real estate industry in Mexico, I opted for my other field of expertise, doing uds mortgages in Mexico.

Nevertheless, a recent call from a former client, who now wanted to invest in a property in Playa del Carrnen, and the excitement of the creation on an MLS, www.mexicomlsnetwork.com, through a joint venture with an American MLS company, prompted me to take the challenge and retake my real estate career in Mexico. Which is what I did back in the USA. I was a Mortgage Broker and Real Estate Agent. Normally selling the property and doing the mortgage for my clients.

Little did I know, however, that my first real estate commission dispute in Mexico would be unfolding right in front of me, as part of my induction to Mexico’s real estate business practice.

What bothers me most, is not the commission itself, but how conniving can people become in the process. On the one hand, we have a developer, who despite the fact that he has already gone through some tough times trying to recover his property from a fraudulent builder and his attorney friend, people whom have already done the same with other developers in town, and after a costly battle having recovered his property, now plays the role of “well, I don’t want to get involved”, in the commission dispute. So he leaves the decision to his Sales Manager, whom, for all I know, his only sales experience comes from selling tomatoes in the corner store.

Perhaps I should mention that on several occasions, in the past, I did walk away from the closing table leaving part of my commission, if not all, being that I was getting a mortgage and a real estate commission, to close on a deal. However, that was always my decision, not someone else’s decision.

Let me just say that the end of the above mentioned story has not yet been written. It is just beginning to unfold.

So, as we are pushing for the creation of a Broker’s Council, http://rebcofmexico.blogspot.com/, that might be the answer to all of these commission disputes, which seem to be common practice in our real estate market, we would like to offer an explanation of what a legal definition of a Procuring Cause would be in terms of USA Real Estate Law for those interested in the subject.

PROCURING CAUSE:

Definition: The legal definition of procuring cause would be "the cause that results in the attainment of a stated goal". In real estate it would take on the meaning of the real estate agent or broker who, by their actions in producing a buyer, brought about the sale of a property
In the context of a real estate transaction, procuring cause refers to actions that begin or set in motion a serious of events that lead to the final sale of a property.
Typically, for the broker to be entitled to the commission, it must bring together the seller and purchaser, and not just a person associated with the seller or purchaser. The broker must often be involved in the negotiations between the buyer and seller to be entitled to a commission. The mere act of informing a potential purchaser, who eventually purchases the property, about a prospective purchase may not be enough for the broker to be a procuring cause in the sale. The precise definition depends on state law and the facts and circumstances in each case.
A broker will be regarded as the "procuring cause" of a sale, so as to be entitled to commission, if his efforts are the foundation on which the negotiations resulting in a sale are begun. A cause originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the employment of the broker who is producing a purchaser ready, willing, and able to buy real estate on the owner's terms. Mohamed v. Robbins, 23 Ariz. App. 195, 531 p.2d 928, 930.