Tenant Representation in Utah, How It Works and Who Pays

When a company looks for office, industrial, retail or land in Utah, the person on the other side of the table usually works for the owner. The listing broker's job is to get the best deal for the landlord or seller. That is fair, and it is also why many companies bring in a broker of their own.

That broker is called a tenant representative when you rent or a buyer representative when you purchase. This post explains what they do, how they are usually paid, when to start, and what to ask before you hire one.

What a tenant or buyer rep actually does

A good representative works for you through the whole process, not just the tours.

Before the search

• Helps you turn business needs into a written requirements list: size, layout, power, parking, location, budget and timing. (For industrial users, our industrial site checklist is a good starting point.)
• Helps you think through whether to lease, buy or build. See lease vs. buy vs. build-to-suit.
• Sets a timeline that works backward from your lease expiration or move date.

During the search

• Surveys the market, including space that is not widely marketed.
• Screens out buildings that fail your must-haves, so you only tour real options.
• Arranges and attends tours, and asks the questions owners do not volunteer.
• Coordinates with your architect, contractor, attorney and IT team as needed.

During negotiation

• Requests proposals from several owners so they compete for your business.
• Compares offers side by side on total cost, not just the headline rent: free rent, improvement allowances, operating costs, escalations, term and options.
• Negotiates business terms such as renewal options, expansion rights, signs, parking and who pays for what.
• Works with your attorney, who reviews the lease or purchase contract. A broker is not a lawyer.

After signing

• Helps track key dates such as option deadlines and renewal notices, so you do not lose rights by missing a date.

How tenant and buyer reps are typically paid

This is the question most people are shy to ask, so here is the straight answer.

In many commercial lease and sale transactions, the representative's commission is paid by the landlord or seller, often as a share of the commission the owner has agreed to pay its listing broker. In that common setup, the tenant or buyer does not write a separate check to its own broker.

But terms vary from deal to deal. Some agreements have the client pay part or all of the fee, for example when an owner will not pay a commission, or for consulting work on a lease renewal. The point is not to assume. Ask, and get it in writing.

Utah's real estate rules support that. Under Utah Admin. Code R162-2f-401a, a licensee must define the scope of the agency in a written agency agreement with the client, and that list expressly includes a tenant the licensee represents. The same rule requires licensees to disclose their agency relationships in writing before a binding purchase or lease agreement is signed, and to disclose in writing any compensation beyond the real estate commission.

So before your broker starts work, you should have a written agreement that says:

• Who the broker represents (you).
• What the broker will do.
• How long the agreement lasts and what area or property types it covers.
• How the broker is paid, by whom, and what happens if the owner does not pay.

This is a summary of public rules, not legal advice. Read the agreement, and have your attorney review it if anything is unclear.

What about dual agency?

Sometimes one brokerage represents both the owner and the tenant. Utah calls this limited agency, and the same rule requires the licensee to get informed consent from both parties in writing, explaining what will be kept confidential and what will be shared. If a broker proposes it, ask how your negotiating position will be protected, and remember you can say no.

When to start your search

As a general guideline, many companies start 9 to 18 months before their lease expires, or before the date they need to be in new space. Larger, more specialized or harder-to-find requirements tend toward the long end. Smaller, simpler moves can sometimes run shorter.

Why so early? Because the search is only the first step. After you choose a site you still need to negotiate, have the lease reviewed, design the space, get permits and build it out. Starting early also gives you leverage with your current landlord, who knows you have real options.

A typical sequence looks like this:

Every deal is different, so treat this as a framework rather than a schedule.

Questions to ask before you hire a broker

You are picking someone to represent your company on a major commitment. Ask:

1. Are you licensed in Utah, and with which brokerage? You can verify a Utah real estate license with the Division of Real Estate.
2. Who do you represent in this deal? You want the answer to be "you," in writing.
3. Do you or your brokerage also represent owners of buildings I might consider? If so, how will that be handled and disclosed?
4. How are you paid, and by whom? What happens if an owner will not pay a commission?
5. How do you find options that are not widely marketed?
6. How will you compare offers? Ask to see the kind of side-by-side analysis they would prepare.
7. Who will actually do the work day to day?
8. What is in your agreement? Term, scope and how to end it.
9. What other advisors should I bring in? A good broker will tell you when you need an attorney, CPA, architect or engineer.

A broker who welcomes these questions is a good sign.

When you may not need a rep

If you are renewing in place with no intent to move, and you have an experienced in-house real estate team, you may handle it yourself. Even then, many companies test the market first, because the best renewal terms often come when a landlord sees you have other options.

You can learn more about how we work on the Utah Site Selection home page.

Start your Utah site search

If your lease expires in the next year or two, or you need new space, now is a good time to talk. Call or text 801-664-3370 to talk with Stockton Farnsworth, Utah Associate Broker, Team Utah Commercial, brokered by RE/MAX Associates.

General education only, not legal, tax, investment or appraisal advice. Information is believed reliable but not guaranteed. Written by Stockton Farnsworth, Utah Associate Broker, Team Utah Commercial, brokered by RE/MAX Associates.