Commissions on free rent?

i have 9 months of free rent in my 5 year lease...should i pay commissions on the free rent (straightlined) or should i pay commissions based on cashflow?
In Leasing Property - Asked by gino l. - Mar 10, 2014
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Answer(s)

Chris T.
Broker/Agent
Suwanee, GA

It is all negotiable, normal transaction is to pay first month rent and % thereafter. Or pay % of total aggregate rents

Mar 10, 2014
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Steve C.
Broker/Agent
Frederick, MD

We get paid based on the aggregate amount of money the landlord receives in base rent. To make it simple and help the landlord, we add back any free rent the tenant receives. For example; on a 5 year lease if the tenant gets 9 months rent abatement, the lease term becomes 5 years, 9 months. That way the landlord receives 5 full years of rent.

Mar 11, 2014
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David V.
Broker/Agent
Boise, ID

I concur with Steve C., above. Add the period of free rent into the Lease term and get paid for the full amount less the free rent.

Mar 11, 2014
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Ricardo R.
Developer
Mcallen, TX

On the retail side, the % commission paid is based on the value of the lease during the base term. Any free rent would offset to the total value of the lease and it would not be applicable to apply a commission to monies not paid. After doing several hundred lease deals, I very commonly see the more experienced brokers write the LOIs for the base period in terms of years + the free rent period added so 3 years plus 3 months or 5 years plus 4 months etc, that way the base term takes into consideration the entire initial term.

Mar 18, 2014
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