It is with tremendous excitement – and a healthy dose of relief – that I have the honor of announcing that SB 1171, a law that I conceived and designed (with the help of numerous amazing supporters), was signed into law by Governor Brown on Friday, August 15th. Known as the real estate broker agency disclosure bill, this bill would never have become a law without the support of State Senator Ben Hueso and countless other lawmakers, business associates, colleagues and supporters who recognized the inherent unfairness in commercial real estate laws as they existed until now.

Commercial real estate laws have favored landlords for decades. In short, they allowed for commercial real estate brokers to represent both a tenant and a landlord in the same transaction, without any requirement that they notify the parties of their role as a dual agent. By contrast, laws strictly requiring disclosure of this “dual agent” practice have been in place in residential real estate laws for years.

The absence of this law resulted in a tremendous amount of conflicted representation, which almost always adversely affected the tenant buying or leasing commercial space. In other words, this was affecting the small business owners, the startup companies, the family owned businesses, the law firms renting three floors. The owners of businesses that fuel our local economies and provide invaluable professional services were being deceived in thinking that their brokers had only their interests at heart.

SB 1171 corrects those inequalities by ensuring that all commercial real estate tenants or buyers receive full disclosure from their broker on exactly who they are representing in a given transaction. Effective January 1, 2015, written disclosures from brokers must be provided and must fall into one of three statements:

1. Agent represents only the landlord/seller;
2. Agent represents only the tenant/buyer;
3. Dual Agency: Agent represents both the landlord/seller and the tenant/buyer.

There will be a Dual Agency definition immediately below the three choices stating that a dual agent is not allowed to relay any confidential information between the two parties, unless written consent is obtained. Breach of this confidentiality will have legal consequences for the broker.

Hughes Marino has specialized in tenants only representation for nearly three decades, and for years we have fought hard to level the playing field for our clients, our friends, and our fellow business owners throughout Southern California. We consider the passing of SB 1171 to be a victory for all of the hardworking business owners in the state, who deserve the opportunity to receive unbiased representation when selecting the next space to house their business.

From each and every one of us at Hughes Marino, we sincerely thank all of you for your support in helping us to spearhead this game-changing legislation.