Every listing agent knows that their commission is usually premised on the existence of a Listing Agreement. And every agent has also heard of the concept of “procuring cause.” A topic that is not so frequently discussed is how those ideas interact with one another and whether they can both apply to the same transaction. A recent Florida case (Esslinger-Wooten-Maxwell, Inc. v. Lones Family Limited Partnership) tried to shed some light on the issue. First, a quick primer:
Most listing agents have a seller execute a listing agreement that describes their entitlement to a commission in black-and-white. For instance, an exclusive right of sale listing agreement will say that a commission is owed if the property is sold to anyone during the listing period (whether the agent brings the buyer or not), and will require payment during a “protection period” after the expiration of the listing if the property is sold to a buyer previously introduced by the agent. This structure is great because the parties’ rights are set out in a written contract, and are enforceable by reference to the terms of that contract.
The procuring cause doctrine is different. It applies when the agent and seller have no contract in place, and the agent brings a buyer who is “ready, willing, and able to perform.” There are other requirements as well, but the important distinction is that the procuring cause doctrine applies in circumstances where no express listing agreement exists. So, if the procuring cause doctrine has no relevance when a listing agreement exists, what happens when a listing (and protection period) have expired and a seller completes a transaction with a buyer that was introduced by the agent?
That was the question presented in the Esslinger-Wooten-Maxwell case. The court started the analysis by reiterating that the procuring cause doctrine only applies when no express contract has taken its place. It went on to state that “the procuring cause doctrine cannot be inferentially incorporated to supersede the formalized intent of the parties to the written agreement,” which was their needlessly-complicated way of saying that “the procuring cause doctrine doesn’t apply once the listing ends.” Basically, the court noted that the parties had already negotiated the outcome if a sale occurred after the end of the listing (by negotiating a protection period) and that they would not tack the procuring cause doctrine onto the end of the protection period. The court noted some exceptions that are beyond the scope of this blog, but the general takeaway is this: after your protection period has ended, don’t rely on the procuring cause doctrine to entitle you to a commission for a buyer you previously introduced.
So, does that mean that agents should do away with the protection period language in listing agreements so that they have the procuring cause doctrine to fall back on? In the opinion of this writer: no. The benefit that is gained from having a defined, and clearly enforceable, protection period is greater than the benefit that would be gained from having access to the procuring cause doctrine post-listing. As always, if you have any questions or concerns about your rights to a commission, please contact a qualified, licensed real estate attorney.
Daniel C Guarinieri, Esq.,firstname.lastname@example.org
Berlin Patten Ebling, PLLC
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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