[WSBARP] Commission Owed? Procuring Cause Where Broker Locates A Willing Buyer But Residential Seller Refuses to Sell

Thu Jan 29 13:00:40 PST 2015

As I understand the question posed by Rob—what contractual duty does the seller owe to the listing broker. Under Rob’s fact pattern, the seller has no obligation (other than good faith and fair dealing) to the proposed buyer. The seller can accept the offer or decline the offer, regardless of the offer terms. The offer can match the listing terms in all respects or even be for more than the list price and the seller need not accept it.

The contractual obligation the seller owes to the listing broker is defined by the listing agreement and the ready, willing, and able buyer case law. If the broker performs under the contract, the seller owes a commission to the broker—regardless of whether the seller accepts or declines the offer from the ready, willing and able buyer. Take a look at Record Realty, Inc. v. Hull 15 Wash. App 826.

If the seller sells the property at some time in the future within the terms defined by the listing agreement, the broker may also have a claim under the tail or extender provision in the listing agreement.

This is the sort of stuff that makes for lawsuits.

David

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rich Holland
Sent: Thursday, January 29, 2015 12:19 PM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Commission Owed? Procuring Cause Where Broker Locates A Willing Buyer But Residential Seller Refuses to Sell

I have to agree.  If memory serves, a listing is actually a solicitation for an offer.  The Seller isn’t making a unilateral offer that can simply be accepted on its terms unchanged.  The Seller is really saying “if you offer this I might take it”.  Now I don’t know the precise wording of the listing agreement itself, I suppose a listing agreement could include a provision that says “IF we bring you a buyer that meets x,y,z you agree to sell or pay us a commission” but I don’t understand that to be the issue here.

Rich Holland

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Justin Monro
Sent: Thursday, January 29, 2015 11:59 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Commission Owed? Procuring Cause Where Broker Locates A Willing Buyer But Residential Seller Refuses to Sell

Well I disagree with David. David’s issue is different if I am wrong then correct me. But I did file a complaint in court and we did lose. The judge stated in the ruling that a seller is not obligated to sell their property even if the property is listed and then owe a commission. I tried to argue that I was owed a commission because I presented a ready willing able buyer, judge didn’t buy it because no mutual contract was completed by the seller and the buyer therefore no commission owed to buyers broker. 

The Listing contract is only between the listing agent and the seller, not the buyer’s agent or broker. 

IMO you will lose this argument, How is a judge to force a seller to pay a buyer’s broker a commission when no PSA have been signed?  judges are reluctant to provide fees to a broker for which a seller has not signed a PSA. Seller is only “offering” to the public to sell the property, the listing agreement doesn’t mean that they have to sell the property to a person and then the buyer’s broker is entitled to a commission. 

Also a ready willing buyer is only a buyer who has “waived” all contingencies and inspections. 

Sincerely,

Justin K. Monro

Attorney at Law

The Monro Law Firm P.S. Inc.

1830 Bickford Ave. Ste 204

Snohomish, WA 98290

P:360.863.3728

F:360.863.3985

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From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of David Williams
Sent: Thursday, January 29, 2015 11:30 AM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Commission Owed? Procuring Cause Where Broker Locates A Willing Buyer But Residential Seller Refuses to Sell

I disagree with Justin as I’ve successfully litigated the issue of a ready, willing, and able buyer entitling a real estate broker to a commission. My take is that when a broker procures a ready, willing and able buyer (a factual determination), writes an offer consistent with the listing terms, and submits the offer to the seller, the broker has fully performed under the listing agreement. The seller then owes a commission to the broker, but does not have an obligation to sell the property to the RWA buyer. In my case, the broker was awarded fees in addition to the commission.

The problem is that the broker will have to sue and prove that the buyer was in fact, a ready, willing and able buyer and that requires the buyer to cooperate by providing financial records.

Like Justin, I’m also a real estate broker.

