Background: As a buyer’s agent, you should thoroughly understand your entitlement to compensation in any given situation. One way to help seal the deal is to enter into a C.A.R. Buyer Representation and Broker Compensation Agreement (BRBC) with your buyer-client. The new BRBC form uses a new term, “Broker Involvement,” which means certain tasks that you may be required to perform to claim your commission (see paragraph 4B(1)). It’s a very low threshold that you will satisfy for a certain piece of property by acting on your buyer’s behalf, such as by showing the property, providing your buyer with a written broker analysis, or submitting the buyer’s offer. However, merely sending a list of properties to your buyer, absent more, is not considered to be “Broker Involvement” under the BRBC.

Multiple Choice Question: When are you, as the buyer’s agent, required to have “Broker Involvement” to be entitled to compensation under the BRBC? Pick the best answer:

A. When you have a non-exclusive BRBC.
B. Both Answer A and when identifying properties to protect under your safe harbor period.
C. When you have a procuring cause claim.
D. All of the above. 

Answer: Answer A is not wrong, but it’s not the best answer. By default, the new BRBC is a non-exclusive representation agreement, unless you check the box in paragraph 4B(2) to convert the form into an exclusive representation agreement. As a non-exclusive agreement, you are only entitled to compensation under the BRBC if you had “Broker Involvement” for the property (see paragraph 4B(1)). But if you check the box for an exclusive agreement, as you should strive to do, you will be entitled to compensation regardless of any “Broker Involvement.”

Answer B is the best answer. You can protect your compensation during a safe harbor period after your representation period ends, as long as you give your buyer a list of properties you have identified with “Broker Involvement” (see paragraph 4E of the BRBC). You must have “Broker Involvement” for properties protected under your safe harbor period, regardless of whether you have an exclusive or non-exclusive agreement. You can use C.A.R.’s Notice of Broker Involved Properties (NBIP) to give your list of properties to the buyer before your representation period ends.

Answer C is wrong. Do not confuse “Broker Involvement” with “Procuring Cause.” There is some overlap, but the 2 terms generally pertain to very different claims. “Broker Involvement” generally pertains to your commission claim against your buyer under your BRBC contract. To recover under the BRBC, you would generally have to go against your own buyer through mediation, arbitration, and/or the filing of a lawsuit.

In contrast, “Procuring Cause” is generally understood in our practice to be a claim that a buyer’s agent may have against another agent from another brokerage for the compensation offered through the MLS. To recover under the MLS rules, you would generally file a claim against the other brokerage through local board arbitration (or C.A.R. interboard arbitration).

To win an MLS board arbitration matter, you generally want to satisfy as many of the 23 “Procuring Cause” factors as you can, such as by introducing the property to the buyer, showing the property, providing information to the buyer, writing the buyer’s offer, and working for the buyer. Most notably, 4 of the 23 “Procuring Cause” factors favor the agent with an applicable BRBC. For more information, take a look at C.A.R.’s Procuring Cause Guidelines (password-protected for C.A.R. members only).

-Thank You to Jeanette Amen (La Jolla Office) for suggesting this week’s legal tip!

Copyright© 2023 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of February 6, 2023. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.