§ 29A.08 Form of Brokerage Agreement for Services to Landlords

• Jurisdiction: United States
• Publication year: 2022

§ 29A.08 Form of Brokerage Agreement for Services to Landlords¹

[1]—Issues of Scope

One of the first issues to address when setting up a brokerage relationship is the scope of the engagement. "The most comprehensive agreements are written broadly to cover any sale, lease, or sublease as well as any change in ownership, transfer, exchange or other disposition to any person that occurs during the term of the broker's agreement."² Typically, in lease and sublease listings, the broker's agreement will include renewals and expansions. The typical language proposed by the broker includes all people brought to the table regardless of who brought them there. It is important to limit liability by specific exclusion of certain people and situations. For example, anyone with whom the client was already dealing should be excluded, as should inter-company transactions, family deals or partner buyouts if a restructuring or merger is likely or planned.³

[2]—Form of Brokerage Agreement

The following is a form of an exclusive agency brokerage agreement for office and retail space leasing transactions within an entire office building, which addresses some of the issues discussed above, and which includes a form letter agreement required for outside brokers. Note that many potential issues are hopefully eliminated by dealing with them specifically by inclusion or exclusion, such as, for example, the limitation of the scope of the broker's agency to leasing transactions for available rental premises and the exclusion of the sale, ground leasing, or financing of the fee estate or the entire building.

BROKERAGE AGREEMENT

THIS AGREEMENT ("Agreement") is made as of __________ by and between __________ ("Landlord"), a __________ corporation duly constituted and authorized to conduct business under the laws of the State of New York, having a principal place of business at __________, New York, New York 10000, and __________ ("Broker"), a __________, duly constituted and authorized to conduct business under the laws of the State of New York, having a principal place of business at __________, New York, New York 10000.

WITNESSETH:

WHEREAS, Landlord is the owner of the property known as __________, New York, New York, 10000, (hereinafter referred to as the "Property") and;

WHEREAS, Landlord is seeking to lease current or future vacant or available office and/or retail space at the Property (such vacant or available office and/or retail space is hereinafter singly and/or collectively referred to as the "Available Premises"); and

WHEREAS, Broker warrants and represents that Broker is a real estate broker duly licensed pursuant to the laws of the State of New York; and

WHEREAS, Landlord desires to employ the services of Broker as its exclusive rental agent for the leasing of the Available Premises to tenants which are acceptable to Landlord (hereinafter referred to singly as "Tenant," collectively as "Tenants"), in Landlord's sole discretion, and on such terms and conditions as may be acceptable to Landlord, in Landlord's sole discretion;

NOW, THEREFORE, in consideration of one dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Recitals; Appointment. The above recitals are incorporated herein and made a part hereof as if fully set forth. The Landlord hereby appoints Broker as the exclusive rental agent with the exclusive agency right to obtain Tenants only for the Available Premises and for no other space in the Property or for any other purpose. The appointment of Broker and Broker's performance under this Agreement shall exclude, and no commission shall be payable on account of, the lease, sublease, release, surrender, or other disposition of takeover space from a proposed Tenant of Available Premises, or the sale, syndication, net sublease, financing, refinancing, or other disposition of the fee estate, any ground leasehold and/or any building on the Property, whether or not such disposition arises as a result of an option or right granted to a Tenant pursuant to its lease, or otherwise. Broker hereby agrees to perform said service in accordance with the terms and conditions of this Agreement.

2. Term. The term of this Agreement (the "Term") shall commence on __________ (the "Commencement Date") and shall expire at midnight on __________ (the "Expiration Date"), unless sooner terminated as hereinafter provided in Section 8 hereof.

2.1 Renewal Option: The Landlord shall have the two options to renew this Agreement, each option extending the Term for one additional year, with each option to be exercised by written notice given at any time during the Term by Landlord to Broker.

