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Mortgagetech…, Home Owner in San Jose, CA

I have a commercial office lease (I'm the landlord) and we just made it to 15 years. Is a commision due on the option extension and how much?

Asked by Mortgagetechguru, San Jose, CA Tue Nov 9, 2010

The tenant and I are negotiating the lease rate for the first 5 year option (as the original 15 year lease term is expiring). The original tenants commercial broker is coming back wanting full commissions on the option period even though very little work is required. Is a full commission customary for an option after 15 years. If not, what is customary if anything? Wouldn't it be the commission for years 15-20 rather than a commission amount normally paid for a whole new 5 year lease?

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Technically, if the original tenants stays beyond the lease term then the broker has the right to collect their commission. How much? I really don't know how much you agreed to pay him upon. But it must be stated in your contract.

Have a wonderful day.
0 votes Thank Flag Link Wed Nov 10, 2010
Their was an agreement between the tenant and this commercial broker done 15 years ago but it's been lost. Supposedely, it said commissions were to be paid for options too (of course the tenant doesn't pay the commissions). The contract between myself and my broker (listing broker) clearly stated that there would be no commissions paid on option extensions so we know my broker isn't due anything. The lease agreement between myself and the tenant protects the brokers and their commissions including option periods. However, it is completely silient as to what that amount is. Thus, I come back to what is customary for an option extention of 5 years after the first 15 years. There is no place that says what the commissions are for option periods other than a statement to return to the original commission agreement (which was lost). Hopefully, this helps clarify things.
0 votes Thank Flag Link Tue Nov 9, 2010
Ditto what Gabriel stated. Your original contract and/or leasing agreement should have that clearly spelled out. If you can't find it, ask the original broker to give you a copy.
Web Reference: http://terrivellios.com
0 votes Thank Flag Link Tue Nov 9, 2010
Hi Mortgagetech,

Well, it's spelled out in your contract. I assume that you have not read your contract and it is hard for me to answer your question without looking at it. If you like, you can give me a call at 408-426-1441 or email me (4commercialre@gmail.com) so I can look over your contract one more time.

Take care.
0 votes Thank Flag Link Tue Nov 9, 2010
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