If You Want To File for Mediation/Arbitration...

When brokers can’t agree who is the procuring cause of a sale, they are encouraged to work it out between themselves. However, if this is not possible, the best way to resolve the matter is through mediation or arbitration with the local Association of Realtors.

This will give a quick overview of the process and what constitutes arbitrable issues:

DISPUTES

Through MLS a listing broker offers compensation to a participating broker who is the procuring cause of a closed sale. This is a “contractual” agreement.

In some transactions there is more than one broker who claims to be the procuring cause. This could be based on showing the property, writing the contract or other significant factors.

Procuring cause disputes are subject to mediation/arbitration and usually involve one of more of the following:

The listing broker knows there is more than one broker (agent) involved in the transaction and files a request naming the two cooperating brokers to have the association make the determination before the listing broker pays the selling commission;

The listing broker pays Realtor A at closing; Realtor B feels he/she is entitled to a commission. Realtor B can file against the listing broker or Realtor A or both;

The listing broker believes he/she is the procuring cause but at closing pays the “contract” broker. The listing broker can then file against “the contract broker” For the return of the selling commission.

There are other variations but these are the most common.

Disputes Which Are Not Arbitrable

A disagreement over which Realtor is entitled to a listing agreement is not arbitrable because it is not a contractual issue between the Realtors. It is an issue with the seller. A party seeking a listing commission must sue the seller. The only exceptions is an open lising (See SOP 17-4) where the seller agrees to arbitrate.