When Does a Real Estate Broker Earn a Commission in Washington
Whether you are a business owner seeking to sell a commercial property or a family buying their first home in Seattle, you might well work with a broker to consummate your real estate transaction. Basically, a broker for a seller in a real estate transaction receives a commission typically in the form of a percentage of the sale though the contract between the broker and seller will dictate the specific terms. Under applicable law in the State of Washington, the agreement determines the terms and conditions of broker compensation. However, there are many situations where the language of the contract is ambiguous. If the contract is unclear or silent in terms of when the broker’s fee is earned, the broker will not be deemed to have earned a fee unless he or she is the “procuring cause” of the sale.
This equitable doctrine requires a seller to pay a fee to a broker who procures a buyer on specific terms. This legal doctrine is based on the premise that the seller and buyer should not be permitted to be financially enriched at the broker’s expense. The procuring cause principal prevents the buyer and seller from completing a real estate transaction and circumventing the right of the broker to collect a fee for facilitating the sale. If the broker’s efforts contribute to the sale, the broker should be paid for his efforts.
Absent contrary contract language, the broker only collects a fee if he is a procuring cause of the sale. While this does not mean that the broker must be the “sole” cause of a sale, the procuring cause standard does require more than the simple fact that the broker commenced performing under the contract. The right to a commission will turn on evidence of at least some minimal causal relationship between the broker’s activities and the consummation of the sale according to the agreed terms. See Lloyd Hammerstead, Inc. v. Saunders, 6 Wn. App. 633, 495 P.2d 349 (1972).
If a seller wishes to specify a different standard that controls when a broker has earned his fee, this must be clearly articulated in the agreement between the parties. If you have questions regarding your liability for broker fees in a real estate transaction, you should retain legal counsel to ensure that your interests are protected. To schedule a free consultation with a Seattle real estate attorney, call the Dickson Frohlich today at (253) 572-1000 or send us an email at [email protected].