Broker commission in perpetuity - how do I move forward?
I recently took over the property management for a family member's commercial property. Full disclosure: I have no experience in the field. 

A tenant's lease is up in 60 days - they're a good tenant with an established business that has been in the location for 10 years. I was contacted by this tenant's broker, who stated that according to the original lease (signed by the previous property owner) any lease extensions would be paid commission to the broker regardless of his involvement in renegotiation. I reviewed the lease and indeed, there is a clause stating just this. Additionally, the lease states that in the event of transfer of ownership, the broker retains this right, which means that family member/current property owner is bound to these lease terms. The most recent lease agreement also guarantees the tenant to two additional 3 year terms (to be negotiated at market rate.)

This long-winded explanation all to say: Property owner would prefer to not pay commissions to this broker in perpetuity. Is there a way to get out of this lease or renegotiate without the broker? Property is in California.
[{"id": "j1c2epf", "text": "You could put language in the renewal amendment that removes that or states \u201cbroker must be actively involved in future renewals\u201d \n\nI have a hard time believing the lease says \u201cregardless of broker involvement\u201d because that\u2019s typically not something a LL ever agrees too.", "replies": [{"id": "j1dim3h", "text": "I agree. Idiotic thing to agree to as a LL. If I had to guess, I would say the broker was somehow involved in the previous ownership enabling the installation of this language.", "replies": [], "depth": 2}, {"id": "j1dizbj", "text": "&gt;I have a hard time believing the lease says \u201cregardless of broker involvement\u201d because that\u2019s typically not something a LL ever agrees too.\n\nPrior Landlord likely wasn't aware of the clause or did not have legal advisement.  I have never seen this clause in any ratified lease in over three decades in the industry.", "replies": [{"id": "j1g3dzv", "text": "Which market do you practice?", "replies": [], "depth": 3}], "depth": 2}, {"id": "j1dkwva", "text": "Sorry let me clarify- lease states that if lessor exercises any option, broker is entitled to commission.", "replies": [{"id": "j1dnayr", "text": "I would run that by a local attorney and see if there\u2019s interpretation that allows you to use reasonable judgment around whether that broker should be actively involved in order to be entitled to the commission, and I would also add language to the amendment stating \u201cbroker must be actively involved in all renewals going forward\u201d", "replies": [{"id": "j1dsqc3", "text": "This is more common in my experience.  If tenant exercises their option in accordance with the lease, and terms are established per leases then brokers would generally get paid. This is fairly common in commission agreements. \n\nJust \u201crenewing \u201c their lease doesn\u2019t necessarily mean they are or are not exercising an option. If you want to beat the broker, then renew the tenant without them exercising the option. Just know that you could still have to pay a broker for the renewal anyway if they are representing the tenant.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "j1c7pi2", "text": "If you have no idea what you\u2019re doing, call your RE lawyer, then your broker, then your tenant. This type of thing can cost you a lot more money in the future if you don\u2019t resolve it now in this amendment. \n\nCall your lawyer to confirm what\u2019s owed to the broker if anything, and what tenant is entitled to as far as renewal goes. \n\nCall your own broker so they can tell you what\u2019s market and they will talk this other broker down. \n\nThen call your tenant. Do whatever renewal you agree to or are obligated to by the lease, but insist on deleting that broker language section.  Explain why if asked. You will then need to enter into a separate commission agreement between ownership and the tenant rep beoker.", "replies": [{"id": "j1dol7h", "text": "This is the right answer.", "replies": [], "depth": 2}, {"id": "j1ei3da", "text": "Thanks, this seems like a solid plan", "replies": [], "depth": 2}], "depth": 1}, {"id": "j1d1d6g", "text": "Have the tenant file a new LLC, sign the lease agreement with this newly formed entity.", "replies": [{"id": "j1d2af5", "text": "Commission language typically covers related entities. Based on OP's description of the language (sounds pretty robust) I'm willing to bet it does.", "replies": [{"id": "j1dlb8h", "text": "Correct, change of ownership, location, affiliated businesses all covered in lease", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "j1d2q42", "text": "What's the demand like to backfill the space if the tenant were to leave? Is the tenant paying a below market deal? If you have leverage you should use it as a term of the deal to get that brokerage language modified for the future.", "replies": [{"id": "j1dl583", "text": "They\u2019re well below market now.", "replies": [{"id": "j1dx0en", "text": "How are the options structured? If it's a situation where you can offer a better deal than what the options are, you may be able to talk to the tenant and say \"we can offer you 'x' if your broker agrees to these terms regarding their commission\".\n\nOther than that, there really isn't a way to get around it based on how you're describing it. The broker had to have been involved with the previous owner in some way bc I've never heard of language being structured like that.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "j1dg7it", "text": "You\u2019re more or less bound, without getting shady and overly complicating it. The tenant MUST exercise their options so that they start to burn off, don\u2019t agree to any more options and if they don\u2019t exercise then let the lease expire and enter into a new one at the expiry without the carryover commission. \n\nIt\u2019s a pain in the ass provision, but it does incentivize the broker to ensure your tenant stays. Bake the fee into the market rent and move on. Let the options burn off and don\u2019t agree to it in the future.", "replies": [], "depth": 1}, {"id": "j1e4okk", "text": "Pay up!", "replies": [], "depth": 1}, {"id": "j1eaepw", "text": "The broker is not a party to the lease.  You can have the tenant execute an amendment wiping out that clause.  You can do this as part of the extension or even before it.", "replies": [], "depth": 1}, {"id": "j1fd9hz", "text": "Unpopular opinion - assuming you don\u2019t care about this connection, just tell the broker to piss off. The chances of being sued for the commission is very small. Especially if we\u2019re talking less that $10k.", "replies": [], "depth": 1}, {"id": "j1fh4nw", "text": "Serious question: Was this a shady broker that took advantage of owners by making them sign such agreement?", "replies": [], "depth": 1}, {"id": "j1gg1js", "text": "Fairly common language by a broker to be paid on options and extensions. Usually 1% on renewal, never a full commission. \nI did a similar lease with a broker because he manages all property for a large healthcare group. He got me a good deal as LL, no shame on getting him pay. \nAs someone stated above, negotiated on your renewal to lower the number.", "replies": [], "depth": 1}, {"id": "j1gnzdo", "text": "Instead of renewal why don\u2019t you sign new lease? You could possibly give tenant more favorable terms and also save money vs paying this clown broker", "replies": [{"id": "j1gor6s", "text": "This is covered in the lease. Not a possibility", "replies": [], "depth": 2}, {"id": "j1gpqi2", "text": "Sad but lawyer up for sure", "replies": [], "depth": 2}], "depth": 1}, {"id": "j1mbfgt", "text": "You let the tenant go month-to-month with an annual increase. Thus there is no new lease in that agreement. \n\nAfter a certain amount of time of months a month you could go back to the tenant and say I have prepared a new lease for you, and it says no brokers commission. You can offer them a reduction in rent for a short period of time or better terms.\n\nThe problem will be if the broker is related to these people. \n\nJust my opinion.", "replies": [], "depth": 1}]