David Williams

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Justin Monro
Sent: Thursday, January 29, 2015 11:00 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Commission Owed? Procuring Cause Where Broker Locates A Willing Buyer But Residential Seller Refuses to Sell

No, I filed a complaint on this same issue in Sno. Co. court and lost in 2007. Read 18.86. Just because you have a buyer ready and willing, doesn’t mean the seller has to even sell their house at all. 

I am a real estate broker too. The only time a broker is going to receive compensation/commission (maybe) is if the buyer uses another agent/broker to induce the sale if the original broker had already showed them this property or thereby using the listing agent and closing the deal. I have been successful in winning those arguments because the NWMLS has an arbitration provision that all members must use this arbitration process first in commission disputes.

But, your issue is different and I wouldn’t even approach it. Your client if they do proceed in court will lose and they will have to pay attorney fees.

Sincerely,

Justin K. Monro

Attorney at Law

The Monro Law Firm P.S. Inc.

1830 Bickford Ave. Ste 204

Snohomish, WA 98290

P:360.863.3728

F:360.863.3985

CONFIDENTIALITY NOTE: This e-mail message contains information belonging to The Monro Law Firm P.S. Inc. which may be privileged, confidential and/or protected from disclosure.  The information is intended only for the use of the individual or entity named above.  If you think that you have received this message in error, please contact the sender.  If you are not the intended recipient, any dissemination, distribution or copying is strictly prohibited.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rob Rowley
Sent: Thursday, January 29, 2015 9:41 AM
To: WSBA RPPT
Subject: [WSBARP] Commission Owed? Procuring Cause Where Broker Locates A Willing Buyer But Residential Seller Refuses to Sell

Is a licensed Washington residential real estate broker entitled to a commission where they locate and have an signed RESPA with a ready, willing and able residential purchaser for the exact sale amount set forth in the listing agreement but the seller is being incredibly difficult and refuses to sell to the buyer.  I’m familiar with the procuring cause doctrine.  See below.

I've cut-and-paste below the language in the listing agreement which appears to grant the listing agent a commission where there is no closed sale but a ready, willing and able purchaser for the exact sale amount.

Commission owed when “Firm procures a buyer for the Sale of the Property on the terms of this Agreement….”

Your thoughts?

Rob Rowley

Spokane

4.  TOTAL  COMMISSION. (Complete all applicable  provisions)  If, while this Agreement remains in effect, Firm procures  a buyer  for

the Sale of the Property on the terms in this Agreement or on other terms acceptable to Seller, or Seller directly or indirectly Sells or  contracts  to Sell any interest  in the Property,  then Seller  Will pay  Firm a commission:  in the case  of a sale or  exchange,

6 ·000     % of the total selling price, but not less than$   2,000. 00                       ; in the case of a lease,                          % of the total gross rents payable during the first                       year(s) of the lease term plus                                     %of  the total gross rents payable during the remainder  of the lease term. If an agreed lease provides for one or more renewal option(s) which are exercised.

an additional commission of                                  % of the rents payable during each such renewal period shall be paid in cash upon

exercise of each such renewal option. If an agreed lease provides  an option for the purchase, then the sale commission  shall be

