The agency disclosure identifies which party each broker represents in the deal: the landlord, the tenant or both. It confirms each side consented in writing to that relationship and usually limits the brokers' role and liability under the lease itself. Knowing who represents whom tells you what information is safe to share.
What this clause does
A typical industrial lease involves two brokers: one hired by the owner to lease the building and one hired by the tenant to find and negotiate space. The agency section of the lease records who represents whom. It is short, usually near the back of the document, and easy to initial without reading.
California generally requires brokers to give written agency disclosures in commercial sale and lease transactions, and many other states have similar rules. The disclosure explains the duties a broker owes a client, including loyalty and confidentiality, and the duties owed to everyone at the table, including honesty and disclosure of known material facts about the property.
The practical difference is loyalty. A broker who represents you is working to get you favorable terms. A broker who represents the other side must deal with you honestly, but is working for the other side.
Agency is about duties, not job titles. A broker may usually work for tenants or usually work for owners, but what counts is the written agreement and the disclosure for this particular deal.
Three ways a deal can be structured
Separate representation. The landlord has a listing broker and you have your own. Each advocates for its client, and the negotiation runs through them. This is the usual structure on mid-size and larger industrial transactions.
Unrepresented tenant. You call the number on the sign and deal directly with the listing broker. That broker's loyalty runs to the owner. They can be knowledgeable, helpful and completely honest, and they are still paid to get the owner higher rent and fewer concessions.
Dual agency. One broker, or two brokers at the same firm, represent both sides. Some states restrict or prohibit it. Where it is allowed, it requires informed written consent from both parties, and the broker cannot pass along either side's confidential position, such as the lowest rent the owner will take or the highest the tenant will pay.
Where it goes wrong
Dual agency is hard to do well. A lease negotiation is largely a contest over the same dollars, and brokers who have represented both sides will tell you it is harder than representing one. If you are offered a dual agency arrangement, ask two direct questions: how will you represent me fairly, and what would be hardest for you in representing both of us? Listen for answers grounded in comparable leases and competing buildings rather than personal reassurance.
The quieter problem is the tenant who never realized it was unrepresented. If you tell the listing broker your move date, your budget ceiling or that this is the one building that works for your operation, assume the owner will hear it.
Most standard lease forms also state that the brokers are not parties to the lease and are not responsible if either side defaults. Some go further, limiting broker liability or shortening the time to bring a claim. Read that language so you understand what recourse you do and do not have.
What to do before you tour
Decide on representation before you start calling on buildings. Once you have toured a property directly with the owner's broker, bringing in your own broker later can get complicated, because the listing side may argue you were already introduced.
Put your relationship with your broker in writing, including how the commission is paid. On most industrial leases the owner pays both brokers under the listing agreement, so the tenant typically does not write a separate check for representation. Confirm that for your specific deal rather than assuming it.
Representation matters after signing too. Your broker should help you track critical dates, work through a sublease or renewal, and tell you how your rent compares to the market as your expiration approaches. If the single broker in your original deal represented the owner, expect that broker to be working for the owner again when your renewal comes up.
Then check the agency section of the lease draft against what you agreed. If it describes the wrong relationship, correct it before signing, and have a real estate attorney review how the broker provisions interact with the rest of the lease.
If you are the tenant
- Ask every broker you speak with, in writing, whom they represent in this transaction.
- Engage your own broker before touring so representation is settled before the first site visit.
- If asked to consent to dual agency, ask how the broker will handle confidential information and pricing, and get the answer in writing.
- Keep your deadline, budget ceiling and fallback buildings confidential unless you are talking with your own representative.
- Confirm who pays the commissions and that it is documented in the lease or a separate agreement.
If you are the owner
- Make sure your listing agreement spells out how dual agency will be handled and how the commission changes when one firm represents both sides.
- When one firm represents both parties, expect your broker to support pricing with market comparables and competing space, not inside knowledge of either side.
- Read the broker provisions of the lease, including any liability limits, so you know which obligations are yours and which are not.
Go deeper in Justin's books
Both books walk through leases chapter by chapter, from the tenant side and the owner side.
Ask any broker who operates in a state where dual agency is allowed, and they will tell you that it is more difficult to represent both parties simultaneously.
Common questions
Does the landlord's broker have to tell me the lowest rent the landlord will accept?
No. A broker representing the owner owes the owner loyalty and confidentiality. They must be honest with you and disclose known material facts about the property, but they are not required to reveal the owner's negotiating position.
Do I pay for a tenant broker on an industrial lease?
On most industrial leases, the owner pays both brokers under the listing agreement. Practices vary by market and deal type, so confirm how your broker is paid in your written agreement before you begin touring.
Is dual agency legal?
It depends on the state. Some states prohibit or restrict it, and states that allow it usually require informed written consent from both parties. Ask your broker how it works where your building is located, and ask your attorney if you have concerns.
General information about how industrial leases commonly work, not legal advice. Every lease is different: have a California real estate attorney review yours before you sign.