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Updated almost 7 years ago on . Most recent reply

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Brandon Fierra
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Assigning Lease - Who pays broker commission, Landlord, Assignor?

Brandon Fierra
Posted

Hello,

I am on the landlord side of a retail strip center in Los Angeles, CA. We have a small market tenant with 3 years remaining on the original term plus 1 option of 5 years. The option is personal to the market tenant only.The market tenant wants out of the lease and has contracted with a broker to find a replacement tenant. The landlord is not contracted with or represented by the broker. The market tenant wants to assignee the lease of only 3 years remaining to an ice cream retailer, but the ice cream retailer wants to have 1 option of 5 years. The landlord doesn't have to agree, but is willing to give that 1 option of 5 years in order to make the assignment deal come together. Just recently, the broker says the market tenant is only responsible for the broker commission of the 3 years remaining on the lease, and that the landlord needs to pay a broker commission for the option given to the ice cream retailer. 

I thought this was strange because the landlord is not the client to the broker, the market tenant is the client to the broker, there is no contract between the landlord and the broker, and the landlord doesn't have to give an option to help the market tenant assignee the lease to the ice cream retailer.

Am I correct in saying that the market tenant should pay for any broker commission in relation to the 3 year assignment and the 1 option of 5 years?

Any help will be much appreciated. Thank you in advance.

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