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The Listing Agreement is a document that establishes a contractual relationship between the owner of a property (referred to as the 'Owner') and a broker (referred to as the 'Broker'). This agreement grants the Broker the sole and exclusive right to lease the property for a specified term. The importance of this document lies in its ability to protect the interests of both parties involved in the leasing process.
The entire document consists of several sections that outline the terms and conditions of the agreement. The first section is the 'Title' which clearly states that the document is a Listing Agreement. This sets the context for the rest of the document. The second section is the 'Content' which provides a detailed description of the agreement, including the parties involved, the property being leased, and the commission schedule.
The 'Lease Terms' section specifies the conditions under which the leasing commission will be paid to the Broker. It states that the commission will be paid when the Broker procures a lease on terms set forth in the agreement or if the Owner directly or through another person or entity leases the property. It also mentions that a leasing commission will be paid if the Owner enters into a lease agreement within six months after the expiration of the listing with anyone who received information on the property during the term of the listing.
The 'Commission Schedule' section provides details on how the leasing commission will be calculated. It states that the commission will be calculated at a rate of commission of the total gross rentals due pursuant to the initial lease term. If a tenant procuring broker is involved, the commission will be the greater of the standard leasing commission or the gross sum of the amount calculated at a rate of tenant procuring broker of the total gross rentals due. Additionally, a tenant procuring bonus commission will be added at a rate of one dollar per rentable square foot per year of the initial lease term.
The 'Minimum Leasing Commission' section states that the minimum leasing commission will be equal to one month of the highest monthly rental payment amount due pursuant to the lease. If a tenant procuring broker is involved, the minimum leasing commission will be equal to one and a half months of the highest monthly rental payment amount due.
The 'Agency / Dual Agency' section authorizes the Broker to appoint other salespersons affiliated with the Broker as sub-brokers and to enter into cooperative brokerage agreements. It also addresses the issue of dual agency, stating that the Broker may act as a dual agent if the property is leased to a lessee represented by one of the Broker's salespersons or if the property is leased to a lessee who the listing broker also represents.
The 'Sign Block' section specifies the terms related to property showings and signage. It states that the Broker is authorized to show the property during specified hours and days and to place signs on the property. It also mentions that the agreement will continue on a month-to-month basis after the expiration date unless terminated by either party with thirty days of written notice.
In conclusion, the Listing Agreement is a crucial document that establishes the rights and obligations of the Owner and the Broker in the leasing process. It outlines the commission structure, addresses the issue of dual agency, and provides guidelines for property showings and signage.
1. Enter the relevant information: Fill in the names and principal places of business of the Owner and the Broker in the agreement. This ensures that both parties are clearly identified.
2. Specify the lease terms: Provide the details of the property being leased, including its location and description. This helps in accurately identifying the property.
3. Understand the commission structure: Familiarize yourself with the commission schedule mentioned in the agreement. This will help you understand how the leasing commission will be calculated.
4. Determine the minimum leasing commission: Calculate the minimum leasing commission based on the highest monthly rental payment amount due pursuant to the lease. This will ensure that the minimum commission amount is correctly determined.
5. Be aware of payment terms: Note that commissions are due and payable in two installments - one-half on lease execution and payment of a deposit, and one-half on occupancy. Understand that the Broker is authorized to apply deposits held in their trust account towards the payment of commission.
6. Understand the consequences of non-payment: Be aware that any unpaid commission will accrue interest at a rate of ten percent per annum. Understand that the non-prevailing party in a legal action to enforce the agreement will be responsible for paying attorney's fees and legal costs.
7. Consider commission sharing arrangements: Understand that the Broker reserves the right to determine commission sharing arrangements with any tenant procuring brokers or buyer procuring brokers. This ensures transparency in commission distribution.
8. Be aware of the dual agency provision: Understand that the Broker may act as a dual agent if the property is leased to a lessee represented by one of the Broker's salespersons or if the property is leased to a lessee who the listing broker also represents. This provision helps in managing potential conflicts of interest.
9. Follow property showing and signage guidelines: Adhere to the specified hours and days for property showings and ensure that only the Broker's signs are displayed on the property. This helps in maintaining consistency and professionalism.
10. Termination of the agreement: Note that the agreement will continue on a month-to-month basis after the expiration date unless terminated by either party with thirty days of written notice. Be aware of the termination process and ensure compliance with the notice period.
By following these steps, you can effectively use the Listing Agreement to establish a clear and mutually beneficial leasing arrangement between the Owner and the Broker.