Real Estate Broker Agreements: Fiduciary Duties, Reps and Warranties, Indemnification, Conflicts of Interest

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Thursday, January 27, 2022

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Course Materials

This CLE webinar will provide real estate counsel with practical guidance on negotiating broker agreements to clarify a broker's fiduciary duties and limit potential future liability. The panel will address how misrepresentations in broker agreements create risk and how to work with brokers to develop enforceable contracts.

Description

When buying a commercial real estate property, the brokerage agreement is between the buyer or seller and the broker. The broker is an agent of the buyer or seller and, as an agent, has fiduciary duties to the client. Sometimes the broker could act as a dual agent, which creates potential conflicts of interest. Real estate counsel can serve to ensure the broker will represent a client's interest in a transaction by crafting a detailed agreement that meets those needs.

Most states recognize that real estate brokers occupy a position of trust through a fiduciary relationship with the parties they represent. A fiduciary relationship brings with it requirements of fidelity and good faith. These issues are often raised in claims that an agent has acted as a real estate broker and a buyer (or seller) of a property. It is a potentially dangerous position for an agent to occupy.

The benefit of the brokerage agreement is clear communication between the buyer (or seller) and the broker. It is an excellent opportunity to discuss who will perform what tasks. At a minimum, the best agreements shall establish: (1) the timing for completing tasks, (2) when and how the broker is paid, (3) how to handle broker expenses, and (4) when the broker's representation ends.

The broker agreement should limit liability and include indemnification language that protects the broker from the client's acts and ensures that clients are not held responsible for the broker's act. Because this is an agency relationship, the client must communicate to the broker what representations or statements the broker can make on behalf of the buyer or seller. If a dual agent situation cannot be avoided, the issues of potential conflicts of interest should be addressed in the agreement.

Listen as our expert panel discusses what constitutes an enforceable broker agreement, clarifies provisions to establish clear fiduciary duties, and outlines how to avoid conflicts of interest while limiting potential liability for the acts of others.

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Outline

  1. Broker agreements
    1. Necessary provisions
      1. Timing
      2. Payment
      3. Termination
    2. Misrepresentations
    3. Unlicensed practice of law
    4. Reps and warranties
    5. Indemnification
    6. Conflicts of interest

Benefits

The panel will discuss these and other key topics:

  • What provisions should a broker agreement include?
  • How can a real estate broker agreement address the fiduciary duties a broker owes to the client?
  • What happens to the broker's fees if the closing fails to happen?
  • When should parties consider a dual agent broker, and how should the agreement protect against conflicts of interest?

Faculty

Dunnagan, Keith
Keith B. Dunnagan

Managing Shareholder
BPE Law Group

Mr. Dunnagan’s clients largely consist of investors, developers, businesses, and professional services providers...  |  Read More

Schorr, Zachary
Zachary D. Schorr

Lead Trial Attorney
Schorr Law

Mr. Schorr is an experienced Los Angeles real estate attorney and litigator who enjoys the litigation process and...  |  Read More

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