Standard practice has been that sellers and landlords customarily cover the brokers’ fees in the commercial real estate landscape. This ruling puts these types of arrangements at risk and will likely reshape the industry by prompting stricter regulations, increasing transparency, strengthening client protections, and fostering a more ethical environment.
To safeguard their interests and navigate the evolving terrain, commercial real estate practitioners are advised to engage with qualified legal counsel to explore the integration of targeted risk management terms into their listing, commission and commercial lease agreements.
Here are key considerations:
Disclosure and Transparency | Transparency is key in commercial leasing. The jury decision will likely lead to increased scrutiny of real estate companies involved in commercial leasing transactions. Parties engaging in unethical (or potentially illegal) practices will face stricter scrutiny from clients, regulators, and industry watchdogs. Both lessors and lessees should consider disclosing an abundance of material facts that could impact the other party’s interests. A well-drafted lease should emphasize the importance of full disclosure, fostering an atmosphere of trust and openness between the parties.
