Pennsylvania Association of Realtors®

Commercial Buyer/Tenant Agency Contract (PAR Form CBAC)

Guidelines for Preparation & Use

Updated April 2018

Table of Contents Note to PAR Form Users ...... 4 General Notes on Usage ...... 3 Exclusive Buyer/Tenant Agency ...... 3 Parties ...... 4 Paragraph 1: STARTING & ENDING DATES OF CONTRACT ...... 5 Paragraph 2: SCOPE OF REPRESENTATION ...... 6 Paragraph 3: CRITERIA ...... 6 Paragraph 4: BROKER’S FEE ...... 7 Paragraph 5: PAYMENT OF BROKER’S FEE ...... 8 Paragraph 6: BROKER’S FEE IF TENANT BUYS PROPERTY ...... 10 Paragraph 7: DUAL AGENCY ...... 10 Paragraph 8: DESIGNATED AGENCY ...... 10 Paragraph 9: CONFLICT OF INTEREST ...... 10 Paragraph 10: BROKER’S SERVICES TO OTHER PARTIES ...... 10 Paragraph 11: OTHER CLIENTS ...... 10 Paragraph 12: ENTIRE CONTRACT ...... 10 Paragraph 13: CHANGES TO THIS CONTRACT ...... 11 Paragraph 14: TRANSFER OF THIS CONTRACT ...... 11 Paragraph 15: DEPOSIT MONEY (FOR PURCHASES) ...... 11 Paragraph 16: CONFIDENTIALITY ...... 11 Paragraph 17: CIVIL RIGHTS ACT ...... 11 Paragraph 18: EXPERTISE OF AGENTS ...... 11 Paragraph 19: DUE DILIGENCE ...... 12 Paragraph 20: CHOICE OF LAW ...... 12 Paragraph 21: SPECIAL CLAUSES ...... 12 Acknowledgments and Signatures ...... 13

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Note to PAR Form Users As stated in the title, this document is only a guideline for the proper use of PAR Form CBAC. The suggestions presented here should be used in conjunction with, and as a supplement to, your professional education; they are not meant as a substitute for proper professional education.

Any purchase of real estate is a complicated transaction, and no set of instructions, no matter how complete, could possibly cover all the issues and nuances that appear in any individual transaction. Seek guidance from your Broker and/or your legal counsel if you have any questions regarding the proper manner of filling out any contract during the course of a transaction.

To make these Guidelines more useful there are numerous “extras” added to the main text. Many of the “Note” or “Practice Tip” items you will see are based, in part, on the experiences of PAR members, staff and legal counsel, and are designed to point out some of the more practical items to consider when filling out the Agreement.

General Notes on Usage Pennsylvania Association of Realtors® Standard Forms are developed by the PAR Standard Forms Committee for use in a wide variety of transactions and market areas. To provide maximum flexibility to the parties, many provisions contain blank spaces that can be filled in as appropriate.

Except where restricted by law, the pre-printed language that is not agreeable to the parties can be crossed out and/or modified, with the parties dating and initialing the change in the margins. As a general rule, text added by the parties that changes pre-printed text, or pre-printed text altered by the parties, will prevail over pre-printed language should a dispute arise.

This Contract has been drafted using the term “client” as opposed to “buyer,” “tenant,” or “lessee.” The word “client” will address both corporate entities and individuals, as well as covering all types of transactions. Your client can switch objectives during the term of the Contract without you having to revise it.

Exclusive Buyer/Tenant Agency This form establishes that you are working with the Client as an exclusive buyer agent, whether they are looking to purchase or a property. Form CBAC is designed to be a binding agreement for both the Broker and the Client. Neither party has an automatic right to terminate and walk away from the contract unless both sides negotiate that sort of term in writing.

