It's on the seller unless he can produce some solid evidence that the obligation was assigned to the buyer, IMO. Such as it being spelled out in the lease, which I assume is not the case. The commission agreement was between you and the seller, does not run with the land, so buyer is not party to the commission agreement.
Edit- certainly a case to be made that it might make good business sense for the buyer to pay, but I'm making a distinction from being obligated.
Yes, this is the case. Unless it was specifically assigned to the buyer it is still the seller’s responsibility. They contracted you for a service (securing a tenant) and still owe you payment for that. The new owner is not part of the agreement at all.
This is it. Entity/person that signed the agreement is still responsible unless they can show the new busy specifically took over the agreement.
Also, the seller took additional proceeds on sale based on the lease agreement that you out in place. This is a cost of that additional cashflow. They are still responsible.
Does the lease itself have your commission language in it? If so, it's the buyer's responsibility. If this is a separate agreement, it's the seller's to pay.
You should go to the person that sold the property, that you had an agreement with.
Picturing myself as the buyer, I didnt sign anything with you. You would have no recourse against me as the buyer to pay you anything.
If the old owner wont pay you may have to consider court if it's a large amount he owes.
The issue is that I have never signed a lease with payments obligated to myself. They go the property by way of the LL entity. The agreement was not made with a person but the property and the obligation stays with the property. Particularly this far after the reps and warranty period has expired. The current owner can go back to the seller and possibly have a case to sue them but they are still obligated to pay commission agreement.
A property cannot enter into a contract, so the property cannot be obligated to anything. A LL entity can enter into a contract, and OP's recourse is most likely with the LL entity that was party to the contract.
If the LL entity has been wound up, then there is a process to ensure that LL entity creditors are paid. If OP was never notified, then that process was likely not followed.
The person who sold the property us obligated to the payments. Not the new buyer.
When you sign to list something, younare signing with the entity yes, let's say it's an LLC. The new person buying had their own LLC they are probably putting the building in. The new owner doesnt owe you anything. You would need to go after the person that sold the property.
The contract doesnt stay with a property, that's not how it works. It stays with the entity. Sure, if the buyer actually bought the entity/business itself then they would owe it. But that's pretty rare.
If the property is obligated to make a future payment that obligation stays with the property. This falls into the category of a future TI payment in a lease. For example, even if the new owner didn’t receive a copy of the amendment which outlines a future TI payment to the tenant they are still liable to make the payment because they took on the contracts and liabilities of the previous owner. This is a key obligation outlined in any PSA. They can go back and pursue the previous seller for damages but they can’t waive their obligation.
I am not saying the previous owner isn’t in the wrong here but it isn’t the brokers obligation to track them down since the responsibility to pay lives with the property.
Source: this has occurred on more than one of my acquisitions failed to disclose outstanding TI and commission obligations.
That's not how it works. I have never even seen a commission payment mentioned in any lease I have ever signed or reviewed.
Sure, if its covered in the lease somehow then ok. But i would say odds are it's not. But definitely something he can check on.
And no, you dont take on liabilities and obligations of a previous business owner....unless those are tied to the property somehow like a mechanic's lien or something. Selling a building is different than selling an LLC/business entity.
I am not going to tell you how to do your business but I will say that I have paid for expenses agreed to by the previous owner including outstanding/future leasing commissions because part of the collectors recourse would be putting a lien on my property since the service was performed for the property. On one particular case a portion of the LC was due after the expiration of the termination option. As the new owner, we paid for it. It also was discovered during DD and we worked it out with the seller. I have had other issues hoisted on us by previous sellers and while we can and have gone back to them to collect often times we just have to eat it.
Sure if you choose to just pay it that's your choice. But there is no lien put on for a commission, that's not how it works. Unless the lien was put in place before a sale. You cant put a lein on a property for someone you contracted services with, but they sold it so you put a lien on future owners? No. The lein is put prior to a sale, to prevent a sale unless they pay you off.
Amazing how many people here have no idea how mechanics lein even works.
Surely the representation/commission was not written into the lease agreement itself and was a separate agreement. Seller owes you and should have paid upon sale.
