§ 29A.02 Basic Provisions of the Leasing Brokerage Agreement

• Jurisdiction: United States
• Publication year: 2022

§ 29A.02 Basic Provisions of the Leasing Brokerage Agreement

The brokerage agreement for a leasing transaction, like that for other real estate transactions, requires three basic provisions. The first covers the amount of the commission and the method of its computation. Many leasing transactions include complex rental provisions or potential commission-generating events. If the method used to calculate the commission is imprecise, the compensation payable to the broker cannot be definitively determined. In such a case, a court might hold that this basic term has not been agreed upon.

The second required provision is the description of the leased premises. The description in the brokerage agreement need not be as precise as a legal description or the description necessary in the lease itself. However, it must identify the premises sufficiently so that it can be determined with reasonable certainty. In one case, the agreement described the office space merely as "Park Central VI." The appellate court held that under Texas law the purpose of the description is not to identify the exact boundaries of the leased premises, but to afford a means of identification. The court granted remand to allow the broker to prove that a person familiar with the area could possibly locate the premises with reasonable certainty.¹

The third basic requirement relates to the lease rent. This term must be precisely stated, in the brokerage agreement, so that it can be determined if the broker provided a tenant willing to pay the rent desired by the landlord. A precise...