Protect Yourself in Real Estate: Spotting Risky Side Deals

One of the most misunderstood side contracts is the Buyer's Exclusivity Agreement—a document that may entitle a broker to commission even if they are not directly involved in securing the final property purchase. Without a clear understanding of its terms, buyers can find themselves facing unexpected financial liability.

What is a Buyer’s Exclusivity Agreement?

A Buyer’s Exclusivity Agreement (BEA) typically grants one broker the exclusive right to represent the buyer for a specified period of time or within a defined geographic area. The agreement may state that the broker is entitled to a commission if the buyer purchases any property—even if the broker did not introduce or negotiate the deal.

This is where side contract liability becomes critical. Even if the main real estate contract is clean, the BEA can impose separate obligations that lead to legal and financial consequences.

Where Liability Arises: The Hidden Traps

Liability often arises from:

1. Failure to Read or Negotiate the Side Contract: Many buyers sign exclusivity agreements without fully understanding their implications. This is particularly risky when the agreement lacks clear scope limitations—e.g., whether it applies to all property types or just residential properties in a specific zip code.

2. Unclear Time and Geographic Boundaries: If the BEA does not specify how long it lasts or where it applies, it can lead to the broker claiming commission on unrelated deals. For example, buying an investment condo six months later in a neighboring county could still trigger a commission payment.

3. Lack of Tie-In to Main Contract Terms: Side contracts should be aligned with the primary real estate transaction. If your purchase contract includes contingencies—such as financing, inspections, or seller concessions—ensure that your BEA also allows for contingencies. Otherwise, you may owe commission on a deal that never closes.

   
   

Best Practices: How to Protect Yourself

To protect your interests when dealing with exclusivity agreements and other side contracts, consider these strategies:

1. Define the Time and Place Clearly

Limit the BEA’s effectiveness to a specific date range and geographic area. For example:

“This agreement shall apply only to purchases made within Duval County, Florida, and shall terminate on September 30, 2025.”

This prevents brokers from claiming commissions on unrelated or future purchases.

2. Tie the BEA to Your Needs and Main Transaction

Negotiate language that creates a contingency clause in the BEA based on the outcome of your primary transaction. For instance:

“Commission shall be payable only upon the successful closing of a transaction where Broker has materially participated in negotiation or procurement of the subject property.”

This ensures that if the main deal falls through, or if the broker played no role, you are not liable for commission.

3. Include an Acknowledgement of Exclusions

Clarify any properties or ongoing deals that should be excluded from the BEA. You can include a clause like:

“The Buyer shall not owe commission to Broker for properties introduced by Buyer or purchased from previously negotiated offers known prior to execution of this agreement.”

Let’s say you sign a BEA with Broker A in January for all residential properties in Jacksonville, FL. In March, you independently find a property through Broker B and close on it in April.

If your BEA does not:

• Define Jacksonville narrowly (e.g., zip codes or neighborhoods),

• Limit the time frame,

• Require that Broker A materially participates in the transaction,

Then Broker A could potentially claim they are owed a full commission—even if they did nothing to facilitate the deal.

At Askew & Associates, P.A., we advise clients to approach all real estate transactions with full awareness—not just of the main purchase contract but of all side agreements that may create liability. Exclusivity agreements, when drafted or signed without clarity, can derail otherwise smooth deals.

Before signing anything, consult with a real estate attorney who can help you:

• Review the exclusivity agreement,

• Align it with your main transaction needs,

• Negotiate protective language,

• And, most importantly, safeguard you from unintended consequences.

If you have an ongoing real estate purchase or concerned about a side contract you’ve signed—or are about to—reach out to our firm. We’ll ensure that your legal and financial interests are thoroughly protected at every step.

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699.

Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.