Tenant Representation Agreement: What It Says, Clause by Clause, Before You Sign

Clauses one to three: scope, term, geography

• Scope. What the broker will do. It should name each stage, from the market search and the tours through landlord proposals, the letter of intent and the lease, and say whether help during the buildout is included. Push back if it is one vague line.
• Term. A start date and an end date, with enough months to finish a search and a lease, some slack, and no automatic renewal. How many months is right depends on whether the floor is pre-built or needs construction.
• Geography and property type. Which neighborhoods and what kind of space the agreement covers. Office space in the Manhattan submarkets on your list is enough. An agreement covering any lease anywhere reaches deals it was never meant to.

Clauses four to six: exclusivity, compensation, termination

• Exclusivity. Whether you have agreed to work only through this broker. Exclusive is not bad in itself. Exclusive, long and with no exit is. If you sign one, name any space you already found.
• Compensation. Who pays the broker, when, and what happens if a landlord refuses, on a sublease, or on a renewal. If any shortfall can fall to you, ask for a cap.
• Termination. How either party ends the agreement, and the tail that follows: the period afterward in which the broker is still owed on floors it introduced. Ask for a written list of those floors.

Two shorter documents, the engagement letter and the property touring agreement, compress the same clauses. Read them just as closely. Our glossary entry goes further into each.

Clause five in practice: does signing cost the tenant anything?

Usually nothing. In most transactions the landlord pays the broker fee under its own commission agreement with the brokers, and that holds whether or not you have signed a representation agreement. An upfront fee is unusual in this market, and a request for one deserves a question.

The price of a bad agreement is not a bill. It is months tied to a firm that is not performing, or a commission claim on a deal done after you parted. Have your attorney confirm anything that shifts a fee to you.

Three red flags, and what you can see before signing anything

• A long term. A year or more for a search that should take a few months.
• A long tail. Protection that runs far past the end of the term, or reaches properties the broker never showed you.
• No way out. No termination right, or a renewal that triggers unless you cancel.

None of this has to be settled before you look at listings. We publish the address of every floor we list and the asking rent of nearly all of them, so you can study the market first and talk about paper second. The block below draws on the whole book.