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Real Estate Brokers and the "Procuring Cause" Doctrine

A real estate broker is a person who acts as an intermediary between sellers and buyers of real estate, more often than not, in exchange for some sort of commission. Generally, the amount of compensation owed to a real estate broker is governed by the terms of the applicable contract between the broker and the buyer or seller. When the terms of the contract are clear regarding when and how a real estate broker is paid, the terms of the contract control and compensation related issues seldom arise. On the other hand, when the terms of the contract are ambiguous or silent as to the standard for the broker's commission, a broker will only be entitled to a commission if the broker was the "procuring cause" of the sale.

The law in the State of Washington is that, in the absence of express contract language to the contrary, when a broker is employed to procure a purchaser on certain terms, and does in fact procure a purchaser to whom the sale is eventually made, the broker is entitled to a commission regardless of who makes the sale so long as the broker was the "procuring cause." Feeley v. Mullikin, 44 Wn.2d 680, 683, 269 P.2d 828 (1954). The procuring cause doctrine is an equitable doctrine based upon the principle that one who employs a broker shall not be permitted to enrich him or herself at the expense of the broker whose services have inured to his or her benefit. Miller v. Paul M. Wolff, 316 P.3d 1113 (2014). Thus, in order to protect brokers in a highly competitive field, the doctrine serves to prevent buyers and sellers from dealing directly with each other to avoid paying the broker's commission, and allows a broker to receive payment when sales ultimately result from the broker's efforts. Id.

In Washington, a broker is a procuring cause of a sale if it "sets in motion a series of events culminating in the sale and, in doing so, accomplishes what the broker undertook under the applicable agreement." Roger Crane & Associates, Inc. v. Felice, 875 P.2d 705, 74 Wn. App. 769 (1994). See also, Bonanza Real Estate, Inc. v. Crouch, 10 Wn. App. 380, 385, 517 P.2d 1371 (1974); Feeley v. Mullikin, 44 Wn.2d at 683. Although this standard is up for interpretation, Washington courts have made it clear that mere commencement of performance by the broker is insufficient, and that "some minimal causal relationship" is required between the activities of the broker during the term of agreement and the ultimate sale. Lloyd Hammerstad, Inc. v. Saunders, 6 Wn. App. 633, 495 P.2d 349 (1972).

Of course, the parties to a contract are free to negotiate their own terms and provide for payment of a broker's commission on something less than the procuring cause of sale, in which case the terms of the contract control unless the contract is ineffective. Washington Professional Real Estate LLC v. Dr. Kipp Young, 260 P.3d 991, 996, 163 Wn. App 800 (2011). When, however, the contract is silent as to the standard for the broker's commission, the procuring cause doctrine will apply.

For questions on these topics or any real estate law, please contact Jameson Babbitt Stites & Lombard PLLC at 206.292.1994.

STANDARD DISCLAIMER STATEMENTS MADE IN THIS ARTICLE ARE MADE SOLELY TO INITIATE DIALOGUE AND INSPIRE YOUR INDEPENDENT INQUIRIES AND RESEARCH AND MAY NOT BE RELIED UPON AS LEGAL ADVICE.

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