Gov. Brown signs law requiring disclosure from real estate brokers

Whether you're purchasing, selling or leasing a property, commercial real estate transactions must be carefully planned, executed and documented in a contract that minimizes risk and protects your interests. The value of the property and any potential liabilities have to be accurately assessed, and a legal professional with experience in a wide range of real estate transactions can provide counsel and guard against pitfalls.

Conflicts of interest occasionally arise in real estate deals. In the residential market, brokers are required to inform the purchaser and the seller of any prior business history that could compromise the motivation to represent either side. Now a bill recently signed by Gov. Jerry Brown will impose such requirements on commercial real estate transactions in California.

Starting on Jan. 1, commercial real estate agents will be required to disclose any prior business history they may have had with tenants or landlords. The legislation was opposed by the California Association of Realtors, which said disclosure requirements shouldn't apply in commercial transactions "because the relatively more sophisticated parties are adequately protected by other prohibitions on conflicts of interest and disclosures of relationships." The association said the bill would result in unnecessary complications. However, supporters of the bill say that it ensures transparency in a market that too often favors commercial landlords over tenants. Brokers who represent both sides of a transaction must also meet the disclosure requirement, which applies to a firm's managing broker and not to individual agents involved in the transaction.

Business law is constantly changing, and to avoid liability and potential disputes, business people in California should have experienced legal counsel in any transaction.

Source: Sacramento Business Journal, "New law requires more representation disclosure by brokers," Ben van der Meer, Aug. 20, 2014

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