The NAR Antitrust Settlement reshaped how buyer broker compensation operates, and with it, the arbitration landscape on which REALTORS® have relied for decades. That may leave REALTORS® wondering about procuring cause claims now that cooperative compensation is no longer advertised on the MLS. Here is a look at where things currently stand. 

A Quick Refresher on REALTOR® Arbitration 

All REALTOR® principals, by virtue of their membership as REALTORS® and/or members of a REALTOR® MLS, agree to arbitrate certain real estate disputes with other REALTORS®. Article 17 of the Code of Ethics requires REALTORS® to arbitrate contractual disputes, along with certain non-contractual disputes.  

Where Procuring Cause Enters  

This is where the concept of procuring cause has traditionally come into play. Think back to before the NAR Antitrust Settlement, when listing brokers still advertised cooperative compensation on the MLS. It was not unusual for two different buyer brokers to each claim they were the reason a buyer closed on a home. Both would argue they were the procuring cause of the sale, and both believed they earned the cooperative compensation as a result. 

In that scenario, one buyer broker could file an arbitration claim against the other, asserting procuring cause. Notably, the two buyer brokers had no contract between them, which meant this was a non-contractual dispute, and Article 17 (Standard of Practice 17-4) made it arbitrable. 

How the Settlement Changed the Picture 

Today, listing brokers are prohibited from advertising cooperative compensation on the MLS, and most transactions now address buyer broker compensation directly in the purchase contract. That means there is typically no offer of cooperative compensation left over which two buyer brokers can fight, which means no claim of procuring cause.  

So where does that leave procuring cause? Is it dead? 

Not Dead, But on Life Support 

Procuring cause is not dead, but it is fair to say it is on life support. A few scenarios can still give rise to a legitimate procuring cause claim. 

One is when a listing broker extends an offer of cooperative compensation outside the MLS—through some other means—to two different buyer brokers, both of whom then claim to be the procuring cause of the sale.  

There could also be a particular scenario where buyer broker compensation paid by a principal to the transaction is still arbitrable. If a buyer broker is compensated by the seller or the buyer rather than by the listing broker, and the listing broker responds by reducing the commission the seller owes, another buyer’s agent who believes he or she was the procuring cause of the sale could still bring an arbitration claim. The commission reduction is the key fact. It implies that the listing broker had originally offered cooperative compensation, and that offer was effectively rescinded once someone else—the buyer or the seller—compensated the buyer broker directly. 

Other, rarer scenarios are addressed in Standard of Practice 17-4. 

The Bottom Line 

The practice changes stemming from the NAR Antitrust Settlement have fundamentally changed the arbitration landscape. With cooperative compensation no longer shared on the MLS, and most brokers moving away from the cooperative compensation model altogether, there are simply fewer situations where two buyer brokers may arbitrate who was the procuring cause of a sale. 

If you have questions about arbitration or procuring cause, contact us on the Virginia REALTORS® Legal Hotline.