A commercial property manager is responsible for operating a shopping center. The manager must prepare an annual operating budget, negotiate vendor contracts, and handle tenant relations. In addition to management fees, the owner authorizes the manager to earn a leasing commission for each new tenant the manager brings in. Is this compensation structure permissible?
Correct Answer
D) Yes, if disclosed to and authorized by the owner in the management agreement
Two streams of pay are permissible where the owner knows about both and has agreed to them in the management agreement, because the objection to dual pay is concealment rather than arithmetic. Other choices: saying property managers cannot earn commissions states a bar that does not exist; saying that earning both a management fee and commission is always prohibited turns a disclosure question into an absolute one; and conditioning it on the manager not holding a real estate license has it backwards, since a license is what allows leasing work to be paid by commission at all.
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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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