3. Landlord's Approval. All terms and conditions of a proposed lease for the Available Premises (a "Lease") shall be subject to Landlord's sole and absolute discretion to approve or disapprove. Accordingly, a Lease shall become effective only when (i) approved by Landlord's Board of Directors, (ii) signed by an authorized officer of Landlord and by a partner, officer or managing member of, or other individual duly authorized by Tenant, (iii) delivered by Landlord to Tenant, and (iv) all conditions precedent to the effectiveness of the Lease have been satisfied. Nothing contained in this Agreement shall be construed as granting Broker any right, power or authority to enter into any Lease or other occupancy agreement in the name of, or on behalf of, Landlord, or to bind Landlord thereto or hold Landlord obligated or liable thereunder without Landlord's prior written consent. The Lease shall be executed only by Landlord and not by Broker.

4. Broker's Commission.

4.1 Payment of Commission.

(a) In consideration of Broker's efforts with respect to a Lease being entered into by and between Landlord and Tenant, Landlord agrees to pay to Broker, and Broker agrees to accept from Landlord as payment in full in connection with each such Lease, a leasing commission calculated and payable as provided in this Section 4 and in accordance with the rates and at the times set forth in Exhibit A attached hereto and made part hereof, entitled "Schedule of Commissions." In the event that the Lease is not executed by Landlord and Tenant for any reason whatsoever, including, but not limited to, any default or act of omission or commission, arbitrary, intentional, or otherwise, by either of the intended parties to the Lease, or by reason of any lack with respect to obtaining or failure to obtain any approval or consent that may be necessary or required by either of such parties, or by reason of any of the conditions precedent to any commission being payable hereunder not being fully satisfied, Broker hereby waives and releases all rights, claims, and demands in law or in equity for any commission whatsoever in connection with the Lease and all negotiations relating thereto.

(b) In calculating commissions, the term "fixed rent" shall be defined in accordance with the definition contained in the Lease between Landlord and Tenant, and commissions shall be calculated based on the fixed rent payable on an annual basis, prorated for partial calendar years during the term of the Lease. In the event that Tenant's Lease contains increases in annual fixed rent by fixed dollar amount step-ups, then such rent step-ups shall be included in fixed rent in calculating commissions. For purposes, however, of calculating commissions payable under this Agreement, the following items shall be excluded and/or deducted from fixed rent and commissions shall be calculated and payable net of the following items: (i) all additional rents, percentage rents, and all other payments and reimbursements by Tenant during the Lease term, including, without limitation, adjustments in fixed rent calculated upon increases in the wage or labor costs, cost of living formulae, costs of maintaining or operating the Property, or any other escalation formula which increases the fixed rent or additional rent, utility or utility services supplied, maintenance, cleaning, and waste removal services, real estate taxes or payments in lieu of taxes, and all other reimbursable expenses, (ii) any portion of fixed rent which is attributable to the cost of electricity furnished on a rent-inclusion basis, (iii) reimbursements by Tenant for work, labor or materials furnished by Landlord, (iv) with respect to extraordinary construction work, repairs and/or decorating (or other work) which Landlord has agreed to perform for such Tenant, any amounts (A) undertaken to be paid by Landlord to such Tenant, or (A) given as an allowance to such Tenant (either by way of a credit against rent or in a lump sum), (v) any moving costs paid by Landlord or credited to such Tenant, (vi) any other credits given by Landlord to such Tenant against rent for any reason, including but not limited to rent concessions, (vii) payments made by Tenant in connection with any option to cancel contained in Tenant's Lease, (viii) all costs and expenses assumed or incurred by Landlord, if any, in connection with Tenant's lease obligations for space rented by Tenant outside the Property, including, without limitation, expenses incurred in reletting such space until such time as Landlord is relieved of all of such lease obligations of Tenant, and (ix) any rent paid or credited by Landlord to Tenant by reason of Landlord's retaining as subtenant or otherwise retaining any portion of the Available Premises leased to such Tenant.

4.2 Conditions and Time of Payment.

(a) Any commission due Broker shall be deemed earned in full and shall be payable only upon the satisfaction of all of the following conditions (the "Conditions"):

(i) (A) a written Lease for the Available Premises in form satisfactory to Landlord and Landlord's attorneys is unconditionally executed and delivered by Landlord and Tenant and (B) the security deposit, if any, and advance rent required...