Commercial Lease Commission Agreement Template

COMMERCIAL LEASE COMMISSION AGREEMENT TEMPLATE

1. Document Preamble & Recitals

This Commercial Lease Commission Agreement (the "Agreement") is entered into and made effective as of [Effective Date] (the "Effective Date"), by and between:

Landlord/Broker: [Party A Name], having its principal place of business at [Party A Address] (hereinafter referred to as the "Paying Party"), and

Real Estate Broker/Agent: [Party B Name], having its principal place of business at [Party B Address] (hereinafter referred to as the "Broker").

RECITALS

WHEREAS, the Paying Party holds the legal right, authority, or representation capacity to lease out, manage, or consummate transactions concerning the commercial real property located at [Property Address] (the "Property"); and

WHEREAS, the Broker is a duly licensed real estate broker or brokerage entity in the jurisdiction of [Jurisdiction], and has procured a ready, willing, and able tenant, namely [Tenant Legal Name] (the "Tenant"), to execute a commercial lease agreement for the Property; and

WHEREAS, the Parties intend to memorialize the terms, conditions, and calculation metrics governing the payment of a commercial lease commission arising from the execution and consummation of said lease transaction.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and valuable consideration set forth herein, the receipt and sufficiency of which are hereby mutually acknowledged, the Parties agree as follows:

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2. Operational Definitions

For the purposes of this Agreement, the following terms shall have the meanings ascribed below, and such definitions shall apply equally to the singular and plural forms of the terms defined:

1. "Affiliate" means any legal entity that directly or indirectly controls, is controlled by, or is under common control with a Party to this Agreement, where "control" means the ownership of more than fifty percent (50%) of the voting securities or equity interests of such entity.
2. "Base Rent" means the fixed, recurring minimum rental payments due from the Tenant to the Landlord under the Lease, excluding any percentage rent, operating expense escalations, utility charges, real estate taxes, or other additional rent or pass-through charges.
3. "Commission" means the financial compensation payable to the Broker pursuant to Section 3 of this Agreement, calculated as a percentage of the aggregate Base Rent or via a mutually agreed flat fee.
4. "Default" means the material breach of any covenant, term, representation, or condition of this Agreement, or the failure to perform any obligation within the designated cure period.
5. "Effective Date" means the date first written above, upon which both Parties have fully executed this Agreement.
6. "Lease" means the legally binding commercial lease agreement executed between the Landlord and the Tenant concerning the Property, including any exhibits, addenda, renewals, extensions, or expansions.
7. "Party" means either the Paying Party or the Broker individually, and "Parties" means both the Paying Party and the Broker collectively.
8. "Property" means the commercial real estate premises located at [Property Address], legally described in Exhibit A attached hereto.
9. "Term" means the active duration of this Agreement, commencing on the Effective Date and terminating upon the complete satisfaction of all financial and operational obligations herein.

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3. Substantive Terms & Obligations

3.1 Procuring Cause Representation

The Paying Party acknowledges and agrees that the Broker is the sole and procuring cause of the lease transaction executed between the Landlord and the Tenant for the Property. No other broker, agent, or intermediary is entitled to a commission or fee regarding this specific transaction unless explicitly set forth in a separate written co-brokerage agreement signed by the Broker.

3.2 Commission Calculation and Structure

Subject to the full execution of the Lease and the fulfillment of the conditions precedent outlined in Section 3.3, the Paying Party shall pay to the Broker a total Commission calculated as follows:

• Percentage Basis: [Commission Percentage, e.g., 5] percent ([Numerical Percentage]%) of the cumulative Base Rent payable over the initial [Number of Months/Years] term of the Lease; or
• Flat Fee Basis: The fixed sum of [Dollar Amount] ($[Numerical Amount]), payable in accordance with the schedule set forth in Section 3.4.

3.3 Conditions Precedent to Commission Payment

The obligation of the Paying Party to pay the Commission is strictly conditioned upon the concurrent satisfaction of all of the following events:

1. The formal execution and delivery of the Lease by both the Landlord and the Tenant.
2. The receipt by the Landlord of any required security deposit and the first month’s Base Rent from the Tenant.
3. The occupancy of the Property by the Tenant or the formal commencement date of the Lease, whichever occurs first.

3.4 Payment Schedule and Installments

The Commission shall be paid by the Paying Party to the Broker in the following manner:

• Initial Installment: Fifty percent ([50]) of the total Commission shall be due and payable immediately upon the full execution of the Lease and receipt of initial funds from the Tenant.
• Final Installment: The remaining fifty percent ([50]) of the total Commission shall be due and payable upon the Tenant taking physical occupancy of the Property or the Lease Commencement Date, whichever occurs first.