Practice Tip: If you aren’t entirely sure about locking the Client into a long-term agreement, or the Client doesn’t seem sure about wanting to be in a long-term agreement, there are a number of ways to handle it: (1) sign the Contract for a short period of time, perhaps a few weeks; (2) provide a cancellation provision in the Special Clauses paragraph where one or the other can cancel after a certain time period; (3) use PAR Form NBA, the Non-Exclusive Buyer Agency agreement, the establish the Broker as a Buyer Agent for any shown by the Broker without requiring the parties to work together on any other properties if they don’t want to; or (4) establish an oral non-exclusive agreement with the Client, using Form NBA as a “written memorandum” of your discussion.

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Definitely DO NOT avoid an uncomfortable situation and simply decide not to develop any buyer agency agreement. While the Real Estate Licensing and Registration Act (RELRA) does permit brokers to provide services prior to getting a signed agreement, it also states that the broker isn’t entitled to collect a fee without a written agreement. Don’t get caught trying to get your representation agreement signed at the same time as the Agreement of Sale or lease. That probably is not the best time to first bring up that a client might owe a fee of some sort.

Note: Form NBA has not been drafted specifically for commercial use. Be sure that any additional information you require for a commercial transaction is appended to the form. Remember to never create an agency relationship that is prohibited by broker policy. Check with your broker about whether non-exclusive agency is permitted in your brokerage.

If you are working as a transaction licensee, you would want to produce a written agreement stating what services you are providing to the Client and what your fee for those services will be. PAR publishes a Transaction Licensee Contract (Form TLC) for this purpose. Again, Form TLC was not drafted specifically for commercial use, so include any additional information needed.

Parties BROKER (COMPANY): Starting on the first line, insert the name and contact information of the Broker including the mailing address, telephone number, and fax number.

Practice Tip: When filling out this form, keep in mind that only the legal name and address of Pennsylvania licensed real estate offices should appear on these lines. Don’t use office nicknames or home addresses if they are not approved by and registered with the State Real Estate Commission.

LICENSEE(s) (NAME): Starting on the first line insert the name or names of the Licensee(s) who will be working with the Client, as well as their telephone numbers, fax number, and email address.

Note: All agreements are between the Client and the Broker, not the individual Licensee. Even though the Licensee’s name is on the agreement, he or she is not a party to the agreement. When moving from one broker to another, remember that individual licensees do not have a right to “carry” clients with them. This is an issue that must be negotiated between a broker and an agent.

CLIENT: Fill in the name of the Client, whether it is an individual or a corporate entity. If the Client is a corporate entity (corporation, partnership, etc.), put the company name where indicated. Because a company cannot physically sign a representation agreement, you will likely be working with one or more company representatives. Write the name of the person who will be signing the Contract and his or her title. Provide contact information for the Client including a mailing address, telephone number(s), email address(es), and a fax number.

Note: The Client identified on the Contract is the party. However, when dealing with corporate clients, it is not unusual for a broker to be dealing with corporate representatives 4 Commercial Buyer/Tenant Agency Contract Guidelines for Preparation & Use 4/18

rather than with corporate officers. Keep in mind that corporate representatives have differing levels of authority. For example, in some instances, the individual working with a broker may only be authorized to perform a preliminary site evaluation and may not have the authority to actually sign an acquisition agreement. At a minimum, brokers need to be aware of whether the corporate representative they are working with has the authority to bind the corporate client to a fee agreement. If this is not the case, it may be advisable to investigate whether you can get a higher-level individual to authorize the Contract.

In signing the Contract, the Client acknowledges that the agreement is between the Client and the Broker and it is exclusive. As a licensee interviewing potential clients, you are required by the Realtor Code of Ethics to ask if they are subject to another exclusive representation agreement. If the potential client indicates that they had been in an exclusive contract previously, ask to see their termination documentation. Be sure that they have actually terminated the other contract, and that there are no provisions of the termination that you need to be aware of (for example, a provision binding the client to a partial fee, or requiring that they exclude certain properties viewed with the first broker from an agreement with a second broker). Handling these issues at the beginning of a relationship can avoid huge potential problems at or near if a broker you were unaware of suddenly appears with an exclusive buyer agency contract and makes a claim for a fee.

If the Client informs you that there is another current contract, check the box for “Yes” and have the Client explain the terms of that contract in the space provided. If there is not another current contract, check the box for “No.”

