On August 15, 2014, Gov. Jerry Brown signed Senate Bill 1171 (Hueso, D-San Diego) into law. SB 1171 will become effective January 1, 2015.
Under SB 1171, commercial real estate agents and brokers will need to disclose any proposed dual agency role to the potential client in writing prior to representation. The written disclosure must include one of three statements: (1) Agent represents only the landlord/seller; (2) Agent represents only the tenant/buyer; or (3) Agent represents both the landlord/seller and the tenant/buyer. The potential client will then need to acknowledge the disclosure by signing prior to representation. This legislation neither bans the practice of dual agency nor does it decrease or change the fiduciary duty owed by the real estate professional to their client, it simply, as Sen. Hueso stated, “allows the consumer to make an informed decision.”
Unlike residential real estate agents who are required to provide written disclosures regarding their role as a dual agent prior to engaging a client, prior to signing SB 1171 into law commercial brokers were not required to provide such written disclosures to their clients. By providing this disclosure, parties of commercial real estate transactions will have the opportunity to be better informed about their brokers and the potential conflicts that may arise in the transaction. Whether you are the tenant, landlord, buyer or seller, the commercial real estate broker should always represent your best interest.
If you are a commercial real estate broker, commercial tenant, or commercial landlord and have questions regarding the implementation of SB 1171, call the commercial real estate attorneys at The Loftin Firm today.