In October 2023, a Missouri jury awarded a staggering $1.8 billion in damages in a case involving the National Association of Realtors (NAR) and certain real estate companies. Though this ruling related to residential brokerage commissions, this landmark verdict is sending ripples throughout the real estate industry and could have far-reaching implications for commercial transactions, in particular commercial leases, in the event that the standard broker landscape is ruled anticompetitive.
Standard practice has been that sellers and landlords customarily cover the brokers’ fees in the commercial real estate landscape. This ruling puts these types of arrangements at risk and will likely reshape the industry by prompting stricter regulations, increasing transparency, strengthening client protections, and fostering a more ethical environment.
To safeguard their interests and navigate the evolving terrain, commercial real estate practitioners are advised to engage with qualified legal counsel to explore the integration of targeted risk management terms into their listing, commission and commercial lease agreements.