¶ 18 Prudential argues first that the trial court erred in concluding as a matter  <https://scholar.google.com/scholar_case?case=12662020904116579957&q=%22procuring+cause%22&hl=en&as_sdt=4,48#p996> 996 <https://scholar.google.com/scholar_case?case=12662020904116579957&q=%22procuring+cause%22&hl=en&as_sdt=4,48#p996> *996 of law that it was not the procuring cause of the Youngs' sale to the Eastmans. Under the procuring cause of sale doctrine, when a party is employed to procure a purchaser and does procure a purchaser to whom a sale is eventually made, that party is entitled to a commission regardless of who makes the sale.  <https://scholar.google.com/scholar_case?case=5557530725935576541&q=%22procuring+cause%22&hl=en&as_sdt=4,48> Prof'ls 100 v. Prestige Realty, Inc., 80 Wash.App. 833, 836-37, 911 P.2d 1358 (1996) (citing  <https://scholar.google.com/scholar_case?case=14752154418933755729&q=%22procuring+cause%22&hl=en&as_sdt=4,48> Willis v. Champlain Cable Corp., 109 Wash.2d 747, 754, 748 P.2d 621 (1988) (citing, in turn,  <https://scholar.google.com/scholar_case?case=17316328426877481457&q=%22procuring+cause%22&hl=en&as_sdt=4,48> Feeley v. Mullikin, 44 Wash.2d 680, 683, 269 P.2d 828 (1954))). A broker is aprocuring 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 agreement. <https://scholar.google.com/scholar_case?case=18404900289712929203&q=%22procuring+cause%22&hl=en&as_sdt=4,48> Roger Crane, 74 Wash.App. at 776, 875 P.2d 705 (quoting  <https://scholar.google.com/scholar_case?case=6205961917513517522&q=%22procuring+cause%22&hl=en&as_sdt=4,48> Bonanza Real Estate, Inc. v. Crouch, 10 Wash.App. 380, 385, 517 P.2d 1371 (1974)). The doctrine provides a default standard for liability to pay a commission where the parties have not agreed on a different standard, or where the parties' agreement as to when a commission will be paid proves ineffective. See  <https://scholar.google.com/scholar_case?case=14752154418933755729&q=%22procuring+cause%22&hl=en&as_sdt=4,48> Willis, 109 Wash.2d at 755, 748 P.2d 621. In cases where the parties' contract includes a standard for liability for a commission that is consistent with the concept of procuring cause of sale, case law dealing with the procuring cause standard applies.  <https://scholar.google.com/scholar_case?case=5557530725935576541&q=%22procuring+cause%22&hl=en&as_sdt=4,48> Prof'ls 100, 80 Wash.App. at 837-38, 911 P.2d 1358. But a contract can provide for payment of commissions to a broker for being something less than the procuring cause of sale and when it does, the terms of the contract control unless the contract is ineffective. Id.; and see <https://scholar.google.com/scholar_case?case=3489881059366442515&q=%22procuring+cause%22&hl=en&as_sdt=4,48> Clients' Serv., Inc. v. Pupo, 71 Wash.2d 610, 615, 430 P.2d 552 (1967) (whether the broker must have been the procuring cause of the sale in order to be entitled to commission depends on the language of the broker's agreement).

¶ 19 The terms under which Prudential was entitled to a commission during the term of its listing agreement with the Youngs included instances consistent with the concept of procuring cause of sale. But the tail provision in this case is not couched in procuring cause terms. It provides:

If the property or any portion thereof or any interest therein is, directly or indirectly, sold, exchanged, leased or is purchased under an option, within 365 days after the expiration of this Agreement to any person with whom a Broker negotiated or to whose attention the Property was brought through the signs, advertising, or any other action or effort of a Broker, Broker's agents, employees or subagents, or on information secured directly or indirectly from or through a Broker during the term of this Agreement, then Seller shall pay Broker the above compensation.

CP at 37, ¶ 8(a). Because the Eastmans' offer and the sale of the Youngs' home occurred after the listing agreement expired, it is the tail provision of the listing agreement that controls. Prudential is entitled to a commission only if the conditions of the tail provision, not the procuring cause doctrine, are satisfied.

Robert R. Rowley | Attorney at Law

505 W. Riverside Ave, Suite 500

Spokane, WA  99201

Telephone: (509) 252-5074

Mobile: (509) 994-1143

Facsimile: (509) 928-3084

Email:  <mailto:rob at rowleylegal.com> rob at rowleylegal.com

Web Site:  <http://www.rowleylegal.com/> www.rowleylegal.com

Practice concentrated on business, real estate and general legal matters in Washington and Idaho.

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