3.5 Commissions on Lease Modifications, Renewals, and Expansions

If the Tenant exercises an option to renew, extend, or expand the Lease, or executes a subsequent lease for additional space within the Property during the initial Lease term or any extensions thereof, the Paying Party shall pay to the Broker an additional commission equal to [Renewal Percentage, e.g., 3] percent ([Numerical Percentage]%) of the Base Rent attributable to such renewal, extension, or expansion period, payable upon the execution of the amendment or renewal document.

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4. Default, Termination, and Remedies

4.1 Events of Default

The occurrence of any of the following shall constitute a material Default under this Agreement:

1. The failure of the Paying Party to pay any installment of the Commission when due.
2. The breach of any material representation, warranty, or covenant made by either Party in this Agreement.
3. The filing of a petition in bankruptcy or insolvency by or against either Party, or the appointment of a receiver for all or substantially all of a Party's assets.

4.2 Notice and Cure Period

If a Party commits a Default, the non-defaulting Party shall provide written notice specifying the exact nature of the Default. The defaulting Party shall have thirty (30) business days from the receipt of such written notice to cure the Default (the "Cure Period"). If the Default is incapable of being cured within thirty (30) business days, but the defaulting Party commences diligent efforts to cure within said period and continuously prosecutes the same to completion, the Cure Period shall be extended for an additional period not to exceed sixty (60) calendar days.

4.3 Remedies Upon Default

If a Default remains uncured following the expiration of the applicable Cure Period, the non-defaulting Party may pursue any and all available legal and equitable remedies, including:

1. Termination: Terminating this Agreement upon written notice to the defaulting Party.
2. Specific Performance and Damages: Enforcing the terms of this Agreement through a court of competent jurisdiction and recovering all unpaid Commissions, statutory interest calculated at the rate of [Interest Rate, e.g., 1.5] percent per month (or the maximum rate permitted by law), and actual documented damages.
3. Legal Fees and Costs: The prevailing Party in any litigation, arbitration, or enforcement action arising out of this Agreement shall be entitled to recover from the non-prevailing Party all reasonable attorneys' fees, court costs, and collection expenses incurred.

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5. Boilerplate Legal Provisions

5.1 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable. If modification is not possible, the provision shall be deemed severed from this Agreement, and the remaining provisions shall remain in full force and effect, provided that the fundamental economic and legal bargain remains intact.

5.2 Entire Agreement

This Agreement constitutes the entire understanding and agreement between the Parties with respect to the subject matter hereof, superseding all prior oral or written negotiations, representations, understandings, or agreements. No modification, amendment, or waiver of any provision of this Agreement shall be effective unless set forth in a written instrument signed by authorized representatives of both Parties.

5.3 Force Majeure

Neither Party shall be held liable for any failure or delay in the performance of its obligations under this Agreement if such failure or delay arises out of acts of God, war, terrorism, civil unrest, labor strikes, fire, flood, governmental restrictions, pandemics, or other catastrophic events beyond the reasonable control of the affected Party, provided that the affected Party gives prompt written notice to the other Party and uses commercially reasonable efforts to mitigate the effects of the event.

5.4 Governing Law and Jurisdiction

This Agreement, and all claims or causes of action arising out of or relating to it, shall be governed by, construed, and enforced in accordance with the substantive laws of the State/Jurisdiction of [Jurisdiction], without regard to its conflict of laws principles. The Parties hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located within [County], [Jurisdiction] for the resolution of any dispute arising hereunder.

5.5 Dispute Resolution

Any dispute, controversy, or claim arising out of or relating to this Agreement, including its formation, interpretation, breach, or termination, shall be resolved through mandatory binding arbitration administered by [Arbitration Body, e.g., the American Arbitration Association] in accordance with its commercial arbitration rules. The place of arbitration shall be [City, State], and the proceedings shall be conducted in the English language before a single arbitrator. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

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6. Formal Execution Block

IN WITNESS WHEREOF, the Parties hereto have caused this Commercial Lease Commission Agreement to be executed by their respective duly authorized officers or representatives as of the Effective Date first written above.

PAYING PARTY / LANDLORD / BROKER:

[Paying Party Entity Name]
By: _____________________________________
Name: [Authorized Signatory Name]
Title: [Signatory Title]
Date: [Execution Date]

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BROKER / AGENT:

[Broker Entity Name]
By: _____________________________________
Name: [Authorized Signatory Name]
Title: [Signatory Title]
Date: [Execution Date]