Building Better Leases Series – Disclosures Regarding the Nature of a Real Estate Agency Relationship

Building Better Leases

This section of the Lease refers to the relationship that the Lessor and Lessee have with the Brokers.

As long as it does not contradict the affirmative duties described, an agent is not obligated to reveal confidential information shared with the agent by either Party. “Loyalty” is the term used to describe the only real difference between how an agent is to deal with his client and how the agent is to deal with another Party. Loyalty implies that the Broker has a fiduciary obligation to look out for the best interest of his client. Other than that, the Broker has the same obligations of integrity, honesty, and professionalism to both Parties. This goes for both thee Lessee’s Agent and the Lessor’s Agent.

If the same Agent represents both the Lessee and Lessor, then the Broker is prohibited from disclosing the deal points for which either Party is willing to settle. In addition, the Lessee or Lessor are not relieved of their responsibility to protect themselves, read all agreements, and/or consult with legal or tax professionals. A Dual Agency is created not only when one agent represents both Parties, but also when two agents working under the same broker’s license represent the Parties. Therefore, the Brokers are advised to disclose to the Parties the nature of the Dual Agency if it exists and get each Parties consent in writing to the Dual Agency.

Brokers act as third parties, and thus are not responsible under the Lease for a Default or Breach by either Party. After one year, the Parties may not bring a Broker into legal action for breach of duty or error or omission relating to the Lease. Furthermore, the Broker’s liability, including court costs, cannot exceed the amount of is fee for the Lease transaction. The purpose of this section is to protect Brokers. Just because there are protections, it does not mean that a Broker will not be named or involved in litigation, so it’s important that they uphold their services for the duration of the Lease.

The information provided does not, and is not intended to, constitute legal advice; instead, all information is for general information purposes only. Consult an attorney for legal advice.