February 5th, 2018 at 11:41 am
Answer: It depends. Your compensation agreement for this lease transaction is with the listing agent who placed the property in the MLS. For a future lease renewal, some MLSs have a field for the listing agent to offer a “Renewal Compensation.” If that box says “Yes,” the listing agent will owe you compensation for a lease renewal. But if the Renewal Compensation field says “No” or if the MLS doesn’t have a field for Renewal Compensation, you are not entitled to compensation from the listing agent for a lease renewal. Similarly, for a future sale of the property to your client, you are not entitled to compensation from the listing agent, unless otherwise provided in the MLS.
For a future lease renewal or sale, you may technically have a compensation claim against the landlord, because you are arguably a third-party beneficiary of the Lease Listing Agreement between the landlord and listing agent. Unfortunately, the chances of winning a third-party beneficiary claim are not great, given that you are not an actual contractual party to the Lease Listing Agreement.
Probably the best approach in this situation is for you to negotiate with your own client, the tenant, to pay you for a future lease extension or renewal, or purchase of the property. You may use the C.A.R. standard-form Lease/Rental Commission Agreement (Form LCA) for this purpose.
You may be tempted to get the landlord to sign your LCA, or the listing agent to pay you for a future lease renewal or sale. However, be aware that the NAR Code of Ethics (Standard of Practice 16-16) prohibits you from: (1) Using the terms of an offer to lease to attempt to modify the listing agent’s offer of compensation to the tenant’s agent; or (2) Making the submission of an executed lease contingent upon the listing agent’s agreement to modify the offer of compensation.
-Thank you to Fred Coleman (Santa Monica Manager) for suggesting this week’s legal tip.
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