Paragraph 1: STARTING & ENDING DATES OF CONTRACT Subparagraph (A): Term is Negotiable No Association of Realtors, whether national, state or local, has a pre-determined or recommended length of time for representation agreements. The length of the Contract should be negotiated only by the parties.

Subparagraph (B): Scope and Term of Contract The Client should understand that this Contract will be binding upon the parties, whether the Client intends to purchase or lease a property. The Client should also understand that in general, the Contract is exclusive. Unless otherwise indicated, the Client will work only with the identified Broker and Licensee(s) in finding a property. If there is some exclusion, indicate as much on the space provided.

For example: A corporation looking for properties in both Pittsburgh and Philadelphia might sign representation agreements with brokers in each market.

The Contract is presumed to start on the date it is signed, unless otherwise noted. This provision should not be used to back-date an agreement signed well after the start of representation. Rather, it is intended to be used where the agency agreement is not to start until a later date. Always insert an end date. State laws prohibit representation agreements from lasting longer than one year and also prohibit automatic renewal clauses.

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Practice Tip: Fee issues can sometimes turn on the terms of a contract or whether a representation agreement was signed at all. For example, there have been several court decisions denying fees to brokers who did not have representation agreements as required by the licensing law. It is best to get this Contract signed as close as possible to the beginning of your relationship with the Client. This way the Contract’s start date and the Client’s signature date will be able to establish the start of the relationship.

Practice Tip: If you do not fill in an ending date, there is no “presumed” term for a buyer agency contract. Courts will not supply that term for you and create a contract that the parties did not agree to. In fact, a court might find that the contract is void and unenforceable without an ending date.

Subparagraph (C): Automatic Termination The Contract will end upon settlement or possession of a Property, depending on the nature of the transaction (sale or lease).

Paragraph 2: SCOPE OF REPRESENTATION Subparagraph (A): Consumer Notice This statement authorizes the Broker to work in an agency capacity. Note that “Buyer’s Agent” is a defined term within the Consumer Notice (and RELRA and the SREC Rules & Regulations) that applies to a broker working with both buyers and tenants.

Subparagraph (B): Transaction Types A commercial client may be investigating the possibility of a wide variety of transaction types. This subparagraph is included to help the parties establish certain boundaries of representation, and can serve two important purposes. First, it allows a client to eliminate certain types of transactions from consideration, thus helping guide the Broker away from pursuing properties that don’t fit the Client’s needs. Second, this can also help the Broker explain the different options available to a less sophisticated client who may not be aware of the many options available. Check the box for the option(s) that suit the Client.

Practice Tip: Proper explanation of this Paragraph will also help inform the Client that they are obligated to pay a fee for many different types of transactions, not just an outright purchase or lease. This can avoid potential situations where the Client claims that the Broker is not entitled to a fee based upon the type of transaction that has been entered into.

Paragraph 3: PROPERTY CRITERIA This Paragraph will help the Broker understand what types of properties will meet the needs of the Client. Unlike residential transactions, there are likely to be a number of highly subjective criteria relevant to the Client’s needs. Using this basic information will help the Broker focus on the best properties for the Client.

Fill in the type of property the Client is looking for, what the Client intends to use the property for, where the Client would like the property to be located, the Client’s price range (for , buying, and building if necessary), and any additional information the Client can provide.

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Note: While the criteria are included to help guide the services provided by the Broker, they are explicitly not designed to limit the scope of the Broker’s representation. The Paragraph specifically states that the criteria “do not limit the representation of Broker nor restrict Broker’s right to earn a fee on property acquired by Client that does not meet these criteria.” For example, if the Client states that they are looking for a property priced between $450,000 and $500,000, they are still obligated to pay the Broker’s fee if they end up purchasing a property priced at $445,000.

Practice Tip: Clients may ask for certain “exclusions” to be included in a representation agreement. These exclusions are generally meant to protect clients against having to pay a broker’s fee in situations where they may be otherwise represented or where they have already done a substantial amount of their own work without assistance from a broker. If exclusions are desired, specific exclusion language (preferably drafted by an attorney) should be included in the Contract or in an addendum; this Paragraph is not intended for exclusions (unless modified by agreement of the parties).

