I spotted a substantial and interesting post at REJournals from Monte Mann, co-chair of the real estate litigation group at Chicago law firm Novack & Macey, LLP that may help illustrate some the legal theory behind some disputes over commissions in commercial real estate. Mann, a commercial real estate litigator practicing in Illinois for twenty years as well as admitted to the Washington DC bar, shares some thoughts concerning legal fights over commission money, including notions of “procuring cause,” a claim that brokers add weight to with every communication they make with and concerning prospects, properties, contracts and other pieces on the game board of the commercial real estate marketplace.
As always: never, ever, ever take anything you read at The Source as legal advice, and always, always, always seek qualified commercial real estate counsel!
Mann on “procuring cause:”
In court, it is the broker’s burden to prove that he or she was the procuring cause of the transaction. Typically, brokers will attempt to satisfy the procuring cause standard with evidence like correspondence between the broker and the owner, advertising and marketing materials for the property, and testimony establishing the broker showed the property to the prospective tenant or purchaser and/or negotiated the transaction. Conversations between the broker and the parties to the transaction are often critical in these cases. A broker may also prove that he or she was the procuring cause of a transaction with evidence that the broker provided the eventual buyer or tenant with information such as zoning regulations, tax information, and construction details.
A broker will not be considered the procuring cause of a transaction where the court rules that the broker’s influence on the transaction was only “slight,” the broker was initially involved for a short period of time, but another broker actually induced the buyer or tenant to enter into the transaction, or where the contract actually signed differs so greatly from the contract the broker originally was authorized to negotiate that the actual contract was beyond the parties’ original contemplation.