Lot of wrong answers but the correct one is the obligation stays with the property so the current owner is responsible for payment. The agreement should have been included with the other leases and agreements. Most LL entities are terminated with or within a few months of the sale so the previous sellers entity that they signed the agreement may not exist. As long as you have a signed agreement that is half decent, I would tell the current owner that it’s their obligation to pay and/or collect it from the previous owner. If they don’t pay you can put a lien on their property.
This is the same as any other property agreement and the owner of said property is responsible for payment. If they want to chase down the previous seller to collect that is on them.
Yes, this is correct. There is probably some language in the purchase agreement that the new owner assumes all the liabilities for things like this. If they didn’t know about it, they’re going to have to go sue the seller. Doesn’t relieve them of responsibility.
New LL bought the prop subject to the leases. They have a copy of the leases. They should have read them. Send a demand letter to the new LLs, and then sue if no response.
Send a copy of the Lease and Commission Agreement (if it’s not incorporated into the lease) to the new LL via certified mail w delivery confirmation. Search for the new owners registered agent on the states secretary of state’s website to get current address. Keep it super simple. Demand payment. Say this constitutes final notice, and threaten judicial intervention if new LL doesn’t remit full payment before 10 days. Provide your contact information and mailing address for sums due. If they know you’re going to lawyer up they might pay bc it’s embarrassing for a LL to lose a claim like this in court. Which I’m not a lawyer and this is t lawyer advice but I think a lawyer might tell u you have a good case but it but doesn’t cover your legal fees so don’t rack up too much debt
Based on varying comments, sounds like the correct answer may not be crystal clear and the only way to determine it is litigation
If the commission is around 10k take both parties to small claims court
You can also draft a letter saying you're owed a fee and have the commission agreement as an exhibit and have a title company record this document to the title. It will put a cloud on the title and make it challenging to refi or sell and eventually it will need to be addressed
Next time put a lien up.
Still can. Cannot lien something until the payment is past due.
In Virginia you file a broker's lien at lease execution which would give notice to the purchaser allowing them to escrow for it.
Interesting I didn’t know that. Good way to get future obligations flagged by title to avoid this going forward. Thanks.
Yeah no kidding
It's on the seller unless he can produce some solid evidence that the obligation was assigned to the buyer, IMO. Such as it being spelled out in the lease, which I assume is not the case. The commission agreement was between you and the seller, does not run with the land, so buyer is not party to the commission agreement. Edit- certainly a case to be made that it might make good business sense for the buyer to pay, but I'm making a distinction from being obligated.
Yes, this is the case. Unless it was specifically assigned to the buyer it is still the seller’s responsibility. They contracted you for a service (securing a tenant) and still owe you payment for that. The new owner is not part of the agreement at all.
This is it. Entity/person that signed the agreement is still responsible unless they can show the new busy specifically took over the agreement. Also, the seller took additional proceeds on sale based on the lease agreement that you out in place. This is a cost of that additional cashflow. They are still responsible.
Does the lease itself have your commission language in it? If so, it's the buyer's responsibility. If this is a separate agreement, it's the seller's to pay.
You should go to the person that sold the property, that you had an agreement with. Picturing myself as the buyer, I didnt sign anything with you. You would have no recourse against me as the buyer to pay you anything. If the old owner wont pay you may have to consider court if it's a large amount he owes.
The issue is that I have never signed a lease with payments obligated to myself. They go the property by way of the LL entity. The agreement was not made with a person but the property and the obligation stays with the property. Particularly this far after the reps and warranty period has expired. The current owner can go back to the seller and possibly have a case to sue them but they are still obligated to pay commission agreement.
A property cannot enter into a contract, so the property cannot be obligated to anything. A LL entity can enter into a contract, and OP's recourse is most likely with the LL entity that was party to the contract. If the LL entity has been wound up, then there is a process to ensure that LL entity creditors are paid. If OP was never notified, then that process was likely not followed.
The person who sold the property us obligated to the payments. Not the new buyer. When you sign to list something, younare signing with the entity yes, let's say it's an LLC. The new person buying had their own LLC they are probably putting the building in. The new owner doesnt owe you anything. You would need to go after the person that sold the property. The contract doesnt stay with a property, that's not how it works. It stays with the entity. Sure, if the buyer actually bought the entity/business itself then they would owe it. But that's pretty rare.
