A commercial tenant is negotiating a five-year lease for retail space. The tenant hires a tenant representative broker to negotiate lease terms on the tenant's behalf. What agency relationship exists between the tenant and the tenant representative?
Correct Answer
A) The tenant representative is the tenant's agent and owes fiduciary duties
Hiring a broker to negotiate on your behalf creates an agency, and it carries the full set of duties: loyalty, disclosure, obedience, confidentiality, accounting and reasonable care, all owed to the tenant. Other choices: saying no agency relationship exists in commercial leasing would leave a tenant paying for advice nobody was accountable for; a subagent of the landlord works for the other side, which is the opposite of what the tenant engaged; and a dual agent representing both the tenant and landlord would need both parties to know and consent, and nothing here suggests the landlord is a client too.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.
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- → A property manager signs a lease on behalf of the property owner. The management agreement authorizes the manager to execute leases for terms up to one year. The manager signs a three-year lease with a commercial tenant. What is the likely consequence?
- → A property manager discovers that a rental unit has a significant mold problem. The manager repairs the visible mold but does not inform the property owner about the extent of the damage or the potential liability. Has the property manager violated any agency duty?
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- → Under the new rules, how can a buyer's agent be compensated?
- → Casey Patel is hired only to find a ready, willing, and able buyer for Morgan Flores's duplex and has no authority over Morgan's other affairs. Classified by the scope of authority granted, what type of agent is Casey?
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