After August 14, 2024, the broker compensation fields for real estate transactions will be removed from Bright MLS. NVAR has received questions regarding a tenant or a tenant’s broker’s ability to request financial contribution from the landlord or landlord’s broker. In those instances, here are 2 options:
(1) Listing Brokerage and Tenant’s Brokerage Compensation Agreement: The listing brokerage for the landlord can offer a portion of their commission to the tenant’s brokerage upon successful ratification of a lease. This agreement was previously enforced by the MLS through the compensation field. Now, the brokerages will need a separate, written agreement in order to memorialize compensation offered to the tenant’s brokerage, if any. If that is the case, the brokerages can use the following language to formalize their agreement:
This Agreement (“Agreement”) is made on , between (“Listing Brokerage”) and (“Tenant’s Brokerage”), relating to the lease and rental of Premises: .
Listing Brokerage and Tenant’s Brokerage agree that Listing Brokerage will pay Tenant’s Brokerage the following amount upon ratification of a lease for Premises:
o % of first full month’s rent, OR o $ .
Listing Brokerage and Tenant’s Brokerage authorize Listing Brokerage to collect the first full month’s rent from Tenant and disburse the amount specified above to Tenant’s Brokerage at ratification of the lease.
Keep in mind that both the listing brokerage and the tenant’s brokerage must agree in writing to the final amount in the blanks above in order to memorialize this request and create a binding agreement between the brokerages. This Agreement can include an email, but the best practice would be to place these final terms on a blank document, signed and dated by both brokerages. Importantly, this Agreement would not be an addendum to the lease.
(2) Landlord-Tenant Compensation Agreement The tenant may request financial contribution from the landlord to be paid directly to the tenant’s agent. In that case, the tenant and landlord may use the following language to formalize their agreement:
This Agreement (“Agreement”) is made on (“Effective Date”) by and between (“Landlord”) and (“Tenant”) who acknowledge by their signatures below that in this real estate leasing transaction, (“Listing Brokerage”) represents Landlord, and (“Tenant’s Brokerage”) represents Tenant.
Premises: -______________________________________________________________.
In the event that Landlord and Tenant enter into a lease for Premises, Landlord will pay Tenant’s Brokerage the following amount upon ratification of the lease:
o % of first full month’s rent, OR o $ .
Landlord and Tenant authorize Listing Brokerage to collect the first full month’s rent from Tenant and disburse the amount specified above to Tenant’s Brokerage at ratification of the lease.
This language can be inserted into an addendum to the Lease, or it can stand as its own agreement between the parties. The landlord and tenant must agree in writing to the final amount in the blanks above to memorialize the request and create a binding agreement between the parties. We recommend the final terms be signed and dated by both the landlord and tenant.
Finally, please keep in mind that these options are two separate and distinct agreements, meaning that if you use both, the tenant’s brokerage may be paid twice. Always double-check your own brokerage agreements with your clients as well to ensure the type of request made here aligns with the current version of the brokerage agreement.
For specific questions and follow-up, please contact the Legal Hotline & FAQs (nvar.com).