Tenant Representation Agreement: NYC Office Leasing, Explained

What a tenant representation agreement covers

Whatever the document is called, a sound agreement answers seven questions, and each is worth reading for whom it protects:

• Scope of services: the search, tours, proposals, the letter of intent and the lease negotiation, and whether support through the buildout is included.
• Term: a defined end date, long enough to run the search, the LOI and the lease, with each phase set out in the timeline guide, plus room for slippage.
• Geography and property scope: the submarkets and kinds of space covered, so the agreement cannot reach deals it was never meant to touch.
• Exclusivity: whether you have agreed to work only through this broker for the term.
• Compensation: who pays, when, and what happens if a landlord will not pay a commission.
• Tail, or protection period: how long after the term ends the broker is still owed on a deal for a property it introduced.
• Termination and disclosure: how either side can end the agreement, and how the broker will disclose any role on the landlord's side of a building you tour.

None of these takes legal training to read. Each one either keeps you free to act or ties you to a firm, and the agreement should leave no doubt which.

Exclusive vs non-exclusive broker agreements

An exclusive tenant representation agreement commits the tenant to one broker for the term: every landlord conversation runs through that firm, and the broker is owed on the deal whoever first spotted the space. In return the broker can commit real time, speak for you to every landlord with authority, and avoid the confusion of two firms submitting the same tenant to the same building. A non-exclusive arrangement keeps the tenant free to work with others or go direct, at the cost of less commitment from any one firm and a real risk of disputes over who introduced a space.

The label matters less than the term and the exit. A short exclusive with a clean termination right protects both sides; a long exclusive with no way out, signed before the broker has shown a single space, is the red flag our guide to choosing a tenant rep broker warns about. For the record, Nomad asks for no retainer and no exclusivity agreement. A broker reaches out within the hour during business hours, and the first shortlist follows within 24 hours.

Engagement letters and property touring agreements

A broker engagement letter is usually a shorter form of the same contract. It names the broker, the scope and the fee arrangement, and it may or may not be exclusive. Give it the same care as a longer agreement, because the length of a document says nothing about how far it reaches.

A property touring agreement is narrower. Some brokers, and some landlords' agents, ask a tenant to sign one before showing space, recording that the broker introduced specific properties so it is protected if you lease one of them. It is a contract and binds you to what it says, so check which properties it lists, how long the protection lasts, and whether it makes you responsible for a fee if the landlord does not pay one. In this market, touring office space through a tenant broker should not cost the tenant anything up front.

How the commission is addressed

In most New York office transactions the landlord pays the tenant broker's commission under its own agreement with the brokers, commonly calculated from the rent over the lease term (who pays the broker in NYC works through an example); in a sublease, the company giving up the space usually pays. Some firms title the document a tenant representation and broker compensation agreement, which describes it well: who the broker works for, and how the broker gets paid. A good one says so plainly and then deals with the exceptions: a landlord that will not pay, a sublease, a renewal of your current lease, or a deal you bring to the table yourself.

The exceptions are where cost can land on the tenant, so each deserves a sentence rather than silence. If the agreement makes you responsible for any shortfall, cap it, and limit it to deals you approved knowing the landlord's position.

Red flags before you sign

Each of these is negotiable before signing, and a broker who will not explain or adjust them is telling you how the rest of the search will go:

• A long exclusive with no termination right, signed before you have seen the broker work.
• Automatic renewal that extends the exclusive unless you remember to cancel.
• A tail that covers every property in the city rather than the ones the broker actually introduced, or that runs long after the term.
• Language making the tenant pay the commission whenever a landlord declines to, with no cap and no say.
• Blanket consent to dual agency signed in advance, instead of disclosure building by building when it arises.
• A retainer or upfront fee in a market where the landlord side usually pays.