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The broker provision of a lease should acknowledge the broker or brokers entitled to compensation and provide representations that the parties have not worked with any other broker in connection with the lease. Typically, the parties also agree to indemnify each other for violating these representations.
Too-Loose Language
The typical representation language merely states that the parties, landlord and tenant, have not dealt with any other broker in connection with the lease. Notably, the parties then proceed to agree mutually to indemnify each other in the event of any breach of their representations. The following is a lease provision taken from an actual case (with slight modifications).
Landlord and Tenant each warrants to the other that in connection with this Lease it has not employed or dealt with any other broker, agent or finder, other than the Brokers (defined above). Landlord acknowledges that Landlord shall pay any commission or fee due to the Brokers, pursuant to a separate agreement. Tenant shall indemnify and hold Landlord harmless from and against any claim for brokerage or other commissions asserted by any broker, agent or finder employed by Tenant or with whom Tenant has dealt, other than the Brokers. Landlord shall indemnify and hold harmless Tenant from and against any claim for brokerage or other commissions asserted by the Brokers to the extent Landlord fails to pay the Brokers as provided for in the separate brokerage agreement between Landlord and the Brokers, and by any other broker, agent or finder employed by Landlord or with whom Landlord has dealt.
The fundamental flaw with this broker provision is that it assigns responsibility to both parties for the same dealings. That is, if both parties deal with a third party, then both parties are responsible for indemnifying each other with regard to those dealings. Essentially, the mutual provisions negate, or cancel out, the indemnification obligations when both parties have dealt with the same broker.
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