Commercial Real Estate Listing Agreements: For Sellers and Their Brokers

When preparing to sell a commercial property, one of the most important legal documents a seller will encounter is the commercial real estate listing agreement. Property owners, commercial landlords, developers, and brokers should all be careful to understand the structure and legal implications of this contract.

We will discuss what commercial listing agreements are, when and why they should be used, the risks of relying on internet templates, and the top terms that should be included to protect both sellers and their brokers/agents. Because of the risk and complexity for all parties to this type of agreement, it is essential to work with a skilled and experienced real estate attorney to review, draft, negotiate, or advise on your behalf.

What Is a Commercial Real Estate Listing Agreement?

A commercial real estate listing agreement is a contract between a property owner (the seller) and a licensed real estate broker or agent. This agreement authorizes the broker to market, list, and sell a commercial property on behalf of the owner; the seller still retains the authority to accept, counter, or decline any offers from buyers. Unlike residential listings, commercial listing agreements often involve more complex terms, longer marketing periods, and higher-value transactions which can contain often multiple assets.

The agreement sets the expectations for commission (payment), scope of services, exclusivity, marketing strategy, and legal protections for both parties.

When Should a Listing Agreement Be Used?

A listing agreement should always be used when a seller engages a real estate broker to market and sell commercial property. In most states, a written agreement is legally required; however, the terms of this agreement can be highly variable. These agreements are typically signed before any marketing efforts begin or the property is advertised, either publicly or privately.

Common situations where listing agreements are essential include:

• Leasing an undeveloped space in a commercial development
• Leasing a developed space in a commercial development
• Selling a retail center, office building, warehouse, or industrial space
• Disposing of investment or income-producing properties
• Portfolio and multiple parcel divestments
• Liquidating assets as part of a business restructuring or dissolution
• Transferring property in a 1031 exchange or other tax-sensitive transaction
• Listing commercial land or development parcels for sale

Why You Shouldn’t Rely on Online Templates

It may be tempting to use a commercial listing agreement template from the internet. While some templates provide a starting point, most are not customized for your jurisdiction, property type, or transaction complexity. They often fail to account for state-specific real estate license laws, broker disclosure obligations, commercial property nuances (tenants, zoning, income statements, etc.), tailored indemnification or risk-shifting clauses, and more.

Using a boilerplate form without legal review can expose you to disputes over commission, liability, or misrepresentation, especially if the sale doesn’t go as planned. If you’re entering into or negotiating a listing agreement, consulting a real estate attorney can save you significant time, money, and liability exposure.

Top Terms to Include in a Commercial Listing Agreement

To protect both sellers and real estate brokers, the following key provisions should be carefully drafted and negotiated:

1. Parties and Property Description. Clearly identify the legal owner and brokerage firm, the assigned agents and professionals, and include a detailed legal description or address of the property.

2. Scope of Authority. Define what the broker is authorized to do (market the property, negotiate offers, host tours, prepare materials, etc.). Specify whether the broker may accept offers on your behalf.

3. Listing Term (Duration). Set a start and end date for the agreement. Include any provisions for automatic renewal, early termination, or post-expiration rights to commission.

4. Commission Structure. Specify how the broker is compensated (percentage of sale price or flat fee), when the commission is earned, and whether it’s still due if the buyer was introduced before expiration.

5. Exclusivity or Non-Exclusivity. Clarify whether it is an exclusive right to sell, an exclusive agency, or open listing. The level of exclusivity impacts commission and control.

6. Broker’s Duties and Marketing Plan. Spell out what services the broker will provide, which can include but should not be limited to MLS listing, signage, brochures, online promotion, broker networking, etc. Include any obligations to report market activity.

7. Seller’s Representations and Warranties. Sellers often warrant that they have the authority to sell the property, that there are no undisclosed liens or encumbrances, and that the information they provide is accurate.

8. Indemnification and Limitation of Liability. Each party should be protected from liability arising from the other’s negligence or misconduct. Brokers may also seek protection from claims tied to seller disclosures or property condition.

9. Broker Protection Clause (Tail Provision). This clause allows brokers to still earn a commission if a buyer introduced during the listing period closes after the agreement expires, often within 180 days or more.

10. Dispute Resolution and Governing Law. Include how disputes will be handled. Will the broker be involved in litigation, arbitration, or mediation at an additional cost, or for free? Which state’s laws will govern the agreement? This becomes crucial if things go sideways; commercial agreements often have a higher risk of failure than residential.

When Should You Hire a Real Estate Attorney?

Commercial real estate transactions are inherently high-stakes and complex. Hiring an attorney is a smart move when:

• You intend to listing a high-value commercial property
• You have multiple owners or stakeholders involved
• The property is tenant-occupied or income-producing
• There is a custom commission arrangement or dual agency disclosure
• You are concerned about liability, confidentiality, indemnification, or dispute exposure
• You are using a broker’s in-house listing agreement and want an independent legal review

An experienced commercial real estate attorney can ensure your listing agreement protects your rights, aligns with your goals, and minimizes future risks.

Protect Your Interests Early

Signing a commercial listing agreement isn’t just a formality; it’s a legal commitment that can impact your bottom line. Sellers and brokers alike benefit from clear, customized terms that reflect the true scope of their relationship and the risks involved.

Avenue Legal Group represents sellers, developers, brokers, and business owners in commercial real estate transactions across Oklahoma and beyond. We review, draft, negotiate, and advise on all types of commercial real estate agreements, including listing agreements, purchase contracts, lease agreements, and commission disputes.

If you’re preparing to list a commercial property or want help reviewing a broker’s proposed agreement, we’re here to guide you.

Contact Avenue Legal Group to discuss your commercial transaction or brokerage operations.