Paragraph 4: BROKER’S FEE Subparagraph (A): Fee is Negotiable This is a standard disclosure found in all PAR employment forms, designed to combat a perception that there is some sort of “standard” or “recommended” fee established by the Association. The Broker and Client should negotiate the fee that will be paid.

Subparagraph (B): Fee for a Sale No matter what fee structure the Broker and the Client agree to, fill in the details of how the fee will be paid. Fill in the blank spaces provided if you will be paid a percentage of the gross purchase price, a flat fee, a percentage of the purchase price of any personal property included in the sale, or a combination of the three. If your fee structure does not fit into the default provided, write your fee arrangement as specifically as possible in the space provided after the pre-printed language.

Practice Tip: It is recommended that you fill in all of the blanks in PAR forms, even if you fill them in with “0” or “N/A.” This will help contradict any claim that a blank (especially for fees) was filled in after the client signed the form.

For example: Broker’s Fee in the case of a sale is 5% of the gross purchase price of , AND $2,000, AND 0% of the gross purchase price of personal property, unless otherwise stated here: Broker will accept the cooperating compensation offered by the listing broker, if greater than the fee provided for above.

Practice Tip: Remember that like brokerage agency policies, the Broker may have policies about the types and amounts of fees that may/must be accepted by licensees working with the Broker. It is always up to the Broker to establish the parameters of acceptable fees within the brokerage; licensees should never draft a fee clause that has not been approved by the Broker.

Subparagraph (C): Fee for a Lease No matter what fee structure the Broker and the Client agree to, fill in the details of how the fee will be paid. Fill in the blank spaces provided if you will be paid a percentage of the gross rent for the 7 Commercial Buyer/Tenant Agency Contract Guidelines for Preparation & Use 4/18

entire term of the lease and/or a flat fee. If your fee structure does not fit into the default provided, write your fee arrangement as specifically as possible in the space provided after the pre-printed language.

Subparagraph (D): Fee for Options, Renewals, and Other Tenancy Fill in the details of how the fee will be paid for any continued tenancy after the original term of the lease. Fill in the blank spaces provided if you will be paid a percentage of the gross purchase price and/or a flat fee. If you and the Client agree to different terms, write your fee arrangement as specifically as possible in the space provided after the pre-printed language.

Subparagraph (E): Cooperating Compensation Many buyer agents will offer to accept cooperating compensation from a listing broker as complete or partial satisfaction of any fee owed by a client. Note that this provision does not state that the amount of cooperating compensation will be always accepted as full payment of a fee. If the cooperating compensation is less than the amount that the Broker would have earned in Paragraph 4(B) or 4(C), then the Client will pay the difference unless otherwise agreed.

Practice Tip: As long as it is done within the bounds of the law and the Realtor Code of Ethics, it is permissible for brokers to renegotiate cooperating compensation among themselves. PAR publishes the Cooperating Broker Compensation Agreement (Form CBC) for this purpose. It is also permissible for clients to negotiate a “seller assist” from the seller to help pay any brokerage fees. The Compensation Addendum to the Agreement of Sale (Form CAS) can be used for this.

Paragraph 5: PAYMENT OF BROKER’S FEE Subparagraph (A): If a Sale or Lease Occurs The Broker’s fee is earned at the time the Client enters into a sale or lease agreement. Remember that the general practice is that the fee isn’t actually paid until settlement, particularly if that fee is being paid through cooperating compensation; the listing broker can’t pay cooperating compensation until he has received his fee at settlement. If the transaction is a lease or an installment contract, the fee is paid at the time the agreement is executed.

The Paragraph also specifies that the fee will be paid in United States currency and will accrue interest at a rate of 15% each year if the Client fails to pay when the amount is due.

