Buyer Representation Agreements

Unlike residential transactions, California does not currently require a written buyer-broker agreement for commercial purchases. Still, a well-drafted agreement protects both the buyer and the broker by putting expectations in writing before the relationship begins.

What Buyer Representation Agreements Should Cover

A Buyer Representation Agreement is a contract between a buyer and a real estate broker or agent that outlines the terms under which the agent will represent the buyer in a commercial property transaction. To ensure a buyer understands their rights, the agent’s obligations, and any potential conflicts of interest, real estate brokers and agents should provide written disclosure of their representation to the buyer before entering into an agreement.

The key elements of a Buyer Representation Agreement typically include:

Exclusive vs. Non-Exclusive Representation

• An exclusive agreement means the buyer commits to working only with one agent or brokerage for a specified time period.
• A non-exclusive agreement allows the buyer to work with multiple agents.

Duties and Responsibilities

• The agent agrees to assist the buyer in finding, evaluating, and negotiating commercial properties.
• The buyer agrees to communicate openly and work in good faith with the agent.

Compensation

• Specifies how the agent will be paid — either through a commission, flat fee, or other arrangement.
• In many cases, the seller pays the commission, but the agreement clarifies compensation in case the seller does not offer payment.

Term and Termination

• Defines the duration of the agreement and how it can be terminated.
• Some agreements include a protection period, ensuring the agent still receives compensation if the buyer purchases a property the agent introduced after termination.

Confidentiality and Fiduciary Duty

• The agent must act in the best interests of the buyer and maintain confidentiality about sensitive financial or strategic information.

California’s New Residential Requirement: Why It Doesn’t Apply Here

Since January 1, 2025, California has required a written buyer-broker representation agreement for residential real estate transactions under AB 2992, which amended Business and Professions Code §10147.5 and several sections of the Civil Code. This law requires buyer’s agents to execute a written agreement with residential buyers before or at the time an offer is made, limits the agreement to three months for individual buyers, and mandates specific disclosures.

This requirement is limited to the sale of residential real property containing four units or fewer, or mobilehomes. It does not extend to commercial property, including church, school, or ministry facilities. That means a written Buyer Representation Agreement for a commercial purchase is a matter of contract and best practice, not a statutory requirement — but the underlying protections it provides (clear expectations, defined compensation, and a documented fiduciary relationship) are just as valuable in a commercial transaction.

Note

By securing a dedicated broker through a written agreement, buyers gain clarity on roles, compensation, and expectations before entering a complex commercial transaction. Whether entering an exclusive or non-exclusive agreement, understanding its terms — and knowing that it isn’t legally mandated the way a residential agreement now is — helps a church or nonprofit board negotiate a fair, well-documented relationship with its broker.

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Disclaimer: Every situation is different and particular facts may vary thereby changing or altering a possible course of action or conclusion. The information contained herein is intended to be general in nature as laws vary between federal, state, counties, and municipalities and therefore may not apply to any given matter. This information is not intended to be legal advice or relied upon as a legal opinion, course of action, accounting, tax, or other professional services. You should consult the proper legal or professional advisor knowledgeable in the area that pertains to your particular situation.