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New Law Draws Broker Line

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SB 1171 became law last week, sponsored by state Sen Ben Hueso, D-San Diego. (Can't they start coming up with more creative names for bills?) Hughes Marino CEO Jason Hughes, a San Diego-based tenant rep specialist instrumental in drafting the bill, tells us what it means for commercial real estate brokers in California.

The key thing that brokers need to know about the law, according to Jason: disclosure. The measure, which takes effect Jan. 1, requires brokers to disclose to tenants—in writing—if they also represent landlords. “Now, especially with court rulings, the large brokerage companies will need to disclose that they’re only representing the landlord or disclose that they will be working in a dual agency role,” says Jason. Among other things, a dual agent can’t provide any confidential information between the two parties unless with written consent.

The new law, in conjunction with a recent California State Court of Appeal ruling (Horiike v. Coldwell Banker), specifies that commercial real estate pros working for the same corporate broker are in fact dual agents if the listing office corporate broker is the same as the selling agent’s corporate broker. Hughes says he believes this new law will be the catalyst to break commercial brokerage firms into two camps: either they'll rep landlords or they'll rep tenants.