[WSBARP] "Linkage" Agreement

Tue Apr 18 17:12:10 PDT 2023

I litigated this exact issue recently.  I represented the property manager
who had a short provision in the management agreement stating if the owner
wanted to sell the property during the term of the contract the owner would
use the manager as the agent/broker.  The provision further stated that if
the owner used another firm to market and sell the property then the
manager would be owed damages equaling 6% of the sale price.  The case was
contested but in the end the court stated that the owner agreed to it and
it was a valid contract.  The owner paid a double commission in the end.

I am not saying every judge would do the same.  But if you represent the
owner make sure you review these management contracts carefully.

Kelby J. Derenick
Attorney

*9414 State Ave., Suite E*

*Marysville, WA 98270Ph: (206) 659-5061*

*14 E. Main Street, Suite 207*
*Walla Walla, WA 99362*
*Ph: (509) 676-9805*

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On Tue, Apr 18, 2023 at 2:42 PM Laird, Katherine <
KatherineLaird at centurypacificlp.com> wrote:

> Ideally, this would not be mandatory.  The owner could agree to allow the
> PM to make a proposal for selling the property in the future as part of a
> competitive process. .  What is the proposed brokerage fee? is it in this
> PM agreement?  I suspect not.  Also, I would only agree to this provision
> if the property manager has the chops to sell a building of this size and
> scope (at the time of sale) and the fee arrangement is already
> established.  I would argue a commitment to sole source the brokerage work
> in the future would warrant a discounted fee.  😉
>
> good luck,
>
> Katherine
> ------------------------------
> *From:* wsbarp-bounces at lists.wsbarppt.com <
> wsbarp-bounces at lists.wsbarppt.com> on behalf of Nestor Gorfinkel
> <nestor at GlcLawyer.com>
> *Sent:* Tuesday, April 18, 2023 2:15:54 PM
> *To:* WSBA Real Property Listserv
> *Subject:* Re: [WSBARP] "Linkage" Agreement
>
> *[EXTERNAL]*
> ------------------------------
>
> I have seen management agreements that include those clauses. However, on
> behalf of owner I would exempt transfers to related parties, related
> entities or for estate planning purposes. I would also add refinances,
> Helocs or other loans in your case.
>
>
>
>
>
> Cordially,
>
>
>
> Nestor Gorfinkel, Attorney at Law
>
> Licensed in Florida & Washington State
>
> Florida Civil-Law (International) Notary
>
>
>
>
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> *From:* wsbarp-bounces at lists.wsbarppt.com <
> wsbarp-bounces at lists.wsbarppt.com> *On Behalf Of *Chris B
> *Sent:* Tuesday, April 18, 2023 4:51 PM
> *To:* wsbarp at lists.wsbarppt.com
> *Subject:* [WSBARP] "Linkage" Agreement
>
>
>
> One of my property management clients wants a clause in its management
> agreement whereby the client agrees to also list the property with them if
> they choose to sell during the term of the contract.  I would never agree
> to such a clause myself, but aside from that, any thoughts on whether this
> would be permissible?
>
>
> The same client also has an agreement where he loans money to its clients
> if they can’t afford to pay for needed repairs. This seems sketchy to me
> too, but I am curious what everyone else thinks.
>
>
>
> Chris Benis
>
> First Avenue Law Group, PLLC
>
> 321 First Avenue West, Seattle, WA  98119
>
> 206.447-1900 office – 206.447.9075 fax – www. firstavenuelaw.com
>
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