For purchases made after the ending date of the Contract, it is a little bit more complicated to determine whether a fee is owed and will generally depend on the circumstances surrounding the transaction on a case-by-case basis. If the Client enters into an agreement to purchase or lease property, he or she will owe the Broker’s Fee if: (1) the agreement is a result of the Broker’s actions during the term of the Contract, or (2) the property was seen during the term of the Contract AND the Client is not under an exclusive representation agreement with another broker at the time the agreement to purchase or lease was signed.

Note: If the Client has signed an exclusive representation agreement with another broker, then you will not be owed a fee for a purchase made after the end of the term of the

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Contract, regardless of how the Client found the property. If there is no other broker involved, however, the client agrees to pay you a fee.

Practice Tip: This provision does not determine procuring cause; it is only relevant to fees owed contractually between a client and broker. For example, assume that six months after the expiration of a representation agreement, a client purchases a property he saw with a broker. He has not engaged a second broker, preferring to handle the negotiations himself. Contractually, he may owe a fee to the broker according to their representation agreement. The listing broker, however, may not be obligated to pay cooperating compensation (if offered), as the broker claiming the fee may not actually be procuring cause of the transaction given the circumstances.

Subparagraph (B): Exclusive Representation This provision is often misunderstood by clients. They may believe that they have a right to terminate a contract and “walk away” from an exclusive buyer agency agreement to engage another agent at will. It is good business practice to explain very explicitly what “exclusive” means in this context. If a broker does negotiate a termination of a contract with a client, both parties should be sure to get a copy of that termination in writing so their relationship is clear to future brokers.

Subparagraph (C): Owner Default This Paragraph is a “back-up” fee structure in the event that the seller or of the property signs an agreement to sell or lease but then backs out of the transaction. In the event that your client would end up in this situation, fill in these blanks at the time the Contract is signed; do not skip it and think that you’ll figure something out “if it happens.” The first line can be filled in with either a flat dollar amount or a percentage to be paid from damages owed by the seller or landlord. The second line can be filled in with a flat amount for a fee. Keep in mind that the Broker, by the terms of the Contract, will accept whichever amount is less.

Note: Notice that the Contract specifies that the first option will be an amount paid by the seller or landlord on account of the transaction, which may be fees, damages, or judgments. This means that the Broker may be waiting for some period of time for a dispute to be settled by mediation, arbitration or in the court system.

Remember that the Broker may have policies about this type of fee, so be sure to check with brokerage policy.

Subparagraph (D): Successors and Assigns This Paragraph provides that if the Client is under a lease and subsequently purchases the property either during the term of the lease, any extensions of the lease, or within a certain time period after the lease expires then the Client will pay the Broker a fee. Fill in the blank with a number of days that will extend the fee provision.

This Paragraph is also binding on the Client’s successors, assigns, agents, officers, employees and shareholders. This prevents the Client from transferring their interest in the Property to a third party with the intention of avoiding payment.

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Paragraph 6: BROKER’S FEE IF TENANT BUYS PROPERTY Enter a dollar amount or other fee that will be paid to the Broker if the Client who has signed a lease during the term of the Contract thereafter purchases the Property after the expiration of the lease. Keep in mind that this fee provision will only apply if the purchaser was originally procured by the Broker. This fee is to be paid by the owner of the Property at the time of settlement.

Paragraph 7: DUAL AGENCY RELRA requires a disclosure to a client if a broker could potentially be working as a Dual Agent. Rather than having to disclose in writing before each individual transaction whether the broker also represents the seller, the disclosure is included in the Contract to put the Client on notice that Dual Agency is possible. If your broker does not permit Dual Agency, check the box at the end of the Paragraph indicating that “Dual Agency is not applicable.”

Paragraph 8: DESIGNATED AGENCY The default language of the Contract assumes that Designated Agency is applicable unless you indicate otherwise by checking the box at the end of the Paragraph. Leaving the box unchecked means that the Broker may designate one or more licensees to represent the interests of the Client, and that the Designated Agent will work exclusively for the Client. If the same Designated Agent represents both the Client and the owner in the same transaction, that licensee is a Dual Agent.

