There is a dangerous and growing trend among small business owners in Colorado of conducting real estate transactions without the assistance of legal counsel.? ?All too often business owners opt to rely exclusively on their broker for advice, counsel, and guidance when signing a lease or buying or selling a commercial building.? While this approach is certainly convenient, it is fraught with risk because it gives many people a false sense of security that their best interests are being represented.? In actuality, this is often not the case because a broker?s interest is not necessarily aligned with either party to the transaction.
It is important to recognize that real estate brokers and attorneys play very different roles and have very different responsibilities in facilitating a client?s real estate transactions. ?It is the job of a broker to help locate suitable space and/or to market your property. ?A broker should be aware of existing market conditions and provide advice on general price structure based on his or her understanding of the market. ?Brokers, however, have very limited duties to their clients and may not be positioned to promote your best interest. Nor do they have to be.? For example, in Colorado a real estate broker can and often does represent both parties in a transaction. ?Additionally, in general, a broker only gets paid when the transaction closes, thus, the main goal for many brokers is not to make sure the client gets the best deal, but to make sure the client closes the deal. ?An attorney however, by law, has a clear unequivocal duty to the client. An attorney is hired with the sole purpose of representing a client?s best interest.? An attorney is paid directly by the client and is paid whether or not a deal closes, so an attorney has no incentive to encourage a client to close a deal for any reason and certainly not under terms that are not appropriately beneficial to the client.
Although brokers play an important role in real estate transactions, they cannot provide legal advice. ?Brokers can only use pre-printed forms drafted and approved by a licensed attorney.? Brokerage agreements clearly state that a broker cannot provide the client with legal advice.? An attorney, and more specifically a real estate attorney, has the specialized training and expertise to point out and protect business owners and their businesses from liabilities lurking within the deal.? Too often a broker cannot resolve title matters or assist with issues that arise after a contract has been signed, such as non-disclosure of facts or defects in a property or lease space.? Brokers rarely revise printed form contracts or provide addendums specifically tailored to the needs of the client. Recognizing the proper role of a broker is the first step in understanding the risk associated with relying solely on a broker for assistance in a real estate transaction.? Ultimately, signing a lengthy commercial lease without the benefit of legal advice can very easily result in more costs and business delays if, for example, you end up in a lease that you cannot get out of.
SMART TIP: At the AR Group we have experienced and knowledgeable attorneys to best represent you and your business with commercial leasing, subleasing, lease terminations, purchase and sale of real estate, title matters and other real estate transactions. ?Call the AR Group before you sign your next commercial lease and let up help you reduce your liabilities hidden within the printed form.