Real Estate Ethics

[mmurphy]

I was solisted by a local real estate agency to sell my commercial property to MSRA. I declined, a few months later the same agency came to me to rent out space for storage for MSRA. I agreed that I would consider it, no discussions were had, aside from a few general remarks over the phone with the real estate agency. Thursday afternoon, the real estate agency called me up saying the papers were ready, the check was cut, could I come and sign it.. First of all, I have issues with the process, it should have been discussed. BUT -- If I didn't hire this real estate agency to do this for me, why are they taking the first month rent from ME to "secure tenant" and prepare the documents? Is this ethical, shouldn't the leasee pay that, they're acting in his interest, not ours. ???

 

[Tracey]

Sounds like the agency is operating under the time-honored 'assume the deal is done' method. You did not engage the agency to act as your property managers. You did not sign an agreement setting forth the terms of any property management agreement. The agency is trying to get its "sales" commission by getting you to agree to give up your first month's rent. Don't do it. The agency has probably stuck a monthy "administrative fee" of 3-7% of the rent in the lease, too.

You are correct when you say that the agent is the buyer/leasee's agent, not yours. It is up to MSRA & the agent to work out how the agent gets paid. Inform both the agent & MSRA in writing (certified, return receipt) that you did not engage the agent to act as your property manager, and that the agent is MSRA's agent and must seek payment from them. The agent has done a very slick "switch" on you & is trying to turn him/herself into your agent & hoping you don't notice!

Include your own lease contract & tell MSRA that any rental will be governed by your lease, not the one their agent drew up. You should also indicate which terms of the lease are negotiable. DO NOT sign the lease MSRA's agent wrote up without having your own attorney review it first. Think about it -- they wanted to buy the property & they had their agent write the lease. The agent has no fiduciary duty to you whatsoever & has undoubtedly written the lease in MSRA's favor. A further warning bell: "your" rental agent is asking you to sign a lease you've never seen, just because there's a check waiting for you. This is not how an agent behaves.

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.

[This message has been edited by Tracey (edited June 12, 2000).]