Paragraph 9: CONFLICT OF INTEREST This Paragraph informs the Client that the Broker has an ongoing obligation to inform the Client of any conflicts of interest on the part of the Broker or any of the Broker’s salespeople. Note that even without this contractual clause, all brokers and licensees are legally and ethically required to disclose any conflicts.

Paragraph 10: BROKER’S SERVICES TO OTHER PARTIES This language is a disclosure required by RELRA, stating that the Broker might provide services to an owner of a property in addition to the services being provided to the Client. The fact that an owner might pay a separate fee to the Broker for any services must also be disclosed to the Client. Note that providing some of these services to a property owner does not necessarily make the Broker a Dual Agent. The type of service and the intent and expectations of the parties will determine the agency status of the Broker.

Paragraph 11: OTHER CLIENTS With this provision, the Client agrees that the Broker may show properties viewed by the Client to other prospective clients. RELRA states that this type of activity is not a conflict of interest.

Paragraph 12: ENTIRE CONTRACT This Paragraph informs the parties that this text and any attachments are the entire agreement between the parties, and any statements made before its execution must be reduced to writing and included in the Contract in order to be part of it.

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Paragraph 13: CHANGES TO THIS CONTRACT Any changes or additions must also be in writing. This is important in order to avoid any later claims that either party made verbal representations that should be enforced instead of what was written.

Paragraph 14: TRANSFER OF THIS CONTRACT The Broker may transfer the Contract to another broker under certain circumstances, with written notice to the Client. The Broker must notify the Client “immediately in writing” if a transfer is made. If this Contract is transferred to another broker, the Client is agreeing to continue to abide by the requirements set out here with the new broker.

Paragraph 15: DEPOSIT MONEY (FOR PURCHASES) Subparagraph (A): Escrow Accounts Unless another escrow agent is named in the agreement of sale, the Broker agrees to retain all deposit monies received on the Property in an escrow account in accordance with Pennsylvania law.

Note: If the Client gives you a deposit and you intend to transfer it to the listing agent, notice must be given to your Client before the Client signs the agreement of sale that the money is being transferred to the listing broker. The Deposit Money Notice (PAR Form DMN) or the Buyer’s Estimated Closing Costs (PAR Form BEC) can be used to fulfill this requirement.

Subparagraph (B): Release of Deposits The Broker holding the deposit monies will continue to do so until both parties agree to release them, a final court order is received, or the terms of a pre-agreement between the Client and the seller are met. PAR includes this pre-agreement in the paragraph on deposits in the Agreements of Sale.

Paragraph 16: CONFIDENTIALITY As a general matter, all licensees have a duty of confidentiality regarding Client information. This Paragraph restates that obligation. The Client agrees that where there is a breach of confidentiality that is caused by a party over which the Broker has no control, the Client waives the right to pursue the Broker for this breach. This might come into play, for example, where an inspector or contractor purposefully or inadvertently passes on information about a property or a prospective client.

Paragraph 17: CIVIL RIGHTS ACT This Notice is required by the Pennsylvania Human Relations Act (PHRA).

Paragraph 18: EXPERTISE OF REAL ESTATE AGENTS The basic purpose of this Paragraph is to put the Client on notice that it will be their sole responsibility to do any inspections or other investigations regarding the Property and its suitability for their needs. Additionally, the Client is informed that any advice on non-real estate topics (legal, accounting, etc.) should be sought from a qualified professional. 11 Commercial Buyer/Tenant Agency Contract Guidelines for Preparation & Use 4/18

Note: The introductory text states that a broker is “obligated to disclose adverse factors about a property that are reasonably apparent to someone with expertise in the marketing of real property.” This is not a specific requirement of the law, but is a general common law duty of a real estate licensee. A licensee is not required to perform any inspections or other research on a property to discover defects, but must disclose those that are readily apparent.

