Oral Brokerage Contracts, Procuring Cause, and Real Estate Commissions
Pure commission-based professionals working in the highly competitive real estate field can face steep challenges even when everyone plays by the rules. So when a broker or agent works to put together a deal but does not receive a commission for their efforts, it can be demoralizing.
Florida recognizes oral brokerage agreements as valid.
But there is good news for brokers and agents who are circumvented in a deal that they were instrumental in closing. Florida law provides financial relief for realtors cut out of a deal—as long as the broker or sales associate is found to be the procuring cause of the transaction.
If you did not receive a real estate commission that you are contractually entitled to—whether the contract is written or oral—the Business Trial Group can help. We handle all real estate commission disputes on a contingency-fee basis, so you pay no fees until we prevail in your case.
Oral Real Estate Contracts
Issues regarding procuring cause are often found where there is no written brokerage agreement.
Florida law recognizes oral brokerage agreements as valid and enforceable. While the burden of proof is on the party who asserts an oral contract, and it is certainly more prudent to have a written agreement, a real estate broker or agent can still recover their commission even when there’s no written contract.
Procuring Cause in Florida
As a general rule, to entitle a broker to a commission, the broker must either find or procure a purchaser or effect a sale of such property.
The broker is typically entitled to a commission when he or she produces a purchaser that is “ready, able and willing to perform upon the terms fixed.” This is known as the procuring cause doctrine.
To earn a commission under the procuring cause doctrine, the broker must bring the parties together and a sale must be effectuated as a result of continuous negotiations between the seller and buyer.
The broker/agent has two requirements under the doctrine in order to be entitled to a commission: (1) initiate negotiations by doing some affirmative act to bring buyer and seller together; and (2) remain involved in the continuing negotiations between buyer and seller.
The Continuous Negotiations Test
To satisfy the second prong of the procuring cause test and for the transaction not to be considered abandoned, there must be continuous negotiations between the parties.
While there is no definitive line in the sand and it can vary depending on the type and complexity of the transaction, Florida courts have found that transactions were not abandoned when as long as a year went by without communication between the broker and client.
There is also an exception to the continuous negotiations requirement when the broker is purposefully excluded from the continuous negotiations. In this situation, the broker needs to prove that the parties negotiated directly with each other without the participation of the broker who first brought them together.
Protect Your Right to a Real Estate Commission
The main takeaway for real estate agents and brokers is that under Florida law, your word counts. With or without a written brokerage agreement you are still entitled to a commission if you were the procuring cause of a real estate transaction.
You are entitled to a commission if you procured a real estate deal.
If you think you are owed a commission on a residential or commercial real estate transaction, you should speak with an experienced attorney as soon as possible. Real estate commission lawsuits tend to be fact intensive, so it is important get legal advice as soon as you think a problem may arise. You may also be able to gain an advantage by getting a broker’s lien before the transaction closes. Acting quickly to secure representation will give you the best opportunity to recover what you are owed.
Contingency-Fee Real Estate Litigation
The Business Trial Group has successfully represented numerous residential and commercial real estate brokers in commission disputes, achieving significant settlements and verdicts.
From our more than 40 offices, we regularly assist clients in Miami, Ft. Lauderdale, West Palm Beach, Naples, and throughout Central and North Florida. And because we work on a contingency basis, you will pay no retainer or hourly fees, and no fees whatsoever until we successfully resolve your case.