14C — July 25 - August 14, 2014 — Shopping Centers — M id A tlantic
Real Estate Journal
www.marejournal.com
S hopping C enters
By Scott C. Butler, Esquire, Kaplin Stewart Earned commissions under exclusive listing agreements
c ent er f o r sale or lease, the owner of the proper- ty and the broker will enter into a n e x c l u - sive listing agreement to set forth the W
hen engaging a real estate broker to list a retail shopping
mission for any leases or agreements of sale that are executed during the exclusive listing period or during a “tail” period thereafter. This provision should be discussed and negotiated between the parties so that the agreement is clear as to when a commis- sion is earned by the broker. The owner should be care- ful to exclude any trans- actions that preceded the exclusive listing agreement or that might be subject to a “tail” period in a prior listing agreement with a different broker. This will ensure that the owner is not obligated to
pay two listing brokers for the same transaction. The simple solution is to list the excluded transactions on an exhibit to the new exclusive listing agreement and provide that these transactions will not cause any commissions to be paid under the new listing agreement. The owner’s obligation to pay a commission on renewal terms and expansion amend- ments is also an issue that should be discussed between the parties. The broker’s argument is that the com- mission is earned since the broker brought the tenant to the owner and, therefore, should be compensated for the additional rents result- ing from any renewal terms and amendments. The owner, however, has also been a cause in the renewal terms and the amendments by pro- viding an attractive product to the tenant that is causing the tenant to decide to stay at the property or expand its premises. The owner should also be concerned about a sale of the property in the future and how the additional bro- kerage fees that are payable on the existing leases might be perceived by a potential purchaser. Most exclusive listing agreements provide that the broker is to be paid a commission on leases and agreements of sale that are executed with tenants and purchasers that were specifi- cally marketed by the broker, even if such execution occurs after the expiration of the exclusive listing period and during a “tail” period. With regard to this “tail” period, the owner should clarify that only tenants and purchasers that actually submitted a let- ter of intent during the exclu- sive listing period be subject to this provision. Also, the duration of the “tail” period should not be so long that the next broker on the property will want a commission. At some point, the next broker will be able to argue that the letter of intent was no longer in effect and the new broker caused the transaction to occur. Scott C. Butler, Esquire is a principal of Kaplin Stewart in Blue Bell, PA in the real estate transac- tions department. n
Scott C. Butler
amount of the commissions and when such commissions are earned. Many of these agreements provide that the broker is to be paid a com-
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For Sale
• 31,420 Square Feet on 2.75 Acre Site • Stucco Finished Block Construction • Individual Utilities • At Traffic Light • Opposite Toy’s ‘R Us & McDonald’s • Adjoins Million SF Wyoming Valley Mall and Numerous National Big Box & Strip Center Located Retailers & Restaurants • High Traffic Count • Attractive Demographics • Mix of National & Regional Tenants Pine Mall 695 Kidder Street Wilkes-Barre, Pennsylvania
Mountainside Plaza 2243 Scranton Carbondale Hwy, Dickson City, Pennsylvania • 20,400 Square Feet on 1.5 25 Acres • Vinyl Sided, Wood Trimmed Frame Construction • Individual Utilities • Fifty Feet From Traffic Light • Adjoins McCann Technical School • Near 750,000 SF Viewmont Mall and Numerous National Big Box & Strip Center Located Retailers & Restaurants • High Traffic Count • Attractive Demographics • Goodwill Industries is Major Tenant
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