Practice Tip: The Real Estate Seller Disclosure Law only applies to transfers involving one to four residential dwelling units. If a property has one to four residential units then the seller must prepare and deliver the legally required disclosure form, at least as it pertains to those units. For commercial transactions not involving one to four residential units, PAR has developed the Information Sheet (Form CPI). Form CPI is similar to the residential disclosure form, but with many issues unique to commercial real estate. No disclosure form is legally required for these transactions, but some listing brokers ask for the information to be provided so they know of any issues with a property. Form CPI may also be provided to a potential client to give them notice about known conditions of a property.

Paragraph 19: DUE DILIGENCE Similar to Paragraph 18, this Paragraph is included to reinforce that the Client is responsible for conducting all desired research and inspections regarding the Property. The Client is notified that unless otherwise stated in a lease or agreement of sale, the Property will be transferred in its present condition, meaning in the condition as it exists at the time of settlement or lease. Any requests for inspections should be made to the Broker before the Client signs an agreement to purchase or lease.

Note: Remember that due diligence inspections can be much broader than the physical condition of the Property. For example, clients might need to check limitations that might affect their proposed use of the property, or it may be necessary to clear up issues regarding easements that could affect land use. Licensees should be sure to let their clients know that all due diligence inspections should be considered prior to signing an agreement to purchase or lease.

Paragraph 20: CHOICE OF LAW For multi-state or multi-national corporations, it may not be clear whether the corporate entity is subject to the jurisdiction of Pennsylvania law (i.e., whether it can be sued in Pennsylvania). By agreeing to this Paragraph, the Client agrees that even if the usual legal tests for jurisdiction would not apply, it submits to the jurisdiction of Pennsylvania courts.

Paragraph 21: RECOVERY FUND This paragraph contains the disclosure required by RELRA and the Rules & Regulations of the State Real Estate Commission.

Paragraph 22: SPECIAL CLAUSES Use this space for including additional terms in the Contract. For example, this area could be used to add exclusions for certain properties or to include a provision allowing the Client to terminate the Contract if he is unhappy with the level of service received. Additional provisions that will not fit here should be attached in a written addendum. 12 Commercial Buyer/Tenant Agency Contract Guidelines for Preparation & Use 4/18

Acknowledgments and Signatures Consumer Notice This line confirms that the Client has seen and read the Consumer Notice. Certain disclosures (e.g., a notice regarding the Real Estate Recovery Fund) that must be in all representation agreements are also included in the Consumer Notice and may be referenced rather than reprinted in the representation agreement.

Contract Has Been Read and Signed It is not uncommon for potential clients to request to move forward in searching for properties without signing a representation agreement. Although brokers are permitted to provide services in this manner, a broker is not “entitled to collect a fee” unless a written agreement exists.

Electronic Transmission This language confirms that return of the Contract, and any addenda or amendments, by email or fax is acceptable to the parties. If the Contract is executed in one or more parts, each part will be considered to be an original and will make one agreement. This means that if the Client signs a contract and emails it to the Broker, who signs it, each piece will be an original that makes up one whole contract.

Notice Before Signing Once the Agreement is signed, the Client and the Broker are legally bound by the terms of the Agreement. Encourage the Client to consult an attorney if there are any questions about his or her rights and obligations under the Agreement.

Authority to Sign In the commercial context, initial property searches may be conducted by third party contractors or lower level corporate employees. As this form is a fee agreement, brokers are well advised to be sure that the person signing the Agreement has the legal authority to commit a corporate entity to pay a fee. Depending on the situation, some brokers might feel more comfortable asking for some sort of written proof from the corporate entity that the signer is, in fact, properly authorized. In some cases, this may even take the place of a statement by a Board of Directors or corporate officers. If a broker has not asked the question before this point, the issue will be prompted before signing.

Signatures Make sure all the relevant people/entities sign and date the Agreement. Where there may be a joint corporate venture, be sure that representatives of all parties have joined in the Agreement. In the blank next to “Broker,” put the name of the real estate company as it appears on the real estate license. The salesperson or associate broker (or whoever is authorized by broker policies to accept and approve representation agreements) should sign his or her name in the blank next to “Accepted By” and put the date in the space provided.

Distribution of Copies Provide all parties with a copy of the signed Agreement.

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