Commission Spread Annually
Every time a lawyer gets their hands on a Lease it comes back with the commission spread annually over multiple years.

Any tips on the leverage a broker has to stop this?

Shouldn't the future amount owed be tied to an index so you don't get hit with inflation?

What are your tricks, tips and workarounds?
[{"id": "cz8grjt", "text": "Is it at all customary where you are? Where I am I've had nothing more than people suggest it but they concede when I let them know it's not done that way (because it's not) Are you representing tenants I assume?", "replies": [], "depth": 1}, {"id": "cz8nevj", "text": "What asset type? Landlord Rep or Tenant Rep? What is the norm in your market? Are you getting paid on the aggregate lease cost, Base Rent Only or on a per square foot basis? From your phrasing above it seems like a standard procedure in your market, if that's the case deal size is the key to setting precedent. I've never had this happen BTW so just speculating. Our commission fights center around amount owed at lease execution (100% up front or 50% at execution and the balance upon rent commencement) and in some cases a lower percentage on renewals (this is rare). Our commissions on office deals are based on aggregate lease cost. ", "replies": [{"id": "czarqtb", "text": "I've seen it a couple times where I am at now. In my previous market it was unheard of. As one of the other comments suggested it is probably the lawyer seeing what he could get away with. \n\nI'm actually on the listing side, but the owner, my client, was a real estate attorney in the past. \n\nAnyway the deal died Saturday when they sent the counter back. Yes, I say *they* because our client sent it directly to the other party. I'm Jr. broker on it so I don't get much say in the deal. Even though there were some very experienced professionals on it, it was amateur hour all around. \n\nAnother Lawyer thinking they know more than the brokers and ultimately killing the deal....", "replies": [{"id": "czasaz0", "text": "Sucks to hear that. I've (tenant rep) had it happen before where my client's lawyer actively tried to kill the deal due to his past dealings with the owner. He was successful the first go around and then fortunately was unsuccessful on the second attempt. Even though the deal closed the whole experience was incredibly frustrating. ", "replies": [{"id": "czbaqf7", "text": "My favorite was a deal I did where an existing tenant in good standing wanted to expand into some shell  space.  They agreed to pay above asking, they funded the entire build out, and agreed to be required to purchase at some point.  Like holy fuck I can't believe anyone would agree to what they did type of deal.  \n\nMy clients lawyer advised since this tenant was a law firm we should not do it as he thought the legal profession was headed down hill......  nothing about them in particular, didn't even bother to look at their fiscals.  Just no find someone else legal is dieing \n\nWtf", "replies": [{"id": "czbbyvj", "text": "WTF indeed. Your client's atty sounds like he keeps his money under the mattress.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cz92gcm", "text": "Typically the leases I see only dictate that my firm will be paid a commission per a separate agreement. The commission agreement is typically not reviewed by an attorney, and outlines the fee and payment timing which is typically 50/50 (half on lease execution, half on move in) or 100% if it's a renewal or credit is strong and owner is broker friendly.", "replies": [{"id": "cz9c6qg", "text": "Exact same thing for me. The commission is already agreed upon, unless the lawyer is also the rep for the landlord and even then the commission should have been agreed upon in the beginning, not when he gets his hands on a lease. If it's not the norm, refute it and get paid normally. \n\nOne thing I learned about lawyers in this business is that they will put whatever the fuck they feel like putting into a lease or an agreement just to see if it'll sign but they'll take it out if you call them out on it.\n\nHave a lawyer review it for you one time and send the other lawyer a note saying the commission agreement will be what is the norm for the market you are in, and see if that works. If it does, you have a lawyer who can just send a note to the other party if it happens again in the future. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "czb9hwf", "text": "I have been a property accountant for office buildings in New Jersey, Ohio, Arizona, California, Utah, and Hawaii (and probably others that I cannot recall), and I have never had a commission paid monthly. It's always been either 50% due at execution / 50% at commencement, or 100% due at either of the two. \n\nAre you sure the lawyer isn't talking about amortizing the lease commission? For example, the commission is 100% paid up front, but if a tenant defaults, LL is due the unamortized portion of their lease commission.  \n\nIf not, tell the lawyer a monthly commission is unfair to your accountant. \n\nFirst of all, I don't have the time to track another monthly bill. \n\nSecond, and more importantly, a lease commission is a balance sheet asset: by paying a commission up front,  we have essentially \"prepaid\" an amount that will count *against* the tenant's NER. So on a monthly basis the accountant will take a portion of the lease commission and offset it against the tenant's monthly rental payment. (So a 10% commission paid for a $100/month tenant means you only get $90 of income per month). This is an easy, 2-line, monthly journal entry between the balance sheet and the P&amp;L. The alternative, paying monthly, means I will have to track the commission as a *liability* on the balance sheet (I owe you the whole amount of the commission, but since I'm not paying it now, it's a liability). This is a troubling prospect and I cannot fathom how many accounts this would affect... I was going to explain how this would work but I just cannot think of a good way to track a commission due as a liability. You would probably have to heavily modify your chart of accounts, and if you ever sold the management rights to a \"big house\" they would have a million questions about why a lease commission is in a liability account.", "replies": [{"id": "czbjg0d", "text": "Thanks, this was a great answer. They wanted to do it annually, it was a three year deal so a third upon signing second third at year two and last third at the beginning of the third year. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "czbasun", "text": "What size deal is that?   I've not seen that at all but my lease deals aren't ushually more than a few hundred k so maybe more common on high value stuff?\n\nThe fight we typically always have is the half up front half on commencement bit.  More times than not we want it all at signing then they ask for rent commencement then we settle in between .  \n\nSucks but even the agents on the other side seem to want to do it that way so you wind up kinda screwed unless you are list and really want to ruffle feathers ", "replies": [], "depth": 1}, {"id": "czbotbf", "text": "Once in a blue moon we see a deal like that in the servicing world where the owner will fund the commission from the TI/LC reserve. I would say it's rare nationwide unless owners don't like using their TI/LC reserves for leasing commissions.", "replies": [], "depth": 1}]