From the September issue: The term “vulnerable” is not typically associated with the alpha dogs
of New York City’s high-powered commercial real estate world. But that
is precisely how a number of top commercial firms are feeling these
days, and to compensate, they are taking extra measures to ensure that
landlords can’t stiff them.
An increasing number of brokers are having legal language inserted
into their contracts stating that if their commission is not paid by a
certain date, it will come from the tenant they worked with, instead of
the landlord. The “rent in lieu of commission” clause, as it is
unofficially known, is structured so the payment won’t cost the tenant
a dime; rather, it will simply be deducted from the rent they would
otherwise pay to the landlord.
Last month one of the city’s top brokerage firms issued a 10-point
memo to its commission-based employees explaining ways that they can
best protect their spoils.