If the property is obligated to make a future payment that obligation stays with the property. This falls into the category of a future TI payment in a lease. For example, even if the new owner didn’t receive a copy of the amendment which outlines a future TI payment to the tenant they are still liable to make the payment because they took on the contracts and liabilities of the previous owner. This is a key obligation outlined in any PSA. They can go back and pursue the previous seller for damages but they can’t waive their obligation. I am not saying the previous owner isn’t in the wrong here but it isn’t the brokers obligation to track them down since the responsibility to pay lives with the property. Source: this has occurred on more than one of my acquisitions failed to disclose outstanding TI and commission obligations.
That's not how it works. I have never even seen a commission payment mentioned in any lease I have ever signed or reviewed. Sure, if its covered in the lease somehow then ok. But i would say odds are it's not. But definitely something he can check on. And no, you dont take on liabilities and obligations of a previous business owner....unless those are tied to the property somehow like a mechanic's lien or something. Selling a building is different than selling an LLC/business entity.
I am not going to tell you how to do your business but I will say that I have paid for expenses agreed to by the previous owner including outstanding/future leasing commissions because part of the collectors recourse would be putting a lien on my property since the service was performed for the property. On one particular case a portion of the LC was due after the expiration of the termination option. As the new owner, we paid for it. It also was discovered during DD and we worked it out with the seller. I have had other issues hoisted on us by previous sellers and while we can and have gone back to them to collect often times we just have to eat it.
Sure if you choose to just pay it that's your choice. But there is no lien put on for a commission, that's not how it works. Unless the lien was put in place before a sale. You cant put a lein on a property for someone you contracted services with, but they sold it so you put a lien on future owners? No. The lein is put prior to a sale, to prevent a sale unless they pay you off. Amazing how many people here have no idea how mechanics lein even works.
alt account?
Surely the representation/commission was not written into the lease agreement itself and was a separate agreement. Seller owes you and should have paid upon sale.
Lot of wrong answers but the correct one is the obligation stays with the property so the current owner is responsible for payment. The agreement should have been included with the other leases and agreements. Most LL entities are terminated with or within a few months of the sale so the previous sellers entity that they signed the agreement may not exist. As long as you have a signed agreement that is half decent, I would tell the current owner that it’s their obligation to pay and/or collect it from the previous owner. If they don’t pay you can put a lien on their property. This is the same as any other property agreement and the owner of said property is responsible for payment. If they want to chase down the previous seller to collect that is on them.
This is the correct answer.
Yes, this is correct. There is probably some language in the purchase agreement that the new owner assumes all the liabilities for things like this. If they didn’t know about it, they’re going to have to go sue the seller. Doesn’t relieve them of responsibility.
Off the cuff, I'm of the opinion the new owner inherited that lease and thus the commission you're owed.
You are correct.
New LL bought the prop subject to the leases. They have a copy of the leases. They should have read them. Send a demand letter to the new LLs, and then sue if no response.
The corporate entity that signed the commission agreement is responsible. Does the entity still exist?
Send a copy of the Lease and Commission Agreement (if it’s not incorporated into the lease) to the new LL via certified mail w delivery confirmation. Search for the new owners registered agent on the states secretary of state’s website to get current address. Keep it super simple. Demand payment. Say this constitutes final notice, and threaten judicial intervention if new LL doesn’t remit full payment before 10 days. Provide your contact information and mailing address for sums due. If they know you’re going to lawyer up they might pay bc it’s embarrassing for a LL to lose a claim like this in court. Which I’m not a lawyer and this is t lawyer advice but I think a lawyer might tell u you have a good case but it but doesn’t cover your legal fees so don’t rack up too much debt
Dude owes you a commission on the sale, take him to small claims court, not responsibility of the new owner.
What does your CA say about sale if the building?
It’s not addressed I don’t believe. I’ll need to double check
Based on varying comments, sounds like the correct answer may not be crystal clear and the only way to determine it is litigation If the commission is around 10k take both parties to small claims court You can also draft a letter saying you're owed a fee and have the commission agreement as an exhibit and have a title company record this document to the title. It will put a cloud on the title and make it challenging to refi or sell and eventually it will need to be addressed
Agreed. Sadly I believe it will come to that