Great article written by our partner in Philadelphia, Mark Gola.
As we have been saying for a while now, commercial real estate representation has been tilted unfairly toward the landlord. One egregious example of this is allowing brokerage companies to represent both the landlord and tenant in transactions. As the tenants are the ones simply handing over money for a space, full service brokerage agencies commonly put their heft behind the landlords to develop long lasting relationships and drive up costs.
This concept, referred to as “dual agency,” muddies the negotiation process, and creates less than transparent situations for both sides. At Gola, we’ve been championing the idea that commercial real estate brokerage companies need to represent the tenant or the landlord, not both.
In late 2016, it seemed California courts were finally looking to at least create more transparency around the issue. As we told you about the Horiike v. Coldwell Banker Residential Brokerage Co lawsuit the state was looking into the unfair practices within the industry. And now, it seems California State Supreme Court has upheld a ruling that dual agents are an inherent conflict of interest. This ruling has spurred the state government to take a closer look at dual agency, and modify real estate laws surrounding this issue.
“This is obviously a step in the right direction for the real estate industry in general and corporate tenants in particular,” Mark Gola, owner of Gola Corporate Real Estate said. “And while it may take time for it to roll out across the country, it’s good to see the balance of power shifting.”