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Rent Coach: When does a broker fee agreement expire?

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Q. If you sign a broker fee agreement that has a 180-day term, does that 180 days apply to the lease commencement date or the date the lease was signed?

For instance, if on 4/27/12 I signed a fee agreement with a broker I am no longer working with for an apartment I viewed with him, but I have now signed a lease with an 11/1/12 commencement date for a different apartment I was shown by a new broker in the same building the first broker showed me, have I breached the fee agreement?

A. A brokerage fee agreement typically contains language that protects the broker in the event that their client rents an apartment in a building that the broker has directed them to within a specified period of time.  The client would be deemed to have “rented” the apartment at the time that the leases were fully executed by both parties (i.e. the tenant and the landlord). 

The date that a tenant will take possession of the apartment (aka “the commencement date”) would not be relevant in a determination of whether the broker is owed a fee. 

Thus, in the situation you describe, so long as you and the landlord signed the lease within the 180 day period, you would still be obligated to pay a commission to the broker with whom you signed the fee agreement.

Moreover, if you chose to engage a second broker for the purpose of renting that apartment, you will likely owe that broker a commission as well.  Essentially, you have chosen to hire two different people to do the same job.    

Going forward, if you have signed a fee agreement with one broker and then choose to work with another, it is highly advisable that you provide the second broker with a list of the buildings covered by the first agreement.  That way, your new broker will know not to show you any of those buildings.  Of course, if you would like to hear of new listings in the buildings covered by the fee agreement you could ask your first broker to advise you of them or wait until your agreement with them has come to its natural end.


Mike Akerly is a New York City real estate attorney, landlord, and real estate broker. He is also the publisher of the Greenwich Village blog VillageConfidential.    

 

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