Realtor lease extension fee
Our current rental house tenant with one year lease was found by a realtor who we paid 5% yearly rental income as her commission when we rented the house to the tenant. The tenant wanted to extend the lease after a year. We drafted up and signed an addendum to the lease to extend the lease for another year. Two months after we extended the lease with the current tenant, the realtor who found the tenants for us more than a year ago came and demanded that we pay her another 5% of the full year rental as her commission again for the lease renewal. We did all the renewal paperwork ourselves with the current tenant and the realtor was not involved in any of it at all. We were surprised at her demand as we only paid one-time 5% yearly rent commission to any other realtors who had found a tenant for us with or without lease renewal. However, she presented us with the simple standard contract we had signed with her more than a year ago, which had an extra small insertion of a line stating that she would receive the same amount of 5% full commission every time we renew the yearly lease with this current tenant she had found for us. We did not pay close attention to this seemed usual simple contract at the time as we had done this so many times with other realtors in the past with no issues. We never expected that she had inserted something so unreasonable in the contract. Is it legal for realtor to ask for full commission every year when you renew the lease with the same tenant while she is not involved in the process at all? If this is the case, we will probably have to look for another tenant instead.
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#4 All Forums Contributor
- Real Estate Broker
- Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
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#4 All Forums Contributor
- Real Estate Broker
- Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
Yea that's a bummer. That fee is excessive.
We are in Southern California.
#2 Contractors Contributor
- Severna Park, MD
Its in the contract and you signed it . And there is no such thing as a "standard " contract .
#4 All Forums Contributor
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#4 All Forums Contributor
- Real Estate Broker
- Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
Yea that's a bummer. That fee is excessive.
#3 Managing Your Property Contributor
Does it say every time you renew the lease or every time you renewal the annual lease? ie next time can you get the tenants to sign a 2 year lease and not pay her the 5%? That seems excessive especially if she isn't doing anything.
A 5% commission isn't bad. I typically pay 1 month rent which works out to a little over 8%. It's the dollar amount that matters though. Your CA rents are probably higher than what I charge.
The contracts my realtor uses have the same kind of clause requiring payment of another 1 month rent commission on renewals. I always strike that out and my realtor doesn't object. I also strike the clause that says the realtor is due a 6% commission if I sell the property to the tenant they found for me.
Always read the contract in its entirety.
- Real Estate Broker
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It's a ridiculous fee. Excessive. Unjustified.
Whatever. You signed a contract and should abide by it. I highly recommend you negotiate a lower fee for this year to satisfy the agent and then get a written termination of services so that it's clear she will never be paid again.
- Nathan Gesner
It sounds like it was in the contract you signed, and the Realtor is due that money. That being said, you can try to negotiate new terms and write up a contract addendum. For example, if you think there's a chance this tenant will renew again, try to amend the contract to say she gets a lower rate for future renewals, and next time have her do the work for it!
It sounds like she's shortsightedly burning a bridge with a client (you) for a relatively small commission, killing the chance for a larger commission from future rentals/purchases/sales in the future!
What are the termination conditions of the contract? Maybe there's no way to undo the past, but at least you can figure out how to get out of it for next time. I'm sure it's not "forever".. if it's unspecified or ambiguous, then I would talk to a contracts lawyer to figure out how to cleanly get out of it.
This is tough one in the each state handles contract law in a different manner. This goes specifically to "procuring cause" and I would find this clause hard to enforce...but I'm not in CA. If you don't have an attorney to bounce this off of, maybe you could call the Realtor association in your area and ask to speak with someone about this.
If you signed such a contract and thereby agreed to pay the renewal commission, then that leaves you with this:
Never, ever use that realtor ever again. Never. Ever.
I never mind paying for services I use. Being held hostage is not something I value.