Yes. Even if the Brokers did not participate in the exercise of the AIR Lease Option to extend the term, the Brokers are entitled to a commission.
Paragraph 15 of the AIR lease forms state that “if Lessee exercises any Option, . . . Lessor shall pay Brokers a fee in accordance with the fee schedule of the Brokers in effect at the time the Lease was executed.” The Brokers entitled to a fee are those listed in Paragraph 1.10 of the AIR Lease. Paragraph 1.10 includes a space to list Lessor’s Broker and Lessee’s Broker.
If the owner of the Project at the time the Lease was first executed sells the Project before the Option is exercised, this payment obligation applies to the new owner, according to Paragraph 15.2 of the AIR lease forms.
Paragraphs 15.1 and 15.2 are frequently stricken by Lessors even when they are not represented by counsel. If these Paragraphs are stricken, the AIR lease forms would not confer on Brokers any right to receive the fee. In addition, if there is a separate agreement between Brokers and Lessor that precludes such a fee, Brokers are not entitled to a fee.
Assuming Paragraphs 15.1 and 15.2 have not been stricken, and if Brokers are not paid the fee, can Brokers sue Lessor (even though the Lease was signed by Lessor and Lessee, and not Brokers)? Yes. According to Paragraph 15.2 of the AIR lease forms, Brokers are “third party beneficiaries” of Paragraph 15 of the Lease and therefore may sue Lessor for the amounts owed.
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